Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its
results for the second-quarter ended June 30, 2020.
(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 20 of this release. All dollar amounts
are expressed in U.S. dollars, unless otherwise noted.)
2020 Q2 highlights:
- Production1 of 571,978 attributable gold
equivalent ounces (Au eq. oz.), and sales of 584,477 Au eq.
oz.
- All Kinross mines continued production during the
quarter, as the Company’s comprehensive COVID-19 response
plans mitigated operational risk and continued to help protect the
health and safety of employees and host communities.
- Kinross’ three largest producing mines – Paracatu, Kupol and
Tasiast – delivered 63% of total production and
were the lowest cost mines in the portfolio, with
an average cost of sales of $596 per Au eq. oz.
- Reported net earnings2 and adjusted
net earnings3 both more than doubled to $195.7 million, or
$0.16 per share, and $194.0 million, or $0.15 per share,
respectively, compared with Q2 2019.
- Operating cash flow of $432.8 million and
adjusted operating cash flow3 of $416.9 million, a
30% and 45% increase, respectively, compared with Q2 2019.
- Production cost of sales1,3 of $725 per Au eq.
oz. and all-in sustaining cost1,3 of $984 per Au
eq. oz. sold, both of which are within the Company’s original
annual 2020 guidance range.
- Attributable margin per Au eq. oz. sold4
increased 53% to $987 per Au eq. oz. compared with Q2 2019,
outpacing the 31% increase in average realized gold price to $1,712
per Au oz. compared with Q2 2019.
- Cash and cash equivalents of $1,527.1 million
and total liquidity of $2.3 billion at June 30,
2020, as both improved quarter-over-quarter. The Company also
further improved its debt metrics, including its net debt to EBITDA
ratio, and has no debt maturities until September 2021.
- While the Company withdrew its full-year guidance as a
precautionary measure given the global uncertainties caused by the
pandemic, production, cost of sales per ounce, all-in
sustaining cost per ounce and capital expenditures
are on track to meet Kinross’ original 2020 guidance.
- On June 15, 2020, Kinross announced an agreement in
principle with the Government of Mauritania to enhance the parties’
partnership.
- On July 15, 2020, Kinross announced the results of the
Lobo-Marte project pre-feasibility study in Chile, which
added 6.4 million Au oz.5 to the Company’s
mineral reserve estimates and increased its reserve life
index by approximately 2.5 years6.
CEO commentary: J. Paul
Rollinson, President and CEO, made the following comments in
relation to 2020 second-quarter results.
“Kinross had a strong second quarter, as we
generated robust free cash flow, more than doubled earnings
year-over-year, and continued to strengthen our investment grade
balance sheet. Our margins increased 53% year-over-year, well above
the 31% increase in the average realized gold price. Our portfolio
of mines performed well and continued production during the
quarter, with our three largest producing mines – Paracatu, Kupol
and Tasiast – delivering the lowest costs.
“We have been able to effectively manage
COVID-19 impacts on our portfolio of mines during the first half of
the year, as our comprehensive pandemic response plan continued to
help protect the health of our employees and communities, while
supporting the successful continuation of our business. Although we
prudently withdrew our full-year guidance given the potential
impacts of the pandemic on our operations, we continue to work
towards the safe delivery of our annual targets. I would like to
thank our employees around the world for their dedication, hard
work and commitment to safety during these challenging times.
“During the quarter, we announced an agreement
in principle with the Government of Mauritania that enhances our
partnership and will provide further stability for the long-term
success of our Tasiast mine. Earlier this month, we also announced
an addition of 6.4 million ounces to our gold reserve estimates
with the completion of the Lobo-Marte pre-feasibility study. This
high-quality asset increases our reserve life index and further
enhances optionality on our long-term development project
pipeline.
“For the first half of the year, more than 50%
of our production came from the Americas, and more than 80% from
five key assets in five diverse regions. With the recent
acquisition in Russia, and taking into account our track record of
exploration success, we expect these assets and regions
will continue to produce for at least 10 years.”
Financial results
Summary of financial and operating results
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Three months ended |
Six months ended |
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June 30, |
June 30, |
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(unaudited, expressed in millions of U.S. dollars, except ounces,
per share amounts, and per ounce amounts) |
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2020 |
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2019 |
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2020 |
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2019 |
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Operating Highlights |
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Total gold equivalent ounces(a) |
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Produced(c) |
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575,846 |
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653,586 |
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1,147,620 |
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1,264,849 |
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Sold(c) |
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588,485 |
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641,149 |
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1,145,161 |
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1,244,206 |
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Attributable gold equivalent ounces(a) |
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Produced(c) |
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571,978 |
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648,251 |
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1,139,305 |
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1,254,282 |
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Sold(c) |
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584,477 |
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636,035 |
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1,137,219 |
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1,233,684 |
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Financial Highlights |
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Metal sales |
$ |
1,007.2 |
$ |
837.8 |
$ |
1,887.0 |
$ |
1,624.0 |
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Production cost of sales |
$ |
428.5 |
$ |
426.1 |
$ |
849.8 |
$ |
837.8 |
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Depreciation, depletion and amortization |
$ |
210.4 |
$ |
179.9 |
$ |
403.5 |
$ |
344.0 |
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Reversal of impairment charge |
$ |
48.3 |
$ |
- |
$ |
48.3 |
$ |
- |
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Operating earnings |
$ |
321.1 |
$ |
144.3 |
$ |
513.7 |
$ |
259.7 |
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Net earnings attributable to common shareholders |
$ |
195.7 |
$ |
71.5 |
$ |
318.4 |
$ |
136.2 |
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Basic earnings per share attributable to common shareholders |
$ |
0.16 |
$ |
0.06 |
$ |
0.25 |
$ |
0.11 |
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Diluted earnings per share attributable to common shareholders |
$ |
0.15 |
$ |
0.06 |
$ |
0.25 |
$ |
0.11 |
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Adjusted net earnings attributable to common shareholders(b) |
$ |
194.0 |
$ |
79.6 |
$ |
321.4 |
$ |
162.9 |
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Adjusted net earnings per share(b) |
$ |
0.15 |
$ |
0.06 |
$ |
0.26 |
$ |
0.13 |
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Net cash flow provided from operating activities |
$ |
432.8 |
$ |
333.0 |
$ |
732.4 |
$ |
584.6 |
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Adjusted operating cash flow(b) |
$ |
416.9 |
$ |
287.7 |
$ |
835.5 |
$ |
518.5 |
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Capital expenditures(d) |
$ |
214.3 |
$ |
275.8 |
$ |
405.7 |
$ |
519.7 |
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Average realized gold price per ounce(b) |
$ |
1,712 |
$ |
1,307 |
$ |
1,648 |
$ |
1,305 |
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Consolidated production cost of sales per equivalent ounce(c)
sold(b) |
$ |
728 |
$ |
665 |
$ |
742 |
$ |
673 |
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Attributable(a) production cost of sales per equivalent ounce(c)
sold(b) |
$ |
725 |
$ |
663 |
$ |
739 |
$ |
672 |
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Attributable(a) production cost of sales per ounce sold on a
by-product basis(b) |
$ |
707 |
$ |
650 |
$ |
722 |
$ |
659 |
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Attributable(a) all-in sustaining cost per ounce sold on a
by-product basis(b) |
$ |
971 |
$ |
918 |
$ |
976 |
$ |
917 |
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Attributable(a) all-in sustaining cost per equivalent ounce(c)
sold(b) |
$ |
984 |
$ |
925 |
$ |
988 |
$ |
925 |
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Attributable(a) all-in cost per ounce sold on a by-product
basis(b) |
$ |
1,208 |
$ |
1,242 |
$ |
1,226 |
$ |
1,240 |
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Attributable(a) all-in cost per equivalent ounce(c) sold(b) |
$ |
1,217 |
$ |
1,243 |
$ |
1,233 |
$ |
1,242 |
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(a) Total includes 100% of Chirano production. "Attributable"
includes Kinross' share of Chirano (90%) production(b) The
definition and reconciliation of these non-GAAP measures is
included on pages 14 to 19 of this news release(c) "Gold equivalent
ounces" include silver ounces produced and sold converted to a gold
equivalent based on a ratio of the average spot market prices for
the commodities for each period. The ratio for the second quarter
of 2020 was 104.49:1 (second quarter of 2019: 87.98:1). The ratio
for the first six months of 2020 was 98.85:1 (first six months of
2019: 85.78:1)(d) "Capital expenditures" is as reported as
“Additions to property, plant and equipment” on the interim
condensed consolidated statement of cash flows and excludes
“Interest paid capitalized to property, plant and equipment”.
The following operating and financial results
are based on 2020 second-quarter gold equivalent production.
Production and cost measures are on an attributable basis:
Production1: Kinross produced
571,978 attributable Au eq. oz. in Q2 2020, compared with 648,251
Au eq. oz. in Q2 2019. The decrease was mainly due to lower
production at Paracatu, Round Mountain and Chirano, partially
offset by higher production at Bald Mountain and Kupol.
Production cost of sales1,3:
Production cost of sales per Au eq. oz. was $725 for Q2 2020,
compared with $663 for Q2 2019. Production cost of sales per Au oz.
on a by-product basis was $707 in Q2 2020, compared with $650 in Q2
2019, based on Q2 2020 attributable gold sales of 574,299 ounces
and attributable silver sales of 1,063,572 ounces.
All-in sustaining cost1,3:
All-in sustaining cost per Au eq. oz. sold was $984 in Q2 2020,
compared with $925 in Q2 2019. All-in sustaining cost per Au oz.
sold on a by-product basis was $971 in Q2 2020, compared with $918
in Q2 2019.
Revenue: Revenue from metal
sales increased 20% to $1,007.2 million in Q2 2020, compared with
$837.8 million during the same period in 2019.
Average realized gold price7:
The average realized gold price in Q2 2020 increased 31% to $1,712
per ounce, compared with $1,307 per ounce in Q2 2019.
Margins: Kinross’ attributable
margin per Au eq. oz. sold4 increased 53% to $987 per Au eq. oz.
for Q2 2020, compared with the Q2 2019 margin of $644 per Au eq.
oz. sold.
Operating cash flow: Adjusted
operating cash flow3 for Q2 2020 increased significantly by 45% to
$416.9 million, compared with $287.7 million for Q2 2019, primarily
due to the increase in margins.
Net operating cash flow was $432.8 million for
Q2 2020, an increase of 30% compared with $333.0 million for Q2
2019.
Earnings: Adjusted net
earnings3 more than doubled to $194.0 million, or $0.15 per share,
for Q2 2020, compared with adjusted net earnings of $79.6 million,
or $0.06 per share, for Q2 2019, primarily due to the increase in
margins.
Reported net earnings2 also more than doubled to
$195.7 million, or $0.16 per share, for Q2 2020, compared with net
earnings of $71.5 million, or $0.06 per share, in Q2 2019. The
increase was mainly due to higher operating earnings and a non-cash
impairment reversal of $48.3 million at Lobo-Marte as a result of
the addition of mineral reserves at the project in conjunction with
the recently completed pre-feasibility study, partially offset by
the increase in income tax expense in Q2 2020.
Capital expenditures: Capital
expenditures were $214.3 million for Q2 2020, compared with $275.8
million for the same period last year, primarily due to a decrease
in spending at Tasiast as a result of impacts of the pandemic on
stripping rates, and decreases at Bald Mountain and Round
Mountain.
Balance sheet and financial position
As of June 30, 2020, Kinross had cash and cash
equivalents of $1,527.1 million, which increased compared with
$1,138.6 million at March 31, 2020. The quarter-over-over increase
was due to free cash flow generated during Q2 2020 and the $200
million drawdown from the Tasiast project financing.
The Company had additional available credit of
$811.2 million as of June 30, 2020, and total liquidity of
approximately $2.3 billion, with no scheduled debt repayments until
September 2021. The Company had total debt of approximately $2.7
billion, which includes the $750 million draw from the revolving
credit facility in the first quarter and the $200 million in
Tasiast project financing, and net debt8 of approximately $1.1
billion. Kinross has further improved its debt metrics, including
its net debt to EBITDA ratio.
The Company drew down from its revolving credit
facility in March 2020 as a precautionary measure to protect
against economic and business uncertainties caused by the COVID-19
pandemic. The Company repaid $250 million of the drawn amount on
July 24, 2020 given the increase in the Company’s cash and cash
equivalents and its strong financial position, and does not plan to
deploy the remaining funds.
On July 1, 2020, Kinross extended the maturity
date of its $300 million letter of credit guarantee facility with
Export Development Canada for two years to June 30, 2022.
Operating results
All of Kinross’ mines continued production
during Q2 2020, as the Company’s ongoing response to COVID-19
safeguarded the health and safety of employees and host communities
and mitigated material operational impacts to the portfolio.
However, COVID-19 did partially affect overall performance and
productivity rates, mainly as a result of global travel constraints
and the implementation of rigorous safety protocols and measures at
all mines and projects.
Mine-by-mine summaries for 2020 second-quarter
results can be found on pages nine and 13 of this news release.
Operational highlights from Q2 2020 include the following:
Americas
Paracatu performed well during
the quarter, with production increasing compared with Q1 2020
mainly due to higher mill throughput and grades, while cost of
sales per ounce sold decreased largely as a result of favourable
foreign exchange rates. Production was lower compared with Q2
2019’s record performance, as grades and recoveries decreased as
planned. Cost of sales per ounce sold was higher year-over-year
mainly due to the lower production, which was offset by favourable
foreign exchange rates.
At Round Mountain, production
was lower quarter-over-quarter mainly due to fewer ounces recovered
from the heap leach pads, and decreased year-over-year mainly due
to lower mill grades. Cost of sales per ounce sold was higher
versus Q1 2020 and Q2 2019 largely due to lower production as a
result of fewer ounces from the heap leach pads, with higher
maintenance and contractor costs also contributing to the increase
year-over-year.
Bald Mountain had good
performance during the quarter, as production increased compared
with Q1 2020 and Q2 2019 largely as a result of more ounces
recovered from the Vantage Complex heap leach pad and higher
grades. Cost of sales per ounce sold increased compared with Q1
2020 mainly due to higher cost ounces recovered from the heap leach
pads, and was largely in line with Q2 2019.
At Fort Knox, production
increased compared with Q1 2020 primarily as a result of higher
mill grades and recoveries, while cost of sales per ounce sold
decreased mainly due to higher mill grades and lower energy costs.
Production was largely in line year-over-year, with cost of sales
per ounce sold increasing mainly due to a higher percentage of
operating waste mined and higher maintenance costs, partially
offset by lower energy costs.
Russia
The Russia region continued its strong and
consistent performance during the quarter, with production at
Kupol and Dvoinoye increasing
quarter-over-quarter and year-over-year, mainly due to higher gold
grades. Cost of sales per ounce sold was lower compared with Q1
2020 largely as a result of favourable foreign exchange rates, and
was higher versus Q2 2019 mainly due to higher royalties associated
with the increase in the average realized gold price.
West Africa
At Tasiast, production was
lower compared with Q1 2020 and Q2 2019 mainly due to the 17-day
strike during the quarter and mine sequencing, which was slightly
offset by higher grades. The principal impact of COVID-19 was a
lower-than-planned mining rate, which resulted in deferrals of some
stripping and associated capital expenditures. Production is
expected to increase during the second half of the year, and, as a
result, 2020 production is not expected to be materially impacted
by the deferrals. Throughput performance adjusted for the impact of
the strike continued to be strong, with average daily rates
slightly better than the record performance in Q1 2020. Cost of
sales per ounce sold increased compared with the previous quarter
mainly due to the lower production and impacts from COVID-19. Cost
of sales per ounce sold decreased compared with the previous year
mainly due to lower fuel and overhead costs.
In 2021, stripping rates and capital
expenditures are expected to be higher compared to those presented
in the Tasiast Technical Report as the mine makes up for the
stripping deferred from 2020. A modest reduction in 2021 gold
production is also expected compared to the Technical Report due to
a longer-than-planned period of stockpile feed and delayed access
to higher grade ore. The Company expects no impacts to Tasiast’s
life of mine production, mineral reserve estimates and overall
value, and was able to adjust short-term mine plans given the
availability of large stockpiles at site.
At Chirano, production was
lower quarter-over-quarter mainly due to temporary downtime at the
mill and decreased mining rates from COVID-19 impacts, both of
which were slightly offset by higher grades, while cost of sales
per ounce sold decreased mainly due to lower operating waste mined.
Production decreased compared with the previous year mainly due to
lower throughput, grades and recoveries, with cost of sales per
ounce sold increasing mainly due to higher operating waste
mined.
Development projects
Tasiast 24k
The Tasiast 24k project
continues to advance and remains on schedule to increase throughput
capacity to 21,000 t/d by the end of 2021, and then to 24,000 t/d
by mid-2023. During Q2 2020, COVID-19 impacts affected progress on
power plant construction, while civil works in the processing
plant, including the gravity circuit, thickener and screens,
progressed well. The project team continues to explore measures to
mitigate potential impacts of prolonged constraints on the global
movement of people and supplies, which could affect the project
schedule. However, by late June, the Company reinstated more
regular rotations of expatriate staff in Mauritania, which has
improved the situation.
Fort Knox Gilmore
The Fort Knox Gilmore project
continues to progress well and is on schedule and on budget, with
the new Barnes Creek heap leach expected to be completed in Q4
2020. Stripping is advancing well and the project is now
approximately 80% complete.
Chulbatkan
At the Chulbatkan development
project in Russia, the 2020 drill program is ramping back up after
COVID-19-related challenges reduced drilling rates in the second
quarter and remains on track to be completed by year-end. As of the
end of Q2 2020, approximately 35,500 metres of infill, step-out and
metallurgical drilling was completed, with drilling confirming the
well disseminated nature of the orebody, including large lower
grade intercepts, combined with pockets of high grade intercepts.
In the third quarter, the drilling program will focus on further
defining the high-grade zone of the known resource through
additional tight-spaced drilling. The project currently has a
large, near-surface estimated mineral resource, with highly
continuous mineralization that is open along strike and at
depth.
For Chulbatkan cross-section
figure:https://www.kinross.com/files/doc_financials/2020/q2/KGC-Chulbatkan-Exploration-Figure.pdf
La Coipa Restart and
Lobo-Marte
At the La Coipa Restart
project, work is ramping up after limitations on people movement
challenged the project in the first quarter. Mining crews are being
mobilized and fleet rebuilds are commencing in preparation for
pre-stripping, which is expected to start in early 2021, with first
production expected in mid-2022. The project team continues to
study opportunities to optimize the mine plan and potentially
extend mine life.
On July 15, 2020, Kinross announced results for
the Lobo-Marte pre-feasibility study (PFS). The
project added a significant 6.4 million gold ounces5 to Kinross’
2019 year-end probable mineral reserve estimates and increased the
Company’s reserve life index by approximately 2.5 years6. The PFS
estimate includes total life of mine production of approximately
4.5 million Au oz. during a 15-year mine life, and pending a
positive development decision, is expected to commence production
after the conclusion of mining at the La Coipa project.
The long-term Lobo-Marte project provides
Kinross with an excellent, organic development option that has
attractive all-in sustaining costs and strong returns at the
consensus long-term gold price. The project is expected to realize
significant upside value and increase margins at higher gold prices
without having to increase stripping or current cost estimates as
the pit design would remain based on a $1,200/oz. gold price. The
Company plans to commence a feasibility study later this year, with
scheduled completion in Q4 2021, and will continue to prioritize
balance sheet strength and disciplined capital allocation as it
moves forward with the project.
Exploration
update
Exploration activities during the first half of
the year continued to focus on promising targets around current
operations, and areas where existing infrastructure can be
leveraged, with the goal of extending mine life and adding to the
Company’s mineral reserve and resource estimates. Highlights
include:
Kupol: During
the first half of the year, exploration within the existing
footprint of Russia operations were very encouraging, with positive
results from the Kupol NE Extension, Kupol Deeps South, Moroshka
and Providence. Exploration will continue to focus on these targets
for the rest of 2020, with the goal of adding significant ounces to
Kupol’s mineral reserve and resource estimates at year-end and
extending mine life.
Chirano:
Exploration at Chirano showed promising results during the first
half of the year as the Company continued to target multi-year mine
life extensions. To date, a total of approximately 29,000 metres of
drilling was completed at the Akwaaba, Tano, Obra and Mamnao West
areas. At Obra, drilling yielded significant results and has
extended the depth of high-grade mineralization. For the second
half of the year, Kinross will continue to explore the underground
mining potential at Obra by commencing initial works on an
exploration drift to drill from the underground in order to
increase accuracy and targeting. Drilling will also continue to
explore the extensions of Akwaaba, Tano and Suraw, and the
potential for open pit mining at Mamnao West.
For Chirano Obra cross-section and
long-section
figures:https://www.kinross.com/files/doc_financials/2020/q2/KGC-Chirano-Exploration-Figures.pdf
Round
Mountain: At Round Mountain, drilling continued
at Phase X, which is the northwest continuation of Phase W
mineralization. Results received to date have been encouraging, as
drilling has intersected significant mineralization in the upper
portions within the shallow portion of Phase X to potentially
optimize the pit shell design, and confirmed that mineralization
extends from Phase W. Further drilling is assessing mineralization
to reduce the strip ratio at Phase X.
Curlew Basin
Project: The 2020 Curlew exploration program has
focused on areas around the historical K2 mine, which is located
approximately 35 kilometres north of the Kettle River mill. The
program added 162 Au koz. with grades of 8.8 g/t to Kinross’
indicated mineral resource estimates at year-end 2019, and high
level engineering and economic assessment of potential mining at
the Curlew Basin achieved encouraging results during the first half
of the year. Exploration activities will continue to target
incremental high-margin ounces proximal to and extensions of the K2
and K5 deposits by constructing a series of exploration drifts to
explore the highly prospective areas. The drifts will allow for
underground drilling that will test the large prospective ground at
optimal drill angles and at expected lower costs.
Exploration work for the second half of the year
is expected to also continue at the Company’s other brownfield
targets, including Fort Knox, Bald Mountain and La Coipa. As well,
Kinross expects to focus on growing mineral resource estimates at
Tasiast Sud in Mauritania and progressing work at district targets
around Kupol-Dvoinoye in Russia.
Agreement in principle with Government
of Mauritania
On June 15, 2020, Kinross reached an agreement
in principle with the Government of Mauritania to resolve
outstanding matters between the parties. The terms are subject to
finalizing definitive agreements and provide Kinross with a 30-year
exploitation license for Tasiast Sud, with expedited permitting and
the possibility of early mining. The terms also provide for the
reinstatement of a tax exemption on fuel duties and repayment by
the Government to Kinross of outstanding VAT refunds. Kinross also
volunteered to update the royalty structure for Tasiast so it is
tied to the gold price, is in line with Mauritania’s current mining
conventions and codes, and further aligns interests by ensuring the
country receives an appropriate share of economic benefits from the
Tasiast mine.
2020 GuidanceThe 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 20 of this news release.
On April 1, 2020, the Company made the prudent
decision to withdraw its full-year guidance. Although the COVID-19
pandemic has not materially impacted Kinross’ overall business
performance during the first half of the year, the pandemic
continues to present the potential for further business
disruptions.
To date, Kinross’ ongoing and comprehensive
response to the pandemic has enabled the Company to safeguard
employees and local communities, help prevent the spread of
COVID-19, and mitigate operational risk. The Company continues to
target the safe delivery of its operating plans and is on track to
meet its original 2020 guidance for production, cost of sales per
ounce sold, all-in sustaining cost per ounce sold and capital
expenditures.
Q2 2020 conference call
details
In connection with the release, Kinross will
hold a conference call and audio webcast on Thursday, July 30, 2020
at 8:00 a.m. ET followed by a question-and-answer session. Please
enter the passcode: 5161488 to access the
call.
Canada & US toll-free – +1
(833) 968-2237; passcode: 5161488Outside
of Canada & US – +1 (825) 312-2059; passcode:
5161488
Replay (available up to 14 days after the
call):
Canada & US toll-free – +1
(800) 585-8367; passcode:
5161488Outside of Canada & US
– +1 (416) 621-4642; passcode:
5161488
You may also access the conference call on a
listen-only basis via webcast at our website www.kinross.com. The
audio webcast will be archived on www.kinross.com.
This news release should be read in conjunction
with Kinross’ 2020 second-quarter unaudited Financial Statements
and Management’s Discussion and Analysis report at www.kinross.com.
Kinross’ 2020 second-quarter unaudited Financial Statements and
Management’s Discussion and Analysis have been filed with Canadian
securities regulators (available at www.sedar.com) and furnished to
the U.S. Securities and Exchange Commission (available at
www.sec.gov). Kinross shareholders may obtain a copy of the
financial statements free of charge upon request to the
Company.
About Kinross Gold
Corporation
Kinross is a Canadian-based senior gold mining
company with mines and projects in the United States, Brazil,
Russia, Mauritania, Chile and Ghana. Kinross maintains listings on
the Toronto Stock Exchange (symbol:K) and the New York Stock
Exchange (symbol:KGC).
Media Contact Louie DiazSenior
Director, Corporate Communicationsphone:
416-369-6469louie.diaz@kinross.com
_________________________________________________
Investor Relations ContactTom
Elliott
Senior Vice-President, Investor Relations and Corporate
Developmentphone:
416-365-3390
tom.elliott@kinross.com Review of operations
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, (unaudited) |
|
Gold equivalent ounces |
|
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost of sales($millions) |
|
Production cost ofsales/equivalent ounce sold |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
56,031 |
|
55,440 |
|
|
56,465 |
|
55,740 |
|
|
$ |
66.1 |
|
$ |
50.7 |
|
|
$ |
1,171 |
$ |
910 |
Round Mountain |
74,351 |
|
90,833 |
|
|
71,087 |
|
87,106 |
|
|
|
51.6 |
|
|
57.8 |
|
|
|
726 |
|
664 |
Bald Mountain |
48,368 |
|
40,564 |
|
|
49,594 |
|
31,547 |
|
|
|
42.7 |
|
|
27.0 |
|
|
|
861 |
|
856 |
Paracatu |
138,851 |
|
186,167 |
|
|
140,646 |
|
186,520 |
|
|
|
83.6 |
|
|
106.8 |
|
|
|
594 |
|
573 |
Maricunga |
- |
|
6,648 |
|
|
1,159 |
|
9,474 |
|
|
|
0.8 |
|
|
8.0 |
|
|
|
690 |
|
844 |
Americas Total |
317,601 |
|
379,652 |
|
|
318,951 |
|
370,387 |
|
|
|
244.8 |
|
|
250.3 |
|
|
|
768 |
|
676 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
130,983 |
|
127,684 |
|
|
130,771 |
|
124,873 |
|
|
|
79.3 |
|
|
70.2 |
|
|
|
606 |
|
562 |
Russia Total |
130,983 |
|
127,684 |
|
|
130,771 |
|
124,873 |
|
|
|
79.3 |
|
|
70.2 |
|
|
|
606 |
|
562 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
88,579 |
|
92,901 |
|
|
98,679 |
|
94,748 |
|
|
|
57.8 |
|
|
58.9 |
|
|
|
586 |
|
622 |
Chirano (100%) |
38,683 |
|
53,349 |
|
|
40,084 |
|
51,141 |
|
|
|
46.6 |
|
|
46.7 |
|
|
|
1,163 |
|
913 |
West Africa Total |
127,262 |
|
146,250 |
|
|
138,763 |
|
145,889 |
|
|
|
104.4 |
|
|
105.6 |
|
|
|
752 |
|
724 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
575,846 |
|
653,586 |
|
|
588,485 |
|
641,149 |
|
|
|
428.5 |
|
|
426.1 |
|
|
|
728 |
|
665 |
Less Chirano non-controlling interest (10%) |
(3,868 |
) |
(5,335 |
) |
|
(4,008 |
) |
(5,114 |
) |
|
|
(4.7 |
) |
|
(4.7 |
) |
|
|
|
Attributable Total |
571,978 |
|
648,251 |
|
|
584,477 |
|
636,035 |
|
|
$ |
423.8 |
|
$ |
421.4 |
|
|
$ |
725 |
$ |
663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, (unaudited) |
|
Gold equivalent ounces |
|
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost of sales($millions) |
|
Production cost ofsales/equivalent ounce sold |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
107,697 |
|
93,053 |
|
|
107,233 |
|
93,677 |
|
|
$ |
130.7 |
|
$ |
89.5 |
|
|
$ |
1,219 |
$ |
955 |
Round Mountain |
158,816 |
|
175,968 |
|
|
156,802 |
|
170,720 |
|
|
|
107.7 |
|
|
113.8 |
|
|
|
687 |
|
667 |
Bald Mountain |
90,456 |
|
87,819 |
|
|
91,970 |
|
74,777 |
|
|
|
78.4 |
|
|
56.2 |
|
|
|
852 |
|
752 |
Paracatu |
263,217 |
|
332,943 |
|
|
261,843 |
|
332,917 |
|
|
|
171.1 |
|
|
201.7 |
|
|
|
653 |
|
606 |
Maricunga |
- |
|
17,364 |
|
|
2,470 |
|
17,098 |
|
|
|
1.6 |
|
|
12.8 |
|
|
|
648 |
|
749 |
Americas Total |
620,186 |
|
707,147 |
|
|
620,318 |
|
689,189 |
|
|
|
489.5 |
|
|
474.0 |
|
|
|
789 |
|
688 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
251,868 |
|
257,772 |
|
|
252,795 |
|
255,287 |
|
|
|
156.2 |
|
|
148.2 |
|
|
|
618 |
|
581 |
Russia Total |
251,868 |
|
257,772 |
|
|
252,795 |
|
255,287 |
|
|
|
156.2 |
|
|
148.2 |
|
|
|
618 |
|
581 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
192,416 |
|
194,259 |
|
|
192,629 |
|
194,506 |
|
|
|
109.7 |
|
|
124.9 |
|
|
|
569 |
|
642 |
Chirano (100%) |
83,150 |
|
105,671 |
|
|
79,419 |
|
105,224 |
|
|
|
94.4 |
|
|
90.7 |
|
|
|
1,189 |
|
862 |
West Africa Total |
275,566 |
|
299,930 |
|
|
272,048 |
|
299,730 |
|
|
|
204.1 |
|
|
215.6 |
|
|
|
750 |
|
719 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
1,147,620 |
|
1,264,849 |
|
|
1,145,161 |
|
1,244,206 |
|
|
|
849.8 |
|
|
837.8 |
|
|
|
742 |
|
673 |
Less Chirano non-controlling interest (10%) |
(8,315 |
) |
(10,567 |
) |
|
(7,942 |
) |
(10,522 |
) |
|
|
(9.4 |
) |
|
(9.1 |
) |
|
|
|
Attributable Total |
1,139,305 |
|
1,254,282 |
|
|
1,137,219 |
|
1,233,684 |
|
|
$ |
840.4 |
|
$ |
828.7 |
|
|
$ |
739 |
$ |
672 |
|
|
|
|
|
|
|
|
|
|
|
|
Interim condensed consolidated balance
sheets
(unaudited,
expressed in millions of U.S. dollars, except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
June
30, |
|
December 31, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,527.1 |
|
|
$ |
575.1 |
|
|
Restricted cash |
|
|
13.3 |
|
|
|
15.2 |
|
|
Accounts receivable and other assets |
|
|
134.1 |
|
|
|
137.4 |
|
|
Current income tax recoverable |
|
|
166.1 |
|
|
|
43.2 |
|
|
Inventories |
|
|
985.0 |
|
|
|
1,053.8 |
|
|
|
|
|
2,825.6 |
|
|
|
1,824.7 |
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
|
6,688.3 |
|
|
|
6,340.0 |
|
|
Goodwill |
|
|
158.8 |
|
|
|
158.8 |
|
|
Long-term investments |
|
|
105.2 |
|
|
|
126.2 |
|
|
Investment in joint venture |
|
|
18.3 |
|
|
|
18.4 |
|
|
Other long-term assets |
|
|
568.5 |
|
|
|
572.7 |
|
|
Deferred tax assets |
|
|
- |
|
|
|
35.2 |
|
|
Total assets |
|
$ |
10,364.7 |
|
|
$ |
9,076.0 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
451.8 |
|
|
$ |
469.3 |
|
|
Current income tax payable |
|
|
53.6 |
|
|
|
68.0 |
|
|
Current portion of provisions |
|
|
60.6 |
|
|
|
57.9 |
|
|
Other current liabilities |
|
|
43.4 |
|
|
|
20.3 |
|
|
Deferred payment obligation |
|
|
141.5 |
|
|
|
- |
|
|
|
|
|
750.9 |
|
|
|
615.5 |
|
|
Non-current liabilities |
|
|
|
|
|
Long-term debt and credit facilities |
|
|
2,671.6 |
|
|
|
1,837.4 |
|
|
Provisions |
|
|
813.4 |
|
|
|
838.6 |
|
|
Long-term lease liabilities |
|
|
32.6 |
|
|
|
38.9 |
|
|
Unrealized fair value of derivative liabilities |
|
|
15.9 |
|
|
|
0.8 |
|
|
Other long-term liabilities |
|
|
89.2 |
|
|
|
107.7 |
|
|
Deferred tax liabilities |
|
|
370.2 |
|
|
|
304.5 |
|
|
Total liabilities |
|
$ |
4,743.8 |
|
|
$ |
3,743.4 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Common shareholders' equity |
|
|
|
|
|
Common share capital |
|
$ |
4,472.0 |
|
|
$ |
14,926.2 |
|
|
Contributed surplus |
|
|
10,704.3 |
|
|
|
242.1 |
|
|
Accumulated deficit |
|
|
(9,511.0 |
) |
|
|
(9,829.4 |
) |
|
Accumulated other comprehensive income (loss) |
|
|
(59.4 |
) |
|
|
(20.4 |
) |
|
Total common shareholders' equity |
|
|
5,605.9 |
|
|
|
5,318.5 |
|
|
Non-controlling interest |
|
|
15.0 |
|
|
|
14.1 |
|
|
Total equity |
|
|
5,620.9 |
|
|
|
5,332.6 |
|
|
Total liabilities and equity |
|
$ |
10,364.7 |
|
|
$ |
9,076.0 |
|
|
|
|
|
|
|
|
Common shares |
|
|
|
|
|
Authorized |
|
|
Unlimited |
|
|
|
Unlimited |
|
|
Issued and outstanding |
|
|
1,257,998,978 |
|
|
|
1,253,765,724 |
|
|
|
|
|
|
|
|
Interim condensed consolidated statements of
operations
(unaudited,
expressed in millions of U.S. dollars, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
|
June
30, |
|
June 30, |
|
June
30, |
|
June 30, |
|
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
Metal sales |
|
$ |
1,007.2 |
|
|
$ |
837.8 |
|
|
$ |
1,887.0 |
|
|
$ |
1,624.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
Production cost of sales |
|
|
428.5 |
|
|
|
426.1 |
|
|
|
849.8 |
|
|
|
837.8 |
|
|
|
Depreciation, depletion and amortization |
|
|
210.4 |
|
|
|
179.9 |
|
|
|
403.5 |
|
|
|
344.0 |
|
|
|
Reversal of impairment charge |
|
|
(48.3 |
) |
|
|
- |
|
|
|
(48.3 |
) |
|
|
- |
|
|
|
Total cost of sales |
|
|
590.6 |
|
|
|
606.0 |
|
|
|
1,205.0 |
|
|
|
1,181.8 |
|
|
|
Gross profit |
|
|
416.6 |
|
|
|
231.8 |
|
|
|
682.0 |
|
|
|
442.2 |
|
|
|
Other operating expense |
|
|
52.9 |
|
|
|
29.5 |
|
|
|
74.8 |
|
|
|
62.4 |
|
|
|
Exploration and business development |
|
|
17.9 |
|
|
|
28.4 |
|
|
|
37.0 |
|
|
|
47.9 |
|
|
|
General and administrative |
|
|
24.7 |
|
|
|
29.6 |
|
|
|
56.5 |
|
|
|
72.2 |
|
|
|
Operating earnings |
|
|
321.1 |
|
|
|
144.3 |
|
|
|
513.7 |
|
|
|
259.7 |
|
|
|
Other income (expense) - net |
|
|
9.2 |
|
|
|
(2.5 |
) |
|
|
8.6 |
|
|
|
0.2 |
|
|
|
Finance income |
|
|
1.0 |
|
|
|
1.9 |
|
|
|
3.0 |
|
|
|
4.0 |
|
|
|
Finance expense |
|
|
(32.8 |
) |
|
|
(26.1 |
) |
|
|
(58.5 |
) |
|
|
(53.6 |
) |
|
|
Earnings before tax |
|
|
298.5 |
|
|
|
117.6 |
|
|
|
466.8 |
|
|
|
210.3 |
|
|
|
Income tax expense - net |
|
|
(102.5 |
) |
|
|
(46.5 |
) |
|
|
(147.5 |
) |
|
|
(74.6 |
) |
|
|
Net earnings |
|
$ |
196.0 |
|
|
$ |
71.1 |
|
|
$ |
319.3 |
|
|
$ |
135.7 |
|
|
|
Net earnings (loss) attributable to: |
|
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
$ |
0.3 |
|
|
$ |
(0.4 |
) |
|
$ |
0.9 |
|
|
$ |
(0.5 |
) |
|
|
Common shareholders |
|
$ |
195.7 |
|
|
$ |
71.5 |
|
|
$ |
318.4 |
|
|
$ |
136.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to common
shareholders |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.16 |
|
|
$ |
0.06 |
|
|
$ |
0.25 |
|
|
$ |
0.11 |
|
|
|
Diluted |
|
$ |
0.15 |
|
|
$ |
0.06 |
|
|
$ |
0.25 |
|
|
$ |
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
(millions) |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
1,257.6 |
|
|
|
1,252.3 |
|
|
|
1,256.1 |
|
|
|
1,251.5 |
|
|
|
Diluted |
|
|
1,268.5 |
|
|
|
1,261.2 |
|
|
|
1,266.9 |
|
|
|
1,260.3 |
|
|
|
Interim condensed consolidated statements of cash
flows
(unaudited,
expressed in millions of U.S. dollars) |
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
June
30, |
|
June 30, |
|
June
30, |
|
June 30, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
2020 |
|
|
|
2019 |
|
|
Net inflow (outflow) of cash related to the following
activities: |
|
|
|
|
|
|
|
|
|
Operating: |
|
|
|
|
|
|
|
|
|
Net earnings |
|
$ |
196.0 |
|
|
$ |
71.1 |
|
|
$ |
319.3 |
|
|
$ |
135.7 |
|
|
Adjustments to reconcile net earnings to net cash provided from
operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
210.4 |
|
|
|
179.9 |
|
|
|
403.5 |
|
|
|
344.0 |
|
|
Reversal of impairment charge |
|
|
(48.3 |
) |
|
|
- |
|
|
|
(48.3 |
) |
|
|
- |
|
|
Share-based compensation expense |
|
|
2.8 |
|
|
|
3.0 |
|
|
|
7.3 |
|
|
|
7.6 |
|
|
Finance expense |
|
|
32.8 |
|
|
|
26.1 |
|
|
|
58.5 |
|
|
|
53.6 |
|
|
Deferred tax expense (recovery) |
|
|
44.1 |
|
|
|
5.8 |
|
|
|
112.5 |
|
|
|
(31.4 |
) |
|
Foreign exchange (gains) losses and other |
|
|
(20.9 |
) |
|
|
1.8 |
|
|
|
(17.3 |
) |
|
|
9.0 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivable and other assets |
|
|
(49.1 |
) |
|
|
(40.3 |
) |
- |
|
(127.7 |
) |
|
|
(25.7 |
) |
|
Inventories |
|
|
31.6 |
|
|
|
12.6 |
|
|
|
39.3 |
|
|
|
50.0 |
|
|
Accounts payable and accrued liabilities |
|
|
96.4 |
|
|
|
56.6 |
|
|
|
112.2 |
|
|
|
42.4 |
|
|
Cash flow provided from operating activities |
|
|
495.8 |
|
|
|
316.6 |
|
|
|
859.3 |
|
|
|
585.2 |
|
|
Income taxes (paid) recovered |
|
|
(63.0 |
) |
|
|
16.4 |
|
|
|
(126.9 |
) |
|
|
(0.6 |
) |
|
Net cash flow provided from operating
activities |
|
|
432.8 |
|
|
|
333.0 |
|
|
|
732.4 |
|
|
|
584.6 |
|
|
Investing: |
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(214.3 |
) |
|
|
(275.8 |
) |
|
|
(405.7 |
) |
|
|
(519.7 |
) |
|
Interest paid capitalized to property, plant and equipment |
|
|
(3.8 |
) |
|
|
(0.9 |
) |
|
|
(26.1 |
) |
|
|
(21.8 |
) |
|
Acquisitions |
|
|
- |
|
|
|
- |
|
|
|
(128.3 |
) |
|
|
(30.0 |
) |
|
Net additions to long-term investments and other assets |
|
|
(1.4 |
) |
|
|
(5.9 |
) |
|
|
(3.3 |
) |
|
|
(12.3 |
) |
|
Net proceeds from the sale of property, plant and equipment |
|
|
0.7 |
|
|
|
1.2 |
|
|
|
2.2 |
|
|
|
2.1 |
|
|
Increase in restricted cash - net |
|
|
(24.9 |
) |
|
|
(0.2 |
) |
|
|
(23.1 |
) |
|
|
(0.8 |
) |
|
Interest received and other - net |
|
|
0.7 |
|
|
|
1.2 |
|
|
|
1.7 |
|
|
|
2.1 |
|
|
Net cash flow used in investing activities |
|
|
(243.0 |
) |
|
|
(280.4 |
) |
|
|
(582.6 |
) |
|
|
(580.4 |
) |
|
Net cash flow of discontinued operations provided from
investing activities |
|
|
|
|
|
|
|
|
|
Financing: |
|
|
|
|
|
|
|
|
|
Proceeds from drawdown of debt |
|
|
200.0 |
|
|
|
100.0 |
|
|
|
950.0 |
|
|
|
260.0 |
|
|
Repayment of debt |
|
|
- |
|
|
|
(80.0 |
) |
|
|
(100.0 |
) |
|
|
(105.0 |
) |
|
Interest paid |
|
|
(3.4 |
) |
|
|
(1.1 |
) |
|
|
(29.0 |
) |
|
|
(28.4 |
) |
|
Payment of lease liabilities |
|
|
(4.8 |
) |
|
|
(3.9 |
) |
|
|
(9.5 |
) |
|
|
(7.2 |
) |
|
Other - net |
|
|
2.0 |
|
|
|
(0.4 |
) |
|
|
(4.6 |
) |
|
|
(0.2 |
) |
|
Net cash flow provided from financing
activities |
|
|
193.8 |
|
|
|
14.6 |
|
|
|
806.9 |
|
|
|
119.2 |
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
|
4.9 |
|
|
|
1.3 |
|
|
|
(4.7 |
) |
|
|
3.0 |
|
|
Increase in cash and cash equivalents |
|
|
388.5 |
|
|
|
68.5 |
|
|
|
952.0 |
|
|
|
126.4 |
|
|
Cash and cash equivalents, beginning of
period |
|
|
1,138.6 |
|
|
|
406.9 |
|
|
|
575.1 |
|
|
|
349.0 |
|
|
Cash and cash equivalents, end of period |
|
$ |
1,527.1 |
|
|
$ |
475.4 |
|
|
$ |
1,527.1 |
|
|
$ |
475.4 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating Summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mine |
Period |
Ownership |
Tonnes Ore Mined (a) |
Ore Processed (Milled) (a) |
Ore Processed(Heap Leach)
(a) |
Grade (Mill) |
Grade(Heap Leach) |
Recovery (b) |
Gold Eq Production (e) |
Gold Eq Sales (e) |
Productioncost of sales |
Productioncost of sales/oz |
Cap Ex (g) |
DD&A |
|
|
|
(%) |
('000 tonnes) |
('000 tonnes) |
('000 tonnes) |
(g/t) |
(g/t) |
(%) |
(ounces) |
(ounces) |
($ millions) |
($/ounce) |
($ millions) |
($ millions) |
Americas |
Fort Knox |
Q2 2020 |
100 |
6,116 |
2,048 |
4,783 |
0.73 |
0.23 |
83 |
% |
56,031 |
56,465 |
$ |
66.1 |
$ |
1,171 |
$ |
33.9 |
$ |
23.3 |
Q1 2020 |
100 |
6,795 |
1,859 |
5,694 |
0.60 |
0.23 |
80 |
% |
51,667 |
50,768 |
|
64.6 |
$ |
1,272 |
|
19.1 |
|
22.8 |
Q4 2019 |
100 |
7,648 |
2,615 |
5,498 |
0.43 |
0.20 |
81 |
% |
53,183 |
55,040 |
|
65.9 |
$ |
1,197 |
|
37.1 |
|
25.0 |
Q3 2019 |
100 |
7,094 |
2,097 |
5,250 |
0.52 |
0.21 |
83 |
% |
54,027 |
51,606 |
|
58.3 |
$ |
1,130 |
|
37.4 |
|
24.7 |
Q2 2019 |
100 |
4,829 |
1,811 |
3,440 |
0.59 |
0.20 |
81 |
% |
55,440 |
55,740 |
|
50.7 |
$ |
910 |
|
34.9 |
|
22.6 |
Round Mountain |
Q2 2020 |
100 |
4,431 |
911 |
4,357 |
0.80 |
0.36 |
84 |
% |
74,351 |
71,087 |
$ |
51.6 |
$ |
726 |
$ |
36.9 |
$ |
10.2 |
Q1 2020 |
100 |
3,700 |
954 |
3,594 |
0.83 |
0.43 |
83 |
% |
84,465 |
85,715 |
|
56.1 |
$ |
654 |
|
41.8 |
|
12.6 |
Q4 2019 |
100 |
7,408 |
882 |
7,140 |
1.00 |
0.36 |
82 |
% |
103,501 |
108,402 |
|
79.3 |
$ |
732 |
|
62.7 |
|
12.6 |
Q3 2019 |
100 |
7,128 |
1,004 |
7,557 |
1.05 |
0.32 |
85 |
% |
82,195 |
81,617 |
|
57.5 |
$ |
705 |
|
43.1 |
|
9.1 |
Q2 2019 |
100 |
4,074 |
909 |
3,910 |
1.17 |
0.33 |
86 |
% |
90,833 |
87,106 |
|
57.8 |
$ |
664 |
|
58.7 |
|
10.2 |
Bald Mountain (h) |
Q2 2020 |
100 |
4,051 |
- |
4,051 |
- |
0.53 |
nm |
|
48,368 |
49,594 |
$ |
42.7 |
$ |
861 |
$ |
29.6 |
$ |
30.2 |
Q1 2020 |
100 |
3,254 |
- |
3,254 |
- |
0.55 |
nm |
|
42,087 |
42,376 |
|
35.7 |
$ |
842 |
|
31.5 |
|
26.7 |
Q4 2019 |
100 |
2,928 |
- |
3,007 |
- |
0.48 |
nm |
|
66,147 |
65,381 |
|
49.8 |
$ |
762 |
|
54.6 |
|
36.3 |
Q3 2019 |
100 |
6,494 |
- |
6,494 |
- |
0.41 |
nm |
|
33,995 |
37,644 |
|
30.6 |
$ |
813 |
|
38.9 |
|
14.8 |
Q2 2019 |
100 |
3,725 |
- |
4,138 |
- |
0.36 |
nm |
|
40,564 |
31,547 |
|
27.0 |
$ |
856 |
|
57.3 |
|
12.2 |
Paracatu |
Q2 2020 |
100 |
15,223 |
14,703 |
- |
0.40 |
- |
74 |
% |
138,851 |
140,646 |
$ |
83.6 |
$ |
594 |
$ |
49.1 |
$ |
45.2 |
Q1 2020 |
100 |
12,350 |
13,224 |
- |
0.39 |
- |
75 |
% |
124,367 |
121,197 |
|
87.5 |
$ |
722 |
|
14.4 |
|
37.7 |
Q4 2019 |
100 |
12,393 |
14,168 |
- |
0.38 |
- |
76 |
% |
140,224 |
140,430 |
|
111.1 |
$ |
791 |
|
21.4 |
|
42.8 |
Q3 2019 |
100 |
12,442 |
14,731 |
- |
0.38 |
- |
78 |
% |
146,396 |
145,662 |
|
99.5 |
$ |
683 |
|
36.8 |
|
39.5 |
Q2 2019 |
100 |
12,307 |
14,439 |
- |
0.48 |
- |
80 |
% |
186,167 |
186,520 |
|
106.8 |
$ |
573 |
|
34.5 |
|
45.2 |
Maricunga (h) |
Q2 2020 |
100 |
- |
- |
- |
- |
- |
nm |
|
- |
1,159 |
$ |
0.8 |
$ |
690 |
$ |
- |
$ |
0.3 |
Q1 2020 |
100 |
- |
- |
- |
- |
- |
nm |
|
- |
1,311 |
|
0.8 |
$ |
610 |
|
- |
|
0.3 |
Q4 2019 |
100 |
- |
- |
- |
- |
- |
nm |
|
3,221 |
17,455 |
|
11.7 |
$ |
670 |
|
- |
|
0.4 |
Q3 2019 |
100 |
- |
- |
- |
- |
- |
nm |
|
18,016 |
9,203 |
|
7.0 |
$ |
761 |
|
- |
|
0.4 |
Q2 2019 |
100 |
- |
- |
- |
- |
- |
nm |
|
6,648 |
9,474 |
|
8.0 |
$ |
844 |
|
- |
|
0.5 |
Russia |
Kupol (c)(d)(f) |
Q2 2020 |
100 |
386 |
416 |
- |
9.73 |
- |
95 |
% |
130,983 |
130,771 |
$ |
79.3 |
$ |
606 |
$ |
5.9 |
$ |
31.1 |
Q1 2020 |
100 |
500 |
425 |
- |
8.73 |
- |
95 |
% |
120,885 |
122,024 |
|
76.9 |
$ |
630 |
|
5.6 |
|
34.4 |
Q4 2019 |
100 |
468 |
435 |
- |
9.14 |
- |
95 |
% |
132,009 |
135,083 |
|
83.3 |
$ |
617 |
|
15.8 |
|
34.8 |
Q3 2019 |
100 |
338 |
431 |
- |
9.65 |
- |
95 |
% |
137,562 |
136,088 |
|
82.6 |
$ |
607 |
|
7.6 |
|
32.2 |
Q2 2019 |
100 |
431 |
432 |
- |
9.23 |
- |
94 |
% |
127,684 |
124,873 |
|
70.2 |
$ |
562 |
|
8.3 |
|
30.7 |
West Africa |
Tasiast |
Q2 2020 |
100 |
1,134 |
1,168 |
- |
2.40 |
- |
94 |
% |
88,579 |
98,679 |
$ |
57.8 |
$ |
586 |
$ |
40.6 |
$ |
54.8 |
Q1 2020 |
100 |
1,160 |
1,467 |
- |
2.31 |
- |
95 |
% |
103,837 |
93,950 |
|
51.9 |
$ |
552 |
|
69.2 |
|
40.3 |
Q4 2019 |
100 |
1,129 |
1,379 |
- |
2.39 |
- |
96 |
% |
102,973 |
101,940 |
|
50.4 |
$ |
494 |
|
86.1 |
|
35.0 |
Q3 2019 |
100 |
1,010 |
1,297 |
- |
2.37 |
- |
97 |
% |
93,865 |
86,357 |
|
55.1 |
$ |
638 |
|
68.2 |
|
32.0 |
Q2 2019 |
100 |
819 |
1,281 |
- |
2.19 |
- |
97 |
% |
92,901 |
94,748 |
|
58.9 |
$ |
622 |
|
74.9 |
|
32.2 |
Chirano - 100% |
Q2 2020 |
90 |
679 |
785 |
- |
1.85 |
|
88 |
% |
38,683 |
40,084 |
$ |
46.6 |
$ |
1,163 |
$ |
5.8 |
$ |
13.1 |
Q1 2020 |
90 |
690 |
873 |
- |
1.73 |
- |
88 |
% |
44,465 |
39,335 |
|
47.8 |
$ |
1,215 |
|
5.1 |
|
15.9 |
Q4 2019 |
90 |
737 |
844 |
- |
2.00 |
- |
91 |
% |
48,984 |
47,186 |
|
49.0 |
$ |
1,038 |
|
8.0 |
|
21.4 |
Q3 2019 |
90 |
714 |
801 |
- |
2.02 |
- |
92 |
% |
46,641 |
49,458 |
|
50.0 |
$ |
1,011 |
|
4.8 |
|
22.0 |
Q2 2019 |
90 |
619 |
904 |
- |
1.95 |
- |
92 |
% |
53,349 |
51,141 |
|
46.7 |
$ |
913 |
|
2.7 |
|
23.8 |
Chirano - 90% |
Q2 2020 |
90 |
679 |
785 |
- |
1.85 |
- |
88 |
% |
34,815 |
36,076 |
$ |
41.9 |
$ |
1,163 |
$ |
5.2 |
$ |
11.8 |
Q1 2020 |
90 |
690 |
873 |
- |
1.73 |
- |
88 |
% |
40,019 |
35,401 |
|
43.0 |
$ |
1,215 |
|
4.7 |
|
14.3 |
Q4 2019 |
90 |
737 |
844 |
- |
2.00 |
- |
91 |
% |
44,086 |
42,468 |
|
44.1 |
$ |
1,038 |
|
7.2 |
|
19.3 |
Q3 2019 |
90 |
714 |
801 |
- |
2.02 |
- |
92 |
% |
41,977 |
44,512 |
|
45.0 |
$ |
1,011 |
|
4.3 |
|
19.8 |
Q2 2019 |
90 |
619 |
904 |
- |
1.95 |
- |
92 |
% |
48,014 |
46,027 |
|
42.0 |
$ |
913 |
|
2.4 |
|
21.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Tonnes of ore mined and processed represent 100%
Kinross for all periods presented.(b) 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.(c) The Kupol segment includes the Kupol and Dvoinoye
mines.(d) Kupol silver grade and recovery were as follows: Q2 2020:
70.36 g/t, 86.1% Q1 2020: 80.02 g/t, 84.1% Q4 2019: 65.63 g/t,
84.8%; Q3 2019: 67.44 g/t, 87.8%; Q2 2019: 75.29 g/t, 84.9%(e)
"Gold equivalent ounces include silver ounces produced and sold
converted to a gold equivalent based on the ratio of the average
spot market prices for the commodities for each period. The ratios
for the quarters presented are as follows:Q2 2020: 104.49:1, Q1
2020: 93.34:1, Q4 2019: 85.59:1; Q3 2019: 86.73:1; Q2 2019:
87.98:1"(f) Dvoinoye ore processed and grade were as follows:
Q2 2020: 113,472, 9.55 g/t; Q1 2020: 117,502, 9.24 g/t; Q4
2019: 100,685, 9.89 g/t; Q3 2019: 113,497, 9.82 g/t; Q2 2019:
113,872, 9.24 g/t(g) "Capital expenditures" is as reported as
“Additions to property, plant and equipment” on the interim
condensed consolidated statement of cash flows and excludes
“Interest paid capitalized to property, plant and equipment”.(h)
"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 to adjusted net earnings for the periods
presented:
|
|
|
|
|
|
|
|
|
Adjusted Net Earnings |
(unaudited, expressed in millions of U.S dollars, except per share
amounts) |
Three months ended |
|
Six months ended |
June 30, |
|
June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Net
earnings attributable to common shareholders - as reported |
$ |
195.7 |
|
$ |
71.5 |
|
|
$ |
318.4 |
|
$ |
136.2 |
|
Adjusting
items: |
|
|
|
|
|
|
Foreign exchange (gains)
losses |
|
(9.7 |
) |
|
4.1 |
|
# |
|
(7.4 |
) |
|
2.0 |
|
|
Foreign exchange losses (gains) on translation of tax basis and
foreign exchange on deferred income taxes within income tax
expense |
|
27.6 |
|
|
(5.6 |
) |
# |
|
53.9 |
|
|
(6.8 |
) |
|
Taxes in respect of prior
periods |
|
9.1 |
|
|
5.7 |
|
# |
|
6.1 |
|
|
11.4 |
|
|
Reversal of impairment
charge(a) |
|
(48.3 |
) |
|
- |
|
|
|
(48.3 |
) |
|
- |
|
|
COVID-19 and Tasiast strike
costs(b) |
|
28.7 |
|
|
- |
|
|
|
29.5 |
|
|
- |
|
|
U.S. CARES Act net
benefit |
|
(5.0 |
) |
|
- |
|
# |
|
(25.4 |
) |
|
- |
|
|
Fort Knox pit wall slide
related costs |
|
- |
|
|
4.9 |
|
# |
|
- |
|
|
11.4 |
|
|
Restructuring costs |
|
- |
|
|
- |
|
# |
|
- |
|
|
9.2 |
|
|
Other |
|
1.1 |
|
|
0.3 |
|
# |
|
0.1 |
|
|
2.2 |
|
|
Tax effect of the above
adjustments |
|
(5.2 |
) |
|
(1.3 |
) |
# |
|
(5.5 |
) |
|
(2.7 |
) |
|
|
|
(1.7 |
) |
|
8.1 |
|
|
|
3.0 |
|
|
26.7 |
|
Adjusted
net earnings attributable to common shareholders |
$ |
194.0 |
|
$ |
79.6 |
|
|
$ |
321.4 |
|
$ |
162.9 |
|
Weighted
average number of common shares outstanding - Basic |
|
1,257.6 |
|
|
1,252.3 |
|
|
|
1,256.1 |
|
|
1,251.5 |
|
Adjusted
net earnings per share |
$ |
0.15 |
|
$ |
0.06 |
|
|
$ |
0.26 |
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
(a) During the three and six months ended June 30, 2020, the
Company recognized a non-cash reversal of impairment charge of
$48.3 million related to property, plant and equipment at
Lobo-Marte.(b) Includes $6.0 million of Tasiast strike
costs.
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 |
(unaudited, expressed in millions of U.S dollars, except per share
amounts) |
Three months ended |
|
Six months ended |
June 30, |
|
June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Net cash
flow provided from operating activities - as reported |
$ |
432.8 |
|
$ |
333.0 |
|
|
$ |
732.4 |
|
$ |
584.6 |
|
|
|
|
|
|
|
|
Adjusting
items: |
|
|
|
|
|
|
Working capital
changes: |
|
|
|
|
|
|
Accounts receivable and other assets |
|
49.1 |
|
|
40.3 |
|
|
|
127.7 |
|
|
25.7 |
|
|
Inventories |
|
(31.6 |
) |
|
(12.6 |
) |
|
|
(39.3 |
) |
|
(50.0 |
) |
|
Accounts payable and other liabilities, including income taxes
paid |
|
(33.4 |
) |
|
(73.0 |
) |
|
|
14.7 |
|
|
(41.8 |
) |
|
|
|
(15.9 |
) |
|
(45.3 |
) |
|
|
103.1 |
|
|
(66.1 |
) |
Adjusted
operating cash flow |
$ |
416.9 |
|
$ |
287.7 |
|
|
$ |
835.5 |
|
$ |
518.5 |
|
|
|
|
|
|
|
|
Consolidated production cost of sales per gold
equivalent ounce sold is a non-GAAP measure and is defined
as production cost of sales as per the interim condensed
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 |
(unaudited, expressed in millions of U.S. dollars, except ounces
and production cost of sales per equivalent ounce) |
Three months ended |
|
Six months ended |
June 30, |
|
June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
428.5 |
|
$ |
426.1 |
|
|
$ |
849.8 |
|
$ |
837.8 |
|
Less:
portion attributable to Chirano non-controlling interest(a) |
|
(4.7 |
) |
|
(4.7 |
) |
|
|
(9.4 |
) |
|
(9.1 |
) |
Attributable(b) production cost of sales |
$ |
423.8 |
|
$ |
421.4 |
|
|
$ |
840.4 |
|
$ |
828.7 |
|
|
|
|
|
|
|
|
Gold
equivalent ounces sold |
|
588,485 |
|
|
641,149 |
|
|
|
1,145,161 |
|
|
1,244,206 |
|
Less:
portion attributable to Chirano non-controlling interest(j) |
|
(4,008 |
) |
|
(5,114 |
) |
|
|
(7,942 |
) |
|
(10,522 |
) |
Attributable(b) gold equivalent ounces sold |
|
584,477 |
|
|
636,035 |
|
|
|
1,137,219 |
|
|
1,233,684 |
|
Consolidated production cost of sales per equivalent ounce
sold |
$ |
728 |
|
$ |
665 |
|
|
$ |
742 |
|
$ |
673 |
|
Attributable(b) production cost of sales per equivalent ounce
sold |
$ |
725 |
|
$ |
663 |
|
|
$ |
739 |
|
$ |
672 |
|
|
|
|
|
|
|
See pages 18 – 19 of this news release for details of the footnotes
referenced from within the table above. |
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 |
(unaudited, expressed in millions of U.S. dollars, except ounces
and production cost of sales per ounce) |
Three months ended |
|
Six months ended |
June 30, |
|
June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
428.5 |
|
$ |
426.1 |
|
|
$ |
849.8 |
|
$ |
837.8 |
|
Less:
portion attributable to Chirano non-controlling interest(a) |
|
(4.7 |
) |
|
(4.7 |
) |
|
|
(9.4 |
) |
|
(9.1 |
) |
Less:
attributable(b) silver revenue(c) |
|
(17.5 |
) |
|
(15.5 |
) |
|
|
(33.9 |
) |
|
(32.6 |
) |
Attributable(b) production cost of sales net of silver by-product
revenue |
$ |
406.3 |
|
$ |
405.9 |
|
|
$ |
806.5 |
|
$ |
796.1 |
|
|
|
|
|
|
|
|
Gold
ounces sold |
|
578,300 |
|
|
629,206 |
|
|
|
1,124,267 |
|
|
1,219,031 |
|
Less:
portion attributable to Chirano non-controlling interest(j) |
|
|
(4,001 |
) |
|
(5,108 |
) |
|
|
(7,925 |
) |
|
(10,506 |
) |
Attributable(b) gold ounces sold |
|
574,299 |
|
|
624,098 |
|
|
|
1,116,342 |
|
|
1,208,525 |
|
Attributable(b) production cost of sales per ounce sold on a
by-product basis |
$ |
707 |
|
$ |
650 |
|
|
$ |
722 |
|
$ |
659 |
|
|
|
|
|
|
|
|
See pages 18 – 19
of this news release for details of the footnotes referenced from
within the table above. |
In November 2018, the World Gold Council (“WGC”) published
updates to its guidelines for reporting all-in sustaining costs and
all-in costs to address how the costs associated with leases, after
a company’s adoption of IFRS 16, should be treated. 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 interim condensed consolidated statement of operations, as
follows:
|
|
Attributable All-In Sustaining Cost and All-In Cost Per
Ounce Sold on a By-Product Basis |
|
|
(unaudited,
expressed in millions of U.S. dollars, except ounces and costs per
ounce) |
Three months ended |
|
Six months ended |
June 30, |
|
June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
428.5 |
|
$ |
426.1 |
|
|
$ |
849.8 |
|
$ |
837.8 |
|
Less:
portion attributable to Chirano non-controlling interest(a) |
|
(4.7 |
) |
|
(4.7 |
) |
|
|
(9.4 |
) |
|
(9.1 |
) |
Less:
attributable(b) silver revenue(c) |
|
(17.5 |
) |
|
(15.5 |
) |
|
|
(33.9 |
) |
|
(32.6 |
) |
Attributable(b) production cost of sales net of silver by-product
revenue |
$ |
406.3 |
|
$ |
405.9 |
|
|
$ |
806.5 |
|
$ |
796.1 |
|
Adjusting
items on an attributable(b) basis: |
|
|
|
|
|
General and administrative(d) |
|
|
24.7 |
|
|
29.6 |
|
|
|
56.5 |
|
|
63.0 |
|
Other operating expense - sustaining(e) |
|
|
1.2 |
|
|
6.0 |
|
|
|
5.6 |
|
|
11.5 |
|
Reclamation and remediation - sustaining(f) |
|
|
12.4 |
|
|
11.9 |
|
|
|
25.9 |
|
|
23.3 |
|
Exploration and business development - sustaining(g) |
|
|
10.4 |
|
|
18.2 |
|
|
|
22.3 |
|
|
32.1 |
|
Additions to property, plant and equipment -
sustaining(h) |
|
|
97.9 |
|
|
97.8 |
|
|
|
164.3 |
|
|
176.2 |
|
Lease payments - sustaining(i) |
|
|
4.5 |
|
|
3.5 |
|
|
|
8.8 |
|
|
6.4 |
|
All-in
Sustaining Cost on a by-product basis - attributable(b) |
$ |
557.4 |
|
$ |
572.9 |
|
|
$ |
1,089.9 |
|
$ |
1,108.6 |
|
Other operating expense - non-sustaining(e) |
|
|
12.3 |
|
|
12.0 |
|
|
|
23.2 |
|
|
28.2 |
|
Reclamation and remediation - non-sustaining(f) |
|
|
1.2 |
|
|
1.8 |
|
|
|
2.5 |
|
|
3.5 |
|
Exploration - non-sustaining(g) |
|
|
7.2 |
|
|
10.0 |
|
|
|
14.2 |
|
|
15.5 |
|
Additions to property, plant and equipment -
non-sustaining(h) |
|
|
115.2 |
|
|
177.8 |
|
|
|
238.1 |
|
|
342.5 |
|
Lease payments - non-sustaining(i) |
|
|
0.3 |
|
|
0.4 |
|
|
|
0.7 |
|
|
0.8 |
|
All-in
Cost on a by-product basis - attributable(b) |
$ |
693.6 |
|
$ |
774.9 |
|
|
$ |
1,368.6 |
|
$ |
1,499.1 |
|
Gold
ounces sold |
|
|
578,300 |
|
|
629,206 |
|
|
|
1,124,267 |
|
|
1,219,031 |
|
Less:
portion attributable to Chirano non-controlling interest(j) |
|
|
(4,001 |
) |
|
(5,108 |
) |
|
|
(7,925 |
) |
|
(10,506 |
) |
Attributable(b) gold ounces sold |
|
574,299 |
|
|
624,098 |
|
|
|
1,116,342 |
|
|
1,208,525 |
|
Attributable(b) all-in sustaining cost per ounce sold on a
by-product basis |
$ |
971 |
|
$ |
918 |
|
|
$ |
976 |
|
$ |
917 |
|
Attributable(b) all-in cost per ounce sold on a by-product
basis |
$ |
1,208 |
|
$ |
1,242 |
|
|
$ |
1,226 |
|
$ |
1,240 |
|
|
|
|
|
|
|
|
See pages 18 – 19
of this news release for details of the footnotes referenced from
within the table above. |
The Company also assesses its all-in sustaining
cost and all-in cost on a gold equivalent ounce basis. Under these
non-GAAP measures, the Company’s production of silver is converted
into gold equivalent ounces and credited to total production.
Attributable all-in sustaining cost and
all-in cost per equivalent ounce sold are calculated by
adjusting total production cost of sales, as reported on the
interim condensed consolidated statement of operations, as
follows:
|
|
Attributable All-In Sustaining Cost and All-In Cost Per
Equivalent Ounce Sold |
(unaudited,
expressed in millions of U.S. dollars, except ounces and costs per
equivalent ounce) |
Three months ended |
|
Six months ended |
June 30, |
|
June 30, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
428.5 |
|
$ |
426.1 |
|
|
$ |
849.8 |
|
$ |
837.8 |
|
Less:
portion attributable to Chirano non-controlling interest(a) |
|
(4.7 |
) |
|
(4.7 |
) |
|
|
(9.4 |
) |
|
(9.1 |
) |
Attributable(b) production cost of sales |
$ |
423.8 |
|
$ |
421.4 |
|
|
$ |
840.4 |
|
$ |
828.7 |
|
Adjusting
items on an attributable(b) basis: |
|
|
|
|
|
|
General and
administrative(d) |
|
24.7 |
|
|
29.6 |
|
|
|
56.5 |
|
|
63.0 |
|
|
Other operating expense -
sustaining(e) |
|
1.2 |
|
|
6.0 |
|
|
|
5.6 |
|
|
11.5 |
|
|
Reclamation and remediation -
sustaining(f) |
|
12.4 |
|
|
11.9 |
|
|
|
25.9 |
|
|
23.3 |
|
|
Exploration and business
development - sustaining(g) |
|
10.4 |
|
|
18.2 |
|
|
|
22.3 |
|
|
32.1 |
|
|
Additions to property, plant
and equipment - sustaining(h) |
|
97.9 |
|
|
97.8 |
|
|
|
164.3 |
|
|
176.2 |
|
|
Lease payments -
sustaining(i) |
|
4.5 |
|
|
3.5 |
|
|
|
8.8 |
|
|
6.4 |
|
All-in
Sustaining Cost - attributable(b) |
$ |
574.9 |
|
$ |
588.4 |
|
|
$ |
1,123.8 |
|
$ |
1,141.2 |
|
|
Other operating expense -
non-sustaining(e) |
|
12.3 |
|
|
12.0 |
|
|
|
23.2 |
|
|
28.2 |
|
|
Reclamation and remediation -
non-sustaining(f) |
|
1.2 |
|
|
1.8 |
|
|
|
2.5 |
|
|
3.5 |
|
|
Exploration -
non-sustaining(g) |
|
7.2 |
|
|
10.0 |
|
|
|
14.2 |
|
|
15.5 |
|
|
Additions to property, plant
and equipment - non-sustaining(h) |
|
115.2 |
|
|
177.8 |
|
|
|
238.1 |
|
|
342.5 |
|
|
Lease payments -
non-sustaining(i) |
|
0.3 |
|
|
0.4 |
|
|
|
0.7 |
|
|
0.8 |
|
All-in
Cost - attributable(b) |
$ |
711.1 |
|
$ |
790.4 |
|
|
$ |
1,402.5 |
|
$ |
1,531.7 |
|
Gold
equivalent ounces sold |
|
588,485 |
|
|
641,149 |
|
|
|
1,145,161 |
|
|
1,244,206 |
|
Less:
portion attributable to Chirano non-controlling interest(j) |
|
(4,008 |
) |
|
(5,114 |
) |
|
|
(7,942 |
) |
|
(10,522 |
) |
Attributable(b) gold equivalent ounces sold |
|
584,477 |
|
|
636,035 |
|
|
|
1,137,219 |
|
|
1,233,684 |
|
Attributable(b) all-in sustaining cost per equivalent ounce
sold |
$ |
984 |
|
$ |
925 |
|
|
$ |
988 |
|
$ |
925 |
|
Attributable(b) all-in cost per equivalent ounce sold |
$ |
1,217 |
|
$ |
1,243 |
|
|
$ |
1,233 |
|
$ |
1,242 |
|
|
|
|
|
|
|
|
(a) The portion attributable to Chirano non-controlling interest
represents the non-controlling interest (10%) in the production
cost of sales for the Chirano mine.(b) “Attributable” includes
Kinross' share of Chirano (90%) production.(c) “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.(d) “General and
administrative” expenses is as reported on the interim condensed
consolidated statement of operations, net of certain restructuring
expenses. General and administrative expenses are considered
sustaining costs as they are required to be absorbed on a
continuing basis for the effective operation and governance of the
Company.(e) “Other operating expense – sustaining” is calculated as
“Other operating expense” as reported on the interim condensed
consolidated statement of operations, less other operating and
reclamation and remediation expenses related to non-sustaining
activities as well as other items not reflective of the underlying
operating performance of our business. Other operating expenses are
classified as either sustaining or non-sustaining based on the type
and location of the expenditure incurred. The majority of other
operating expenses that are incurred at existing operations are
considered costs necessary to sustain operations, and are therefore
classified as sustaining. Other operating expenses incurred at
locations where there is no current operation or related to other
non-sustaining activities are classified as non-sustaining.(f)
“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.(g) “Exploration and business development –
sustaining” is calculated as “Exploration and business development”
expenses as reported on the interim condensed consolidated
statement of operations, less non-sustaining exploration expenses.
Exploration expenses are classified as either sustaining or
non-sustaining based on a determination of the type and location of
the exploration expenditure. Exploration expenditures within the
footprint of operating mines are considered costs required to
sustain current operations and so are included in sustaining costs.
Exploration expenditures focused on new ore bodies near existing
mines (i.e. brownfield), new exploration projects (i.e. greenfield)
or for other generative exploration activity not linked to existing
mining operations are classified as non-sustaining. Business
development expenses are considered sustaining costs as they are
required for general operations.(h) “Additions to property, plant
and equipment – sustaining” represents the majority of capital
expenditures at existing operations including capitalized
exploration costs, periodic capitalized stripping and underground
mine development costs, ongoing replacement of mine equipment and
other capital facilities and other capital expenditures and is
calculated as total additions to property, plant and equipment (as
reported on the interim condensed consolidated statements of cash
flows), less capitalized interest and non-sustaining capital.
Non-sustaining capital represents capital expenditures for major
projects, including major capital stripping projects at existing
operations that are expected to materially benefit the operation,
as well as enhancement capital for significant infrastructure
improvements at existing operations. Non-sustaining capital
expenditures during the three and six months ended June 30, 2020,
primarily related to major projects at Tasiast, Round Mountain and
Fort Knox. Non-sustaining capital expenditures during the three and
six months ended June 30, 2019, primarily related to major projects
at Tasiast, Round Mountain, and Bald Mountain.(i) “Lease payments –
sustaining” represents the majority of lease payments as reported
on the interim condensed consolidated statements of cash flows and
is made up of the principal and financing components of such cash
payments, less non-sustaining lease payments. Lease payments for
development projects or closed mines are classified as
non-sustaining.(j) “Portion attributable to Chirano non-controlling
interest” represents the non-controlling interest (10%) in the
ounces sold from the Chirano mine.(k) “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.
______________________________________
1) Unless otherwise stated, production,
production costs of sales per Au eq. oz., and all-in-sustaining
costs per Au eq. oz., in this news release are based on Kinross’
90% share of Chirano production.2) Net earnings figures in this
release represent “net earnings attributable to common
shareholders.”3) These figures are non-GAAP financial measures and
are defined and reconciled on pages 14 to 19 of this news
release.4) 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.”5) For more information on Lobo-Marte’s
mineral reserve and resource estimates, see Kinross’ news release
dated July 15, 2020 on kinross.com.6) Calculated as estimated 2019
proven and probable gold reserves divided by 2019 gold
production.7) 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.8) Net debt is a non-GAAP financial
measure defined as “Long-term debt and credit facilities” less
“Cash and cash equivalents”.9) 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.
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) “CEO commentary”, “Development projects”,
“Agreement in principle with Government of Mauritania” and “2020
Guidance” 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, currency fluctuations, capital requirements, project
studies, mine life extensions, government regulation permit
applications and conversions, restarting suspended or disrupted
operations; environmental risks and proceedings; and resolution of
pending litigation. The words “continue”, , “estimates”,
“expects”, “explore”, “focus”, “forward”, “goal”, “guidance”,
“mitigate”, “on budget”, “on schedule”, “on track”,
“opportunity”, “option”, “outlook”, “plan”, “potential”,
“progress”, “schedule”, “target”, “upside”, 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 MD&A for the
year ended December 31, 2019, and the Annual Information Form dated
March 30, 2020 as well as: (1) there being no significant
disruptions affecting the operations of the Company, whether due to
extreme weather events (including, without limitation, excessive or
lack of rainfall, in particular, the potential for further
production curtailments at Paracatu resulting from insufficient
rainfall and the operational challenges at Fort Knox and Bald
Mountain resulting from excessive rainfall, which can impact costs
and/or production) and other or related natural disasters, labour
disruptions (including but not limited to strikes or 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 operation of the
Tasiast Phase One expansion, and the development and operation of
the 24k Project; operation of the SAG mill at Tasiast; land
acquisitions and permitting for the construction and operation of
the new tailings facility, water and power supply and continued
operation of the tailings reprocessing facility at Paracatu; and
the Lobo-Marte project in a manner consistent with the Company’s
expectations; (3) political and legal developments in any
jurisdiction in which the Company operates being consistent with
its current expectations including, without limitation, the impact
of any political tensions and uncertainty in the Russian Federation
and Ukraine or any related sanctions and any other similar
restrictions or penalties imposed, or actions taken, by any
government, including but not limited to amendments to the mining
laws, and potential power rationing and tailings facility
regulations in Brazil, potential amendments to water laws and/or
other water use restrictions and regulatory actions in Chile, new
dam safety regulations, and potential amendments to minerals and
mining laws and energy levies laws, and the enforcement of labour
laws in Ghana, new regulations relating to work permits, potential
amendments to customs and mining laws (including but not limited to
amendments to the VAT) and the pending implementation of revisions
to the tax code in Mauritania, the European Union’s General Data
Protection Regulation or similar legislation in other jurisdictions
and potential amendments to and enforcement of tax laws in Russia
(including, but not limited to, the interpretation, implementation,
application and enforcement of any such laws and amendments
thereto), and the impact of any trade tariffs being consistent with
Kinross’ current expectations; (4) the completion of studies,
including optimization studies, scoping studies and pre-feasibility
and feasibility studies, on the timelines currently expected and
the results of those studies being consistent with Kinross’ current
expectations, including the completion of the Lobo-Marte
feasibility study; (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 the Company’s expectations; (8) production and cost of sales
forecasts for the Company meeting expectations; (9) the accuracy of
the current mineral reserve and mineral resource estimates of the
Company (including but not limited to ore tonnage and ore grade
estimates), mine plans for the Company’s mining operations, and the
Company’s internal models; (10) labour and materials costs
increasing on a basis consistent with Kinross’ current
expectations; (11) the terms and conditions of the legal and fiscal
stability agreements for the Tasiast and Chirano operations being
interpreted and applied in a manner consistent with their intent
and Kinross’ expectations and without material amendment or formal
dispute (including without limitation the application of tax,
customs and duties exemptions and royalties); (12) goodwill and/or
asset impairment potential; (13) the regulatory and legislative
regime regarding mining, electricity production and transmission
(including rules related to power tariffs) in Brazil being
consistent with Kinross’ current expectations; (14) access to
capital markets, including but not limited to maintaining our
current credit ratings consistent with the Company’s current
expectations; (15) that the Brazilian power plants will operate in
a manner consistent with our current expectations; (16) that
drawdown of remaining funds under the Tasiast project financing
will proceed in a manner consistent with our current expectations;
(17) potential direct or indirect operational impacts resulting
from infectious diseases or pandemics such as the ongoing COVID-19
pandemic; (18) the effectiveness of preventative actions and
contingency plans put in place by the Company to respond to the
COVID-19 pandemic, including, but not limited to, social
distancing, a non-essential travel ban, business continuity plans,
and efforts to mitigate supply chain disruptions; (19) changes in
national and local government legislation or other government
actions, particularly in response to the COVID-19 outbreak; (20)
litigation, regulatory proceedings and audits, and the potential
ramifications thereof, being concluded in a manner consistent with
the Corporation’s expectations (including without limitation the
ongoing industry-wide audit of mining companies in Ghana which
includes the Corporation’s Ghanaian subsidiaries, litigation in
Chile relating to the alleged damage of wetlands and the scope of
any remediation plan or other environmental obligations arising
therefrom, the ongoing litigation with the Russian tax authorities
regarding dividend withholding tax and the ongoing Sunnyside
litigation regarding potential liability under the U.S.
Comprehensive Environmental Response, Compensation, and Liability
Act); (21) that the Company will enter into definitive
documentation with the Government of Mauritania in accordance with,
and on the timeline contemplated by, the terms and conditions of
the term sheet, on a basis consistent with our expectations and
that the parties will perform their respective obligations
thereunder on the timelines agreed; (22) that the exploitation
permit for Tasiast Sud will be issued on timelines consistent with
our expectations; and (23) that the benefits of the contemplated
arrangements will result in increased stability at the Company’s
operations in Mauritania. 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; reductions in the ability of
the Company to transport and refine doré; 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, production royalties,
excise tax, customs/import or export taxes/duties, asset taxes,
asset transfer tax, property use or other real estate tax, together
with any related fine, penalty, surcharge, or interest imposed in
connection with such taxes), controls, policies and regulations;
the security of personnel and assets; political or economic
developments in Canada, the United States, Chile, Brazil, Russia,
Mauritania, Ghana, or other countries in which Kinross does
business or may carry on business; business opportunities that may
be presented to, or pursued by, us; our ability to successfully
integrate acquisitions and complete divestitures; operating or
technical difficulties in connection with mining or development
activities; employee relations; litigation or other claims against,
or regulatory investigations and/or any enforcement actions,
administrative orders or sanctions in respect of the Company
(and/or its directors, officers, or employees) including, but not
limited to, securities class action litigation in Canada and/or the
United States, environmental litigation or regulatory proceedings
or any investigations, enforcement actions and/or sanctions under
any applicable anti-corruption, international sanctions and/or
anti-money laundering laws and regulations in Canada, the United
States or any other applicable jurisdiction; the speculative nature
of gold exploration and development including, but not limited to,
the risks of obtaining necessary licenses and permits; diminishing
quantities or grades of reserves; adverse changes in our credit
ratings; and contests over title to properties, particularly title
to undeveloped properties. In addition, there are risks and hazards
associated with the business of gold exploration, development and
mining, including environmental hazards, industrial accidents,
unusual or unexpected formations, pressures, cave-ins, flooding and
gold bullion losses (and the risk of inadequate insurance, or the
inability to obtain insurance, to cover these risks). Many of these
uncertainties and contingencies can directly or indirectly affect,
and could cause, Kinross’ actual results to differ materially from
those expressed or implied in any forward-looking statements made
by, or on behalf of, Kinross, including but not limited to
resulting in an impairment charge on goodwill and/or assets. There
can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of
providing information about management’s expectations and plans
relating to the future. All of the forward-looking statements made
in this news release are qualified by this cautionary statement and
those made in our other filings with the securities regulators of
Canada and the United States including, but not limited to, the
cautionary statements made in the “Risk Analysis” section of our
MD&A for the year ended December 31, 2019 and the Annual
Information Form dated March 30, 2020. These factors are not
intended to represent a complete list of the factors that could
affect Kinross. Kinross disclaims any intention or obligation to
update or revise any forward-looking statements or to explain any
material difference between subsequent actual events and such
forward-looking statements, except to the extent required by
applicable law.
Key Sensitivities
Approximately 70%-80% of the Company's costs are denominated in
U.S. dollars.
A 10% change in foreign currency exchange rates would be
expected to result in an approximate $14 impact on production cost
of sales per ounce.9
Specific to the Russian rouble, a 10% change in the exchange
rate would be expected to result in an approximate $15 impact on
Russian production cost of sales per ounce.
Specific to the Brazilian real, a 10% change in the exchange
rate would be expected to result in an approximate $25 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 $2 impact on production cost of sales per
ounce.
A $100 change in the price of gold would be
expected to result in an approximate $4 impact on production cost
of sales per ounce as a result of a change in royalties.
Other information
Where we say "we", "us", "our", the "Company",
or "Kinross" in this news release, we mean Kinross Gold Corporation
and/or one or more or all of its subsidiaries, as may be
applicable.
The technical information about the Company’s
mineral properties contained in this news release has been prepared
under the supervision of Mr. John Sims, an officer of the Company
who is a “qualified person” within the meaning of National
Instrument 43-101.
Source: Kinross Gold Corporation
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