Kinross Gold Corporation (TSX: K, NYSE: KGC) (“Kinross” or the
“Company”) today announced its results for the fourth quarter and
year ended December 31, 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 25 of this release. All
dollar amounts are expressed in U.S. dollars, unless otherwise
noted.)
2020 full-year results and
guidance:
|
2020 guidance (+/- 5%) |
2020 full-year results |
2021 guidance (+/- 5%) |
Gold equivalent
production1(ounces) |
2.4 million |
2.4 million |
2.4 million |
Production cost of sales1, 2 ($ per Au eq.
oz.) |
$720 |
$723 |
$790 |
All-in sustaining cost1, 2($ per Au eq. oz.) |
$970 |
$987 |
$1,025 |
Capital expenditures |
$900 million |
$916 million |
$900 million |
- Expect to increase production1 20%
to 2.9 million Au eq. oz. in 2023 and produce1 an average of 2.5
million Au eq. oz. per year to 2029.
2020 Q4 and full-year
highlights:
- Production1,2 of
624,032 Au eq. oz. produced in Q4 2020 and 2,366,648 Au eq. oz. in
2020.
- Production cost of
sales1,2 of $682 per Au eq. oz. in Q4 2020 and $723 per Au
eq. oz. in 2020.
- All-in sustaining
cost1,2 of $1,013 per Au eq. oz. sold in Q4 2020 and $987
per Au eq. oz. sold in 2020.
- Attributable
margins3 increased 61% to $1,193 per Au eq. oz. sold in Q4
2020, and 53% to $1,051 per Au eq. oz. sold for 2020, compared with
Q4 2019 and 2019, respectively, with both increases outpacing the
rise in average realized gold price2.
- Adjusted operating cash
flow2 increased to $527.6 million in Q4 2020 compared with
Q4 2019, and increased 59% for 2020 to $1,912.7 million compared
with 2019. Operating cash flow of $681.1 million
in Q4 2020 and $1,957.6 million in 2020.
- Free cash flow2
quarterly and full-year records of $382.8 million and $1,041.5
million, respectively.
- Reported net
earnings4 of $783.3 million, or $0.62 per share in Q4
2020, and $1,342.4 million, or $1.07 per share, in 2020.
- Adjusted net
earnings2 of $335.1 million, or $0.27 per share in Q4
2020, and $966.8 million, or $0.77 per share, in 2020. Adjusted net
earnings more than doubled quarter-over-quarter and
year-over-year.
- Cash and cash
equivalents of $1,210.9 million, and total
liquidity of $2.8 billion at December 31,
2020.
- Kinross’ Board of Directors
declared a quarterly dividend of $0.03 per common
share payable on March 18, 2021 to shareholders of record
at the close of business on March 3, 2021.
Operations highlights:
- Maintained operations throughout
2020 and delivered on original annual production, cost and capital
expenditures guidance despite the impact of COVID-19 across the
global portfolio.
- Three largest producing mines –
Paracatu, Kupol and
Tasiast – represented 62% of production and were
the lowest cost mines in the portfolio in 2020 for the second year
in a row.
- Tasiast delivered
record production and costs in 2020 for the second consecutive
year, and is expected to increase throughput to 21,000 tonnes per
day by year-end with the Tasiast 24k project.
- Fort Knox Gilmore project completed
on time and under budget, with newly-acquired “bolt-on” Peak
project advancing well.
Environment, Social, Governance
(ESG):
- Successfully managing the risks
associated with the COVID-19 pandemic by implementing rigorous
safety measures across global portfolio and provided approximately
$6 million towards host community efforts to combat COVID-19.
- ESG performance ranked in the top
quartile of peer group, as measured by Sustainalytics, MSCI, ISS,
Vigeo, Refinitiv and S&P’s Dow Jones Sustainability Index.
Kinross was also recognized as the top mining company in The Globe
and Mail’s annual corporate governance ranking.
- Improved climate change disclosures
and benchmarked against the recommendations made by the Task Force
on Climate-related Financial Disclosures (TCFD), and included
Sustainability Accounting Standards Board (SASB) metrics in most
recent Sustainability Report.
- Kinross continued to generate
significant economic benefits to host countries through taxes,
support of local suppliers and employment, with approximately 98%
of Kinross employees from its host countries.
- Safety performance was in line with
three-year averages, with safety rates among the lowest in the
industry. This was overshadowed by the first mine-site fatality at
Kinross since 2017.
________________________1 Unless otherwise stated, production,
production cost of sales per Au eq. oz., and all-in-sustaining
costs per Au eq. oz., in this news release are based onKinross’ 90%
share of Chirano production and costs, and 70% share of Peak
costs.2 These figures are non-GAAP financial measures and are
defined and reconciled on pages 18 to 24 of this news release. 3
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.”4 Net earnings figures in this release
represent “net earnings from continuing operations attributable to
common shareholders”.
CEO Commentary:J. Paul
Rollinson, President and CEO, made the following comments in
relation to 2020 fourth-quarter and year-end results:
“Kinross delivered an excellent year in 2020,
generating record free cash flow of more than $1 billion from our
diversified portfolio of mines. We met our original guidance for
the ninth consecutive year despite the impacts of the global
pandemic. Kinross managed COVID-19 risks by implementing rigorous
measures to keep our employees safe, maintain business continuity
and support local communities. I would like to thank our workforce
around the world for meeting the challenges of the pandemic. Our
ability to quickly adapt and safely execute our plans in a
difficult environment speaks to the strong culture of operational
excellence we have built at Kinross.
“Operationally, our three largest mines –
Paracatu, Kupol and Tasiast – produced 62% of our total ounces and
were the lowest cost mines in our portfolio in 2020. Tasiast was a
standout performer and achieved record annual production and low
costs for the second consecutive year. We also added 5.7 million
ounces to our mineral reserve estimates after depletion as a result
of successful exploration and mine optimization programs. Kinross
made good progress at our projects, including Tasiast 24k and La
Coipa, and added to our portfolio with the acquisition of the
Chulbatkan and Peak projects. Construction at the Fort Knox Gilmore
project was completed on time and under budget and we continued to
advance Udinsk and Lobo-Marte.
“During the year, we continued to strengthen our
investment grade balance sheet, more than doubled our adjusted net
earnings to approximately $970 million, and increased our margins
by 53% to $1,051 per ounce, which outpaced the increase in the
average realized gold price. We also instituted a sustainable
quarterly dividend to return capital to shareholders, which
underscores the strength of our financial position.
“Kinross delivered on our ESG commitments in
2020, with our ESG performance ranked in the top quartile of our
peer group, as measured by independent third-party organizations.
We continued to generate significant economic benefits to our host
countries through taxes, support of local suppliers and
employment.
“Looking forward, we expect to continue our
consistent performance in 2021 and have provided solid guidance for
the year. We expect production to grow by 20% to 2.9 million ounces
in 2023, and to produce an average of 2.5 million ounces annually
to 2029, putting us in excellent position to continue generating
value.”
Financial results
Summary of financial and operating
results
|
Three months ended |
Years ended |
|
December 31, |
December 31, |
(in millions of U.S. dollars, except ounces, per share amounts, and
per ounce amounts) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Operating Highlights |
|
|
|
|
Total gold equivalent ounces(a) |
|
|
|
|
Produced(c) |
|
627,944 |
|
|
650,242 |
|
|
2,383,307 |
|
|
2,527,788 |
|
Sold(c) |
|
637,169 |
|
|
670,917 |
|
|
2,375,548 |
|
|
2,512,758 |
|
|
|
|
|
|
Attributable gold equivalent ounces(a) |
|
|
|
|
Produced(c) |
|
624,032 |
|
|
645,344 |
|
|
2,366,648 |
|
|
2,507,659 |
|
Sold(c) |
|
633,149 |
|
|
666,199 |
|
|
2,358,927 |
|
|
2,492,572 |
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
Metal sales |
$ |
1,195.1 |
|
$ |
996.2 |
|
$ |
4,213.4 |
|
$ |
3,497.3 |
|
Production cost of sales |
$ |
436.5 |
|
$ |
500.5 |
|
$ |
1,725.7 |
|
$ |
1,778.9 |
|
Depreciation, depletion and amortization |
$ |
234.0 |
|
$ |
210.4 |
|
$ |
842.3 |
|
$ |
731.3 |
|
Reversals of impairment charges - net |
$ |
(602.6 |
) |
$ |
(361.8 |
) |
$ |
(650.9 |
) |
$ |
(361.8 |
) |
Operating earnings |
$ |
992.3 |
|
$ |
568.8 |
|
$ |
1,899.4 |
|
$ |
991.1 |
|
Net earnings attributable to common shareholders |
$ |
783.3 |
|
$ |
521.5 |
|
$ |
1,342.4 |
|
$ |
718.6 |
|
Basic earnings per share attributable to common shareholders |
$ |
0.62 |
|
$ |
0.41 |
|
$ |
1.07 |
|
$ |
0.57 |
|
Diluted earnings per share attributable to common shareholders |
$ |
0.62 |
|
$ |
0.41 |
|
$ |
1.06 |
|
$ |
0.57 |
|
Adjusted net earnings attributable to common shareholders(b) |
$ |
335.1 |
|
$ |
156.0 |
|
$ |
966.8 |
|
$ |
422.9 |
|
Adjusted net earnings per share(b) |
$ |
0.27 |
|
$ |
0.13 |
|
$ |
0.77 |
|
$ |
0.34 |
|
Net cash flow provided from operating activities |
$ |
681.1 |
|
$ |
408.6 |
|
$ |
1,957.6 |
|
$ |
1,224.9 |
|
Adjusted operating cash flow(b) |
$ |
527.6 |
|
$ |
387.6 |
|
$ |
1,912.7 |
|
$ |
1,201.5 |
|
Capital expenditures(d) |
$ |
298.3 |
|
$ |
297.9 |
|
$ |
916.1 |
|
$ |
1,060.2 |
|
Free cash flow(b) |
$ |
382.8 |
|
$ |
110.7 |
|
$ |
1,041.5 |
|
$ |
164.7 |
|
Average realized gold price per ounce(b) |
$ |
1,875 |
|
$ |
1,485 |
|
$ |
1,774 |
|
$ |
1,392 |
|
Consolidated production cost of sales per equivalent ounce(c)
sold(b) |
$ |
685 |
|
$ |
746 |
|
$ |
726 |
|
$ |
708 |
|
Attributable(1) production cost of sales per equivalent ounce(c)
sold(b) |
$ |
682 |
|
$ |
744 |
|
$ |
723 |
|
$ |
706 |
|
Attributable(a) production cost of sales per ounce sold on a
by-product basis(b) |
$ |
653 |
|
$ |
728 |
|
$ |
700 |
|
$ |
691 |
|
Attributable(a) all-in sustaining cost per ounce sold on a
by-product basis(b) |
$ |
991 |
|
$ |
1,041 |
|
$ |
970 |
|
$ |
974 |
|
Attributable(a) all-in sustaining cost per equivalent ounce(c)
sold(b) |
$ |
1,013 |
|
$ |
1,050 |
|
$ |
987 |
|
$ |
983 |
|
Attributable(a) all-in cost per ounce sold on a by-product
basis(b) |
$ |
1,309 |
|
$ |
1,337 |
|
$ |
1,248 |
|
$ |
1,282 |
|
Attributable(a) all-in cost per equivalent ounce(c) sold(b) |
$ |
1,322 |
|
$ |
1,340 |
|
$ |
1,260 |
|
$ |
1,284 |
|
(a) |
Total includes 100% of Chirano production. "Attributable" includes
Kinross' share of Chirano (90%) and Peak (70%) production and
costs. |
(b) |
The definition and reconciliation of these non-GAAP financial
measures is included on pages 18 to 24 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
2020 was 86.32:1 (2019 - 85.99:1). The ratio for Q4 2020 was
77.02:1 (Q4 2019 – 85.59:1). |
(d) |
“Capital expenditures” is as reported as “Additions to property,
plant and equipment” on the consolidated statements of cash flows
and excludes “Interest paid capitalized to property, plant and
equipment”. |
The following operating and financial results are based on
fourth-quarter and year-end 2020 gold equivalent production.
Production and cost measures are on an attributable basis:
Production1,2: Kinross produced
624,032 attributable Au eq. oz. in Q4 2020, compared with 645,344
Au eq. oz. in Q4 2019. The slight decrease was largely due to lower
production at Bald Mountain, Round Mountain and Chirano, largely
offset by increases at Tasiast and Paracatu.
Over the full year, Kinross produced 2,366,648
Au eq. oz., in line with the Company’s annual guidance, compared
with full-year 2019 production of 2,507,659 Au eq. oz. The decrease
was consistent with plan and was a result of lower production at
Paracatu, Round Mountain and Chirano, partially offset by higher
production at Fort Knox and Tasiast.
Average realized gold price2:
The average realized gold price in Q4 2020 increased 26% to $1,875
per ounce, compared with $1,485 per ounce in Q4 2019.
The average realized gold price per ounce
increased 27% to $1,774 for full-year 2020, compared with $1,392
per ounce for full-year 2019.
Revenue: During the fourth
quarter, revenue increased 20% to $1,195.1 million, compared with
$996.2 million during the same period in 2019.
Revenue for full-year 2020 increased 20% to
$4,213.4 million, compared with $3,497.3 million for full-year
2019.
Production cost of
sales1, 2: Production cost of sales per
Au eq. oz. decreased to $682 for Q4 2020 compared with $744 for the
same period in 2019, mainly as a result of lower costs at Paracatu,
Fort Knox and Round Mountain, partially offset by higher costs at
Tasiast and Chirano.
Production cost of sales per Au eq. oz. was $723
for full-year 2020, which was in line with guidance, compared with
$706 per Au eq. oz. for full-year 2019. The increase was mainly due
to higher costs at Chirano.
Production cost of sales per Au oz. on a
by-product basis was $653 in Q4 2020 compared with $728 in Q4 2019,
based on attributable gold sales of 618,221 ounces and attributable
silver sales of 1,149,687 ounces.
Production cost of sales per Au eq. oz. on a
by-product was $700 for full-year 2020, compared with $691 for
full-year 2019, based on 2020 attributable gold sales of 2,307,735
ounces and attributable silver sales of 4,425,708 ounces.
Margins3:
Kinross’ attributable margin per Au eq. oz. sold increased by 61%
to $1,193 for Q4 2020, compared with the Q4 2019 margin of $741,
which is significantly higher than the 26% quarterly year-over-year
increase in average realized gold price.
Full-year 2020 margin per Au eq. oz. sold
increased 53% to $1,051, compared with $686 for full-year 2019,
outpacing the 27% year-over-year increase in average realized gold
price.
All-in sustaining cost1, 2:
All-in sustaining cost per Au eq. oz. sold decreased to $1,013 in
Q4 2020, compared with $1,050 in Q4 2019. All-in sustaining cost
per Au eq. oz. sold was $987 for full-year 2020, which is within
the 2020 guidance range, compared with $983 for full-year 2019.
All-in sustaining cost per Au oz. sold on a
by-product basis decreased to $991 in Q4 2020, compared with $1,041
in Q4 2019. All-in sustaining cost per Au oz. sold on a by-product
basis was $970 for full-year 2020, in line with $974 in the
previous year.
Operating cash flow: Adjusted
operating cash flow2 for Q4 2020 increased by 36% to $527.6
million, compared with $387.6 million for Q4 2019.
Adjusted operating cash flow2 for the full year
increased 59% to $1,912.7 million compared with $1,201.5 million
the previous year, primarily due to an increase in margins.
Net operating cash flow increased 67% to $681.1
million for Q4 2020, compared with $408.6 million for Q4 2019. Net
operating cash flow for full-year 2020 was $1,957.6 million, a 60%
increase compared with $1,224.9 million for full-year 2019.
Free cash
flow2: Free cash flow more than tripled
to $382.8 million in Q4 2020, a quarterly record, compared with
$110.7 million for Q4 2019.
Kinross delivered record free cash flow of
$1,041.5 million for full-year 2020, which was significantly higher
compared with $164.7 million the previous year.
Earnings: Adjusted net
earnings2 more than doubled to $335.1 million, or $0.27 per share,
for Q4 2020, compared with $156.0 million, or $0.13 per share, for
Q4 2019.
Full-year 2020 adjusted net earnings2 more than
doubled to $966.8 million, or $0.77 per share, compared with
adjusted net earnings of $422.9 million, or $0.34 per share, for
full-year 2019, mainly due to higher margins partially offset by an
increase in depreciation, depletion and amortization and income tax
expense.
Reported net earnings4 increased 50% to $783.3
million, or $0.62 per share, for Q4 2020, compared with $521.5
million, or $0.41 per share, for Q4 2020.
Reported net earnings4 in full-year 2020
increased 87% to $1,342.4 million, or $1.07 per share, compared
with $718.6 million, or $0.57 per share, in 2019. The increase was
primarily as a result of the increase in operating earnings,
including impairment reversals, partially offset by the increase in
income tax expense.
Included in reported net earnings in 2020 is a
non-cash, after-tax impairment reversal of $612.8 million at
Tasiast, Lobo-Marte and Chirano of $299.5 million, $180.4 million,
and $132.9 million, respectively. The impairment reversals were
related to property, plant and equipment mainly due to higher
long-term gold price assumptions.
Capital expenditures: Capital
expenditures were $298.3 million for Q4 2020, compared with $297.9
million for Q4 2019.
Capital expenditures for full-year 2020 were
$916.1 million, within the Company’s annual guidance, and a $144.1
million decrease compared with $1,060.2 in 2019. The decrease was
primarily as a result of reduced spending at Tasiast and the
completion of the Bald Mountain Vantage Complex project and the
construction of the Round Mountain Phase W project in 2019. These
decreases were partially offset by additional mining equipment
purchased at Paracatu.
Balance sheet
As of December 31, 2020, Kinross had cash and
cash equivalents of $1,210.9 million, compared with $575.1 million
at December 31, 2019. The increase was primarily due to strong cash
flow and the $200 million drawdown on the Tasiast project
financing. The increase in Kinross’ cash position was partially
offset by the first 50% payment for the Chulbatkan acquisition5,
payment for the 70% interest in the Peak development project, along
with the $100 million in debt repayments on the revolving credit
facility, and total interest and dividend payments.
The Company had additional available credit of
$1,563.6 million as of December 31, 2020 and total liquidity of
approximately $2.8 billion. Kinross had total debt of approximately
$1.9 billion at year-end 2020, of which $500 million in senior
notes are due in September 2021, which the Company intends to
repay.
Kinross has further improved its debt metrics,
including its net debt to EBITDA ratio, and continues to prioritize
maintaining and strengthening its investment grade balance
sheet.
________________________5 The second 50% payment
was made in January 2021, which the Company also paid in cash.
Operating resultsMine-by-mine
summaries for 2020 fourth-quarter and full-year operating results
may be found on pages 13 and 17 of this news release. Highlights
include the following:
Americas
Paracatu production for the
full year decreased compared with the record production in the
previous year mainly due to anticipated lower recoveries and
throughput as result of the mine plan, partially offset by higher
grades. Full-year cost of sales per ounce sold was largely in line
with 2019. Paracatu finished the year with a strong fourth quarter,
increasing production and lowering cost of sales per ounce sold
compared with Q3 2020. The production increase in Q4 2020 was
mostly due to higher mill grades, while cost of sales per ounce
sold was lower mainly due to higher production and lower
maintenance costs. Mine plan optimization work at Paracatu added
911 Au koz. to its mineral reserve estimates before depletion,
extending mine life by one year to 2032.
At Round Mountain, full-year
production was lower compared with 2019 mainly due to anticipated
lower mill grades related to mine sequencing, while full-year cost
of sales per ounce sold decreased primarily due to lower operating
waste mined. In Q4 2020, production increased compared with the
previous quarter mainly as a result of higher grades, mill
recoveries and ounces recovered from the heap leach pads. Cost of
sales per ounce sold increased quarter-over-quarter, which was
mostly due to higher operating waste mined, which was anticipated
as part of the mine sequencing and is expected to continue in
2021.
At Bald Mountain, full-year
production increased slightly compared with 2019 mainly due to
higher grades. Cost of sales per ounce sold increased
year-over-year primarily as a result of higher operating waste
mined. Bald Mountain finished the year well, with production
largely in line quarter-over-quarter, while cost of sales per ounce
sold decreased, mainly due to lower maintenance costs.
Fort Knox performed well in
2020, as full-year production increased year-over-year, mainly as a
result of higher mill grades and mill throughput. Cost of sales per
ounce sold for full-year 2020 was largely in line with the previous
year. In Q4 2020, production and cost of sales per ounce sold were
lower quarter-over-quarter mainly due to an anticipated decrease in
mill grades and a re-sequencing in mining which prioritized capital
stripping. Construction at the Gilmore project was completed on
time and under budget, and first production from the new heap leach
pad was achieved in January 2021.
Russia
The Russia region continued to perform well in
2020 while managing pandemic-related challenges as remote,
camp-based operations. The combined full-year production at
Kupol and Dvoinoye decreased
slightly compared with full-year 2019, mainly as a result of
anticipated lower grades. Full-year cost of sales per ounce sold
was in line with the previous year. Production during Q4 2020
increased compared with the previous quarter, mainly due to higher
grades. Cost of sales per ounce sold was higher versus Q3 2020
mainly as a result of an increase in mine cost per tonne at
Dvoinoye, as the last tonnes were mined in November 2020. Although
mining activities were completed at Dvoinoye as planned, stockpiles
are expected to be processed at the Kupol mill over the next three
years. Kupol’s brownfields exploration program once again added to
the mine’s mineral reserve estimates and extended mine life by one
year to 2025, with opportunities for further mine life
extensions.
West Africa
In 2020, Tasiast delivered
record high annual production and record low cost of sales per
ounce sold for the second consecutive year. The mine performed well
in 2020 despite the impacts of COVID-19 and the strike in Q2 2020,
and finished the year with a strong fourth quarter. Full-year
production increased compared with the previous year mainly due to
higher mill throughput and grades, while full-year cost of sales
per ounce sold decreased mainly as a result of higher production.
Tasiast achieved record quarterly production in Q4 2020 primarily
as a result of higher mill throughput. Tasiast also reduced cost of
sales per ounce quarter-over-quarter mainly due to lower processing
costs.
At Chirano, full-year
production decreased compared with 2019 mainly due to lower grades,
throughput and recoveries. Full-year cost of sales per ounce sold
was higher mainly due to higher milling and maintenance costs. In
Q4 2020, production was lower quarter-over-quarter mainly due to
lower grades from the underground operations. Cost of sales per
ounce sold decreased quarter-over-quarter primarily as a result of
lower power and milling costs. The exploration program at Chirano
continued to yield excellent results and added to the operation’s
mineral reserve estimates, helping extend mine life by three years
to 2025, with opportunities for further mine life extensions.
Company Guidance The following
section of the news release represents forward-looking information
and users are cautioned that actual results may vary. We refer to
the risks and assumptions contained in the Cautionary Statement on
Forward-Looking Information on page 25 of this news release.
Production
guidance1
In 2021, Kinross expects to produce 2.4 million
Au eq. oz. (+/- 5%) from its operations, which is consistent with
2020 production. In 2022 and 2023, annual production is expected to
increase to approximately 2.7 million Au eq. oz. and 2.9 million Au
eq. oz., respectively.
Annual gold equivalent production guidance(+/-
5%) |
2021 |
2.4 million oz. |
2022 |
2.7 million oz. |
2023 |
2.9 million oz. |
Kinross’ 2021 production forecast was impacted
by the expected deferred production of approximately 100k Au eq.
oz. at Tasiast from 2021 to 2022 due to lower mining rates as a
result of COVID-19 impacts in 2020 and the strike in Q2 2020.
In 2021, production is expected to progressively
increase quarter-over-quarter, largely driven by higher expected
production in the second half of the year at Tasiast. The Company’s
three largest mines – Paracatu, Kupol and Tasiast – are expected to
account for approximately 60% of the total production in 2021 and
are expected to be the lowest cost mines in the portfolio.
The expected production growth in 2022 and 2023
represents additional ounces enabled by planned life of mine
extensions and projects resulting from the Company’s previous
three-year major capital reinvestment phase, which established a
low-risk and timely platform for growth in the current gold price
environment. Kinross’ comprehensive continuous improvement
programs, which have enhanced productivity and operational
efficiencies, and its exploration strategy focused on promising
prospects around existing operations, also contributed to the
anticipated production increase.
Cost of sales
guidance1
Production cost of sales is expected to be $790
per Au eq. oz. (+/- 5%) for 2021. The year-over-year increase is
mainly due to higher operating waste mined as a result of planned
mine sequencing, particularly at the U.S. mines and at Tasiast in
the second half of the year. The delayed access to higher grade ore
at Tasiast as a result of COVID-19 impacts and a decrease in
low-cost ounces from Dvoinoye, which completed mining in November
2020 as planned, also affected 2021 cost of sales guidance. Cost of
sales per ounce is expected to increase quarter-over-quarter during
the year, largely driven by anticipated increases in operating
waste mined.
Cost of sales per ounce sold is expected to
decrease in 2022 and return to levels that are largely in line with
2020. The decrease is expected to be driven by lower-cost ounces
from Tasiast and La Coipa in 2022 and higher total production.
The Company expects all-in sustaining cost to be
$1,025 per ounce sold (+/- 5%) on both a gold equivalent and
by-product basis for 2021. The increase is mainly driven by the
expected higher cost of sales per ounce.
2021 by-product production and cost
guidance
Accounting basis |
|
2021 Guidance(+/- 5%) |
Gold equivalent
basis |
|
|
Production (Au eq. oz.)1,2 |
|
2.4 million |
Average production cost of sales per Au eq. oz. 1,2 |
|
$790 |
All-in sustaining cost per Au eq. oz. 1,2 |
|
$1,025 |
By-product
basis |
|
|
Gold ounces1 |
|
2.4 million |
Silver ounces |
|
4.0 million |
Average production cost of sales per Au oz. 1,2 |
|
$770 |
2021 regional production and cost
guidance1
Region |
Forecast 2021production (Au eq. oz.) |
Percentage of totalforecast production6 |
Forecast 2021 productioncost of sales (per Au eq.
oz.)2 |
Americas |
|
1.4 million (+/- 5%) |
|
|
58% |
|
|
$800 (+/- 5%) |
|
West Africa (attributable) |
|
520,000 (+/- 10%) |
|
|
22% |
|
|
$870 (+/- 10%) |
|
Russia |
|
480,000 (+/- 5%) |
|
|
20% |
|
|
$650 (+/- 5%) |
|
Total |
|
2.4 million (+/- 5%) |
|
|
100% |
|
|
$790 (+/- 5%) |
|
Material assumptions used to forecast 2021 production cost of
sales are as follows:
- a gold price of $1,500 per
ounce;
- a silver price of $20 per
ounce;
- an oil price of $55 per
barrel;
- foreign exchange rates of:
- 5.0 Brazilian reais to the U.S.
dollar;
- 1.30 Canadian dollars to the U.S.
dollar;
- 70 Russian roubles to the U.S.
dollar;
- 725 Chilean pesos to the U.S.
dollar;
- 5.50 Ghanaian cedis to the U.S.
dollar;
- 35 Mauritanian ouguiyas to the U.S.
dollar; and
- 0.90 U.S. dollar to the Euro.
Taking into account existing currency and oil hedges:
- a 10% change in foreign currency
exchange rates would be expected to result in an approximate $14
impact on production cost of sales per ounce7;
- specific to the Russian rouble, a
10% change in this 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 this 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 $3
impact on production cost of sales per ounce; and
- a $100 change in the price of gold
would be expected to result in an approximate $5 impact on
production cost of sales per ounce as a result of a change in
royalties.
________________________6 The percentages are
calculated based on the mid-point of regional 2020 forecast
production.7 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.
Capital expenditures
guidance
Total capital expenditures for 2021 are forecast
to be approximately $900 million (+/- 5%) and are summarized in the
table below.
Kinross’ capital expenditures outlook for 2022
and 2023 is $800 million and $700 million, respectively,
and is based on Kinross’ current baseline production guidance.
However, as previously indicated, capital expenditures for 2022 and
2023 exclude additional opportunities in the Company’s pipeline and
are therefore expected to increase to approximate 2021 levels if
additional projects are approved, including Round Mountain Phase S,
Peak, Lobo-Marte and other projects.8
Region |
Forecast 2021sustaining capital
(million) |
Forecast 2021non-sustaining
capital(million) |
Total forecast capital (+/- 5%) (million) |
Americas |
|
$270 |
|
|
$295 |
|
|
$565 |
|
West Africa |
|
$40 |
|
|
$225 |
|
|
$265 |
|
Russia |
|
$25 |
|
|
$40 |
|
|
$65 |
|
Corporate |
|
$5 |
|
|
$0 |
|
|
$5 |
|
TOTAL |
|
$340 |
|
|
$560 |
|
|
$900 |
|
2021 sustaining capital includes the following
forecast spending estimates:
|
$70 million (Americas); $10 million (Russia); $10 million (West
Africa) |
|
$75 million (Americas); $10 million (Russia); $5 million (West
Africa) |
|
$40 million |
|
$25 million (Americas); $10 million (West Africa) |
|
$30 million (Americas) |
2021 non-sustaining capital includes the
following forecast spending estimates:
|
$180 million |
- Development and growth projects and studies:
|
$130 million |
- Tasiast West Branch stripping:
|
$125 million |
|
$75 million |
- Round Mountain Phase W stripping:
|
$30 million |
- Fort Knox Gilmore stripping:
|
$20 million |
________________________8 Kinross’ capital expenditures
estimates for 2021 – 2023 includes preliminary capital estimates of
approximately $330 million for the Udinsk project.
Other 2021 guidance
The 2021 forecast for
exploration is approximately $120 million, all of
which is expected to be expensed. The increase compared with
full-year 2020 will facilitate an enhanced program to follow-up on
2020’s exploration success and exploration projects acquired in
2020, such as the Kayenmyvaam and Kavralyanskaya projects near
Kupol, Chulbatkan, and the Peak development project in Alaska.
The 2021 forecast for overhead (general
and administrative and business development expenses) is
approximately $155 million, which is largely in line with last
year’s guidance. The Company has made cost improvements over recent
years, with 2021 annual overhead guidance down $50 million over the
past five years.
Other operating costs expected
to be incurred in 2021 are approximately $150 million, which are
principally due to $70 million in pandemic-related mitigation
measures.
Based on an assumed gold price of $1,500 per
ounce and other budget assumptions, tax expense is
expected to be $140 million and taxes paid is
expected to be $200 million. Adjusting the Brazilian real and
Russian rouble to the respective exchange rates of 5.20 and 74 to
the U.S. dollar in effect at December 31, 2020, tax expense would
be expected to be $160 million. Tax expense is expected to increase
by 26% of any profit resulting from higher gold prices. Taxes paid
is expected to increase by a range of $20 million to $26 million
for every $100 increase in the realized gold price.
Depreciation, depletion and
amortization is forecast to be approximately $390 (+/-5%)
per Au eq. oz.
Interest paid is forecast to be
approximately $110 million, which includes $55 million of
capitalized interest.
Environment, Social, Governance
highlights (ESG)
Kinross continued to deliver on its ESG
commitments in 2020, with the Company’s performance attributable to
its values, strong policies and governance systems. ESG is embedded
in Kinross’ culture, strategy and operations, and directly
contributes to its license to operate.
The Company’s ESG performance consistently ranks
in the top quartile of its peer group, as measured by
Sustainalytics, MSCI, ISS, Vigeo, Refinitiv and S&P’s Dow Jones
Sustainability Index. Kinross was recognized through inclusion in
the S&P Global Sustainability Yearbook 2021, marking the
Company’s eighth consecutive year in the industry’s top 10 for ESG
performance, and its “A” level rating by MSCI. As a World Gold
Council member, Kinross played an active role in the development of
the Responsible Gold Mining Principles and is making good progress
on the process of conformance.
Managing the risks associated with the COVID-19
pandemic was a key area of focus in 2020, as the Company
implemented rigorous safety measures across its global portfolio to
safeguard its workforce. Kinross provided approximately $6 million
in the communities where the Company operates towards efforts to
combat COVID-19 impacts, including support for health
services, food security and bolstering local economies. By ensuring
operational continuity, Kinross also maintained the economic
benefits that its operations provide to host countries and
communities during a challenging time.
Despite the impact of COVID-19, Kinross’ overall
2020 safety performance was in line with its three-year averages,
with injury frequency rates among the lowest in the industry. This
was overshadowed by a mine site fatality at Round Mountain, the
first for the Company since 2017. Immediately following the
incident Kinross held a global Safety Stand-down to reflect,
reiterate the importance of safety, identify tangible actions to
continually improve processes, and share insights and best
practices across its global portfolio.
Kinross’ strong record of
environmental performance was illustrated in World
Wildlife Fund (WWF) Russia’s environmental transparency rating of
mining and metals companies, ranking first in three of the past
four years, including the top ranking in 2020. In Alaska, Kinross’
successful reclamation of the True North mine, the first large
metal mine to be returned to the State and opened for public
access, was publicly endorsed by the Alaska Department of Natural
Resources and continues a long and successful track record of
responsible reclamation by the Company.
Kinross continued to improve its disclosure on
climate, including benchmarking against the
recommendations made by the Task Force on Climate-related Financial
Disclosures (TCFD). In 2020, the Company conducted a climate risk
and opportunity assessment across all sites, including scenario
analysis of projected climate change.
Social engagement was strong
despite the limitations imposed by COVID-19 restrictions, with
approximately 105,000 stakeholder interactions conducted during
2020. Kinross continued to provide significant economic benefits
through taxes, support of local suppliers and employment, with more
than 98% of Kinross employees from its host countries. The
Company’s community investments supported over 938,000
beneficiaries during the year. Kinross also advanced its
inclusion and diversity goals in 2020, with 33%
female representation on the Board, and a commitment to Canada’s
BlackNorth Initiative and its anti-racism pledge.
In the area of corporate
governance, Kinross maintained its strong
performance. The Company’s Board of Directors succession program
has brought in seven new directors since 2015 and enabled effective
succession planning. The Company was also recognized as the top
mining company in The Globe and Mail’s annual corporate governance
ranking.
For more information on Kinross’ sustainability
performance, see the Company’s 2019 Sustainability Report,
published in August 2020. The Report follows the Global Reporting
Initiative (GRI) framework, fulfills Kinross’ commitment as a
participant in the UN Global Compact and, for the first time,
included indicators and metrics from the SASB (Sustainability
Accounting Standards Board) Metals and Mining Standard.
Board update
Mr. John A. Brough, who had been a Kinross Board
member since 1994 and was the Chair of the Board’s Audit and Risk
Committee for many years, retired effective December 31, 2020.
Kinross’ management and Board would like to thank Mr. Brough for
his long and distinguished directorship on the Board and his many
significant contributions to the Company.
As previously disclosed, Mr. Glenn A. Ives has
assumed the role of Chair of the Audit and Risk Committee.
Conference call details
In connection with this news release, Kinross
will hold a conference call and audio webcast on Thursday, February
11, 2021 at 8 a.m. ET to discuss the results, followed by a
question-and-answer session. To access the call, please dial:
Canada & US toll-free – +1
(833) 968-2237; Passcode: 9694745Outside of Canada &
US – +1 (825) 312-2059; Passcode: 9694745
Replay (available up to 14 days after the
call):
Canada & US toll-free – +1
(800) 585-8367; Passcode: 9694745Outside of Canada &
US – +1 (416) 621-4642; Passcode: 9694745
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 our website at
www.kinross.com.
This release should be read in conjunction with
Kinross’ 2020 year-end Financial Statements and Management’s
Discussion and Analysis report at www.kinross.com. Kinross’ 2020
year-end Financial Statements and Management’s Discussion and
Analysis have been filed with Canadian securities regulators
(available at www.sedar.com) and furnished with the U.S. Securities
and Exchange Commission (available at www.sec.gov). Kinross
shareholders may obtain a copy of the financial statements free of
charge upon request to the Company.
About Kinross Gold Corporation
Kinross is a Canadian-based senior gold mining
company with mines and projects in the United States, Brazil,
Russia, Mauritania, Chile and Ghana. Our focus is on delivering
value based on the core principles of operational excellence,
balance sheet strength, disciplined growth and responsible mining.
Kinross maintains listings on the Toronto Stock Exchange (symbol:K)
and the New York Stock Exchange (symbol:KGC).
Media Contact Louie DiazVice-President,
Corporate Communicationsphone:
416-369-6469louie.diaz@kinross.com
Investor Relations ContactTom
Elliott Senior
Vice-President, Investor Relationsphone:
416-365-3390 tom.elliott@kinross.com
Review of operations
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended December 31, |
Gold equivalent ounces |
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost ofsales ($millions) |
|
Production cost ofsales/equivalentounce sold |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
57,523 |
|
53,183 |
|
|
57,849 |
|
55,040 |
|
|
$ |
51.1 |
|
$ |
65.9 |
|
|
$ |
883 |
|
$ |
1,197 |
|
Round Mountain |
89,422 |
|
103,501 |
|
|
89,709 |
|
108,402 |
|
|
|
62.2 |
|
|
79.3 |
|
|
|
693 |
|
|
732 |
|
Bald Mountain |
51,487 |
|
66,147 |
|
|
57,087 |
|
65,381 |
|
|
|
45.4 |
|
|
49.8 |
|
|
|
795 |
|
|
762 |
|
Paracatu |
148,218 |
|
140,224 |
|
|
150,881 |
|
140,430 |
|
|
|
91.2 |
|
|
111.1 |
|
|
|
604 |
|
|
791 |
|
Maricunga |
414 |
|
3,221 |
|
|
2,035 |
|
17,455 |
|
|
|
1.1 |
|
|
11.7 |
|
|
|
541 |
|
|
670 |
|
Americas Total |
347,064 |
|
366,276 |
|
|
357,561 |
|
386,708 |
|
|
|
251.0 |
|
|
317.8 |
|
|
|
702 |
|
|
822 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
130,731 |
|
132,009 |
|
|
131,541 |
|
135,083 |
|
|
|
79.1 |
|
|
83.3 |
|
|
|
601 |
|
|
617 |
|
Russia Total |
130,731 |
|
132,009 |
|
|
131,541 |
|
135,083 |
|
|
|
79.1 |
|
|
83.3 |
|
|
|
601 |
|
|
617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
111,028 |
|
102,973 |
|
|
107,865 |
|
101,940 |
|
|
|
60.8 |
|
|
50.4 |
|
|
|
564 |
|
|
494 |
|
Chirano (100%) |
39,121 |
|
48,984 |
|
|
40,202 |
|
47,186 |
|
|
|
45.6 |
|
|
49.0 |
|
|
|
1,134 |
|
|
1,038 |
|
West Africa Total |
150,149 |
|
151,957 |
|
|
148,067 |
|
149,126 |
|
|
|
106.4 |
|
|
99.4 |
|
|
|
719 |
|
|
667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
627,944 |
|
650,242 |
|
|
637,169 |
|
670,917 |
|
|
|
436.5 |
|
|
500.5 |
|
|
|
685 |
|
|
746 |
|
Less Chirano non-controlling interest (10%) |
(3,912 |
) |
(4,898 |
) |
|
(4,020 |
) |
(4,718 |
) |
|
|
(4.6 |
) |
|
(4.9 |
) |
|
|
|
Attributable Total |
624,032 |
|
645,344 |
|
|
633,149 |
|
666,199 |
|
|
$ |
431.9 |
|
$ |
495.6 |
|
|
$ |
682 |
|
$ |
744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
Gold equivalent ounces |
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost ofsales ($millions) |
|
Production cost ofsales/equivalentounce sold |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
237,925 |
|
200,263 |
|
|
238,349 |
|
200,323 |
|
|
$ |
251.3 |
|
$ |
213.7 |
|
|
$ |
1,054 |
|
$ |
1,067 |
|
Round Mountain |
324,277 |
|
361,664 |
|
|
319,228 |
|
360,739 |
|
|
|
219.6 |
|
|
250.6 |
|
|
|
688 |
|
|
695 |
|
Bald Mountain |
191,282 |
|
187,961 |
|
|
186,549 |
|
177,802 |
|
|
|
155.9 |
|
|
136.6 |
|
|
|
836 |
|
|
768 |
|
Paracatu |
542,435 |
|
619,563 |
|
|
541,506 |
|
619,009 |
|
|
|
358.9 |
|
|
412.3 |
|
|
|
663 |
|
|
666 |
|
Maricunga |
3,546 |
|
38,601 |
|
|
8,947 |
|
43,756 |
|
|
|
3.7 |
|
|
31.5 |
|
|
|
414 |
|
|
720 |
|
Americas Total |
1,299,465 |
|
1,408,052 |
|
|
1,294,579 |
|
1,401,629 |
|
|
|
989.4 |
|
|
1,044.7 |
|
|
|
764 |
|
|
745 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
510,743 |
|
527,343 |
|
|
510,973 |
|
526,458 |
|
|
|
304.5 |
|
|
314.1 |
|
|
|
596 |
|
|
597 |
|
Russia Total |
510,743 |
|
527,343 |
|
|
510,973 |
|
526,458 |
|
|
|
304.5 |
|
|
314.1 |
|
|
|
596 |
|
|
597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
406,509 |
|
391,097 |
|
|
403,789 |
|
382,803 |
|
|
|
235.7 |
|
|
230.4 |
|
|
|
584 |
|
|
602 |
|
Chirano (100%) |
166,590 |
|
201,296 |
|
|
166,207 |
|
201,868 |
|
|
|
196.1 |
|
|
189.7 |
|
|
|
1,180 |
|
|
940 |
|
West Africa Total |
573,099 |
|
592,393 |
|
|
569,996 |
|
584,671 |
|
|
|
431.8 |
|
|
420.1 |
|
|
|
758 |
|
|
719 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
2,383,307 |
|
2,527,788 |
|
|
2,375,548 |
|
2,512,758 |
|
|
|
1,725.7 |
|
|
1,778.9 |
|
|
|
726 |
|
|
708 |
|
Less Chirano non-controlling interest (10%) |
(16,659 |
) |
(20,129 |
) |
|
(16,621 |
) |
(20,186 |
) |
|
|
(19.6 |
) |
|
(19.0 |
) |
|
|
|
Attributable Total |
2,366,648 |
|
2,507,659 |
|
|
2,358,927 |
|
2,492,572 |
|
|
$ |
1,706.1 |
|
$ |
1,759.9 |
|
|
$ |
723 |
|
$ |
706 |
|
Consolidated balance sheets
(expressed in millions of U.S. dollars, except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,210.9 |
|
|
$ |
575.1 |
|
|
Restricted cash |
|
|
13.7 |
|
|
|
15.2 |
|
|
Accounts receivable and other assets |
|
|
122.3 |
|
|
|
137.4 |
|
|
Current income tax recoverable |
|
|
29.9 |
|
|
|
43.2 |
|
|
Inventories |
|
|
1,072.9 |
|
|
|
1,053.8 |
|
|
|
|
|
2,449.7 |
|
|
|
1,824.7 |
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
|
7,653.5 |
|
|
|
6,340.0 |
|
|
Goodwill |
|
|
158.8 |
|
|
|
158.8 |
|
|
Long-term investments |
|
|
113.0 |
|
|
|
126.2 |
|
|
Investment in joint venture |
|
|
18.3 |
|
|
|
18.4 |
|
|
Other long-term assets |
|
|
537.2 |
|
|
|
572.7 |
|
|
Deferred tax assets |
|
|
2.7 |
|
|
|
35.2 |
|
|
Total assets |
|
$ |
10,933.2 |
|
|
$ |
9,076.0 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
479.2 |
|
|
$ |
469.3 |
|
|
Current income tax payable |
|
|
114.5 |
|
|
|
68.0 |
|
|
Current portion of long-term debt and credit facilities |
|
|
499.7 |
|
|
|
- |
|
|
Current portion of provisions |
|
|
63.8 |
|
|
|
57.9 |
|
|
Other current liabilities |
|
|
49.7 |
|
|
|
20.3 |
|
|
Deferred payment obligation |
|
|
141.5 |
|
|
|
- |
|
|
|
|
|
1,348.4 |
|
|
|
615.5 |
|
|
Non-current liabilities |
|
|
|
|
|
Long-term debt and credit facilities |
|
|
1,424.2 |
|
|
|
1,837.4 |
|
|
Provisions |
|
|
861.1 |
|
|
|
838.6 |
|
|
Long-term lease liabilities |
|
|
46.3 |
|
|
|
38.9 |
|
|
Other long-term liabilities |
|
|
102.4 |
|
|
|
108.5 |
|
|
Deferred tax liabilities |
|
|
487.8 |
|
|
|
304.5 |
|
|
Total liabilities |
|
$ |
4,270.2 |
|
|
$ |
3,743.4 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Common shareholders' equity |
|
|
|
|
|
Common share capital |
|
$ |
4,473.7 |
|
|
$ |
14,926.2 |
|
|
Contributed surplus |
|
|
10,709.0 |
|
|
|
242.1 |
|
|
Accumulated deficit |
|
|
(8,562.5 |
) |
|
|
(9,829.4 |
) |
|
Accumulated other comprehensive income (loss) |
|
|
(23.7 |
) |
|
|
(20.4 |
) |
|
Total common shareholders' equity |
|
|
6,596.5 |
|
|
|
5,318.5 |
|
|
Non-controlling interests |
|
|
66.5 |
|
|
|
14.1 |
|
|
Total equity |
|
|
6,663.0 |
|
|
|
5,332.6 |
|
|
Total liabilities and equity |
|
$ |
10,933.2 |
|
|
$ |
9,076.0 |
|
|
|
|
|
|
|
|
Common shares |
|
|
|
|
|
Authorized |
|
Unlimited |
|
|
Unlimited |
|
|
Issued and outstanding |
|
|
1,258,320,461 |
|
|
|
1,253,765,724 |
|
|
|
|
|
|
|
|
Consolidated statements of operations
(expressed in millions of U.S. dollars, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
Years ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
2020 |
|
2019 |
|
Revenue |
|
|
|
|
|
|
|
Metal sales |
|
$ |
4,213.4 |
|
|
$ |
3,497.3 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
Production cost of sales |
|
1,725.7 |
|
|
1,778.9 |
|
|
Depreciation, depletion and amortization |
|
842.3 |
|
|
731.3 |
|
|
Reversals of impairment charges - net |
|
(650.9 |
) |
|
(361.8 |
) |
|
Total cost of sales |
|
1,917.1 |
|
|
2,148.4 |
|
|
Gross profit |
|
2,296.3 |
|
|
1,348.9 |
|
|
Other operating expense |
|
186.5 |
|
|
108.5 |
|
|
Exploration and business development |
|
92.5 |
|
|
113.5 |
|
|
General and administrative |
|
117.9 |
|
|
135.8 |
|
|
Operating earnings |
|
1,899.4 |
|
|
991.1 |
|
|
Other income - net |
|
7.4 |
|
|
72.7 |
|
|
Finance income |
|
4.3 |
|
|
7.9 |
|
|
Finance expense |
|
(112.6 |
) |
|
(107.9 |
) |
|
Earnings before tax |
|
1,798.5 |
|
|
963.8 |
|
|
Income tax expense - net |
|
(439.8 |
) |
|
(246.7 |
) |
|
Net earnings |
|
$ |
1,358.7 |
|
|
$ |
717.1 |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) attributable to: |
|
|
|
|
|
|
|
Non-controlling interests |
|
$ |
16.3 |
|
|
($1.5 |
) |
|
Common shareholders |
|
$ |
1,342.4 |
|
|
$ |
718.6 |
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to common
shareholders |
|
|
|
|
|
|
|
Basic |
|
$ |
1.07 |
|
|
$ |
0.57 |
|
|
Diluted |
|
$ |
1.06 |
|
|
$ |
0.57 |
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
(millions) |
|
|
|
|
|
|
|
Basic |
|
1,257.2 |
|
|
1,252.3 |
|
|
Diluted |
|
1,268.0 |
|
|
1,262.3 |
|
|
Consolidated statements of cash flows
(expressed in millions of U.S. dollars) |
|
|
|
|
|
|
|
Years ended |
|
|
|
December 31, |
|
December 31, |
|
|
|
|
2020 |
|
|
|
2019 |
|
|
Net inflow (outflow) of cash related to the following
activities: |
|
|
|
|
|
Operating: |
|
|
|
|
|
Net earnings |
|
$ |
1,358.7 |
|
|
$ |
717.1 |
|
|
Adjustments to reconcile net earnings to net cash provided from
operating activities: |
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
842.3 |
|
|
|
731.3 |
|
|
Reversals of impairment charges - net |
|
|
(650.9 |
) |
|
|
(361.8 |
) |
|
Share-based compensation expense |
|
|
13.7 |
|
|
|
14.3 |
|
|
Finance expense |
|
|
112.6 |
|
|
|
107.9 |
|
|
Deferred tax expense |
|
|
217.9 |
|
|
|
41.1 |
|
|
Foreign exchange losses (gains) and other |
|
|
11.8 |
|
|
|
(53.2 |
) |
|
Reclamation expense (recovery) |
|
|
6.6 |
|
|
|
(11.9 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
Accounts receivable and other assets |
|
|
(120.9 |
) |
|
|
(64.5 |
) |
|
Inventories |
|
|
(6.8 |
) |
|
|
53.8 |
|
|
Accounts payable and accrued liabilities |
|
|
279.0 |
|
|
|
165.9 |
|
|
Cash flow provided from operating activities |
|
|
2,064.0 |
|
|
|
1,340.0 |
|
|
Income taxes paid |
|
|
(106.4 |
) |
|
|
(115.1 |
) |
|
Net cash flow provided from operating
activities |
|
|
1,957.6 |
|
|
|
1,224.9 |
|
|
Investing: |
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(916.1 |
) |
|
|
(1,060.2 |
) |
|
Interest paid capitalized to property, plant and equipment |
|
|
(47.9 |
) |
|
|
(45.0 |
) |
|
Acquisitions |
|
|
(267.0 |
) |
|
|
(30.0 |
) |
|
Net (additions to) proceeds from the sale of long-term investments
and other assets |
|
|
(5.9 |
) |
|
|
71.6 |
|
|
Net proceeds from the sale of property, plant and equipment |
|
|
8.4 |
|
|
|
31.9 |
|
|
Increase in restricted cash - net |
|
|
(23.5 |
) |
|
|
(2.5 |
) |
|
Interest received and other - net |
|
|
2.9 |
|
|
|
7.6 |
|
|
Net cash flow used in investing activities |
|
|
(1,249.1 |
) |
|
|
(1,026.6 |
) |
|
Financing: |
|
|
|
|
|
Proceeds from drawdown of debt |
|
|
950.0 |
|
|
|
300.0 |
|
|
Repayment of debt |
|
|
(850.0 |
) |
|
|
(200.0 |
) |
|
Interest paid |
|
|
(63.1 |
) |
|
|
(55.6 |
) |
|
Payment of lease liabilities |
|
|
(20.7 |
) |
|
|
(14.3 |
) |
|
Dividends paid to common shareholders |
|
|
(75.5 |
) |
|
|
- |
|
|
Dividends paid to non-controlling interest |
|
|
(6.0 |
) |
|
|
(5.0 |
) |
|
Other - net |
|
|
(2.4 |
) |
|
|
- |
|
|
Net cash flow (used in) provided from financing
activities |
|
|
(67.7 |
) |
|
|
25.1 |
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
|
(5.0 |
) |
|
|
2.7 |
|
|
Increase in cash and cash equivalents |
|
|
635.8 |
|
|
|
226.1 |
|
|
Cash and cash equivalents, beginning of
period |
|
|
575.1 |
|
|
|
349.0 |
|
|
Cash and cash equivalents, end of period |
|
$ |
1,210.9 |
|
|
$ |
575.1 |
|
|
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)(h) |
Gold Eq Production (e) |
Gold Eq Sales (e) |
Production cost of sales |
Production cost 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 |
Q4 2020 |
100 |
8,456 |
2,583 |
7,021 |
0.61 |
0.20 |
80 |
% |
57,523 |
57,849 |
$ |
51.1 |
$ |
883 |
$ |
46.0 |
$ |
23.2 |
Q3 2020 |
100 |
7,202 |
2,664 |
5,497 |
0.67 |
0.19 |
83 |
% |
72,705 |
73,267 |
$ |
69.5 |
$ |
949 |
$ |
39.7 |
$ |
27.9 |
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 |
Round Mountain |
Q4 2020 |
100 |
6,542 |
988 |
6,315 |
0.92 |
0.50 |
83 |
% |
89,422 |
89,709 |
$ |
62.2 |
$ |
693 |
$ |
41.2 |
$ |
15.2 |
Q3 2020 |
100 |
6,085 |
972 |
5,884 |
0.79 |
0.39 |
83 |
% |
76,039 |
72,717 |
$ |
49.7 |
$ |
683 |
$ |
39.2 |
$ |
11.6 |
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 |
Bald Mountain |
Q4 2020 |
100 |
6,076 |
- |
6,076 |
- |
0.42 |
nm |
51,487 |
57,087 |
$ |
45.4 |
$ |
795 |
$ |
19.3 |
$ |
44.3 |
Q3 2020 |
100 |
4,922 |
- |
4,922 |
- |
0.56 |
nm |
49,339 |
37,492 |
$ |
32.1 |
$ |
856 |
$ |
23.4 |
$ |
27.1 |
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 |
Paracatu |
Q4 2020 |
100 |
12,611 |
12,655 |
- |
0.51 |
- |
77 |
% |
148,218 |
150,881 |
$ |
91.2 |
$ |
604 |
$ |
61.6 |
$ |
58.2 |
Q3 2020 |
100 |
12,468 |
13,673 |
- |
0.38 |
- |
74 |
% |
131,000 |
128,782 |
$ |
96.6 |
$ |
750 |
$ |
27.2 |
$ |
42.4 |
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 |
Maricunga |
Q4 2020 |
100 |
- |
- |
- |
- |
- |
nm |
414 |
2,035 |
$ |
1.1 |
$ |
541 |
$ |
- |
$ |
0.1 |
Q3 2020 |
100 |
- |
- |
- |
- |
- |
nm |
3,132 |
4,442 |
$ |
1.0 |
$ |
225 |
$ |
- |
$ |
0.2 |
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 |
Russia |
Kupol (c)(d)(f) |
Q4 2020 |
100 |
293 |
432 |
- |
9.24 |
- |
95 |
% |
130,731 |
131,541 |
$ |
79.1 |
$ |
601 |
$ |
15.1 |
$ |
31.0 |
Q3 2020 |
100 |
365 |
430 |
- |
8.99 |
- |
95 |
% |
128,144 |
126,637 |
$ |
69.2 |
$ |
546 |
$ |
6.1 |
$ |
27.0 |
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 |
West Africa |
Tasiast |
Q4 2020 |
100 |
1,206 |
1,470 |
- |
2.48 |
- |
94 |
% |
111,028 |
107,865 |
$ |
60.8 |
$ |
564 |
$ |
65.0 |
$ |
46.5 |
Q3 2020 |
100 |
1,338 |
1,244 |
- |
2.78 |
- |
94 |
% |
103,065 |
103,295 |
$ |
65.2 |
$ |
631 |
$ |
50.0 |
$ |
50.2 |
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 |
Chirano - 100% |
Q4 2020 |
100 |
915 |
801 |
- |
1.75 |
- |
88 |
% |
39,121 |
40,202 |
$ |
45.6 |
$ |
1,134 |
$ |
11.3 |
$ |
13.1 |
Q3 2020 |
100 |
768 |
815 |
- |
1.87 |
- |
88 |
% |
44,320 |
46,586 |
$ |
56.1 |
$ |
1,204 |
$ |
5.0 |
$ |
16.1 |
Q2 2020 |
100 |
679 |
785 |
- |
1.85 |
- |
88 |
% |
38,683 |
40,084 |
|
46.6 |
$ |
1,163 |
|
5.8 |
|
13.1 |
Q1 2020 |
100 |
690 |
873 |
- |
1.73 |
- |
88 |
% |
44,465 |
39,335 |
|
47.8 |
$ |
1,215 |
|
5.1 |
|
15.9 |
Q4 2019 |
100 |
737 |
844 |
- |
2.00 |
- |
91 |
% |
48,984 |
47,186 |
|
49.0 |
$ |
1,038 |
|
8.0 |
|
21.4 |
Chirano - 90% |
Q4 2020 |
90 |
915 |
801 |
- |
1.75 |
- |
88 |
% |
35,209 |
36,182 |
$ |
41.0 |
$ |
1,134 |
$ |
10.2 |
$ |
11.8 |
Q3 2020 |
90 |
768 |
815 |
- |
1.87 |
- |
88 |
% |
39,888 |
41,927 |
$ |
50.5 |
$ |
1,204 |
$ |
4.5 |
$ |
14.5 |
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 |
(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: Q4 2020: 65.05
g/t, 84%; Q3 2020: 74.19 g/t, 88%; Q2 2020: 70.36 g/t, 86% Q1 2020:
80.02 g/t, 84% Q4 2019: 65.63 g/t, 85%. |
(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: Q4 2020: 77.02:1, Q3
2020: 78.68:1; Q2 2020: 104.49:1, Q1 2020: 93.34:1, Q4 2019:
85.59:1. |
(f) |
Dvoinoye ore processed and grade were as follows: Q4 2020: 115,998,
9.25 g/t; Q3 2020: 115,054, 9.44 g/t; Q2 2020: 113,472, 9.55 g/t;
Q1 2020: 117,502, 9.24 g/t; Q4 2019: 100,685, 9.89 g/t. |
(g) |
"Capital expenditures" is as reported as “Additions to property,
plant and equipment” on the 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 International Financial Reporting Standards (IFRS) and should
not be considered in isolation. The Company believes that these
measures, together with measures determined in accordance with
IFRS, provide investors with an improved ability to evaluate the
underlying performance of the Company. The inclusion of these
measures is meant to provide additional information and should not
be used as a substitute for performance measures prepared in
accordance with IFRS. These measures are not necessarily standard
and therefore may not be comparable to other issuers.
Adjusted net earnings attributable to
common shareholders and adjusted net earnings per
share are non-GAAP measures which determine the
performance of the Company, excluding certain impacts which the
Company believes are not reflective of the Company’s underlying
performance for the reporting period, such as the impact of foreign
exchange gains and losses, reassessment of prior year taxes and/or
taxes otherwise not related to the current period, impairment
charges (reversals), gains and losses and other one-time costs
related to acquisitions, dispositions and other transactions, and
non-hedge derivative gains and losses. Although some of the items
are recurring, the Company believes that they are not reflective of
the underlying operating performance of its current business and
are not necessarily indicative of future operating results.
Management believes that these measures, which are used internally
to assess performance and in planning and forecasting future
operating results, provide investors with the ability to better
evaluate underlying performance, particularly since the excluded
items are typically not included in public guidance. However,
adjusted net earnings and adjusted net earnings per share measures
are not necessarily indicative of net earnings and earnings per
share measures as determined under IFRS.
The following table provides a reconciliation of
net earnings to adjusted net earnings for the periods
presented:
|
|
|
|
|
|
|
|
|
Adjusted Net Earnings |
(expressed in millions of U.S dollars, except per share
amounts) |
Three months ended |
|
Years ended |
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Net earnings attributable to common shareholders - as reported |
$ |
783.3 |
|
$ |
521.5 |
|
|
$ |
1,342.4 |
|
$ |
718.6 |
|
Adjusting items: |
|
|
|
|
|
|
Foreign exchange losses (gains) |
|
8.2 |
|
|
6.0 |
|
|
|
7.3 |
|
|
(0.6 |
) |
|
Foreign exchange losses (gains) on translation of tax basis and
foreign exchange on deferred income taxes within income tax
expense |
|
4.6 |
|
|
(12.3 |
) |
|
|
101.2 |
|
|
1.6 |
|
|
Taxes in respect of prior periods |
|
39.7 |
|
|
(0.1 |
) |
|
|
51.3 |
|
|
33.3 |
|
|
Reclamation and remediation expenses (recoveries) |
|
6.6 |
|
|
(11.9 |
) |
|
|
6.6 |
|
|
(11.9 |
) |
|
Reversals of impairment charges - net(a) |
|
(602.6 |
) |
|
(361.8 |
) |
|
|
(650.9 |
) |
|
(361.8 |
) |
|
COVID-19 and Tasiast strike costs(b) |
|
23.3 |
|
|
- |
|
|
|
72.4 |
|
|
- |
|
|
U.S. CARES Act net benefit |
|
- |
|
|
- |
|
|
|
(25.4 |
) |
|
- |
|
|
Gain on disposition of royalty portfolio |
|
- |
|
|
(72.7 |
) |
|
|
- |
|
|
(72.7 |
) |
|
Fort Knox pit wall slide related costs |
|
- |
|
|
8.0 |
|
|
|
- |
|
|
25.1 |
|
|
Restructuring costs |
|
- |
|
|
- |
|
|
|
- |
|
|
12.2 |
|
|
Other |
|
3.1 |
|
|
2.7 |
|
|
|
0.2 |
|
|
7.6 |
|
|
Tax effect of the above adjustments |
|
68.9 |
|
|
76.6 |
|
|
|
61.7 |
|
|
71.5 |
|
|
|
|
(448.2 |
) |
|
(365.5 |
) |
|
|
(375.6 |
) |
|
(295.7 |
) |
Adjusted net earnings attributable to common shareholders |
$ |
335.1 |
|
$ |
156.0 |
|
|
$ |
966.8 |
|
$ |
422.9 |
|
Weighted average number of common shares outstanding - Basic |
|
1,258.3 |
|
|
1,253.5 |
|
|
|
1,257.2 |
|
|
1,252.3 |
|
Adjusted net earnings per share |
$ |
0.27 |
|
$ |
0.13 |
|
|
$ |
0.77 |
|
$ |
0.34 |
|
|
|
|
|
|
|
|
(a) |
During the year ended December 31, 2020, the Company recorded
non-cash reversals of impairment charges of $689.0 million related
to property, plant and equipment at Tasiast, Chirano and
Lobo-Marte. The tax impacts on the impairment reversals at Chirano
and Lobo-Marte were expenses of $71.6 million and $4.6 million,
respectively. In addition, the Company recorded impairment charges
of $38.1 million related to certain supplies inventories. During
the year ended December 31, 2019, the Company recorded non-cash
reversals of impairment charges of $361.8 million related to
property, plant and equipment at Paracatu and Tasiast. The tax
impact on the impairment reversal at Paracatu was an expense of
$68.2 million. There were no tax impacts on the impairment
reversals at Tasiast in 2020 and 2019. |
(b) |
During the year ended December 31, 2020, $64.1 million (fourth
quarter of 2020 - $23.3 million) of COVID-19 related labour, health
& safety, donations and other support program costs, as well as
$8.3 million of Tasiast strike costs, were incurred. |
Free cash flow is a non-GAAP
measure and is defined as net cash flow provided from operating
activities less capital expenditures. The Company believes that
that this measure, which is used internally to evaluate the
Company’s underlying cash generation performance and the ability to
repay creditors and return cash to shareholders, provides investors
with the ability to better evaluate the Company’s underlying
performance. However, the free cash flow measure is not necessarily
indicative of operating earnings or net cash flow from operations
as determined under IFRS.
The following table provides a reconciliation of
free cash flow for the periods presented:
|
|
|
|
|
|
|
|
|
Free Cash Flow |
(expressed in millions of U.S dollars) |
Three months ended |
|
Years ended |
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Net cash flow provided from operating activities - as reported |
$ |
681.1 |
|
$ |
408.6 |
|
|
$ |
1,957.6 |
|
$ |
1,224.9 |
|
|
|
|
|
|
|
|
Less: Additions to property, plant and equipment |
|
(298.3 |
) |
|
(297.9 |
) |
|
|
(916.1 |
) |
|
(1,060.2 |
) |
|
|
|
|
|
|
|
Free cash flow |
$ |
382.8 |
|
$ |
110.7 |
|
|
$ |
1,041.5 |
|
$ |
164.7 |
|
|
|
|
|
|
|
|
Adjusted operating cash flow is
a non-GAAP measure and 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 |
(expressed in millions of U.S dollars) |
Three months ended |
|
Years ended |
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Net cash flow provided from operating activities - as reported |
$ |
681.1 |
|
$ |
408.6 |
|
|
$ |
1,957.6 |
|
$ |
1,224.9 |
|
|
|
|
|
|
|
|
Adjusting items: |
|
|
|
|
|
|
Tax payments in respect of prior years |
|
- |
|
|
- |
|
|
|
- |
|
|
16.7 |
|
|
Working capital changes: |
|
|
|
|
|
|
Accounts receivable and other assets |
|
(47.7 |
) |
|
(37.4 |
) |
|
|
120.9 |
|
|
64.5 |
|
|
Inventories |
|
33.1 |
|
|
(44.3 |
) |
|
|
6.8 |
|
|
(53.8 |
) |
|
Accounts payable and other liabilities, including income taxes
paid |
|
(138.9 |
) |
|
60.7 |
|
|
|
(172.6 |
) |
|
(50.8 |
) |
|
|
|
(153.5 |
) |
|
(21.0 |
) |
|
|
(44.9 |
) |
|
(23.4 |
) |
Adjusted operating cash flow |
$ |
527.6 |
|
$ |
387.6 |
|
|
$ |
1,912.7 |
|
$ |
1,201.5 |
|
|
|
|
|
|
|
|
Consolidated production cost of sales
per gold equivalent ounce sold is a non-GAAP measure and
is defined as production cost of sales as reported on the
consolidated statement of operations 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 |
(expressed in millions of U.S. dollars, except ounces and
production cost of sales per equivalent ounce) |
Three months ended |
|
Years ended |
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
436.5 |
|
$ |
500.5 |
|
|
$ |
1,725.7 |
|
$ |
1,778.9 |
|
Less: portion attributable to Chirano non-controlling
interest(a) |
|
(4.6 |
) |
|
(4.9 |
) |
|
|
(19.6 |
) |
|
(19.0 |
) |
Attributable(b) production cost of sales |
$ |
431.9 |
|
$ |
495.6 |
|
|
$ |
1,706.1 |
|
$ |
1,759.9 |
|
|
|
|
|
|
|
|
Gold equivalent ounces sold |
|
637,169 |
|
|
670,917 |
|
|
|
2,375,548 |
|
|
2,512,758 |
|
Less: portion attributable to Chirano non-controlling
interest(j) |
|
(4,020 |
) |
|
(4,718 |
) |
|
|
(16,621 |
) |
|
(20,186 |
) |
Attributable(b) gold equivalent ounces sold |
|
633,149 |
|
|
666,199 |
|
|
|
2,358,927 |
|
|
2,492,572 |
|
Consolidated production cost of sales per equivalent ounce
sold |
$ |
685 |
|
$ |
746 |
|
|
$ |
726 |
|
$ |
708 |
|
Attributable(b) production cost of sales per equivalent ounce
sold |
$ |
682 |
|
$ |
744 |
|
|
$ |
723 |
|
$ |
706 |
|
|
|
|
|
|
|
See page 24 of this news release for
details of the footnotes referenced 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 |
(expressed in millions of U.S. dollars, except ounces and
production cost of sales per ounce) |
Three months ended |
|
Years ended |
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
436.5 |
|
$ |
500.5 |
|
|
$ |
1,725.7 |
|
$ |
1,778.9 |
|
Less: portion attributable to Chirano non-controlling
interest(a) |
|
(4.6 |
) |
|
(4.9 |
) |
|
|
(19.6 |
) |
|
(19.0 |
) |
Less: attributable(b) silver revenue(c) |
|
(28.3 |
) |
|
(20.4 |
) |
|
|
(91.0 |
) |
|
(75.1 |
) |
Attributable(b) production cost of sales net of silver by-product
revenue |
$ |
403.6 |
|
$ |
475.2 |
|
|
$ |
1,615.1 |
|
$ |
1,684.8 |
|
|
|
|
|
|
|
|
Gold ounces sold |
|
622,235 |
|
|
657,179 |
|
|
|
2,324,324 |
|
|
2,458,839 |
|
Less: portion attributable to Chirano non-controlling
interest(j) |
|
(4,014 |
) |
|
(4,717 |
) |
|
|
(16,589 |
) |
|
(20,161 |
) |
Attributable(b) gold ounces sold |
|
618,221 |
|
|
652,462 |
|
|
|
2,307,735 |
|
|
2,438,678 |
|
Attributable(b) production cost of sales per ounce sold on a
by-product basis |
$ |
653 |
|
$ |
728 |
|
|
$ |
700 |
|
$ |
691 |
|
|
|
|
|
|
|
|
See page 24 of this news release for
details of the footnotes referenced 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 consolidated statement of operations, as follows:
|
|
|
|
|
Attributable All-In Sustaining Cost and All-In Cost Per
Ounce Sold on a By-Product Basis |
(expressed in millions of U.S. dollars, except ounces and costs per
ounce) |
Three months ended |
|
Years ended |
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
436.5 |
|
$ |
500.5 |
|
|
$ |
1,725.7 |
|
$ |
1,778.9 |
|
Less: portion attributable to Chirano non-controlling
interest(a) |
|
(4.6 |
) |
|
(4.9 |
) |
|
|
(19.6 |
) |
|
(19.0 |
) |
Less: attributable(b) silver revenue(c) |
|
(28.3 |
) |
|
(20.4 |
) |
|
|
(91.0 |
) |
|
(75.1 |
) |
Attributable(b) production cost of sales net of silver by-product
revenue |
$ |
403.6 |
|
$ |
475.2 |
|
|
$ |
1,615.1 |
|
$ |
1,684.8 |
|
Adjusting items on an attributable(b) basis: |
|
|
|
|
|
|
General and administrative(d) |
|
36.1 |
|
|
31.3 |
|
|
|
117.9 |
|
|
123.6 |
|
|
Other operating expense - sustaining(e) |
|
0.8 |
|
|
8.3 |
|
|
|
9.6 |
|
|
24.7 |
|
|
Reclamation and remediation - sustaining(f) |
|
16.0 |
|
|
13.0 |
|
|
|
54.0 |
|
|
48.2 |
|
|
Exploration and business development - sustaining(g) |
|
13.2 |
|
|
15.4 |
|
|
|
48.3 |
|
|
66.0 |
|
|
Additions to property, plant and equipment - sustaining(h) |
|
136.2 |
|
|
132.7 |
|
|
|
373.5 |
|
|
415.1 |
|
|
Lease payments - sustaining(i) |
|
7.1 |
|
|
3.5 |
|
|
|
19.7 |
|
|
12.7 |
|
All-in Sustaining Cost on a by-product basis - attributable(b) |
$ |
612.9 |
|
$ |
679.4 |
|
|
$ |
2,238.1 |
|
$ |
2,375.1 |
|
|
Other operating expense - non-sustaining(e) |
|
17.1 |
|
|
16.3 |
|
|
|
56.0 |
|
|
57.0 |
|
|
Reclamation and remediation - non-sustaining(f) |
|
1.3 |
|
|
1.7 |
|
|
|
5.0 |
|
|
6.9 |
|
|
Exploration - non-sustaining(g) |
|
17.4 |
|
|
14.5 |
|
|
|
43.3 |
|
|
46.7 |
|
|
Additions to property, plant and equipment - non-sustaining(h) |
|
160.1 |
|
|
159.8 |
|
|
|
536.9 |
|
|
637.9 |
|
|
Lease payments - non-sustaining(i) |
|
0.1 |
|
|
0.4 |
|
|
|
1.0 |
|
|
1.6 |
|
All-in Cost on a by-product basis - attributable(b) |
$ |
809.0 |
|
$ |
872.1 |
|
|
$ |
2,880.3 |
|
$ |
3,125.2 |
|
Gold ounces sold |
|
622,235 |
|
|
657,179 |
|
|
|
2,324,324 |
|
|
2,458,839 |
|
Less: portion attributable to Chirano non-controlling
interest(j) |
|
(4,014 |
) |
|
(4,717 |
) |
|
|
(16,589 |
) |
|
(20,161 |
) |
Attributable(b) gold ounces sold |
|
618,221 |
|
|
652,462 |
|
|
|
2,307,735 |
|
|
2,438,678 |
|
Attributable(b) all-in sustaining cost per ounce sold on a
by-product basis |
$ |
991 |
|
$ |
1,041 |
|
|
$ |
970 |
|
$ |
974 |
|
Attributable(b) all-in cost per ounce sold on a by-product
basis |
$ |
1,309 |
|
$ |
1,337 |
|
|
$ |
1,248 |
|
$ |
1,282 |
|
|
|
|
|
|
|
|
See page 24 of this news release for
details of the footnotes referenced 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 consolidated statement
of operations, as follows:
|
|
Attributable All-In Sustaining Cost and All-In Cost Per
Equivalent Ounce Sold |
(expressed in millions of U.S. dollars, except ounces and costs per
equivalent ounce) |
Three months ended |
|
Years ended |
December 31, |
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
436.5 |
|
$ |
500.5 |
|
|
$ |
1,725.7 |
|
$ |
1,778.9 |
|
Less: portion attributable to Chirano non-controlling
interest(a) |
|
(4.6 |
) |
|
(4.9 |
) |
|
|
(19.6 |
) |
|
(19.0 |
) |
Attributable(b) production cost of sales |
$ |
431.9 |
|
$ |
495.6 |
|
|
$ |
1,706.1 |
|
$ |
1,759.9 |
|
Adjusting items on an attributable(b) basis: |
|
|
|
|
|
|
General and administrative(d) |
|
36.1 |
|
|
31.3 |
|
|
|
117.9 |
|
|
123.6 |
|
|
Other operating expense - sustaining(e) |
|
0.8 |
|
|
8.3 |
|
|
|
9.6 |
|
|
24.7 |
|
|
Reclamation and remediation - sustaining(f) |
|
16.0 |
|
|
13.0 |
|
|
|
54.0 |
|
|
48.2 |
|
|
Exploration and business development - sustaining(g) |
|
13.2 |
|
|
15.4 |
|
|
|
48.3 |
|
|
66.0 |
|
|
Additions to property, plant and equipment - sustaining(h) |
|
136.2 |
|
|
132.7 |
|
|
|
373.5 |
|
|
415.1 |
|
|
Lease payments - sustaining(i) |
|
7.1 |
|
|
3.5 |
|
|
|
19.7 |
|
|
12.7 |
|
All-in Sustaining Cost - attributable(b) |
$ |
641.2 |
|
$ |
699.8 |
|
|
$ |
2,329.1 |
|
$ |
2,450.2 |
|
|
Other operating expense - non-sustaining(e) |
|
17.1 |
|
|
16.3 |
|
|
|
56.0 |
|
|
57.0 |
|
|
Reclamation and remediation - non-sustaining(f) |
|
1.3 |
|
|
1.7 |
|
|
|
5.0 |
|
|
6.9 |
|
|
Exploration - non-sustaining(g) |
|
17.4 |
|
|
14.5 |
|
|
|
43.3 |
|
|
46.7 |
|
|
Additions to property, plant and equipment - non-sustaining(h) |
|
160.1 |
|
|
159.8 |
|
|
|
536.9 |
|
|
637.9 |
|
|
Lease payments - non-sustaining(i) |
|
0.1 |
|
|
0.4 |
|
|
|
1.0 |
|
|
1.6 |
|
All-in Cost - attributable(b) |
$ |
837.3 |
|
$ |
892.5 |
|
|
$ |
2,971.3 |
|
$ |
3,200.3 |
|
Gold equivalent ounces sold |
|
637,169 |
|
|
670,917 |
|
|
|
2,375,548 |
|
|
2,512,758 |
|
Less: portion attributable to Chirano non-controlling
interest(j) |
|
(4,020 |
) |
|
(4,718 |
) |
|
|
(16,621 |
) |
|
(20,186 |
) |
Attributable(b) gold equivalent ounces sold |
|
633,149 |
|
|
666,199 |
|
|
|
2,358,927 |
|
|
2,492,572 |
|
Attributable(b) all-in sustaining cost per equivalent ounce
sold |
$ |
1,013 |
|
$ |
1,050 |
|
|
$ |
987 |
|
$ |
983 |
|
Attributable(b) all-in cost per equivalent ounce sold |
$ |
1,322 |
|
$ |
1,340 |
|
|
$ |
1,260 |
|
$ |
1,284 |
|
|
|
|
|
|
|
|
(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%) and Peak
(70%) production and costs. |
(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
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 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 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 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 year ended December
31, 2020, primarily related to major projects at Tasiast, Fort Knox
and Round Mountain. Non-sustaining capital expenditures during the
year ended December 31, 2019, primarily related to major projects
at Tasiast, Round Mountain, Bald Mountain and Fort Knox. |
(i) |
“Lease payments – sustaining” represents the majority of lease
payments as reported on the 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. |
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) “2020 full year results and 2021 guidance”,
“CEO Commentary”, “Financial results” and “Company Guidance” as
well as statements with respect to our guidance for production,
production costs of sales, cash flow, free cash flow, all-in
sustaining cost of sales, and capital expenditures; the
declaration, payment and sustainability of the Company’s dividends;
optimization of mine plans; identification of additional resources
and reserves; the schedules and budgets for the Company’s
development projects; mine life and any potential extensions; the
Company’s capital reinvestment program and continuous improvement
initiatives and project performance or outperformance, 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, operating costs; 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, government regulation permit
applications and conversions, restarting suspended or disrupted
operations; environmental risks and proceedings; and resolution of
pending litigation. The words “anticipate”, “continue”,
“estimates”, “expects”, “forecast”, “guidance”, “intends”,
“outlook”, “progress”, “potential”, “prioritize”, or variations of
or similar such words and phrases or statements that certain
actions, events or results may, could, should or will be achieved,
received or taken, or will occur or result and similar such
expressions identify forward-looking statements. Forward-looking
statements are necessarily based upon a number of estimates and
assumptions that, while considered reasonable by Kinross as of the
date of such statements, are inherently subject to significant
business, economic and competitive uncertainties and contingencies.
The estimates, models and assumptions of Kinross referenced,
contained or incorporated by reference in this news release, which
may prove to be incorrect, include, but are not limited to, the
various assumptions set forth herein and in our Management’s
Discussion and Analysis (“MD&A”) for the year ended December
31, 2020, 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 Tasiast, 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; the
Lobo-Marte project; commencement of production at the La Coipa
project; approval of an enhanced mine plan at Fort Knox; in each
case in a manner consistent with the Company’s expectations; and
the successful completion of exploration consistent with the
Company’s expectations at the Company’s projects; (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 or any related sanctions and
any other similar restrictions or penalties imposed, or actions
taken, by any government, including but not limited to amendments
to the mining laws, and potential power rationing and tailings
facility regulations in Brazil, potential amendments to water laws
and/or other water use restrictions and regulatory actions in
Chile, new dam safety regulations, potential amendments to minerals
and mining laws and energy levies laws, the enforcement of labour
laws 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 potential application 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,
Ghana and Mauritania (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,
improvement 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 and Peak
feasibility studies and Udinsk pre-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 the accuracy
and reliability of the pre-acquisition mineral resource estimates
of the Peak project and Kinross’ analysis thereof being consistent
with expectations (including but not limited to ore tonnage and ore
grade estimates), future mineral resource and mineral reserve
estimates being consistent with preliminary work undertaken by the
Company, mine plans for the Company’s current and future 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 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 travel restrictions, 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
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
substantially in accordance with 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 under the terms and on timelines consistent with
our expectations; (23) that the benefits of the contemplated
arrangements related to the agreement in principle will result in
increased stability at the Company’s operations in Mauritania; and
(24) the Company’s financial results, cash flows and future
prospects being consistent with Company expectations in amounts
sufficient to permit sustained dividend payments. 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: the inaccuracy of any of the foregoing
assumption, 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, development or
refining 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, 2020 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 ounce7.
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 $3 impact on
production cost of sales per ounce.
A $100 change in the price of gold would be
expected to result in an approximate $5 impact on production cost
of sales per ounce as a result of a change in royalties.
Other information
Where we say "we", "us", "our", the "Company",
or "Kinross" in this news release, we mean Kinross Gold Corporation
and/or one or more or all of its subsidiaries, as may be
applicable.
The technical information about the Company’s
mineral properties contained in this news release has been prepared
under the supervision of Mr. John Sims who is a “qualified person”
within the meaning of National Instrument 43-101.Mr. Sims was an
officer of Kinross until December 31, 2020. Mr. Sims remains the
Company’s qualified person as an external consultant.
Source: Kinross Gold Corporation
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