Achieves seventh consecutive year of meeting
production and cost guidance
Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its
results for the fourth-quarter and year-end December 31, 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 37 of this release. All dollar amounts
are expressed in U.S. dollars, unless otherwise noted.)
2018 full-year results and 2019
outlook:
|
2018 outlook (+/- 5%) |
2018 full-year results |
2019 outlook (+/- 5%) |
Gold equivalent
production1(ounces) |
2.5 million |
2.45 million |
2.5 million |
Production cost of sales2 ($ per Au eq. oz.) |
$730 |
$734 |
$ 730 |
All-in sustaining cost2($ per Au eq.
oz.) |
$975 |
$965 |
$ 995 |
Capital expenditures |
$1,075 million |
$1,043 million |
$1,050 million |
CEO Commentary:
J. Paul Rollinson, President and CEO, made the
following comments in relation to 2018 fourth-quarter and year-end
results:
“Kinross once again delivered on its commitments
in 2018, as we met our production, cost and capital guidance for
the seventh consecutive year. Our portfolio of mines produced solid
results, with standout performances from Paracatu and Bald
Mountain, both of which delivered record annual production.
Following successful completion of the Tasiast Phase One expansion,
the mine achieved record production in the fourth quarter, with
throughput and recoveries exceeding expectations. Kinross also
generated approximately $790 million in operating cash flow and
maintained its strong balance sheet, with $1.9 billion in liquidity
and no debt maturities until 2021.
“We expect to deliver another strong year in
2019, producing approximately 2.5 million gold equivalent ounces at
costs similar to 2018. Our development projects are proceeding
well, and we look forward to a number of milestones this year,
including: the start of commissioning of the Bald Mountain Vantage
Complex processing circuit and completion of the Lobo-Marte scoping
study in the first quarter; the start of commissioning of the Round
Mountain Phase W processing circuit in the second quarter; and, the
completion of the La Coipa Restart feasibility study and the start
of stripping at Fort Knox Gilmore in the third quarter.
“At Tasiast, we continue to evaluate alternative
approaches to further increase throughput and reduce capital while
preserving the overall value of the project. The project financing
is progressing well and we are targeting completion mid-year.”
2018 Q4 and full-year highlights:
- Production1: 610,152 gold
equivalent ounces (Au eq. oz.) in Q4 2018 and 2,452,398 Au eq. oz.
in 2018.
- Revenue: $786.5 million in Q4 2018 and
$3,212.6 million in 2018.
- Production cost of sales2:
$743 per Au eq. oz. in Q4 2018 and $734 per Au eq. oz. in
2018.
- All-in sustaining cost2: $961
per Au eq. oz. sold in Q4 2018 and $965 per Au eq. oz. sold in
2018. All-in sustaining cost per Au oz. sold on a by-product basis
was $955 in Q4 2018 and $959 per Au oz. sold in 2018.
- Operating cash flow: $183.5 million in Q4 2018
and $788.7 million in 2018.
- Adjusted operating cash
flow2: $135.8 million in Q4 2018 and
$874.2 million for 2018.
- Reported net loss3: $27.7
million, or $0.02 per share in Q4 2018, and $23.6 million, or $0.02
per share, in 2018.
- Adjusted net earnings2,3:
adjusted net earnings of $13.5 million, or $0.01 per share in Q4
2018, and adjusted net earnings of $128.1 million, or $0.10 per
share, in 2018.
- Balance sheet: Cash and cash equivalents of
$349.0 million, and total liquidity of $1,901.9 million at December
31, 2018. No debt maturities until 2021.
Operations and organic development
projects:
- Paracatu delivers record annual production
mainly due to higher recoveries and throughput, increasing
production 45% year-over-year while reducing costs.
- Bald Mountain achieves record annual
production, and Tasiast delivers record quarterly
production in the fourth quarter as throughput and recoveries
exceed expectations.
- The Round Mountain Phase W project continues
to progress on budget and on schedule, with pre-stripping advancing
well and commissioning of the processing circuit expected to begin
in Q2 2019.
- The Bald Mountain Vantage Complex project is
proceeding well, with commissioning of the processing circuit
expected to begin in Q1 2019.
- The Fort Knox Gilmore project in Alaska
remains on schedule, with stripping expected to commence in Q3
2019.
- In Chile, the La Coipa Restart project
feasibility study is scheduled to be completed in Q3 2019 and the
Lobo-Marte scoping study is expected to be
completed in Q1 2019.
- The Tasiast Phase Two expansion continues to
be a viable option as the Company completes its evaluation of
alternative approaches to further increase throughput at the site.
Exploration and mineral reserves and
resources update4:
- Kinross added approximately 2.3 million ounces
to reserve estimates in 2018, including approximately 1.9
million ounces at Fort Knox, to largely offset
depletion.
- Mineral reserve estimates at year-end 2018 were 25.5 million
ounces, compared with 25.9 million ounces at year-end 2017.
- The Company extended mine life at Kupol and
Chirano by one year, with strong exploration
results at both sites.
- Exploration activities added a total of approximately 343 Au
koz. to the Company’s estimated mineral reserves and 414 Au koz. to
estimated measured and indicated mineral resources.
Financial results
Summary of financial and operating results
|
|
Three months ended |
Years ended |
|
|
December 31, |
December 31, |
(in millions, except ounces, per share amounts, and per
ounce amounts) |
2018 |
2017 |
2018 |
2017 |
Operating
Highlights |
|
|
|
|
|
Total gold equivalent ounces(a) |
|
|
|
|
|
Produced(c) |
615,279 |
659,339 |
2,475,068 |
2,698,136 |
Sold(c) |
641,101 |
634,762 |
2,532,912 |
2,621,875 |
|
|
|
|
|
|
Attributable gold equivalent ounces(a) |
|
|
|
|
Produced(c) |
610,152 |
652,710 |
2,452,398 |
2,673,533 |
Sold(c) |
636,183 |
628,565 |
2,510,419 |
2,596,754 |
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
Metal sales |
|
$ |
786.5 |
$ |
810.3 |
$ |
3,212.6 |
$ |
3,303.0 |
Production cost of sales |
|
$ |
476.4 |
$ |
414.5 |
$ |
1,860.5 |
$ |
1,757.4 |
Depreciation, depletion and amortization |
|
$ |
184.3 |
$ |
190.3 |
$ |
772.4 |
$ |
819.4 |
Impairment, net of reversals |
|
$ |
- |
$ |
21.5 |
$ |
- |
$ |
21.5 |
Operating earnings |
|
$ |
25.1 |
$ |
102.9 |
$ |
200.5 |
$ |
336.5 |
Net (loss) earnings attributable to common shareholders |
|
$ |
(27.7) |
$ |
217.6 |
$ |
(23.6) |
$ |
445.4 |
Basic (loss) earnings per share attributable to common
shareholders |
|
$ |
(0.02) |
$ |
0.17 |
$ |
(0.02) |
$ |
0.36 |
Diluted (loss) earnings per share attributable to common
shareholders |
|
$ |
(0.02) |
$ |
0.17 |
$ |
(0.02) |
$ |
0.35 |
Adjusted net earnings attributable to common shareholders(b) |
|
$ |
13.5 |
$ |
16.3 |
$ |
128.1 |
$ |
178.7 |
Adjusted net earnings per share(b) |
|
$ |
0.01 |
$ |
0.01 |
$ |
0.10 |
$ |
0.14 |
Net cash flow provided from operating activities |
|
$ |
183.5 |
$ |
366.4 |
$ |
788.7 |
$ |
951.6 |
Adjusted operating cash flow(b) |
|
$ |
135.8 |
$ |
364.2 |
$ |
874.2 |
$ |
1,166.7 |
Capital expenditures |
|
$ |
273.0 |
$ |
313.3 |
$ |
1,043.4 |
$ |
897.6 |
Average realized gold price per ounce(d) |
|
$ |
1,226 |
$ |
1,276 |
$ |
1,268 |
$ |
1,260 |
Consolidated production cost of sales per equivalent ounce(c)
sold(b) |
|
$ |
743 |
$ |
653 |
$ |
735 |
$ |
670 |
Attributable(a) production cost of sales per equivalent ounce(c)
sold(b) |
|
$ |
743 |
$ |
653 |
$ |
734 |
$ |
669 |
Attributable(a) production cost of sales per ounce sold on a
by-product basis(b) |
|
$ |
733 |
$ |
637 |
$ |
723 |
$ |
653 |
Attributable(a) all-in sustaining cost per ounce sold on a
by-product basis(b) |
|
$ |
955 |
$ |
1,013 |
$ |
959 |
$ |
946 |
Attributable(a) all-in sustaining cost per equivalent ounce(c)
sold(b) |
|
$ |
961 |
$ |
1,019 |
$ |
965 |
$ |
954 |
Attributable(a) all-in cost per ounce sold on a by-product
basis(b) |
|
$ |
1,287 |
$ |
1,308 |
$ |
1,275 |
$ |
1,164 |
Attributable(a) all-in cost per equivalent ounce(c) sold(b) |
|
$ |
1,286 |
$ |
1,308 |
$ |
1,274 |
$ |
1,166 |
|
|
|
|
|
|
- "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 27 to 31 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 2018 was 80.74:1 (2017 - 73.72:1). The ratio for Q4 2018 was
84.42:1 (Q4 2017 – 76.22:1)
- The definition of this non-GAAP financial measure is included
on page 31 of this news release.
The following operating and financial results
are based on fourth-quarter and year-end 2018 gold equivalent
production. Production and cost measures are on an attributable
basis:
Production: Kinross produced
610,152 attributable Au eq. oz. in the fourth quarter of 2018,
compared with 652,710 in the fourth quarter of 2017, mainly due to
lower production at Fort Knox and Bald Mountain, partially offset
by record production at Tasiast and Paracatu.
Kinross produced 2,452,398 attributable Au eq.
oz. for full-year 2018, which was in line with the Company’s 2018
guidance range. This compares with production of 2,673,533 Au eq.
oz. for full-year 2017.
Production cost of sales:
Production cost of sales per Au eq. oz.2 was $743 for the fourth
quarter of 2018, compared with $653 for the fourth quarter of 2017,
largely due to higher cost of sales per ounce sold at Fort Knox.
Production cost of sales per Au oz. on a by-product basis2 was $733
in Q4 2018, compared with $637 in Q4 2017, based on Q4 2018
attributable gold sales of 623,930 ounces and attributable silver
sales of 1,034,273 ounces.
Production cost of sales per Au eq. oz. was $734
for full-year 2018, which was in line with the Company’s 2018
guidance. This compares with production cost of sales of $669 per
Au eq. oz. for full-year 2017. The full-year increase was mainly
due to increases in cost of sales per ounce sold at Fort Knox and
Tasiast. Production cost of sales per Au oz. on a by-product basis2
was $723 for full-year 2018, compared with $653 for full-year 2017,
based on 2018 attributable gold sales of 2,458,069 ounces and
attributable silver sales of 4,229,257 ounces.
All-in sustaining cost: All-in
sustaining cost per Au eq. oz. sold2 decreased to $961 in Q4 2018,
compared with $1,019 in Q4 2017. All-in sustaining cost per Au oz.
sold on a by-product basis2 decreased to $955 in Q4 2018, compared
with $1,013 in Q4 2017.
All-in sustaining cost per Au eq. oz. sold was
$965 for full-year 2018, which was at the lower end of the
Company’s 2018 guidance range, compared with $954 for full-year
2017. All-in sustaining cost per Au oz. sold on a by-product basis
was $959 for full-year 2018, compared with $946 for full-year
2017.
Revenue: Revenue from metal
sales was $786.5 million in the fourth quarter of 2018, compared
with $810.3 million during the same period in 2017.
Revenue was $3,212.6 million for full-year 2018,
which was largely in line with revenue of $3,303.0 million for
full-year 2017.
Average realized gold price5:
The average realized gold price in Q4 2018 decreased to $1,226 per
ounce, compared with $1,276 per ounce in Q4 2017.
The average realized gold price per ounce was
$1,268 for full-year 2018, mainly in line with $1,260 per ounce for
full-year 2017.
Margins: Kinross’ attributable
margin per Au eq. oz. sold6 was $483 per Au eq. oz. for the fourth
quarter of 2018, compared with the Q4 2017 margin of $623 per Au
eq. oz. sold. Full-year 2018 margin per Au eq. oz. sold was $534,
compared with $591 for full-year 2017.
Operating cash flow: Adjusted
operating cash flow2 was $135.8 million for the fourth quarter of
2018, compared with $364.2 million for Q4 2017. Adjusted operating
cash flow for full-year 2018 was $874.2 million, compared with
$1,166.7 million for full-year 2017.
Net operating cash flow was $183.5 million for
the fourth quarter of 2018, compared with $366.4 million for Q4
2017. Net operating cash flow for full-year 2018 was $788.7
million, compared with $951.6 million for full-year 2017.
Earnings/loss: Adjusted net
earnings2,3 was $13.5 million, or $0.01 per share, for Q4
2018, compared with adjusted net earnings of $16.3 million, or
$0.01 per share, for Q4 2017. Full-year 2018 adjusted net earnings
was $128.1 million, or $0.10 per share, compared with adjusted net
earnings of $178.7 million, or $0.14 per share, for full-year
2017.
Reported net loss3 was $27.7 million, or $0.02
per share, for Q4 2018, compared with net earnings of $217.6
million, or $0.17 per share, in Q4 2017. Full-year 2018 reported
net loss was $23.6 million, or $0.02 per share, compared with net
earnings of $445.4 million, or $0.36 per share, for full-year 2017.
This change was primarily a result of decreased operating earnings,
a reversal of impairment charges related to the Cerro Casale sale
in 2017, and an increase in 2018 income tax expense.
Capital expenditures: Capital
expenditures decreased to $273.0 million for Q4 2018, compared with
$313.3 million for the same period last year.
Capital expenditures for full-year 2018 were
$1,043.4 million, compared with $897.6 million for 2017, primarily
due to increased spending at Round Mountain, Bald Mountain and
Tasiast, partially offset by lower spending at Paracatu and
Chirano. Capital expenditures were at the low end of the Company’s
guidance.
Balance sheet
As of December 31, 2018, Kinross had cash and
cash equivalents of $349.0 million, compared with $1,025.8 million
at December 31, 2017. The decrease was primarily due to capital
expenditures at the Company’s development projects and the
acquisition of two hydroelectric power plants in Brazil, partially
offset by net operating cash inflows.
The Company has available credit of $1,552.9
million as of year-end 2018, for total liquidity of $1,901.9
million, and no scheduled debt repayments until 2021.
Operating results Mine-by-mine summaries for
2018 fourth-quarter and full-year operating results may be found on
pages 22 and 26 of this news release. Highlights include the
following:
Americas
The Americas region, which represented 61% of
Kinross’ 2018 production, delivered strong results during the year.
Paracatu and Bald Mountain
achieved record annual production, while Round
Mountain continued to perform well.
Paracatu performed strongly in
2018, with production increasing 45% compared with full-year 2017.
The record annual production was mainly as a result of record
recoveries in Plant 2, and significant increases in tonnes of ore
mined and processed. Production in Q4 2018 was higher compared with
the previous quarter mainly due to an increase in grades and higher
recoveries. Cost of sales per ounce in 2018 was lower compared with
2017 primarily as a result of lower power costs due to the
acquisition of the power plants in the third quarter and favourable
foreign exchange movements. Higher grades also contributed to the
lower cost of sales per ounce in Q4 2018 versus the previous
quarter.
At Round Mountain, 2018
production met expectations but was lower compared with 2017
primarily due to fewer ounces recovered from the heap leach pads,
partially offset by the timing of ounces processed through the
mill. Production in Q4 2018 was largely consistent compared with
the previous quarter. Full-year cost of sales per ounce was higher
year-over-year mainly due to lower heap leach grades and higher
fuel and power costs. Cost of sales per ounce increased in Q4 2018
compared with the previous quarter mainly due to higher processing
costs.
Bald Mountain continued to
perform well, achieving record full-year production in 2018.
Production in Q4 2018 was lower compared with Q3 2018 mainly as a
result of timing of recoveries from the heap leach pads. Cost of
sales per ounce for 2018 was lower than full-year 2017 mainly as a
result of less operating waste mined and the timing of gold
equivalent ounces sold. Cost of sales per ounce in Q4 2018
increased compared with the previous quarter mainly due to fewer
ounces recovered from the heap leach pads.
Fort Knox full-year production
decreased year-over-year largely due to a decrease in grades and
tonnes of ore processed in the mill and placed on the heap leach
pads. The pit wall failure in Q1 2018 also limited access to
higher-grade ore and higher than average rainfall in the second
half of 2018 affected geotechnical stability. Production in the
fourth quarter was largely consistent with the third quarter of
2018. Full-year cost of sales per ounce was higher compared with
2017 mainly due to a decline in grades and an increase in operating
waste mined. Cost of sales per ounce in Q4 2018 was lower versus Q3
2018 mainly due to lower processing costs.
Maricunga delivered strong
results during the year, as production from the rinsing of heap
materials placed on the pads prior to the suspension of mining
activities was better than expected. Cost of sales per ounce for
full-year 2018 was higher than 2017 mainly due to timing of
sales.
Russia
The region continued its strong and consistent
performance, as Kupol and
Dvoinoye’s combined full-year production met
expectations, while cost of sales per ounce outperformed. Full-year
production was lower than the previous year mainly due to the
expected decrease in grades and the completion of mining of the
September Northeast deposit at the end of 2017. Production
quarter-over-quarter was largely consistent.
Full-year cost of sales per ounce was slightly
higher versus 2017 mainly due to lower grades at Dvoinoye and
increased maintenance costs. Q4 2018 cost of sales per ounce was
lower quarter-over-quarter mainly due to less operating waste mined
and lower labour costs at Dvoinoye.
At the Dvoinoye Zone 1 deposit,
development is continuing as scheduled and production is expected
to commence in mid-2019.
West Africa
Full-year production at Tasiast
was slightly higher compared with 2017 mainly due to the completion
of the Phase One expansion in the third quarter. The site achieved
record quarterly production in Q4 2018 mainly due to higher than
expected throughput at the new mill and better mill grades and
recoveries. Cost of sales per ounce for the full year was higher
compared with 2017 mainly due to higher fuel and maintenance costs
and an increase in operating waste mined. Cost of sales per ounce
was lower in Q4 2018 compared with Q3 2018 mainly due to higher
mill grades and lower operating waste mined.
Production at Chirano was
slightly lower for the full-year compared with 2017 mainly due to
anticipated lower grades, and was lower quarter-over-quarter
primarily as a result of lower mill throughput. Cost of sales per
ounce for full-year 2018 decreased compared with 2017 mainly due to
lower overhead, maintenance and power costs, as open pit mining was
suspended in Q3 2017. Cost of sales per ounce was higher in Q4 2018
versus Q3 2018 mainly due to lower mill throughput, partially
offset by lower power costs and favourable foreign exchange
movements.
Organic development projects
Tasiast expansion update
Tasiast continues to perform strongly, achieving
record quarterly production in Q4 2018. The site is currently
exceeding throughput and recovery expectations. The Phase One
expansion has been completed successfully and the new SAG mill is
performing very well. In addition, continuous improvement
initiatives have been undertaken which are expected to result in
meaningful cost and operational improvements. The Company expects
Tasiast to continue to deliver strong operational performance in
2019.
The Phase Two expansion continues to be a viable
option as the Company completes its evaluation of alternative
approaches to further increase throughput at Tasiast. The
evaluation is seeking ways to reduce capital expenditures, while
preserving the overall value proposition, and incorporates strong
Phase One performance results, including throughput averaging above
nameplate capacity. Phase Two expansion considerations include,
among other matters: results from the Company’s evaluation of
alternative throughput approaches; acceptable project financing
terms; capital priorities across the Company’s portfolio; and, the
ongoing discussions with the Government of Mauritania.
These discussions with the Government have
focused on matters that arise occasionally and are generally common
to the mining sector. These matters include tax issues, expatriate
work permits, and increasing opportunities for local suppliers, in
accordance with Kinross policy and applicable laws. In addition,
the parties have engaged in an ongoing dialogue regarding the
Company’s exemption from importation duties on fuel under the
Tasiast Mining Convention. Further, the Company continues to seek
from the Government an exploitation license for Tasiast Sud.
The Government has not expressed an intention to
re-open the Tasiast Mining Convention, and in any event, Kinross
remains protected by its rights under the Mining Convention, which
includes international arbitration provisions. The existing Tasiast
operation is also covered under the Company’s political risk
insurance policy with the Multilateral Investment Guarantee Agency
(MIGA), a member of the World Bank Group.
Kinross continues to advance discussions to
obtain the approximately $300 million in project financing for
Tasiast. In addition to the previously signed mandate letters with
Export Development Canada (EDC) and the International Finance
Corporation (IFC), which indicated their interest in the financing,
subject to completing due diligence, two commercial banks have also
expressed interest in the financing and are now engaged in the due
diligence process. The financing is progressing and
completion is targeted for mid-2019.
Round Mountain Phase W
The Round Mountain Phase W
project continues to progress on schedule and on budget, with
pre-stripping advancing well. Initial low grade Phase W ore has
been encountered and is being placed on the existing heap leach
pads. Construction of the new heap leach pad is now approximately
80% complete, while construction of the vertical carbon-in-column
(VCIC) plant is approximately 50% complete, with commissioning for
both expected to start in Q2 2019. Construction of mine
infrastructure such as the truck shop, warehouse, wash bay and fuel
island are all proceeding as planned and are approximately 35%
complete.
Fort Knox Gilmore project
The Fort Knox Gilmore project
is progressing well, on schedule and on budget, with initial ore
expected in early 2020. Construction of the heap leach has begun
and will continue during the 2019 and 2020 construction seasons.
Expansion of the dewatering system will continue throughout the
year in anticipation of stripping that is expected to commence in
Q3 2019.
Bald Mountain Vantage
Complex
The Bald Mountain Vantage
Complex project is proceeding well, with construction
of the heap leach approximately 85% complete, and the VCIC
approximately 30% complete. Some challenges due to weather and a
tight labour market have been encountered, but commissioning of the
heap leach and processing facilities remain on track to begin in
late Q1 2019. Support infrastructure including the truck shop,
warehouse, and wash bay is approximately 25% complete. Stacking of
economic but previously leached ore on the new heap leach pad is
underway with approximately 50% of the material moved onto a
segregated portion. Mining activities at the Vantage Complex have
commenced and initial ore is now being mined and stockpiled in
preparation for placement on the new heap.
Chile projects
The feasibility study for the La Coipa
Restart project and the scoping study for the
Lobo-Marte project are both proceeding well, and
are expected to conclude in the third quarter of 2019 and first
quarter of 2019, respectively. Permitting is in place for the La
Coipa Restart project and permitting strategy planning has begun at
Lobo-Marte.
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 37 of this news release.
In 2019, Kinross expects to produce 2.5 million
Au eq. oz. (+/- 5%) from its operations, in line with 2018
production.Production is expected to be lower in the first quarter
of 2019 compared with the rest of the year, mainly as a result of
the expected Bald Mountain Vantage Complex project ramp up and
lower production from Fort Knox as per the operation’s mining and
milling strategy.
Production cost of sales is expected to be $730
per Au eq. oz. (+/- 5%) for 2019, which is in line with full-year
2018 cost of sales. The Company expects all-in sustaining cost to
be $995 (+/- 5%) per ounce sold on both a gold equivalent and
by-product basis for 2019, which is largely in line with full-year
2018 all-in sustaining cost per ounce.
The table below summarizes the 2019 forecast for
production and production cost of sales on a gold equivalent and
by-product accounting basis:
Accounting basis |
2019 Outlook(+/- 5%)
|
Gold equivalent basis |
|
Production (Au eq. oz.) |
2.5 million |
Average production cost of sales per Au eq. oz. |
$730 |
All-in sustaining cost per Au eq. oz. |
$995 |
By-product basis |
|
Gold ounces |
2.4 million |
Silver ounces |
3.7 million |
Average production cost of sales per Au oz. |
$720 |
The following table provides a summary of the 2019 production
and production cost of sales forecast by region:
Region |
Forecast 2019 production (Au eq. oz.) |
Percentage of total forecast
production7 |
Forecast 2019 production cost of sales (per Au eq.
oz.) |
Americas |
1.44
million (+/- 5%) |
58 |
% |
$750 (+/- 5%) |
West Africa (attributable)* |
560,000 (+/- 10%) |
22 |
% |
$800 (+/- 10%) |
Russia |
500,000 (+/- 3%) |
20 |
% |
$600 (+/- 3%) |
Total |
2.5 million (+/- 5%) |
100 |
% |
$730 (+/- 5%) |
*Based on Kinross’ 90% share of Chirano |
Material assumptions used to forecast 2019
production cost of sales are as follows:
- a gold price of $1,200 per ounce,
- a silver price of $16 per ounce,
- an oil price of $65 per barrel,
- foreign exchange rates of:
- 3.50 Brazilian reais to the U.S. dollar,
- 1.30 Canadian dollars to the U.S. dollar,
- 60 Russian roubles to the U.S. dollar,
- 650 Chilean pesos to the U.S. dollar,
- 4.50 Ghanaian cedi to the U.S. dollar,
- 35 Mauritanian ouguiya to the U.S. dollar, and
- 1.11 U.S. dollars to the Euro.
Taking
into account existing currency and oil hedges:
- a 10% change in foreign currency exchange rates would be
expected to result in an approximate $15 impact on production cost
of sales per ounce8;
- specific to the Russian rouble, a 10% change in this 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 this exchange
rate would be expected to result in an approximate $27 impact on
Brazilian production cost of sales per ounce;
- a $10 per barrel change in the price of oil would be expected
to result in an approximate $3 impact on production cost of
sales per ounce;
- a $100 change in the price of gold would be expected to result
in an approximate $5 impact on production cost of sales per ounce
as a result of a change in royalties owing.
Total capital expenditures for 2019 are forecast
to be approximately $1,050 million (+/- 5%), which includes
capitalized interest of approximately $65 million, and are
summarized in the table below:
Region |
Forecast 2019sustaining
capital (million) |
Forecast 2019non-sustaining
capital(million) |
Total forecast capital (+/- 5%)
(million) |
Americas |
$375 |
$295 |
$670 |
West Africa |
$35 |
$240 |
$275 |
Russia |
$30 |
$5 |
$35 |
Corporate |
$5 |
$0 |
$5 |
Total |
$445 |
$540 |
$985 |
Capitalized interest |
|
|
$65 |
TOTAL |
|
|
$1,050 |
Sustaining capital includes the following
forecast spending estimates:
|
$180
million (Americas); $15 million (Russia) |
|
$70
million (Americas); $10 million (Russia); $5 million (West
Africa) |
|
$50
million (Americas); |
|
$20
million (Americas) |
|
$20
million (Americas); $10 million (West Africa) |
Non-sustaining capital includes the following forecast spending
estimates:
- Tasiast West Branch Stripping:
|
$180 million |
|
$175 million |
|
$60 million |
|
$45 million |
- Bald Mountain Vantage Complex:
|
$20 million |
- Development projects and other:
|
$60 million |
The 2019 forecast for exploration is
approximately $75 million, none of which is expected to be
capitalized, with 2019 overhead (general and administrative and
business development expenses) forecast to be approximately $165
million, both of which are consistent with last year’s
guidance.
Other operating costs expected to be incurred in
2019 are approximately $100 million, which includes approximately
$40 million of care and maintenance costs in Chile and at Kettle
River-Buckhorn. Based on our assumed gold price of $1,200 and other
inputs, tax expense is expected to be negligible and taxes paid are
expected to be $95 million, with tax expense increasing at 16% of
any profit resulting from higher gold prices and taxes paid
increasing at a lower rate of 5%. With a $100 increase in the
realized gold price, tax expense and taxes paid are expected to be
$40 million and $105 million, respectively.
Depreciation, depletion and amortization is
forecast to be approximately $330 (+/-5%) per Au eq. oz.
2018 Mineral Reserves and Mineral Resources
update
(See also the Company’s detailed Annual Mineral
Reserve and Mineral Resource Statement estimated as at December 31,
2018 and explanatory notes starting at page 32.)
In preparing the Company’s 2018 year-end mineral
reserves and mineral resource estimates as of December 31, 2018,
Kinross has maintained gold price assumptions used since 2011 of
$1,200 per ounce for mineral reserves and $1,400 per ounce for
mineral resources. Kinross continues to focus on estimated higher
margin, lower cost ounces, and has maintained its fully-loaded
costing methodology.
Proven and Probable Mineral
Reserves4
Kinross’ total proven and probable gold reserve
estimates were 25.5 million Au oz. at year-end 2018, largely in
line with reserve estimates of 25.9 million Au oz. at year-end
2017. The addition of approximately 1.9 million ounces of estimated
mineral reserves from Fort Knox Gilmore and approximately 343 Au
koz. from exploration mostly offset depletion and engineering
changes during the year.
Measured and Indicated Mineral
Resources4
Kinross’ total estimated measured and indicated
mineral resources at year-end 2018 were 27.8 million Au oz.
compared with mineral resource estimates of 29.6 million Au oz. at
year-end 2017. The slight reduction was mostly due to the
conversion of 1.9 million ounces of estimated resources from Fort
Knox Gilmore to estimated mineral reserves.
Inferred Mineral
Resources4
Kinross’ total estimated inferred gold resources
at year-end 2018 increased to approximately 6.5 million Au oz.,
compared with 6.4 million Au oz. at year-end 2017.
Exploration gains at Kupol, Bald Mountain and Chirano, and
engineering changes at Paracatu, offset the loss of ounces at
Tasiast Sud after the Company was not granted an exploitation
license at the project.
Kinross Gold Mineral Reserve and Mineral
Resource Estimates4 |
|
2017(Au koz) |
Ownership (Au koz) |
Depletion(Au koz) |
Exploration(Au koz) |
Engineering(Au koz) |
2018* (Au koz) |
Proven and Probable Reserves |
25,934 |
(144 |
) |
(2,554 |
) |
343 |
1,945 |
|
25,521 |
Measured and Indicated Resources |
29,594 |
(192 |
) |
(72 |
) |
414 |
(1,962 |
) |
27,781 |
InferredResources |
6,382 |
(817 |
) |
(15 |
) |
505 |
486 |
|
6,540 |
*Totals may not fully add up due to
rounding.
Exploration update
The Company’s 2018 exploration efforts continued
to focus within the footprint of existing mines. A total of more
than 300,000 metres of drilling was completed, of which
approximately 47% was drilled in Russia. A total of 343 koz. was
added to Kinross’ estimated mineral reserves from exploration
activities during the year. Exploration also added 414 Au koz. to
estimated measured and indicated resources and 505 Au koz. to
estimated inferred mineral resources. Most of the additions were
from Kupol, Bald Mountain and Chirano. 2018 exploration highlights
include:
- Kupol-Dvoinoye: A total of
258 Au koz. was added to estimated mineral reserves and 40 Au koz.
to estimated measured and indicated resources from exploration
activities, mainly from Kupol and Zone 1 and Zone 37 at Dvoinoye.
At Kupol, the primary objective of 2018 drilling was to test the
depth and north extensions of the Kupol main vein system. Drill
intercepts continue to confirm high-grade narrow-vein
mineralization extending northwards and at depths below the Kupol
mine workings. As a result of continued exploration success at
Kupol and engineering optimization work at Dvoinoye, scheduled mill
production at Kupol has again been extended by one year to late
2023.
- Chirano: Exploring the depth extensions of
Akwaaba, Paboase and Tano increased the site’s estimated mineral
reserves by 94 Au koz. in 2018. As well, 142 Au koz. was added to
measured and indicated resource estimates and 179 Au koz. to
inferred resource estimates. These additions have extended the
Chirano mine life by one year to 2021. Exploration results have
also shown the increased depth potential at Chirano.
- Bald Mountain: The drill extensions at Redbird
south extensions, Saga, and Winrock added 260 Au koz. to inferred
mineral resource estimates at Bald Mountain. During the year,
Kinross acquired the remaining 50% portion of the joint venture
(JV) area within the Bald Mountain land package that it did not
already own and the Company has outlined a series of generative
targets, which are planned to be explored in 2019.
For 2019, the brownfields exploration program
will follow up on the mineralized targets identified in 2018 with
infill drilling and geologic modelling with the goal of converting
the mineralization to estimated measured, indicated and inferred
mineral resources.
- Kupol-Dvoinoye: Kinross is expected to spend
up to $20 million in 2019 to continue exploring and delineating
high potential targets at Kupol and Dvoinoye. At Kupol, the program
will continue to explore for depth extensions of the Kupol Central
deeps and hanging wall trends. A portion of the budget has also
been allocated for exploration of brownfield targets around the
mine site. The program at Dvoinoye involves infilling intercepts
which were identified in 2018 at the Zone 37 West target. A
significant number of brownfield targets are planned to be drill
tested during 2019.
- Chirano: Following successful
results in 2018, the Company is increasing exploration spending at
Chirano to $7 million to drill depth extensions at Akwaaba and
Paboase. The program also includes drifting from the Paboase
underground to the Tano underground, where economic gold
mineralization was encountered at depth in 2018.
- Bald Mountain: Kinross is increasing
exploration spending to $12 million at Bald Mountain in 2019. This
is expected to be allocated to infill drill programs with the goal
of upgrading estimated mineral resources to mineral reserves at
Top, Redbird, Saga, Winrock and Yelland. Exploration will also
focus on other target areas for mineral resource growth, including
targets within the Central Zone (which was previously the JV
area).
- Fort Knox: Kinross will continue to explore
the western extension of Gilmore in 2019 as well as continue
exploration at the East Wall target. Brownfield targets around the
Fort Knox site will also be tested in 2019, including
Gil-Sourdough, a satellite deposit from the main Fort Knox
deposit.
A more detailed summary of the 2018 highlights
is presented below. Additional details may be found in the
Appendices. “Appendix A” provides illustrations and captions, and
“Appendix B” provides complete drilling results and drill hole
location data and accompanying explanatory notes corresponding to
the values below.
Appendix A:
https://www.kinross.com/files/doc_news/2019/02/Appendix-A_Q4-YE-2018-ExplorationFigures_February-13.pdf Appendix
B:
https://www.kinross.com/files/doc_news/2019/02/Appendix-B_Q4-YE-2018-Exploration-Drill-Results_February-13.xlsx
Kupol - Dvoinoye
Exploration during 2018 at Kupol and Dvoinoye
successfully added 258 Au koz. to estimated mineral reserves and 40
Au koz. to estimated measured and indicated resources, mainly from
Kupol and Zone 1 and Zone 37 at Dvoinoye.
A total of approximately 98,000 metres was
drilled at Kupol depth extension at the Central Zone, the Northeast
Extension and at the Kupol hanging wall target areas. (See Appendix
A: Figure 1) During the early part of the year, a review of the
2017 interpreted mineralized wireframes identified a potential down
plunge extension, where the Premolar fault separates the northern
end of the North Upper domain from the southern end of the North
Extension domain. Follow-up drilling resulted in the confirmation
of mineralization within the down plunged zone. The Company will
continue to focus on infill and depth extension in 2019. (See
Appendix A: Figure 2)
The Kupol Deeps (an area stretching from Big
Bend to the southern limit of North Upper – see Appendix A: Figure
3) drilling encountered a series of good intercepts that generated
most of the inferred resource additions at Kupol. Mineralization,
though narrow, is open at depth for which the Company will continue
to drill test in 2019. The Northeast Deeps is the direct extension
of the Kupol Main vein outside the Kupol mining lease. Drilling in
2018 intersected narrow quartz-carbonate veinlets and breccia fill
on the main structure with some high grades.
Results from 2018 drilling indicate that the
hanging wall can be traced along the length of the Kupol main vein,
however, drilling was widely spaced along the strike and it was
challenging to trace the narrow but high-grade veins over
appreciable strike length. The Company plans to drill from the
underground through current Kupol workings to better target the
high-grade veins in 2019.
During the latter part of 2018, drilling
provided critical stratigraphic information, which resulted in a
new interpretation of the entire Kupol far hanging wall (East
Wedge) vein, now seen to consist of a 0.5 km trend, directly east
of Kupol. Some of the holes confirmed northward continuation of the
favourable Moroshka andesite with altered zones around narrow
low-grade quartz veins. At this stage, this interpretation is
mostly based on a few holes that will be tested in 2019. (See
Appendix A: Figure 1) In addition to the hanging wall, the Kupol
Footwall remains largely untested and will be a focus in 2019.
Kupol Mining Licence and Kupol West Property
significant down-hole drill intercepts
Hole ID |
From (m) |
To (m) |
Interval (m) |
True Width (m) |
Au (g/t) |
Ag (g/t) |
Central Strike Deeps |
KP18-1406 |
302 |
309 |
7 |
4 |
21.80 |
65.34 |
KP18-1389 |
439 |
445 |
6 |
3 |
12.74 |
83.95 |
KP18-1413 |
412 |
420 |
8 |
4 |
8.27 |
120.15 |
KP18-1438 |
29 |
37 |
8 |
6 |
6.23 |
84.39 |
KP18-1357 |
622 |
627 |
5 |
3 |
8.10 |
63.94 |
KP18-1408 |
494 |
503 |
10 |
5 |
4.33 |
25.73 |
KP18-1371 |
699 |
727 |
27 |
11 |
1.29 |
19.43 |
KP18-1367 |
573 |
574 |
1 |
1 |
26.91 |
12.06 |
South Zone |
KP18-1465 |
354 |
361 |
7 |
4 |
9.75 |
153.14 |
KP18-1465 |
365 |
378 |
12 |
8 |
3.42 |
59.32 |
Northeast Extension |
KP18-1429 |
405 |
408 |
2 |
1 |
96.89 |
1217.81 |
KP18-1393 |
485 |
486 |
1 |
1 |
121.90 |
1773.70 |
KP18-1439 |
455 |
456 |
1 |
1 |
83.77 |
1362.66 |
KP18-1387 |
473 |
474 |
1 |
1 |
24.34 |
733.95 |
At Dvoinoye, a total of approximately 43,000
metres of drilling was achieved during the year, which is double
the original plan at the beginning of the year as initial results
were very positive. Drilling at Zone 37 West constitutes most of
the total drilling at Dvoinoye. The area is west of the Dvoinoye
main underground mine. Drilling provided encouraging intercepts
that the Company then followed up in order to test the high grades.
The veins at Zone 37 West intersected to date point to a series of
short strike and parallel domains that are planned for additional
testing during 2019. In addition to Zone 37 West, Zone 1, and the
September area were also tested in 2018 (see Appendix A: Figure
4).
Dvoinoye significant down-hole drill
intercepts
Hole ID |
From (m) |
To (m) |
Interval (m) |
True Width (m) |
Au (g/t) |
Ag (g/t) |
September Northeast |
SP18-026 |
186 |
192 |
6 |
2 |
33.90 |
19.53 |
SP18-018 |
32 |
33 |
1 |
1 |
376.18 |
192.42 |
SP18-011 |
85 |
87 |
3 |
1 |
37.73 |
27.03 |
SP18-018 |
34 |
36 |
2 |
2 |
34.59 |
67.89 |
SP18-023 |
71 |
85 |
14 |
5 |
4.33 |
4.90 |
Zone 1 Southwest |
Z1-18-004 |
60 |
61 |
1 |
1 |
65.18 |
21.00 |
Z1-18-014 |
77 |
80 |
3 |
1 |
16.79 |
5.94 |
Zone 37 West |
VO18-042 |
337 |
341 |
4 |
3 |
130.10 |
109.34 |
VO18-018 |
345 |
351 |
6 |
2 |
45.41 |
57.96 |
VO18-042 |
348 |
352 |
5 |
3 |
6.81 |
23.16 |
VO18-031 |
331 |
335 |
4 |
2 |
6.45 |
28.17 |
Kinross is expected to increase exploration
spending in Russia to approximately $20 million in 2019 to continue
exploring high potential targets in the Kupol and Dvoinoye land
packages. For full drill results and explanatory notes, see
Appendix B.
Kupol - Dvoinoye Mineral Reserve and Mineral
Resource Estimates4 |
|
2017(Au koz) |
Depletion(Au koz) |
Exploration & Engineering (Au koz) |
2018* (Au koz) |
Proven and ProbableReserves |
2,011 |
(466 |
) |
288 |
1,832 |
Measured and Indicated Resources |
323 |
- |
|
39 |
362 |
Inferred Resources |
151 |
- |
|
368 |
519 |
*Totals may not fully add up due to rounding.
Chirano
At Chirano, the exploration focus continues to
add incremental ounces to the mine life. In 2018, a total of
approximately 34,000 metres of drilling was completed at Akwaaba,
Paboase, Tano, Mamnao, and Obra. Most of the program focused on
infilling the depth potential at Akwaaba and Paboase. In both
cases, the results increased the estimated underground reserve
leading to a one-year addition to Chirano’s estimated mine life. In
total, 94 Au koz. was added to estimated mineral reserves, 142 Au
koz. added to estimated measured and indicated mineral resources
and 179 Au koz. was added to estimated inferred mineral resources
from exploration activities in 2018.
Chirano Mineral Reserve and Mineral
Resource Estimates4 |
|
2017(Au koz) |
Depletion(Au koz) |
Exploration & Engineering (Au koz) |
2018* (Au koz) |
Proven and Probable Reserves |
567 |
(205 |
) |
54 |
415 |
Measured and Indicated Resources |
746 |
- |
|
19 |
765 |
Inferred Resources |
152 |
- |
|
173 |
325 |
*Totals may not fully add up due to rounding.
At Akwaaba, a previously untested hanging wall
breccia was drilled, which has proven to be more continuous with
depth. Further testing of the upper portions of this mineralized
zone is planned for 2019. Within the main orebody, drilling in 2018
extended the indicated reserve base by 100 metres while
mineralization remains open at depth. At Paboase, drilling extended
the reserve base by 100 metres and recent grade-control
close-spaced drilling is returning assay grades higher than the
exploration hole results. Though the width of the orebody is
becoming narrow, it is interpreted as a feature (pinch and swell)
with this type of deposit, and as seen at the upper elevations, a
thicker width is expected to be encountered. Mineralization is open
at depth.
During 2018, a study was conducted to assess the
possibility of underground mining at Tano via the Paboase
underground infrastructure. A number of holes were planned to
infill a portion of the Tano orebody to confirm if the grades used
in the study could be achieved. The results were encouraging, and a
drift from Paboase to Tano is being constructed to allow for
underground drilling. Drift construction is expected to be
completed by mid-2019. The Mamnao orebody was drilled to close the
gap between the south and central pit to assess if there is enough
potential between the two pits. The results received were
encouraging and the Company is planning to mine Mamnao and Akoti
South by open pit methods. During the latter part of 2018, three
holes were drilled at Obra to investigate the potential to commence
a study for the viability of mining Obra by underground mining
methods. The holes returned encouraging results and a model will be
updated in 2019 for the study. A budget of $7 million has been
allocated to Chirano for 2019 to drill the depth extensions of
Akwaaba, Paboase, and Tano. (See Appendix A: Figure 5)
Chirano significant down-hole drill
intercepts
Hole
ID |
From
(m) |
To
(m) |
Interval
(m) |
True Width
(m) |
Au
(g/t) |
Akwaaba |
CHDD2619UG |
145 |
164 |
18 |
17 |
9.58 |
CHDD2598UG |
114 |
142 |
28 |
24 |
4.26 |
CHDD2693UG |
208 |
232 |
24 |
23 |
4.43 |
CHDD2669UG |
161 |
193 |
32 |
25 |
3.60 |
CHDD2603UG |
129 |
169 |
40 |
30 |
2.54 |
CHDD2629UG |
165 |
173 |
8 |
7 |
12.29 |
Mamnao |
CHRC2685 |
82 |
100 |
18 |
12 |
3.86 |
CHRC2667 |
63 |
84 |
21 |
20 |
2.85 |
CHRC2662 |
144 |
156 |
12 |
9 |
3.51 |
CHRC2668 |
100 |
115 |
15 |
11 |
2.12 |
CHRC2688 |
159 |
170 |
11 |
7 |
2.82 |
CHRC2678 |
141 |
152 |
11 |
9 |
2.40 |
Obra |
CHRC2692D |
414 |
492 |
78 |
56 |
2.79 |
CHRC2665D |
474 |
546 |
72 |
53 |
2.60 |
CHRC2677D |
547 |
606 |
59 |
51 |
2.26 |
Paboase |
CHDD2560UG |
275 |
296 |
21 |
13 |
6.24 |
CHDD2564UG |
200 |
212 |
12 |
9 |
10.60 |
CHDD2566UG |
231 |
254 |
23 |
15 |
4.71 |
CHDD2570UG |
252 |
263 |
11 |
8 |
5.75 |
CHDD2571UG |
325 |
342 |
16 |
8 |
3.73 |
CHDD2562UG |
254 |
261 |
7 |
7 |
8.51 |
Suraw |
CHRC2577DW1 |
375 |
385 |
10 |
8 |
4.03 |
Tano |
CHRC2615DW1 |
504 |
524 |
20 |
16 |
4.05 |
CHRC2632D |
472 |
490 |
18 |
15 |
3.24 |
CHRC2617D |
519 |
536 |
17 |
11 |
3.44 |
CHRC2615D |
531 |
547 |
16 |
11 |
2.87 |
CHRC2569D |
583 |
601 |
18 |
12 |
2.41 |
CHRC2639DW1 |
542 |
557 |
15 |
10 |
2.63 |
For full drill results and explanatory notes, see Appendix
B.
Bald Mountain
2018 exploration at Bald Mountain focused on
near mine opportunities expected to increase the resource base as
well as providing a direct impact on operational planning and
sequencing of the numerous pits within the large land package (see
Appendix A: Figure 6).
A total of $12 million was spent on the 2018
Bald Mountain exploration program, for which a total of
approximately 54,000 metres of drilling was achieved at Top,
Redbird, Saga, Winrock, and generative targets. With the
acquisition of the remaining 50% of the JV area, Kinross will focus
on exploring for more proximal intrusion-related ores with grades
greater than 1 g/t. Approximately 260 Au koz. was added to inferred
mineral resource estimates at Bald Mountain from exploration in
2018.
At Top, drilling confirmed the continuity of
high-grade mineralization along the Skarn fault in the northern
section of Top 2 over significant thickness, as well as in the
hanging wall area along the F-fault. The geologic model, resource
estimation and engineering are expected to be completed in Q1 2019
and are expected to optimize the mine sequencing plan for Top (see
Appendix A: Figure 7). At Redbird, drilling at the southern end of
the orebody confirmed a shallow high-grade mineralization. In
addition, extension drilling has identified an encouraging
northwest trend structure that will be further explored in 2019. At
Winrock, drilling was aimed at growing the orebody to the south of
the historic resource. Results were encouraging, with additional
drilling planned for 2019. There were other targets such as ZZ Top
in the North Mine area, east of the Top 1 pit, Yelland in the South
Mine area, as well as Stageline and Rattlesnake in the Central Zone
(previously JV area) that were also drilled. Significant results
were achieved from Stageline and ZZ Top. Targets generated in 2017
were further refined in 2018, and will be part of the follow-up
programs planned for the budgeted $12 million 2019 exploration
program.
Bald Mountain significant down-hole drill intercepts
Hole
ID |
From
(m) |
To
(m) |
Interval
(m) |
Au
(g/t) |
Rat |
R18-001 |
101 |
113 |
12 |
25.24 |
R18-001 |
113 |
155 |
43 |
0.72 |
Redbird |
RB18-019 |
219 |
262 |
43 |
4.58 |
RBD18-028 |
321 |
365 |
44 |
2.89 |
RB18-014 |
258 |
340 |
82 |
1.23 |
RB18-012 |
131 |
139 |
8 |
8.96 |
RB18-037 |
355 |
392 |
37 |
1.70 |
RB18-009 |
166 |
210 |
44 |
1.39 |
Saga |
SGD18-026 |
55 |
272 |
216 |
0.74 |
SGW18-001 |
55 |
154 |
99 |
0.55 |
PZ18-017 |
123 |
210 |
87 |
0.55 |
SGW18-005 |
181 |
250 |
69 |
0.64 |
SG18-011 |
84 |
123 |
40 |
0.99 |
SG18-017 |
137 |
169 |
32 |
0.98 |
Top |
T18-012A |
337 |
477 |
140 |
0.92 |
TD18-003 |
223 |
286 |
62 |
1.59 |
TD18-002 |
142 |
260 |
118 |
0.52 |
TD18-007 |
354 |
391 |
37 |
1.60 |
T18-015A |
463 |
524 |
61 |
0.71 |
TD18-009 |
418 |
433 |
15 |
2.27 |
Winrock |
WR18-003 |
117 |
125 |
8 |
7.72 |
WR18-028 |
107 |
122 |
15 |
3.08 |
WR18-007 |
139 |
168 |
29 |
1.29 |
WR18-036 |
18 |
30 |
12 |
2.47 |
WRD18-012 |
34 |
43 |
9 |
3.09 |
Yelland |
YL18-014 |
270 |
280 |
11 |
5.05 |
YL18-009 |
247 |
264 |
17 |
3.12 |
YL18-009 |
264 |
291 |
27 |
1.20 |
YL18-001 |
229 |
251 |
23 |
1.27 |
For full drill results and explanatory notes, see Appendix
B.
Bald Mountain Mineral Reserve and Mineral
Resource Estimates4 |
|
2017(Au koz) |
Depletion(Au koz) |
Exploration & Engineering (Au
koz) |
2018* (Au koz) |
Proven and Probable Reserves |
1,698 |
(334 |
) |
(17 |
) |
1,347 |
Measured and Indicated Resources |
3,349 |
- |
|
(55 |
) |
3,294 |
Inferred Resources |
597 |
- |
|
248 |
|
845 |
*Totals may not fully add up due to rounding.
Fort Knox
The Company continues to explore for
mineralization extensions of the Fort Knox orebody (see Appendix A:
Figure 8). A total of approximately 11,000 metres of drilling was
completed during 2018. At the East Wall, drilling has shown upside
in both grade and depth at the contact along the southern flank.
However, results were generally neutral as new drilling also
indicated that the granite is deeper and lower-grade at the
northern edge.
Exploration also selected samples for assay from
capitalized dewatering and geotechnical drilling that was ongoing
throughout 2018. These holes were primarily along the western edge
of Fort Knox. Geological and assay data from these drill holes
further refined the shape of the granite-schist contact and
extended ore-shears to the west of the current reserve pit.
Re-logging and reinterpretation of the
Gil-Sourdough deposit was carried out during the year in
preparation for a 2019 drilling program. Re-logging identified a
northeast striking, steeply dipping fault system in the heart of
the North Gil ore body which the Company plans to test in 2019.
Drilling will continue in 2019 to probe
mineralization at the East Wall with a goal of converting and
upgrading resources, as well as exploring the Gil-Sourdough gold
deposit.
Fort Knox significant down-hole drill
intercepts
Hole ID |
From (m) |
To (m) |
Interval (m) |
Au (g/t) |
East Wall |
FFC18-1768 |
399 |
433 |
34 |
2.19 |
FFC18-1742 |
311 |
344 |
34 |
0.76 |
Phase 10 |
PL18-462 |
175 |
232 |
56 |
1.60 |
PL18-459 |
233 |
305 |
72 |
0.35 |
For full drill results and explanatory notes, see Appendix
B.
Fort Knox Mineral Reserve and Mineral Resource
Estimates4 |
|
2017(Au koz) |
Depletion(Au koz) |
Exploration & Engineering (Au
koz) |
2018* (Au koz) |
Proven and Probable Reserves |
1,245 |
(250 |
) |
2,041 |
|
3,036 |
Measured and Indicated Resources |
3,229 |
- |
|
(1,432 |
) |
1,797 |
Inferred Resources |
689 |
(5 |
) |
125 |
|
808 |
*Totals may not fully add up due to rounding.
Round Mountain
A total of approximately 5,000 metres of
drilling was completed at Phase S (south pit layback) and at Phase
V (north pit layback). Re-logging of the oxidation boundaries at
Phase S was also carried out, resulting in the addition of 53 Au
koz. to estimated mineral reserves. The re-logging also improved
the geological understanding of Phase W and X (previously termed as
W-2).
Round Mountain significant down-hole drill
intercepts
Hole ID |
From (m) |
To (m) |
Interval (m) |
Au (g/t) |
South Layback |
P-4360 |
338 |
364 |
26 |
1.53 |
Phase V |
P-4372 |
114 |
139 |
24 |
0.79 |
P-4376 |
90 |
117 |
27 |
0.60 |
P-4369 |
126 |
149 |
23 |
0.53 |
For full drill results and explanatory notes, see Appendix
B.
Round Mountain Mineral Reserve and Mineral
Resource Estimates4 |
|
2017(Au koz) |
Depletion(Au koz) |
Exploration & Engineering (Au
koz) |
2018* (Au koz) |
Proven and Probable Reserves |
2,884 |
(329 |
) |
113 |
|
2,668 |
Measured and Indicated Resources |
2,393 |
(51 |
) |
(61 |
) |
2,281 |
Inferred Resources |
2,115 |
(10 |
) |
(47 |
) |
2,058 |
*Totals may not fully add up due to rounding.
Curlew Basin Project (Kettle River)
The 2018 program was re-focused to drill targets
within and around the Curlew district and Kettle area from the
Curlew Basin due to increased mine rehabilitation requirements. A
total of approximately 9,000 metres were drilled in 2018. Drilling
at the Curlew district (outside of the Curlew Basin Project) has
assisted in reinterpretation of the geologic and hydrothermal
characteristics of the area drilled. Breccias intersected in some
of the holes are consistent with the mineralisation found at
Kettle. At the Basin Edge target, drilling intersected veining,
alteration, and magnetic susceptibility indicating an epithermal
signature. The Company plans to test these district interpretations
in 2019.
Tasiast
The Tasiast exploration program focused on the
Tasiast mining lease area, including the Gap between West Branch
South and the northern edge of the Tasiast Sud license, as well as
Piment and the North Mine area (north of Prolongation). During the
year, the Company re-allocated part of Tasiast’s budget to Chirano
and Bald Mountain when the Tasiast Sud program was put on hold.
Drilling at the Gap highlighted erratic zones of
anomalous mineralization along the main Tasiast trend to the south
with a general shallow plunge to the south. The drilling spacing
along strike is too wide for a meaningful geologic conclusion to be
made. The depth extension of the Piment orebody was drilled to test
the high-grade shoot beneath Piment pit to assess if it would be
suitable for an underground mining study. Results received continue
to show the presence of a shallow angle shoot system. The North
Mine area drilling resulted in outlining some resource addition
from C68 Central.
Tasiast significant down-hole drill
intercepts
Hole ID |
From (m) |
To (m) |
Interval (m) |
True Width (m) |
Au (g/t) |
C6.8 |
TA16758RC |
87 |
94 |
7 |
6 |
7.38 |
TA16759RC |
39 |
63 |
24 |
20 |
2.09 |
TA16764RC |
55 |
80 |
25 |
20 |
1.47 |
TA16763RC |
13 |
28 |
15 |
12 |
2.28 |
TA16763RC |
102 |
116 |
14 |
11 |
2.34 |
C6.9 |
TA16672RC |
20 |
38 |
18 |
16 |
2.77 |
TA16668RC |
10 |
40 |
30 |
26 |
1.30 |
Piment Deeps |
TA15040RC |
140 |
161 |
21 |
19 |
4.77 |
TA14988RD |
381 |
394 |
13 |
12 |
7.57 |
TA15035RC |
144 |
179 |
35 |
34 |
2.58 |
TA14986ARD |
358 |
367 |
9 |
8 |
6.31 |
TA15037RC |
190 |
231 |
41 |
39 |
0.98 |
West Branch South |
TA15999RC |
274 |
280 |
6 |
5 |
7.82 |
TA15991RC |
240 |
250 |
10 |
9 |
4.30 |
TA15990RC |
112 |
126 |
14 |
12 |
2.11 |
TA15065RC |
30 |
46 |
16 |
14 |
1.03 |
For full drill results and explanatory notes,
see Appendix B.
Greenfields exploration
update
While brownfields exploration remains Kinross’
core exploration focus, the Company also continues to pursue
greenfields opportunities. In 2018, Kinross focused on targets in
Nevada, Alaska, the Abitibi region in Quebec and Ontario, Manitoba,
areas of Eastern Russia, and northern Finland’s greenstone
belts.
Kinross also pursues greenfields opportunities
and high margin types of deposits through strategic investments and
partnerships with high quality junior exploration companies. The
Company believes fostering good relationships with management teams
that have a successful track record of discovery, and keeping a
solid pipeline of quality targets that demonstrate scope and scale
for significant discovery, are key components of the greenfields
exploration strategy.
In North America, Kinross explored 11 projects
in both JV and 100%-owned Kinross claims. Kinross and its JV
partners undertook geochemical sampling, ground and airborne
geophysical surveys and drilling programs. Indications of
mineralization and prospective targets were generated at several
projects, and first and second phase drilling programs were
undertaken in 2018. The Company and its JV partners have also
identified new opportunities in Nevada, Quebec, Ontario, Manitoba,
the Yukon, and Finland, and are assessing potential drilling
programs at these projects for 2019.
Conference call details
In connection with the release, Kinross will
hold a conference call and audio webcast on Thursday, February 14,
2019 at 8 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: 4097875Outside of Canada
& US – +1 (647) 788-4901; Conference ID: 4097875
Replay (available up to 14 days after the
call):
Canada & US toll-free –
(800) 585-8367; Conference ID: 4097875Outside of Canada
& US – +1 (416) 621-4642; Conference ID: 4097875
You may also access the conference call on a listen-only basis
via webcast at our website www.kinross.com. Theaudio webcast will
be archived on our website at www.kinross.com.
This release should be read in conjunction with Kinross’ 2018
year-end Financial Statements and Management’s Discussion and
Analysis report at www.kinross.com. Kinross’ 2018 year-end
Financial Statements and Management’s Discussion and Analysis have
been filed with Canadian securities regulators (available at
www.sedar.com) and furnished with the U.S. Securities and Exchange
Commission (available at www.sec.gov). Kinross shareholders may
obtain a copy of the financial statements free of charge upon
request to the Company.
About Kinross Gold
Corporation
Kinross is a Canadian-based senior gold mining
company with mines and projects in the United States, Brazil,
Russia, Mauritania, Chile and Ghana. Kinross maintains listings on
the Toronto Stock Exchange (symbol:K) and the New York Stock
Exchange (symbol:KGC).
Media Contact Louie DiazSenior
Director, Corporate Communicationsphone:
416-369-6469louie.diaz@kinross.com
Investor Relations ContactTom
Elliott
Senior Vice-President, Investor Relations and Corporate
Developmentphone:
416-365-3390
tom.elliott@kinross.com Review of operations
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
|
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 |
52,194 |
95,182 |
|
51,889 |
94,724 |
|
$ |
49.1 |
$ |
58.7 |
|
$ |
946 |
$ |
620 |
Round Mountain |
96,715 |
98,249 |
|
91,769 |
104,198 |
|
70.0 |
81.6 |
|
763 |
783 |
Bald Mountain |
47,211 |
105,080 |
|
68,288 |
99,363 |
|
46.9 |
47.0 |
|
687 |
473 |
Kettle River - Buckhorn |
- |
3,906 |
|
- |
3,949 |
|
- |
0.4 |
|
- |
101 |
Paracatu |
145,634 |
66,023 |
|
152,395 |
62,843 |
|
116.6 |
59.8 |
|
765 |
952 |
Maricunga |
7,226 |
19,039 |
|
19,399 |
11,201 |
|
16.1 |
6.9 |
|
830 |
616 |
Americas Total |
348,980 |
387,479 |
|
383,740 |
376,278 |
|
298.7 |
254.4 |
|
778 |
676 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
123,478 |
145,301 |
|
124,408 |
141,518 |
|
68.7 |
73.8 |
|
552 |
521 |
Russia Total |
123,478 |
145,301 |
|
124,408 |
141,518 |
|
68.7 |
73.8 |
|
552 |
521 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
91,548 |
60,274 |
|
83,780 |
54,993 |
|
69.5 |
43.0 |
|
830 |
782 |
Chirano (100%) |
51,273 |
66,285 |
|
49,173 |
61,973 |
|
39.5 |
43.3 |
|
803 |
699 |
West Africa Total |
142,821 |
126,559 |
|
132,953 |
116,966 |
|
109.0 |
86.3 |
|
820 |
738 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
615,279 |
659,339 |
|
641,101 |
634,762 |
|
476.4 |
414.5 |
|
743 |
653 |
Less Chirano non-controlling interest (10%) |
(5,127) |
(6,629) |
|
(4,918) |
(6,197) |
|
(4.0) |
(4.3) |
|
|
|
Attributable Total |
610,152 |
652,710 |
|
636,183 |
628,565 |
|
$ |
472.4 |
$ |
410.2 |
|
$ |
743 |
$ |
653 |
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
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 |
255,569 |
381,115 |
|
256,037 |
381,779 |
|
$ |
214.4 |
$ |
239.9 |
|
$ |
837 |
$ |
628 |
Round Mountain |
385,601 |
436,932 |
|
381,478 |
438,051 |
|
277.6 |
302.5 |
|
728 |
691 |
Bald Mountain |
284,646 |
282,715 |
|
318,091 |
262,916 |
|
174.1 |
168.9 |
|
547 |
642 |
Kettle River - Buckhorn |
- |
76,570 |
|
927 |
77,087 |
|
- |
36.8 |
|
- |
477 |
Paracatu |
521,575 |
359,959 |
|
523,417 |
356,251 |
|
430.5 |
310.2 |
|
822 |
871 |
Maricunga |
60,066 |
91,127 |
|
89,959 |
41,316 |
|
65.7 |
19.9 |
|
730 |
482 |
Americas Total |
1,507,457 |
1,628,418 |
|
1,569,909 |
1,557,400 |
|
1,162.3 |
1,078.2 |
|
740 |
692 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
489,947 |
580,451 |
|
494,835 |
577,007 |
|
288.2 |
300.9 |
|
582 |
521 |
Russia Total |
489,947 |
580,451 |
|
494,835 |
577,007 |
|
288.2 |
300.9 |
|
582 |
521 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
250,965 |
243,240 |
|
243,241 |
236,256 |
|
237.3 |
178.2 |
|
976 |
754 |
Chirano (100%) |
226,699 |
246,027 |
|
224,927 |
251,212 |
|
172.7 |
200.1 |
|
768 |
797 |
West Africa Total |
477,664 |
489,267 |
|
468,168 |
487,468 |
|
410.0 |
378.3 |
|
876 |
776 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
2,475,068 |
2,698,136 |
|
2,532,912 |
2,621,875 |
|
1,860.5 |
1,757.4 |
|
735 |
670 |
Less Chirano non-controlling interest (10%) |
(22,670) |
(24,603) |
|
(22,493) |
(25,121) |
|
(17.3) |
(20.0) |
|
|
|
Attributable Total |
2,452,398 |
2,673,533 |
|
2,510,419 |
2,596,754 |
|
$ |
1,843.2 |
$ |
1,737.4 |
|
$ |
734 |
$ |
669 |
Consolidated balance sheets
(expressed in millions
of United States dollars, except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash
equivalents |
|
$ |
349.0 |
|
$ |
1,025.8 |
Restricted cash |
|
12.7 |
|
12.1 |
Accounts receivable and other assets |
|
101.4 |
|
91.3 |
Current income tax recoverable |
|
79.0 |
|
43.9 |
Inventories |
|
1,052.0 |
|
1,094.3 |
Unrealized fair value of derivative assets |
|
3.8 |
|
17.0 |
|
|
1,597.9 |
|
2,284.4 |
Non-current assets |
|
|
|
|
Property, plant and equipment |
|
5,519.1 |
|
4,887.2 |
Goodwill |
|
162.7 |
|
162.7 |
Long-term investments |
|
155.9 |
|
188.0 |
Investments in joint ventures and associate |
|
18.3 |
|
23.7 |
Unrealized fair value of derivative assets |
|
0.8 |
|
3.9 |
Other long-term assets |
|
564.1 |
|
574.0 |
Deferred tax assets |
|
45.0 |
|
33.3 |
Total assets |
|
$ |
8,063.8 |
|
$ |
8,157.2 |
|
|
|
|
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
465.9 |
|
$ |
482.6 |
Current income tax payable |
|
21.7 |
|
35.1 |
Current portion of provisions |
|
72.6 |
|
66.5 |
Current portion of unrealized fair value of derivative
liabilities |
|
22.2 |
|
1.1 |
Deferred payment obligation |
|
30.0 |
|
- |
|
|
612.4 |
|
585.3 |
Non-current liabilities |
|
|
|
|
Long-term debt |
|
1,735.0 |
|
1,732.6 |
Provisions |
|
816.4 |
|
830.5 |
Unrealized fair value of derivative liabilities |
|
9.6 |
|
0.2 |
Other long-term liabilities |
|
97.9 |
|
133.8 |
Deferred tax liabilities |
|
265.2 |
|
255.6 |
Total liabilities |
|
3,536.5 |
|
3,538.0 |
|
|
|
|
|
Equity |
|
|
|
|
Common shareholders' equity |
|
|
|
|
Common share capital |
|
$ |
14,913.4 |
|
$ |
14,902.5 |
Contributed surplus |
|
239.8 |
|
240.7 |
Accumulated deficit |
|
(10,548.0) |
|
(10,580.7) |
Accumulated other comprehensive income (loss) |
|
(98.5) |
|
21.1 |
Total common shareholders' equity |
|
4,506.7 |
|
4,583.6 |
Non-controlling interest |
|
20.6 |
|
35.6 |
Total equity |
|
4,527.3 |
|
4,619.2 |
Total liabilities and equity |
|
$ |
8,063.8 |
|
$ |
8,157.2 |
|
|
|
|
|
Common shares |
|
|
|
|
Authorized |
|
Unlimited |
|
Unlimited |
Issued and outstanding |
|
1,250,228,821 |
|
1,247,003,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statements of operations
(expressed in millions
of United States dollars, except share and per share amounts) |
|
|
|
|
|
|
Years ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
Revenue |
|
|
|
|
Metal sales |
|
$ |
3,212.6 |
|
$ |
3,303.0 |
|
|
|
|
|
Cost of sales |
|
|
|
|
Production cost of sales |
|
1,860.5 |
|
1,757.4 |
Depreciation, depletion and amortization |
|
772.4 |
|
819.4 |
Impairment, net of reversals |
|
- |
|
21.5 |
Total cost of sales |
|
2,632.9 |
|
2,598.3 |
Gross profit |
|
579.7 |
|
704.7 |
Other operating expense |
|
137.0 |
|
129.6 |
Exploration and business development |
|
109.2 |
|
106.0 |
General and administrative |
|
133.0 |
|
132.6 |
Operating earnings |
|
200.5 |
|
336.5 |
Other income (expense) - net |
|
3.2 |
|
188.1 |
Equity in losses of joint ventures and associate |
|
(0.3) |
|
(1.3) |
Finance income |
|
11.0 |
|
13.5 |
Finance expense |
|
(101.2) |
|
(117.8) |
Earnings before tax |
|
113.2 |
|
419.0 |
Income tax (expense) recovery - net |
|
(138.8) |
|
23.2 |
Net (loss) earnings |
|
$ |
(25.6) |
|
$ |
442.2 |
Net (loss) earnings attributable to: |
|
|
|
|
Non-controlling interest |
|
$ |
(2.0) |
|
$ |
(3.2) |
Common shareholders |
|
$ |
(23.6) |
|
$ |
445.4 |
(Loss) earnings per share attributable to common
shareholders |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.02) |
|
$ |
0.36 |
Diluted |
|
$ |
(0.02) |
|
$ |
0.35 |
|
|
|
|
|
Weighted average number of common shares outstanding
(millions) |
|
|
|
|
Basic |
|
1,249.5 |
|
1,246.6 |
Diluted |
|
1,249.5 |
|
1,257.0 |
|
|
|
|
|
Consolidated statements of cash flows
|
|
|
|
|
(expressed in millions
of United States dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
Net inflow (outflow) of cash related to the following
activities: |
|
|
|
|
|
|
|
|
|
Operating: |
|
|
|
|
Net (loss) earnings |
|
$ |
(25.6) |
|
$ |
442.2 |
Adjustments to reconcile net (loss) earnings to net cash provided
from operating activities: |
|
|
|
|
Depreciation, depletion and amortization |
|
772.4 |
|
819.4 |
Gain on disposition of associate and other interests - net |
|
(2.1) |
|
(55.2) |
Impairment, net of reversals |
|
- |
|
(75.5) |
Equity in losses of joint ventures and associate |
|
0.3 |
|
1.3 |
Share-based compensation expense |
|
14.6 |
|
13.6 |
Finance expense |
|
101.2 |
|
117.8 |
Deferred tax expense (recovery) |
|
8.9 |
|
(76.4) |
Foreign exchange losses (gains) and other |
|
12.5 |
|
(31.9) |
Reclamation (recovery) expense |
|
(8.0) |
|
11.4 |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable and other assets |
|
(22.7) |
|
108.6 |
Inventories |
|
(5.7) |
|
(86.7) |
Accounts payable and accrued liabilities |
|
69.8 |
|
(48.5) |
Cash flow provided from operating activities |
|
915.6 |
|
1,140.1 |
Income taxes paid |
|
(126.9) |
|
(188.5) |
Net cash flow provided from operating
activities |
|
788.7 |
|
951.6 |
|
|
|
|
|
Investing: |
|
|
|
|
Additions to property, plant and equipment |
|
(1,043.4) |
|
(897.6) |
Acquisitions |
|
(304.2) |
|
- |
Net additions to long-term investments and other assets |
|
(52.9) |
|
(73.8) |
Net proceeds from the sale of property, plant and equipment |
|
6.4 |
|
8.5 |
Net proceeds from disposition of associate and other interests |
|
- |
|
269.6 |
Increase in restricted cash |
|
(0.6) |
|
(0.5) |
Interest received and other |
|
7.7 |
|
6.6 |
Net cash flow used in investing activities |
|
(1,387.0) |
|
(687.2) |
Financing: |
|
|
|
|
Net proceeds from issuance/drawdown of debt |
|
80.0 |
|
494.7 |
Repayment of debt |
|
(80.0) |
|
(500.0) |
Interest paid |
|
(57.9) |
|
(62.9) |
Issuance of common shares on exercise of options |
|
0.5 |
|
0.8 |
Dividend paid to non-controlling interest |
|
(13.0) |
|
- |
Other |
|
(2.2) |
|
(1.6) |
Net cash flow used in financing activities |
|
(72.6) |
|
(69.0) |
Effect of exchange rate changes on cash and cash
equivalents |
|
(5.9) |
|
3.4 |
(Decrease) increase in cash and cash
equivalents |
|
(676.8) |
|
198.8 |
Cash and cash equivalents, beginning of
period |
|
1,025.8 |
|
827.0 |
Cash and cash equivalents, end of period |
|
$ |
349.0 |
|
$ |
1,025.8 |
|
|
|
|
|
Operating Summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
Q4 2018 |
100 |
5,645 |
2,856 |
2,927 |
0.44 |
0.19 |
83% |
52,194 |
51,889 |
$49.1 |
$946 |
$30.5 |
$21.9 |
Q3 2018 |
100 |
5,306 |
2,718 |
3,262 |
0.42 |
0.19 |
81% |
51,984 |
52,197 |
53.0 |
$1,015 |
32.6 |
26.0 |
Q2 2018 |
100 |
4,620 |
3,106 |
4,279 |
0.44 |
0.18 |
80% |
71,463 |
72,340 |
70.1 |
$969 |
16.8 |
38.8 |
Q1 2018 |
100 |
9,075 |
3,110 |
5,839 |
0.70 |
0.20 |
82% |
79,928 |
79,611 |
42.2 |
$530 |
9.6 |
23.0 |
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 |
Round Mountain |
Q4 2018 |
100 |
4,386 |
987 |
4,172 |
1.38 |
0.43 |
83% |
96,715 |
91,769 |
$70.0 |
$763 |
$68.0 |
$9.6 |
Q3 2018 |
100 |
5,023 |
980 |
4,410 |
1.43 |
0.42 |
82% |
94,153 |
96,496 |
69.0 |
$715 |
47.1 |
12.7 |
Q2 2018 |
100 |
4,721 |
853 |
4,361 |
1.44 |
0.37 |
86% |
97,650 |
95,432 |
72.0 |
$754 |
43.6 |
13.9 |
Q1 2018 |
100 |
7,893 |
832 |
8,175 |
1.62 |
0.28 |
86% |
97,083 |
97,781 |
66.6 |
$681 |
26.4 |
14.8 |
Q4 2017 |
100 |
5,429 |
864 |
4,201 |
1.46 |
0.46 |
84% |
98,249 |
104,198 |
81.6 |
$783 |
66.2 |
15.3 |
Bald Mountain (8) |
Q4 2018 |
100 |
4,929 |
- |
5,406 |
- |
0.47 |
nm |
47,211 |
68,288 |
$46.9 |
$687 |
$40.4 |
$22.4 |
Q3 2018 |
100 |
7,106 |
- |
5,806 |
- |
0.38 |
nm |
72,560 |
90,931 |
53.4 |
$587 |
44.2 |
29.3 |
Q2 2018 |
100 |
7,109 |
- |
7,109 |
- |
0.48 |
nm |
71,435 |
60,730 |
27.7 |
$456 |
44.9 |
20.8 |
Q1 2018 |
100 |
5,333 |
- |
5,333 |
- |
0.38 |
nm |
93,440 |
98,142 |
46.1 |
$470 |
20.4 |
27.2 |
Q4 2017 |
100 |
5,691 |
- |
5,691 |
- |
0.72 |
nm |
105,080 |
99,363 |
47.0 |
$473 |
46.6 |
28.6 |
Kettle River- Buckhorn |
Q4 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
$- |
$- |
$- |
$- |
Q3 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
- |
$- |
- |
- |
Q2 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
- |
$- |
- |
- |
Q1 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
927 |
- |
$- |
- |
- |
Q4 2017 |
100 |
- |
- |
- |
- |
- |
0% |
3,906 |
3,949 |
0.4 |
$101 |
- |
- |
Paracatu |
Q4 2018 |
100 |
11,680 |
13,479 |
- |
0.44 |
- |
81% |
145,634 |
152,395 |
$116.6 |
$765 |
$33.3 |
$41.7 |
Q3 2018 |
100 |
12,565 |
13,547 |
- |
0.38 |
- |
76% |
126,515 |
125,700 |
97.6 |
$776 |
25.1 |
42.2 |
Q2 2018 |
100 |
11,677 |
14,074 |
- |
0.37 |
- |
75% |
121,226 |
117,043 |
100.4 |
$858 |
23.7 |
30.8 |
Q1 2018 |
100 |
11,988 |
13,041 |
- |
0.36 |
- |
77% |
128,200 |
128,279 |
115.9 |
$903 |
15.5 |
34.2 |
Q4 2017 |
100 |
6,895 |
8,331 |
- |
0.40 |
- |
75% |
66,023 |
62,843 |
59.8 |
$952 |
32.5 |
26.2 |
Maricunga (8) |
Q4 2018 |
100 |
- |
- |
- |
- |
- |
nm |
7,226 |
19,399 |
$16.1 |
$830 |
$- |
$0.6 |
Q3 2018 |
100 |
- |
- |
- |
- |
- |
nm |
10,808 |
30,442 |
22.4 |
$736 |
- |
1.1 |
Q2 2018 |
100 |
- |
- |
- |
- |
- |
nm |
19,866 |
17,764 |
11.7 |
$659 |
- |
0.8 |
Q1 2018 |
100 |
- |
- |
- |
- |
- |
nm |
22,166 |
22,354 |
15.5 |
$693 |
- |
1.5 |
Q4 2017 |
100 |
- |
- |
- |
- |
- |
nm |
19,039 |
11,201 |
6.9 |
$616 |
1.3 |
1.1 |
Russia |
Kupol (3)(4)(6) |
Q4 2018 |
100 |
400 |
425 |
- |
8.77 |
- |
95% |
123,478 |
124,408 |
$68.7 |
$552 |
$19.4 |
$30.1 |
Q3 2018 |
100 |
412 |
439 |
- |
8.69 |
- |
95% |
125,870 |
123,624 |
81.3 |
$658 |
22.0 |
32.0 |
Q2 2018 |
100 |
412 |
430 |
- |
8.42 |
- |
95% |
120,418 |
124,179 |
73.6 |
$593 |
11.2 |
33.0 |
Q1 2018 |
100 |
412 |
427 |
- |
8.58 |
- |
95% |
120,181 |
122,624 |
64.6 |
$527 |
10.8 |
38.4 |
Q4 2017 |
100 |
487 |
425 |
- |
10.38 |
- |
95% |
145,301 |
141,518 |
73.8 |
$521 |
19.1 |
43.3 |
West Africa |
Tasiast |
Q4 2018 |
100 |
3,267 |
1,301 |
- |
2.19 |
- |
94% |
91,548 |
83,780 |
$69.5 |
$830 |
$71.1 |
$28.5 |
Q3 2018 |
100 |
2,187 |
947 |
924 |
1.72 |
0.42 |
91% |
53,363 |
50,549 |
66.2 |
$1,310 |
98.1 |
29.1 |
Q2 2018 |
100 |
966 |
750 |
755 |
1.88 |
0.29 |
91% |
47,276 |
48,409 |
54.8 |
$1,132 |
101.4 |
18.9 |
Q1 2018 |
100 |
1,786 |
736 |
279 |
2.26 |
0.36 |
93% |
58,778 |
60,503 |
46.8 |
$774 |
157.8 |
19.0 |
Q4 2017 |
100 |
2,534 |
807 |
318 |
2.28 |
0.69 |
92% |
60,274 |
54,993 |
43.0 |
$782 |
119.3 |
17.8 |
Chirano - 100% |
Q4 2018 |
90 |
527 |
840 |
- |
2.08 |
- |
92% |
51,273 |
49,173 |
$39.5 |
$803 |
$5.7 |
$28.3 |
Q3 2018 |
90 |
505 |
908 |
- |
2.10 |
- |
92% |
56,675 |
53,915 |
41.7 |
$773 |
6.9 |
30.8 |
Q2 2018 |
90 |
458 |
873 |
- |
2.23 |
- |
92% |
58,572 |
57,399 |
44.6 |
$777 |
5.0 |
31.4 |
Q1 2018 |
90 |
523 |
885 |
- |
2.34 |
- |
92% |
60,179 |
64,440 |
46.9 |
$728 |
6.4 |
33.3 |
Q4 2017 |
90 |
496 |
878 |
- |
2.52 |
- |
92% |
66,285 |
61,973 |
43.3 |
$699 |
10.9 |
32.5 |
Chirano - 90% |
Q4 2018 |
90 |
527 |
840 |
- |
2.08 |
- |
92% |
46,146 |
44,255 |
$35.5 |
$802 |
$5.1 |
$25.5 |
Q3 2018 |
90 |
505 |
908 |
- |
2.10 |
- |
92% |
51,007 |
48,524 |
37.6 |
$775 |
6.2 |
27.7 |
Q2 2018 |
90 |
458 |
873 |
- |
2.23 |
- |
92% |
52,715 |
51,659 |
40.1 |
$776 |
4.5 |
28.3 |
Q1 2018 |
90 |
523 |
885 |
- |
2.34 |
- |
92% |
54,161 |
57,996 |
42.2 |
$728 |
5.8 |
30.0 |
Q4 2017 |
90 |
496 |
878 |
- |
2.52 |
- |
92% |
59,656 |
55,776 |
39.0 |
$699 |
9.8 |
29.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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: Q4 2018: 73.35 g/t,
83.5%; Q3 2018: 72.38 g/t, 85.5%; Q2 2018: 68.65 g/t, 84%; Q1 2018:
69.35 g/t, 81.0%; Q4 2017: 81.85 g/t, 82.8% |
(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: Q4 2018: 84.42:1; Q3 2018:
80.80:1; Q2 2018: 79.00:1; Q1 2018: 79.25:1; Q4 2017: 76.22:1 |
(6) |
Dvoinoye
ore processed and grade were as follows: Q4 2018: 104,495, 9.82
g/t; Q3 2018: 106,918, 10.03 g/t; Q2 2018: 121,739, 9.22 g/t; Q1
2018: 103,369, 10.13 g/t; Q4 2017: 127,671 tonnes, 13.44 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 |
(in millions, except per share amounts) |
Three months ended |
|
Years ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Net (loss) earnings attributable to common shareholders
- as reported |
$ |
(27.7) |
$ |
217.6 |
|
$ |
(23.6) |
$ |
445.4 |
Adjusting items: |
|
|
|
|
|
|
Foreign exchange losses
(gains) |
5.5 |
(0.2) |
|
4.3 |
4.9 |
|
(Gains) losses on
disposition of associate and interests and other assets - net |
(0.1) |
(47.3) |
|
0.8 |
(57.1) |
|
Foreign exchange losses
(gains) on translation of tax basis and foreign exchange on
deferred income taxes within income tax expense |
8.3 |
10.9 |
|
62.0 |
- |
|
Brazil power plant
acquisition related costs |
- |
- |
|
3.4 |
- |
|
Impairment, net of
reversals(a) |
- |
21.5 |
|
- |
(75.5) |
|
Taxes in respect of
prior periods |
36.3 |
2.7 |
|
59.9 |
41.7 |
|
Mine curtailment and
suspension related costs |
- |
1.5 |
|
- |
16.6 |
|
Reclamation and
remediation (recovery) expense |
(8.0) |
(2.4) |
|
(3.5) |
9.5 |
|
Tasiast Phase One
commissioning costs |
- |
- |
|
6.4 |
- |
|
Fort Knox pit wall
slide related costs |
16.5 |
- |
|
37.9 |
- |
|
Chile weather event
related costs |
- |
- |
|
- |
3.3 |
|
Insurance
recoveries |
- |
- |
|
- |
(17.5) |
|
Settlement of a royalty
agreement |
- |
(9.9) |
|
- |
(9.9) |
|
U.S. Tax Reform
impact |
(8.7) |
(93.4) |
|
(8.7) |
(93.4) |
|
Other(b) |
- |
- |
|
0.9 |
1.2 |
|
Tax effect of the above
adjustments |
(8.6) |
(84.7) |
|
(11.7) |
(90.5) |
|
|
41.2 |
(201.3) |
|
151.7 |
(266.7) |
Adjusted net earnings attributable to common
shareholders |
$ |
13.5 |
$ |
16.3 |
|
$ |
128.1 |
$ |
178.7 |
Weighted average number of common shares outstanding -
Basic |
1,250.2 |
1,247.0 |
|
1,249.5 |
1,246.6 |
Adjusted net earnings per share |
$ |
0.01 |
$ |
0.01 |
|
$ |
0.10 |
$ |
0.14 |
|
|
|
|
|
|
|
- During the year ended December 31, 2017, the Company recognized
an impairment charge related to Paracatu of $253.0 million and
reversal of impairment charges of $231.5 million related to
property, plant and equipment at Tasiast and Fort Knox. The Company
also recognized a reversal of impairment charges related to the
disposal of its 25% interest in Cerro Casale of $97.0 million
during the year ended December 31, 2017.
- “Other” includes non-hedge derivatives losses.
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 |
|
Years ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Net cash flow provided from operating activities - as
reported |
$ |
183.5 |
$ |
366.4 |
|
$ |
788.7 |
$ |
951.6 |
|
|
|
|
|
|
|
Adjusting items: |
|
|
|
|
|
|
Working capital
changes: |
|
|
|
|
|
|
Accounts
receivable and other assets |
(95.4) |
(142.0) |
|
22.7 |
(108.6) |
|
Inventories |
19.8 |
20.9 |
|
5.7 |
86.7 |
|
Accounts
payable and other liabilities, including income taxes paid |
27.9 |
118.9 |
|
57.1 |
237.0 |
|
|
(47.7) |
(2.2) |
|
85.5 |
215.1 |
Adjusted operating cash flow |
$ |
135.8 |
$ |
364.2 |
|
$ |
874.2 |
$ |
1,166.7 |
|
|
|
|
|
|
|
Consolidated production cost of sales per gold
equivalent ounce sold is a non-GAAP measure and is defined as
production cost of sales as per the consolidated financial
statements divided by the total number of gold equivalent ounces
sold. This measure converts the Company’s non-gold production into
gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold
equivalent ounce sold is a non-GAAP measure and is defined as
attributable production cost of sales divided by the attributable
number of gold equivalent ounces sold. This measure converts the
Company’s non-gold production into gold equivalent ounces and
credits it to total production.
Management uses these measures to monitor and
evaluate the performance of its operating properties. The following
table presents a reconciliation of consolidated and attributable
production cost of sales per equivalent ounce sold for the periods
presented:
|
|
Consolidated and Attributable Production Cost
of Sales Per Equivalent Ounce Sold |
(in millions, except ounces and production cost of
sales per equivalent ounce) |
Three months ended |
|
Years ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
476.4 |
$ |
414.5 |
|
$ |
1,860.5 |
$ |
1,757.4 |
Less: portion attributable to Chirano non-controlling
interest |
(4.0) |
(4.3) |
|
(17.3) |
(20.0) |
Attributable production cost of sales |
$ |
472.4 |
$ |
410.2 |
|
$ |
1,843.2 |
$ |
1,737.4 |
|
|
|
|
|
|
|
Gold equivalent ounces sold |
641,101 |
634,762 |
|
2,532,912 |
2,621,875 |
Less: portion attributable to Chirano non-controlling
interest |
(4,918) |
(6,197) |
|
(22,493) |
(25,121) |
Attributable gold equivalent ounces sold |
636,183 |
628,565 |
|
2,510,419 |
2,596,754 |
Consolidated production cost of sales per equivalent
ounce sold |
$ |
743 |
$ |
653 |
|
$ |
735 |
$ |
670 |
Attributable production cost of sales per equivalent
ounce sold |
$ |
743 |
$ |
653 |
|
$ |
734 |
$ |
669 |
|
|
|
|
|
|
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 |
|
Years ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
476.4 |
$ |
414.5 |
|
$ |
1,860.5 |
$ |
1,757.4 |
Less: portion attributable to Chirano non-controlling
interest |
(4.0) |
(4.3) |
|
(17.3) |
(20.0) |
Less: attributable silver revenues |
(15.2) |
(19.5) |
|
(66.4) |
(86.5) |
Attributable production cost of sales net of silver
by-product revenue |
$ |
457.2 |
$ |
390.7 |
|
$ |
1,776.8 |
$ |
1,650.9 |
|
|
|
|
|
|
|
Gold ounces sold |
628,842 |
619,467 |
|
2,480,529 |
2,553,178 |
Less: portion attributable to Chirano non-controlling
interest |
(4,912) |
(6,186) |
|
(22,460) |
(25,070) |
Attributable gold ounces sold |
623,930 |
613,281 |
|
2,458,069 |
2,528,108 |
Attributable production cost of sales per ounce sold on
a by-product basis |
$ |
733 |
$ |
637 |
|
$ |
723 |
$ |
653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
Years ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
476.4 |
$ |
414.5 |
|
$ |
1,860.5 |
$ |
1,757.4 |
Less: portion attributable to Chirano non-controlling
interest(1) |
(4.0) |
(4.3) |
|
(17.3) |
(20.0) |
Less: attributable(2) silver revenues(3) |
(15.2) |
(19.5) |
|
(66.4) |
(86.5) |
Attributable(2) production cost of sales net of silver
by-product revenue |
$ |
457.2 |
$ |
390.7 |
|
$ |
1,776.8 |
$ |
1,650.9 |
Adjusting items on an attributable(2) basis: |
|
|
|
|
|
|
General and
administrative(4) |
32.8 |
33.8 |
|
133.0 |
132.6 |
|
Other operating expense
- sustaining(5) |
(20.2) |
7.6 |
|
6.2 |
43.3 |
|
Reclamation and
remediation - sustaining(6) |
11.6 |
17.0 |
|
52.2 |
82.9 |
|
Exploration and
business development - sustaining(7) |
12.3 |
20.9 |
|
53.2 |
59.4 |
|
Additions to property,
plant and equipment - sustaining(8) |
102.2 |
151.2 |
|
335.0 |
421.5 |
All-in Sustaining Cost on a by-product basis -
attributable(2) |
$ |
595.9 |
$ |
621.2 |
|
$ |
2,356.4 |
$ |
2,390.6 |
|
Other operating expense
- non-sustaining(5) |
15.3 |
(4.7) |
|
48.7 |
39.5 |
|
Reclamation and
remediation - non-sustaining(6) |
1.9 |
12.8 |
|
7.5 |
17.4 |
|
Exploration -
non-sustaining(7) |
19.9 |
12.8 |
|
55.4 |
45.8 |
|
Additions to property,
plant and equipment - non-sustaining(8) |
170.0 |
160.3 |
|
665.0 |
448.7 |
All-in Cost on a by-product basis -
attributable(2) |
$ |
803.0 |
$ |
802.4 |
|
$ |
3,133.0 |
$ |
2,942.0 |
Gold ounces sold |
628,842 |
619,467 |
|
2,480,529 |
2,553,178 |
Less: portion attributable to Chirano non-controlling
interest(9) |
(4,912) |
(6,186) |
|
(22,460) |
(25,070) |
Attributable(2) gold ounces sold |
623,930 |
613,281 |
|
2,458,069 |
2,528,108 |
Attributable(2) all-in sustaining cost per ounce sold
on a by-product basis |
$ |
955 |
$ |
1,013 |
|
$ |
959 |
$ |
946 |
Attributable(2) all-in cost per ounce sold on a
by-product basis |
$ |
1,287 |
$ |
1,308 |
|
$ |
1,275 |
$ |
1,164 |
|
|
|
|
|
|
|
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:
|
|
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 |
|
Years ended |
|
|
December 31, |
|
December 31, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
476.4 |
$ |
414.5 |
|
$ |
1,860.5 |
$ |
1,757.4 |
Less: portion attributable to Chirano non-controlling
interest(1) |
(4.0) |
(4.3) |
|
(17.3) |
(20.0) |
Attributable(2) production cost of sales |
$ |
472.4 |
$ |
410.2 |
|
$ |
1,843.2 |
$ |
1,737.4 |
Adjusting items on an attributable(2) basis: |
|
|
|
|
|
|
General and
administrative(4) |
32.8 |
33.8 |
|
133.0 |
132.6 |
|
Other operating expense
- sustaining(5) |
(20.2) |
7.6 |
|
6.2 |
43.3 |
|
Reclamation and
remediation - sustaining(6) |
11.6 |
17.0 |
|
52.2 |
82.9 |
|
Exploration and
business development - sustaining(7) |
12.3 |
20.9 |
|
53.2 |
59.4 |
|
Additions to property,
plant and equipment - sustaining(8) |
102.2 |
151.2 |
|
335.0 |
421.5 |
All-in Sustaining Cost - attributable(2) |
$ |
611.1 |
$ |
640.7 |
|
$ |
2,422.8 |
$ |
2,477.1 |
|
Other operating expense
- non-sustaining(5) |
15.3 |
(4.7) |
|
48.7 |
39.5 |
|
Reclamation and
remediation - non-sustaining(6) |
1.9 |
12.8 |
|
7.5 |
17.4 |
|
Exploration -
non-sustaining(7) |
19.9 |
12.8 |
|
55.4 |
45.8 |
|
Additions to property,
plant and equipment - non-sustaining(8) |
170.0 |
160.3 |
|
665.0 |
448.7 |
All-in Cost - attributable(2) |
$ |
818.2 |
$ |
821.9 |
|
$ |
3,199.4 |
$ |
3,028.5 |
Gold equivalent ounces sold |
641,101 |
634,762 |
|
2,532,912 |
2,621,875 |
Less: portion attributable to Chirano non-controlling
interest(9) |
(4,918) |
(6,197) |
|
(22,493) |
(25,121) |
Attributable(2) gold equivalent ounces sold |
636,183 |
628,565 |
|
2,510,419 |
2,596,754 |
Attributable(2) all-in sustaining cost per equivalent
ounce sold |
$ |
961 |
$ |
1,019 |
|
$ |
965 |
$ |
954 |
Attributable(2) all-in cost per equivalent ounce
sold |
$ |
1,286 |
$ |
1,308 |
|
$ |
1,274 |
$ |
1,166 |
|
|
|
|
|
|
|
- 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 year
ended December 31, 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 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.
2018 Annual Mineral Reserve and Resource
Statement
Proven and Probable Mineral Reserves
MINERAL RESERVE
AND MINERAL
RESOURCE
STATEMENT
GOLDPROVEN AND PROBABLE MINERAL
RESERVES(1,3,4,5,6,8)Kinross
Gold Corporation's Share at December 31, 2018 |
|
Location |
Kinross Interest |
Proven |
Probable |
Proven and Probable |
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
(%) |
(kt) |
(g/t) |
(koz) |
(kt) |
(g/t) |
(koz) |
(kt) |
(g/t) |
(koz) |
NORTH AMERICA |
Bald Mountain |
USA |
100.0 |
% |
2,666 |
1.0 |
84 |
63,984 |
0.6 |
1,263 |
66,650 |
0.6 |
1,347 |
Fort Knox |
USA |
100.0 |
% |
45,729 |
0.4 |
588 |
221,844 |
0.3 |
2,448 |
267,573 |
0.4 |
3,036 |
Round Mountain |
USA |
100.0 |
% |
31,595 |
0.5 |
533 |
82,298 |
0.8 |
2,135 |
113,893 |
0.7 |
2,668 |
SUBTOTAL |
79,990 |
0.5 |
1,205 |
368,126 |
0.5 |
5,846 |
448,116 |
0.5 |
7,051 |
SOUTH
AMERICA |
La Coipa
8 |
Chile |
100.0 |
% |
59 |
1.6 |
3 |
15,630 |
1.7 |
842 |
15,689 |
1.7 |
845 |
Paracatu |
Brazil |
100.0 |
% |
470,953 |
0.4 |
6,162 |
119,675 |
0.5 |
1,776 |
590,628 |
0.4 |
7,938 |
SUBTOTAL |
471,012 |
0.4 |
6,165 |
135,305 |
0.6 |
2,618 |
606,317 |
0.5 |
8,783 |
AFRICA |
Chirano |
Ghana |
90.0 |
% |
2,255 |
1.1 |
76 |
3,798 |
2.8 |
339 |
6,053 |
2.1 |
415 |
Tasiast |
Mauritania |
100.0 |
% |
34,749 |
1.2 |
1,335 |
85,168 |
2.2 |
6,105 |
119,917 |
1.9 |
7,440 |
SUBTOTAL |
37,004 |
1.2 |
1,411 |
88,966 |
2.3 |
6,444 |
125,970 |
1.9 |
7,855 |
RUSSIA |
Dvoinoye |
Russia |
100.0 |
% |
1,537 |
5.0 |
246 |
751 |
9.0 |
216 |
2,288 |
6.3 |
462 |
Kupol |
Russia |
100.0 |
% |
845 |
8.6 |
235 |
4,255 |
8.3 |
1,135 |
5,100 |
8.4 |
1,370 |
SUBTOTAL |
2,382 |
6.3 |
481 |
5,006 |
8.4 |
1,351 |
7,388 |
7.7 |
1,832 |
|
TOTAL GOLD |
590,388 |
0.5 |
9,262 |
597,403 |
0.8 |
16,259 |
1,187,791 |
0.7 |
25,521 |
MINERAL RESERVE
AND MINERAL
RESOURCE
STATEMENT
SILVERPROVEN AND PROBABLE MINERAL
RESERVES(1,3,4,5,6,8)Kinross
Gold Corporation's Share at December 31, 2018 |
|
Location |
Kinross Interest |
Proven |
Probable |
Proven and Probable |
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
(%) |
(kt) |
(g/t) |
(koz) |
(kt) |
(g/t) |
(koz) |
(kt) |
(g/t) |
(koz) |
NORTH AMERICA |
Round Mountain |
USA |
100.0 |
% |
0 |
0.0 |
0 |
8,226 |
6.3 |
1,669 |
8,226 |
6.3 |
1,669 |
SUBTOTAL |
0 |
0.0 |
0 |
8,226 |
6.3 |
1,669 |
8,226 |
6.3 |
1,669 |
SOUTH
AMERICA |
La Coipa
8 |
Chile |
100.0 |
% |
59 |
277.2 |
527 |
15,630 |
71.3 |
35,852 |
15,689 |
72.1 |
36,379 |
SUBTOTAL |
59 |
277.2 |
527 |
15,630 |
71.3 |
35,852 |
15,689 |
72.1 |
36,379 |
RUSSIA |
Dvoinoye |
Russia |
100.0 |
% |
1,537 |
9.3 |
460 |
751 |
12.9 |
311 |
2,288 |
10.5 |
771 |
Kupol |
Russia |
100.0 |
% |
845 |
93.4 |
2,539 |
4,255 |
91.8 |
12,563 |
5,100 |
92.1 |
15,102 |
SUBTOTAL |
2,382 |
39.2 |
2,999 |
5,006 |
80.0 |
12,874 |
7,388 |
66.8 |
15,873 |
|
TOTAL SILVER |
2,441 |
44.9 |
3,526 |
28,862 |
54.3 |
50,395 |
31,303 |
53.6 |
53,921 |
Measured and Indicated Mineral Resources
MINERAL RESERVE
AND MINERAL
RESOURCE
STATEMENT
GOLDMEASURED AND INDICATED MINERAL
RESOURCES(2,3,4,5,6,7,8)Kinross
Gold Corporation's Share at December 31, 2018 |
|
Location |
Kinross Interest |
Measured |
Indicated |
Measured and Indicated |
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
(%) |
(kt) |
(g/t) |
(koz) |
(kt) |
(g/t) |
(koz) |
(kt) |
(g/t) |
(koz) |
NORTH AMERICA |
Bald Mountain |
USA |
100.0 |
% |
14,985 |
0.6 |
310 |
161,913 |
0.6 |
2,984 |
176,898 |
0.6 |
3,294 |
Fort Knox |
USA |
100.0 |
% |
6,460 |
0.4 |
74 |
149,219 |
0.4 |
1,723 |
155,679 |
0.4 |
1,797 |
Round Mountain |
USA |
100.0 |
% |
0 |
0.0 |
0 |
95,831 |
0.7 |
2,281 |
95,831 |
0.7 |
2,281 |
SUBTOTAL |
21,445 |
0.6 |
384 |
406,963 |
0.5 |
6,988 |
428,408 |
0.5 |
7,372 |
SOUTH
AMERICA |
La Coipa
8 |
Chile |
100.0 |
% |
2,612 |
2.2 |
186 |
12,825 |
1.7 |
719 |
15,437 |
1.8 |
905 |
Lobo Marte |
Chile |
100.0 |
% |
96,646 |
1.1 |
3,525 |
88,720 |
1.2 |
3,489 |
185,366 |
1.2 |
7,014 |
Maricunga |
Chile |
100.0 |
% |
35,908 |
0.8 |
937 |
209,097 |
0.7 |
4,492 |
245,005 |
0.7 |
5,429 |
Paracatu |
Brazil |
100.0 |
% |
123,629 |
0.3 |
1,250 |
144,211 |
0.4 |
1,763 |
267,840 |
0.3 |
3,013 |
SUBTOTAL |
258,795 |
0.7 |
5,898 |
454,853 |
0.7 |
10,463 |
713,648 |
0.7 |
16,361 |
AFRICA |
Chirano |
Ghana |
90.0 |
% |
3,043 |
1.9 |
191 |
7,455 |
2.4 |
574 |
10,498 |
2.3 |
765 |
Tasiast |
Mauritania |
100.0 |
% |
4,576 |
0.7 |
106 |
70,109 |
1.2 |
2,815 |
74,685 |
1.2 |
2,921 |
SUBTOTAL |
7,619 |
1.2 |
297 |
77,564 |
1.4 |
3,389 |
85,183 |
1.3 |
3,686 |
RUSSIA |
Dvoinoye |
Russia |
100.0 |
% |
3 |
7.0 |
1 |
33 |
6.4 |
7 |
36 |
6.4 |
8 |
Kupol |
Russia |
100.0 |
% |
58 |
10.2 |
19 |
1,345 |
7.7 |
335 |
1,403 |
7.8 |
354 |
SUBTOTAL |
61 |
10.0 |
20 |
1,378 |
7.7 |
342 |
1,439 |
7.8 |
362 |
|
TOTAL GOLD |
287,920 |
0.7 |
6,599 |
940,758 |
0.7 |
21,182 |
1,228,678 |
0.7 |
27,781 |
MINERAL RESERVE
AND MINERAL
RESOURCE
STATEMENT
SILVERMEASURED AND INDICATED MINERAL
RESOURCES(2,3,4,5,6,7,8)Kinross
Gold Corporation's Share at December 31, 2018 |
|
Location |
Kinross Interest |
Measured |
Indicated |
Measured and Indicated |
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
Tonnes |
Grade |
Ounces |
(%) |
(kt) |
(g/t) |
(koz) |
(kt) |
(g/t) |
(koz) |
(kt) |
(g/t) |
(koz) |
NORTH AMERICA |
Round Mountain |
USA |
100.0 |
% |
0 |
0.0 |
0 |
5,435 |
7.8 |
1,359 |
5,435 |
7.8 |
1,359 |
SUBTOTAL |
0 |
0.0 |
0 |
5,435 |
7.8 |
1,359 |
5,435 |
7.8 |
1,359 |
SOUTH
AMERICA |
La Coipa
8 |
Chile |
100.0 |
% |
2,612 |
38.3 |
3,214 |
12,825 |
59.8 |
24,658 |
15,437 |
56.2 |
27,872 |
SUBTOTAL |
2,612 |
38.3 |
3,214 |
12,825 |
59.8 |
24,658 |
15,437 |
56.2 |
27,872 |
RUSSIA |
Dvoinoye |
Russia |
100.0 |
% |
3 |
10.5 |
1 |
33 |
8.7 |
9 |
36 |
8.8 |
10 |
Kupol |
Russia |
100.0 |
% |
58 |
113.2 |
212 |
1,345 |
108.9 |
4,711 |
1,403 |
109.1 |
4,923 |
SUBTOTAL |
61 |
108.6 |
213 |
1,378 |
106.5 |
4,720 |
1,439 |
106.6 |
4,933 |
|
TOTAL SILVER |
2,673 |
39.9 |
3,427 |
19,638 |
48.7 |
30,737 |
22,311 |
47.6 |
34,164 |
Inferred Mineral Resources
MINERAL RESERVE
AND MINERAL
RESOURCE
STATEMENT
GOLD INFERRED MINERAL RESOURCES
(2,3,4,5,6,7,8)Kinross
Gold Corporation's Share at December 31, 2018 |
|
Location |
Kinross Interest |
Inferred |
Tonnes |
Grade |
Ounces |
(%) |
(kt) |
(g/t) |
(koz) |
NORTH AMERICA |
Bald Mountain |
USA |
100.0 |
% |
62,982 |
0.4 |
845 |
Fort Knox |
USA |
100.0 |
% |
88,652 |
0.3 |
808 |
Round Mountain |
USA |
100.0 |
% |
82,086 |
0.8 |
2,058 |
SUBTOTAL |
233,720 |
0.5 |
3,711 |
SOUTH
AMERICA |
La Coipa
8 |
Chile |
100.0 |
% |
2,130 |
1.5 |
102 |
Lobo Marte |
Chile |
100.0 |
% |
2,003 |
1.1 |
69 |
Maricunga |
Chile |
100.0 |
% |
53,133 |
0.6 |
1,044 |
Paracatu |
Brazil |
100.0 |
% |
48,107 |
0.2 |
350 |
SUBTOTAL |
105,373 |
0.5 |
1,565 |
AFRICA |
Chirano |
Ghana |
90.0 |
% |
3,690 |
2.7 |
325 |
Tasiast |
Mauritania |
100.0 |
% |
5,984 |
2.2 |
420 |
SUBTOTAL |
9,674 |
2.4 |
745 |
RUSSIA |
Dvoinoye |
Russia |
100.0 |
% |
87 |
21.8 |
61 |
Kupol |
Russia |
100.0 |
% |
1,828 |
7.8 |
458 |
SUBTOTAL |
1,915 |
8.4 |
519 |
|
TOTAL GOLD |
350,682 |
0.6 |
6,540 |
MINERAL RESERVE
AND MINERAL
RESOURCE
STATEMENT
SILVER INFERRED MINERAL RESOURCES
(2,3,4,5,6,7,8)Kinross
Gold Corporation's Share at December 31, 2018 |
|
Location |
Kinross Interest |
Inferred |
Tonnes |
Grade |
Ounces |
(%) |
(kt) |
(g/t) |
(koz) |
NORTH AMERICA |
Round Mountain |
USA |
100.0 |
% |
758 |
2.9 |
72 |
SUBTOTAL |
758 |
2.9 |
72 |
SOUTH
AMERICA |
La Coipa
8 |
Chile |
100.0 |
% |
2,130 |
45.4 |
3,111 |
SUBTOTAL |
2,130 |
45.4 |
3,111 |
RUSSIA |
Dvoinoye |
Russia |
100.0 |
% |
87 |
17.4 |
49 |
Kupol |
Russia |
100.0 |
% |
1,828 |
98.2 |
5,770 |
SUBTOTAL |
1,915 |
94.5 |
5,819 |
|
TOTAL SILVER |
4,803 |
58.3 |
9,002 |
Mineral Reserve and Mineral Resource Statement
Notes
(1) Unless otherwise noted, the Company’s
mineral reserves are estimated using appropriate cut-off grades
based on an assumed gold price of $US 1,200 per ounce
and a silver price of $US 17.00 per ounce. Mineral reserves are
estimated using appropriate process recoveries, operating costs and
mine plans that are unique to each property and include estimated
allowances for dilution and mining recovery. Mineral reserve
estimates are reported in contained units and are estimated based
on the following foreign exchange rates:
Russian Rouble to $US 60 Chilean Peso to $US
650Brazilian Real to $US 3.40 Ghanaian Cedi to $US 4.00 Mauritanian
Ouguiya to $US 33
(2) Unless otherwise noted, the Company’s
mineral resources are estimated using appropriate cut-off grades
based on a gold price of $US 1,400 per ounce and a silver price of
$US 20.00 per ounce. Foreign exchange rates for estimating mineral
resources were the same as for mineral reserves.
(3) The Company’s mineral reserve and mineral
resource estimates as at December 31, 2018 are classified in
accordance with the Canadian Institute of Mining, Metallurgy and
Petroleum (“CIM”) “CIM Definition Standards - For Mineral Resources
and Mineral Reserves" adopted by the CIM Council (as amended, the
“CIM Definition Standards”) in accordance with the requirements of
National Instrument 43-101 “Standards of Disclosure for Mineral
Projects" (“NI 43-101”). Mineral reserve and mineral resource
estimates reflect the Company's reasonable expectation that all
necessary permits and approvals will be obtained and
maintained.
(4) Cautionary note to U.S. Investors concerning
estimates of mineral reserves and mineral resources. These
estimates have been prepared in accordance with the requirements of
Canadian securities laws, which differ from the requirements of
United States’ securities laws. The terms “mineral reserve”,
“proven mineral reserve and “probable mineral reserve” are
Canadian mining terms as defined in accordance with NI 43-101 and
the CIM Definition Standards. The CIM Definition Standards differ
from the definitions in the United States Securities and Exchange
Commission (“SEC”) Guide 7 (“SEC Guide 7”) under the United States
Securities Act of 1933, as amended. Under SEC Guide 7,
a “final” or “bankable” feasibility study is required to report
mineral reserves, the three-year historical average price is used
in any mineral reserve or cash flow analysis to designate mineral
reserves and the primary environmental analysis or report must be
filed with the appropriate governmental authority. In addition, the
terms “mineral resource”, “measured mineral resource”, “indicated
mineral resource” and “inferred mineral resource” are defined in NI
43-101 and recognized by Canadian securities laws but are not
defined terms under SEC Guide 7 or recognized under U.S. securities
laws. U.S. investors are cautioned not to assume that any part or
all of mineral deposits in these categories will ever be upgraded
to mineral reserves. “Inferred mineral resources” have a great
amount of uncertainty as to their existence, and great uncertainty
as to their economic and legal feasibility. It cannot be assumed
that all or any part of an “inferred mineral resource” will ever by
upgraded to a higher category. Under Canadian securities laws,
estimates of “inferred mineral resources” may not form the basis of
feasibility or pre-feasibility studies, except in rare cases. U.S.
investors are cautioned not to assume that all or any part of an
inferred mineral resource exists or is economically or legally
mineable. Accordingly, these mineral reserve and mineral resource
estimates and related information may not be comparable to similar
information made public by U.S. companies subject to the reporting
and disclosure requirements under the United States federal laws
and the rules and regulations thereunder, including SEC Guide
7.
(5) The Company's mineral resource and mineral
reserve estimates were prepared under the supervision of and
verified by Mr. John Sims, an officer of Kinross, who is a
qualified person as defined by NI 43-101.
(6) The Company’s normal data verification
procedures have been used in collecting, compiling, interpreting
and processing the data used to estimate mineral reserves and
mineral resources. Independent data verification has not been
performed.
(7) Mineral resources that are not mineral
reserves do not have to demonstrate economic viability. Mineral
resources are subject to infill drilling, permitting, mine
planning, mining dilution and recovery losses, among other things,
to be converted into mineral reserves. Due to the uncertainty
associated with inferred mineral resources, it cannot be assumed
that all or any part of an inferred mineral resource will ever be
upgraded to indicated or measured mineral resources, including as a
result of continued exploration.
(8) Includes mineral resources from the Puren
deposit in which the Company holds a 65% interest.
Mineral Reserve and Mineral Resource
Definitions
A ‘Mineral Resource’ is a
concentration or occurrence of solid material of economic interest
in or on the Earth’s crust in such form, grade or quality and
quantity that there are reasonable prospects for eventual economic
extraction. The location, quantity, grade or quality, continuity
and other geological characteristics of a Mineral Resource are
known, estimated or interpreted from specific geological evidence
and knowledge, including sampling.
An ‘Inferred Mineral Resource’
is that part of a Mineral Resource for which quantity and grade or
quality are estimated on the basis of limited geological evidence
and sampling. Geological evidence is sufficient to imply but not
verify geological and grade or quality continuity. An Inferred
Mineral Resource has a lower level of confidence than that applying
to an Indicated Mineral Resource and must not be converted to a
Mineral Reserve. It is reasonably expected that the majority of
Inferred Mineral Resources could be upgraded to Indicated Mineral
Resources with continued exploration.
An ‘Indicated Mineral Resource’
is that part of a Mineral Resource for which quantity, grade or
quality, densities, shape and physical characteristics are
estimated with sufficient confidence to allow the application of
Modifying Factors in sufficient detail to support mine planning and
evaluation of the economic viability of the deposit. Geological
evidence is derived from adequately detailed and reliable
exploration, sampling and testing and is sufficient to assume
geological and grade or quality continuity between points of
observation. An Indicated Mineral Resource has a lower level of
confidence than that applying to a Measured Mineral Resource and
may only be converted to a Probable Mineral Reserve.
A ‘Measured Mineral Resource’
is that part of a Mineral Resource for which quantity, grade or
quality, densities, shape, and physical characteristics are
estimated with confidence sufficient to allow the application of
Modifying Factors to support detailed mine planning and final
evaluation of the economic viability of the deposit. Geological
evidence is derived from detailed and reliable exploration,
sampling and testing and is sufficient to confirm geological and
grade or quality continuity between points of observation. A
Measured Mineral Resource has a higher level of confidence than
that applying to either an Indicated Mineral Resource or an
Inferred Mineral Resource. It may be converted to a Proven Mineral
Reserve or to a Probable Mineral
Reserve.
A ‘Mineral Reserve’ is the economically mineable
part of a Measured and/or Indicated Mineral Resource. It includes
diluting materials and allowances for losses, which may occur when
the material is mined or extracted and is defined by studies at
Pre-Feasibility or Feasibility level as appropriate that include
application of Modifying Factors. Such studies demonstrate that, at
the time of reporting, extraction could reasonably be justified.
The reference point at which Mineral Reserves are defined, usually
the point where the ore is delivered to the processing plant, must
be stated. It is important that, in all situations where the
reference point is different, such as for a saleable product, a
clarifying statement is included to ensure that the reader is fully
informed as to what is being reported.
The public disclosure of a Mineral Reserve must
be demonstrated by a Pre-Feasibility Study or Feasibility Study. A
‘Probable Mineral Reserve’ is the economically
mineable part of an Indicated, and in some circumstances, a
Measured Mineral Resource. The confidence in the Modifying Factors
applying to a Probable Mineral Reserve is lower than that applying
to a Proven Mineral Reserve.
A ‘Proven Mineral Reserve’ is
the economically mineable part of a Measured Mineral Resource. A
Proven Mineral Reserve implies a high degree of confidence in the
Modifying Factors.
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 fourth-quarter and full-year
highlights”, “2019 outlook”, “Organic development projects”, “CEO
Commentary”, “Operating results”, “Organic development projects”,
“Outlook”, “2018 Mineral Reserves and Mineral Resources
update” and “Exploration 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;
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 activities, currency fluctuations, capital
requirements, project studies, mine life extensions, government
regulation permit applications and conversions, restarting
suspended or disrupted operations; continuous improvement
initiatives; environmental risks and proceedings; 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 the potential for operational challenges at Fort Knox
resulting from excessive rainfall, which can impact costs and/or
production) and other or related natural disasters, labour
disruptions (including but not limited to workforce reductions),
supply disruptions, power disruptions, damage to equipment, pit
wall slides (in particular that the effects of the pit wall slides
at Fort Knox and Round Mountain are consistent with the Company’s
expectations) or otherwise; (2) permitting, development, operations
and production from the Company’s operations and development
projects being consistent with Kinross’ current expectations
including, without limitation; the maintenance of existing permits
and approvals and the timely receipt of all permits and
authorizations necessary for the development and operation of the
Tasiast Phase One and Phase Two expansions or any such alternate
expansion that the Company decides to pursue and the Round Mountain
Phase W expansion including, without limitation, work permits,
necessary import authorizations for goods and equipment; operation
of the SAG mill at Tasiast; exploration license conversions at
Tasiast; land acquisitions and permitting for the
construction and operation of the new tailings facility, water and
power supply and launch of the new tailings reprocessing facility
at Paracatu; and the renewal of the Chirano mining lease; (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 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), 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 an
investment grade rating consistent with the Company’s current
expectations; (15) that the Brazilian power plants will operate in
a manner consistent with our current expectations; (16) that the
Tasiast project financing will proceed in a manner consistent with
our current expectations; and (17) litigation and regulatory
proceedings and the potential ramifications thereof being concluded
in a manner consistent with the Company’s expectations (including
without limitation the ongoing litigation in Chile relating to the
alleged damage of wetlands and the scope of any remediation plan or
other environmental obligations arising therefrom) . Known and
unknown factors could cause actual results to differ materially
from those projected in the forward-looking statements. Such
factors include, but are not limited to: sanctions (any other
similar restrictions or penalties) now or subsequently imposed,
other actions taken, by, against, in respect of or otherwise
impacting any jurisdiction in which the Company is domiciled or
operates (including but not limited to the Russian Federation,
Canada, the European Union and the United States), or any
government or citizens of, persons or companies domiciled in, or
the Company’s business, operations or other activities in, any such
jurisdiction; fluctuations in the currency markets; fluctuations in
the spot and forward price of gold or certain other commodities
(such as fuel and electricity); changes in the discount rates
applied to calculate the present value of net future cash flows
based on country-specific real weighted average cost of capital;
changes in the market valuations of peer group gold producers and
the Company, and the resulting impact on market price to net asset
value multiples; changes in various market variables, such as
interest rates, foreign exchange rates, gold or silver prices and
lease rates, or global fuel prices, that could impact the
mark-to-market value of outstanding derivative instruments and
ongoing payments/receipts under any financial obligations; risks
arising from holding derivative instruments (such as credit risk,
market liquidity risk and mark-to-market risk); changes in national
and local government legislation, taxation (including but not
limited to income tax, advance income tax, stamp tax, withholding
tax, capital tax, tariffs, value-added or sales tax, capital
outflow tax, capital gains tax, windfall or windfall profits tax,
royalty, excise tax, customs/import or export taxes/duties, asset
taxes, asset transfer tax, property use or other real estate tax,
together with any related fine, penalty, surcharge, or interest
imposed in connection with such taxes), controls, policies and
regulations; the security of personnel and assets; political or
economic developments in Canada, the United States, Chile, Brazil,
Russia, Mauritania, Ghana, or other countries in which Kinross does
business or may carry on business; business opportunities that may
be presented to, or pursued by, us; our ability to successfully
integrate acquisitions and complete divestitures; operating or
technical difficulties in connection with mining or development
activities; employee relations; litigation or other claims against,
or regulatory investigations and/or any enforcement actions or
sanctions in respect of the Company (and/or its directors,
officers, or employees) including, but not limited to, securities
class action litigation in Canada and/or the United States,
environmental litigation or regulatory proceedings or any
investigations, enforcement actions and/or sanctions under any
applicable anti-corruption, international sanctions and/or
anti-money laundering laws and regulations in Canada, the United
States or any other applicable jurisdiction; the speculative nature
of gold exploration and development including, but not limited to,
the risks of obtaining necessary licenses and permits; diminishing
quantities or grades of reserves; adverse changes in our credit
rating; and contests over title to properties, particularly title
to undeveloped properties. In addition, there are risks and hazards
associated with the business of gold exploration, development and
mining, including environmental hazards, industrial accidents,
unusual or unexpected formations, pressures, cave-ins, flooding and
gold bullion losses (and the risk of inadequate insurance, or the
inability to obtain insurance, to cover these risks). Many of these
uncertainties and contingencies can directly or indirectly affect,
and could cause, Kinross’ actual results to differ materially from
those expressed or implied in any forward-looking statements made
by, or on behalf of, Kinross,including but not limited to resulting
in an impairment charge on goodwill and/or assets. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of
providing information about management’s expectations and plans
relating to the future. All of the forward-looking statements made
in this news release are qualified by 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 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 27 to 31 of this news release.
3 Net earnings/loss figures in this release represent “net
(loss) earnings from continuing operations attributable to common
shareholders”.
4 See also Kinross’ Annual Mineral Reserve and Mineral Resource
Statement, estimated as at December 31, 2018, and explanatory notes
starting at page 32.
5 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.
6 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.”
7The percentages are calculated based on the mid-point of
regional 2019 forecast production.
8 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.
Kinross Gold (NYSE:KGC)
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