Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its
results for the first-quarter ended March 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 19 of this
release. All dollar amounts are expressed in U.S. dollars, unless
otherwise noted.)
2020 Q1 highlights:
- Production1 of
567,327 attributable gold equivalent ounces (Au eq. oz.), and sales
of 552,742 Au eq. oz.
- Reported net
earnings2 almost doubled to $122.7 million, or $0.10 per
share, and adjusted net earnings3 increased by 53%
to $127.4 million, or $0.10 per share, compared with Q1 2019.
- Operating cash
flow of $299.6 million and adjusted operating cash
flow3 of $418.6 million, a 19% and 81% increase
respectively compared with Q1 2019.
- Production cost of
sales3 of $754 per Au eq. oz. and all-in
sustaining cost3 of $993 per Au eq. oz. sold, both of
which are within the Company’s original annual guidance range.
- Attributable
margin per Au eq. oz. sold4 increased 33% to $827 per Au
eq. oz. compared with Q1 2019, while the average realized gold
price increased 21% to $1,581 per ounce compared with Q1 2019.
- Cash and cash
equivalents of $1,138.6 million and total
liquidity of $1.9 billion at March 31, 2020. The Company
has no debt maturities until September 2021.
- On March 2, 2020, Moody’s upgraded
Kinross’ credit rating to investment grade. Kinross’ debt is now
rated investment grade by each of the agencies
that cover it – Moody’s, S&P Global Ratings and Fitch
Ratings.
- Three largest producing mines –
Paracatu, Kupol and Tasiast – delivered 62% of total production and
achieved an average cost of sales of $642 per Au eq. oz., with
average costs lower than the previous quarter.
- Tasiast, for the
second consecutive quarter, achieved record quarterly production
and a record average throughput rate of 16,100 tonnes per day
(t/d), as the mine continues to benefit from the Phase One
expansion.
- On March 10, 2020, a new
Paracatu technical report was filed confirming the
benefits of an asset optimization program at the mine, which has
resulted in a 24% increase in life of mine production compared to
the prior report.
COVID-19 response:
- During the first quarter, all
Kinross mines remained in operation and were not materially
impacted by COVID-19. However, operations may be challenged over
time given the future global impacts of a prolonged crisis.
- The Company has committed $5.3
million to support host governments and communities in their
response to COVID-19, focusing on providing medical supplies, food
security and assistance to vulnerable groups.
- Kinross’ protocols and contingency
plans, which the Company began implementing in late January, have
continued to safeguard the health and safety of employees, their
families and local communities.
- With the support of host
governments, business continuity plans have been prepared and
implemented for each site to mitigate operational and supply chain
risks.
- On March 20, 2020, Kinross drew
down $750 million from its $1.5 billion revolving credit facility
as a precautionary measure to protect against economic and business
uncertainties related to the pandemic. The Company does not
currently plan to deploy the funds given its strong financial
position.
- On April 1, 2020, the Company
withdrew its full-year 2020 guidance as a precautionary measure
given the pandemic’s significant global impacts, despite no
material impacts on operations to date.
CEO Commentary: J. Paul
Rollinson, President and CEO, made the following comments in
relation to 2020 first-quarter results.
“During the quarter, we focused on protecting
the health and well-being of our employees and communities against
the spread of COVID-19 while maintaining the continuity of our
operations in a safe manner. As a result of our business continuity
plans and precautionary protocols implemented across our global
portfolio, and with the support of our host governments, all our
mines remained operational during the quarter and were not
materially impacted by the pandemic. While we prudently withdrew
our 2020 guidance given the pandemic’s significant global impacts,
we will continue to work safely on meeting our 2020 operational
targets.
“We also took steps to further strengthen our
financial position against the economic and business uncertainties
caused by the global health crisis. The Company generated strong
free cash flow and increased earnings year-over-year, ending the
quarter with excellent liquidity, low net debt, and with investment
grade credit ratings from all three major rating agencies. During
the quarter, our margins increased by 33%, outpacing the 21%
increase in average realized gold price.
“Looking forward, we are confident that our
commitment to health and safety, our risk mitigation plans, our
financial and operational strengths, and our positive relationships
with our host governments put us in a strong position to
effectively manage through this challenging time. We have built a
strong foundation, expect to continue generating strong cash flow,
and offer an exciting future and a compelling value opportunity for
our shareholders.”
Financial results
Summary of financial and operating results
|
|
Three months ended |
|
|
March 31, |
(unaudited, expressed in millions of U.S. dollars, except ounces,
per share amounts, and per ounce amounts) |
|
2020 |
|
|
2019 |
Operating Highlights |
|
|
Total gold equivalent ounces(1) |
|
|
Produced(3) |
|
571,773 |
|
|
611,263 |
Sold(3) |
|
556,676 |
|
|
603,057 |
|
|
|
|
Attributable gold equivalent ounces(1) |
|
|
Produced(3) |
|
567,327 |
|
|
606,031 |
Sold(3) |
|
552,742 |
|
|
597,649 |
|
|
|
|
Financial Highlights |
|
|
Metal sales |
$ |
879.8 |
|
$ |
786.2 |
Production cost of sales |
$ |
421.3 |
|
$ |
411.7 |
Depreciation, depletion and amortization |
$ |
193.1 |
|
$ |
164.1 |
Operating earnings |
$ |
192.6 |
|
$ |
115.4 |
Net earnings attributable to common shareholders |
$ |
122.7 |
|
$ |
64.7 |
Basic earnings per share attributable to common shareholders |
$ |
0.10 |
|
$ |
0.05 |
Diluted earnings per share attributable to common shareholders |
$ |
0.10 |
|
$ |
0.05 |
Adjusted net earnings attributable to common shareholders(2) |
$ |
127.4 |
|
$ |
83.3 |
Adjusted net earnings per share(2) |
$ |
0.10 |
|
$ |
0.07 |
Net cash flow provided from operating activities |
$ |
299.6 |
|
$ |
251.6 |
Adjusted operating cash flow(2) |
$ |
418.6 |
|
$ |
230.8 |
Capital expenditures(4) |
$ |
191.4 |
|
$ |
243.9 |
Average realized gold price per ounce(2) |
$ |
1,581 |
|
$ |
1,304 |
Consolidated production cost of sales per equivalent ounce(3)
sold(2) |
$ |
757 |
|
$ |
683 |
Attributable(1) production cost of sales per equivalent ounce(3)
sold(2) |
$ |
754 |
|
$ |
682 |
Attributable(1) production cost of sales per ounce sold on a
by-product basis(2) |
$ |
738 |
|
$ |
668 |
Attributable(1) all-in sustaining cost per ounce sold on a
by-product basis(2) |
$ |
982 |
|
$ |
917 |
Attributable(1) all-in sustaining cost per equivalent ounce(3)
sold(2) |
$ |
993 |
|
$ |
925 |
Attributable(1) all-in cost per ounce sold on a by-product
basis(2) |
$ |
1,245 |
|
$ |
1,239 |
Attributable(1) all-in cost per equivalent ounce(3) sold(2) |
$ |
1,251 |
|
$ |
1,240 |
(1) |
"Total" includes 100% of Chirano production. "Attributable"
includes Kinross' share of Chirano (90%) production. |
(2) |
The
definition and reconciliation of these non-GAAP financial measures
is included on pages 13 to 18 of this news release. |
(3) |
“Gold
equivalent ounces” include silver ounces produced and sold
converted to a gold equivalent based on a ratio of the average spot
market prices for the commodities for each period. The ratio for
the first quarter of 2020 was 93.63:1 (first quarter of 2019 -
83.74:1). |
(4) |
“Capital
expenditures” is as reported as “Additions to property, plant and
equipment” on the interim condensed consolidated statement of cash
flows and excludes “Interest paid capitalized to property, plant
and equipment”. |
The following operating and financial results are based on 2020
first-quarter gold equivalent production. Production and cost
measures are on an attributable basis:
Production1:
Kinross produced 567,327 attributable Au eq. oz. in Q1 2020,
compared with 606,031 Au eq. oz. in Q1 2019. The decrease was
mainly due to lower production at Paracatu, Kupol and Chirano, and
the end of production at Maricunga, partially offset by higher
production at Fort Knox.
Production cost of
sales3: Production cost of sales per Au
eq. oz. was $754 for Q1 2020, compared with $682 for Q1 2019, which
was partly due to cost increases related to COVID-19 impacts.
Production cost of sales per Au oz. on a by-product basis was $738
in Q1 2020, compared with $668 in Q1 2019, based on Q1 2020
attributable gold sales of 542,043 ounces and attributable silver
sales of 1,001,743 ounces.
All-in sustaining
cost3: All-in sustaining cost per Au eq.
oz. sold was $993 in Q1 2020, compared with $925 in Q1 2019. All-in
sustaining cost per Au oz. sold on a by-product basis was $982 in
Q1 2020, compared with $917 in Q1 2019.
Revenue: Revenue from metal
sales increased to $879.8 million in Q1 2020, compared with $786.2
million during the same period in 2019.
Average realized gold price5:
The average realized gold price in Q1 2020 increased 21% to $1,581
per ounce, compared with $1,304 per ounce in Q1 2019.
Margins: Kinross’ attributable
margin per Au eq. oz. sold4 increased 33% to $827 per Au eq. oz.
for Q1 2020, compared with the Q1 2019 margin of $622 per Au eq.
oz. sold.
Operating cash flow: Adjusted
operating cash flow3 for Q1 2020 increased significantly by 81% to
$418.6 million, compared with $230.8 million for Q1 2019.
Net operating cash flow was $299.6 million for
Q1 2020, an increase of 19% compared with $251.6 million for Q1
2019.
Earnings: Adjusted net
earnings3 increased 53% to $127.4 million, or $0.10 per share,
for Q1 2020, compared with adjusted net earnings of $83.3 million,
or $0.07 per share, for Q1 2019.
Reported net earnings2 almost doubled to $122.7
million, or $0.10 per share, for Q1 2020, compared with net
earnings of $64.7 million, or $0.05 per share, in Q1 2019. The
increase was mainly due to higher margins, which outpaced the
increase in average realized gold price, and lower other operating
expense and reduced overhead, partially offset by higher income tax
expense.
Capital expenditures: Capital
expenditures were $191.4 million for Q1 2020, compared with $243.9
million for the same period last year, primarily due to decreased
spending on development projects at Bald Mountain and Round
Mountain, which both began production in Q3 2019.
Balance sheet and financial position
As of March 31, 2020, Kinross had cash and cash
equivalents of $1,138.6 million, compared with $575.1 million at
December 31, 2019. The increase was primarily due to the drawdown
of $750 million from the Company’s $1.5 billion revolving credit
facility on March 20, 2020 and cash flow from operations during the
quarter. This was partially offset by the acquisition of the
Chulbatkan development project and repayment of the amount drawn on
the revolving credit facility at December 31, 2019.
The Company drew down from its revolving credit
facility as a precautionary measure to protect against economic and
business uncertainties caused by the COVID-19 pandemic and
subsequent government actions. The Company does not currently plan
to deploy the funds given its strong financial position.
The Company has additional available credit of
$805.3 million as of March 31, 2020, and total liquidity of
approximately $1.9 billion, with no scheduled debt repayments until
September 2021. The Company has total debt of approximately $2.5
billion, and net debt6 of approximately $1.3 billion.
Kinross also drew down $200 million from the
$300 million Tasiast project financing facility in early April. The
financing, which was signed on December 16, 2019, is an asset
recourse loan with the IFC (a member of the World Bank Group),
Export Development Canada, ING Bank and Société Générale.
On March 2, 2020, Moody’s Investors Service
("Moody's") announced that it upgraded Kinross’ credit rating to
investment grade. Kinross now has investment grade credit ratings
from Moody’s, S&P Global Ratings and Fitch Ratings, all three
rating agencies that rate the Company’s debt.
Operating results
All of Kinross’ mines remained in operation
during Q1 2020 and were not materially impacted by COVID-19.
However, over time, the Company’s mines may be challenged with
potential disruptions as they continue to operate given the future
global impacts of a prolonged crisis.
As previously announced on April 1, 2020,
numerous preventative actions have been implemented to safeguard
employees and local communities, to help prevent the spread of
COVID-19, and to mitigate operational risk. A global platform has
been established for sites to share best practices on pandemic
response. Each site is complying with COVID-19 related protocols
and guidelines in their respective jurisdictions, including
implementing detailed site isolation plans to manage cases should
they occur and comprehensive physical distancing measures.
For Kinross’ remote camp-based sites, rigorous
screening, isolation and quarantine procedures for employees
arriving at camp have been implemented. Rotations and shift
schedules have been adjusted to limit travel to and from sites.
With the support of host governments, business
continuity plans have been prepared and put in place for each site
to mitigate operational risk. Sustaining the supply chain and
maintaining access to refining capacity have also been key areas of
focus for the Company. Kinross continues to work closely with
critical suppliers to minimize potential disruptions and has
initiated a process to increase stocks of key consumables to at
least three months on hand. Kupol, which is in a unique situation
due to its location and seasonality of the supply chain, has
approximately 12 months of inventory on hand, including fuel.
Kinross has also ordered additional critical spares at its other
operations, assessed potential disruptions and identified
alternative sources of supply.
To help maintain scheduled and timely gold
sales, Kinross has contingency plans in place to ensure sustained
access to global refining capacity, including actively managing
metal shipments and securing alternative transportation
channels.
Mine-by-mine summaries for 2020 first-quarter
results can be found on pages eight and 12 of this news release.
Operational highlights from Q1 2020 include the following:
Americas
At Paracatu, production was
lower compared with the previous quarter and year mainly due to a
decrease in mill throughput as a result of temporary downtime at
the crusher, and temporary lower recoveries primarily related to
anticipated variations in ore characteristics during the quarter.
Cost of sales per ounce sold was lower quarter-over-quarter mainly
due to favourable foreign exchange rates and lower operating waste.
Cost of sales per ounce sold was higher year-over-year mainly due
to lower mill throughput, partially offset by favourable foreign
exchange rates.
On March 10, 2020, a new Paracatu technical
report was filed confirming the benefits of an asset optimization
program at the mine, which has resulted in a 24% increase in life
of mine production compared to the prior report. Paracatu is
expected to produce an average of approximately 540k oz. Au
annually over 12 years from 2020 to 2031.
At Round Mountain, production
decreased quarter-over-quarter mainly due to lower mill grades and
fewer ounces recovered from the heap leach pads, while production
was largely in line year-over-year. Cost of sales per ounce sold
was lower compared with Q4 2019 largely as a result of increased
capital development at Phase W during the quarter. Cost of sales
per ounce sold was lower compared with Q1 2019 mainly due to the
focus on capital stripping during the quarter and lower milling
supplies.
At Bald Mountain, production
was lower compared with the previous quarter and year mainly due to
fewer ounces recovered from the heap leach pads, while the timing
of ounces recovered from the Vantage Complex heap leach pads also
contributed to lower production compared with Q4 2019. Cost of
sales per ounce sold was higher versus both comparable periods
largely due to higher operating waste mined, higher labour and
contractor costs, and impacts from COVID-19.
At Fort Knox, production was
mainly in line quarter-over-quarter and was higher compared with
the previous year largely as a result of more ounces recovered from
the heap leach pad. Cost of sales per ounce sold was higher
compared with the previous quarter and year mainly due to higher
operating waste mined and impacts from COVID-19, which affected
mining rates. Higher maintenance and power costs also contributed
to the increase in costs compared with Q1 2019.
Russia
The Russia region performed as planned during
the quarter, with production at Kupol and
Dvoinoye decreasing slightly compared to Q4 2019
and Q1 2019 mainly due to anticipated lower grades. Cost of sales
per ounce sold was largely in line with the previous quarter and
increased compared with Q1 2019 mainly due to lower production.
West Africa
Tasiast continued its strong
performance and delivered, for the second consecutive quarter,
record quarterly production and throughput. Throughput averaged
16,100 t/d during the quarter, as the mine continued to ramp up
capacity. Production was slightly higher quarter-over-quarter and
year-over-year mainly due to improved mill performance. Cost of
sales per ounce sold increased compared with Q4 2019 mainly due to
higher operating waste mined and impacts from COVID-19, which
affected mining rates. Cost of sales per ounce sold decreased
compared with Q1 2019 primarily due to lower operating waste mined,
and reduced contractor and site overhead costs.
The Company issued a news release earlier today
regarding a strike at Tasiast which can be found at
www.kinross.com. There have been four short labour actions at
Tasiast since Kinross acquired the mine, the last being in 2016.
The average length of these labour actions have been approximately
nine days, and none have had a material impact on the Company.
At Chirano, production was
lower quarter-over-quarter and year-over-year mainly due to lower
grades in the underground deposits. Cost of sales per ounce sold
was higher quarter-over-quarter mainly due to lower production.
Higher operating waste mined also contributed to the increase in
costs compared with the same period last year, as the re-start of
open pit mining only commenced in late in Q1 2019.
Development projects
Tasiast 24k
The Tasiast 24k project continues to progress
well. While the project currently remains on schedule to increase
throughput capacity to 21,000 t/d by the end of 2021, and then to
24,000 t/d by mid-2023, timing could be challenged by constraints
on the global movement of people and supplies caused by prolonged
COVID-19-related travel restrictions. The project team is studying
potential longer-term impacts and mitigation measures. During the
quarter, ongoing debottlenecking work in the processing plant
continued, along with critical path construction activities on the
power plant.
Chulbatkan
At the Chulbatkan development
project in Russia, approximately 23,500 metres of infill, step-out
and metallurgical drilling have been completed as of the end of Q1
2020, with encouraging initial results. The drilling program for
the rest of the year will focus on updating the high-grade portion
of the known resource with the goal of defining and further
extending the resource base at year end. The project currently has
a large, near-surface estimated mineral resource, with highly
continuous mineralization that is open along strike and at
depth.
Fort Knox
Gilmore
The Fort Knox Gilmore project
is progressing on schedule and on budget. Stripping continued
during the quarter and all procurement was completed for work
planned for 2020, with all critical materials delivered to site.
The new Barnes Creek heap leach is expected to be completed in Q4
2020, with construction crews at site and now recommencing
activities after the winter season.
La Coipa Restart and
Lobo-Marte
Kinross commenced work on the La Coipa
Restart project after receiving Board approval on February
12, 2020. In early April 2020, the project team completed the
transfer of the mine fleet from the Maricunga operation, which was
recently placed on care and maintenance, to La Coipa. The project
plan includes refurbishing this mine fleet, along with the existing
La Coipa process plant and camp, to mine the Phase 7 deposit. The
ramp up of the project’s workforce to start stripping is being
challenged by limitations placed on people movement within Chile as
part of the country’s COVID-19 response plan, and as a result,
first production is expected to be delayed by approximately three
months to mid-2022.
The Lobo-Marte pre-feasibility
study (PFS) is advancing well and is scheduled to be completed by
early summer. The PFS is based on the concept of commencing
Lobo-Marte production after the conclusion of mining at Phase 7 and
other potential opportunities at adjacent La Coipa deposits.
2020 GuidanceThe following
section of the news release represents forward-looking information
and users are cautioned that actual results may vary. We refer to
the risks and assumptions contained in the Cautionary Statement on
Forward-Looking Information on page 19 of this news release.
Although the COVID-19 pandemic did not
materially impact Kinross’ operations during the first quarter,
2020 full-year guidance was withdrawn by the Company on April 1,
2020. This prudent decision was due to the significant effect of
the pandemic on the world economy, the implications of
government-mandated constraints on financial, commercial and
business activities, and the potential for further business
disruptions and global health impacts.
Favourable fuel prices and foreign exchange
rates are expected to provide offsets to some of the incremental
costs resulting from Kinross’ contingency measures. The Company
will continue to target the safe delivery of its operating plans,
notwithstanding the potential impacts of the global crisis.
Q1 2020 conference call
details
In connection with the release, Kinross will
hold a conference call and audio webcast on Wednesday, May 6, 2020
at 7:45 a.m. ET followed by a question-and-answer session. To
access the call, please dial:
Canada & US toll-free –
(877) 201-0168; Conference ID: 3084946Outside of Canada
& US – +1 (647) 788-4901; Conference ID: 3084946
Replay (available up to 14 days after the
call):
Canada & US toll-free –
(800) 585-8367; Conference ID: 3084946Outside of Canada
& US – +1 (416) 621-4642; Conference ID: 3084946
You may also access the conference call on a
listen-only basis via webcast at our website www.kinross.com. The
audio webcast will be archived on www.kinross.com.
This news release should be read in conjunction
with Kinross’ 2020 first-quarter unaudited Financial Statements and
Management’s Discussion and Analysis report at www.kinross.com.
Kinross’ 2020 first-quarter unaudited Financial Statements and
Management’s Discussion and Analysis have been filed with Canadian
securities regulators (available at www.sedar.com) and furnished to
the U.S. Securities and Exchange Commission (available at
www.sec.gov). Kinross shareholders may obtain a copy of the
financial statements free of charge upon request to the
Company.
Virtual Annual and Special Meeting of
Shareholders
Kinross’ Annual and Special Meeting of
Shareholders will be held on Wednesday, May 6, 2020 at 10:00 a.m.
ET.
In response to the ongoing public health impact
of COVID-19, the Company has elected to hold the meeting via a live
audio webcast. Kinross believes this is a prudent approach that
prioritizes the health and safety of its shareholders and
employees, while still providing the same level of disclosure,
transparency and participation as previous annual shareholder
meetings.
The virtual meeting will be available online at:
http://www.virtualshareholdermeeting.com/KGC2020
The link to the virtual meeting will also be
accessible at www.kinross.com and will be archived for later
use.
Voting and participation instructions for
eligible shareholders are provided in the Company’s Notice of
Annual and Special Meeting of Shareholders and Management
Information Circular.
About Kinross Gold
Corporation
Kinross is a Canadian-based senior gold mining
company with mines and projects in the United States, Brazil,
Russia, Mauritania, Chile and Ghana. Kinross maintains listings on
the Toronto Stock Exchange (symbol:K) and the New York Stock
Exchange (symbol:KGC).
Media Contact Louie DiazSenior
Director, Corporate Communicationsphone:
416-369-6469louie.diaz@kinross.com
Investor Relations ContactTom
ElliottSenior Vice-President, Investor Relations and Corporate
Developmentphone: 416-365-3390tom.elliott@kinross.com
1) Unless otherwise stated, production figures
in this news release are based on Kinross’ 90% share of Chirano
production.
2) Net earnings figures in this release
represent “net earnings attributable to common shareholders.”
3) These figures are non-GAAP financial measures
and are defined and reconciled on pages 13 to 18 of this news
release.
4) Attributable margin per equivalent ounce sold
is a non-GAAP financial measure defined as “average realized gold
price per ounce” less “attributable production cost of sales per
gold equivalent ounce sold.”
5) Average realized gold price is a non-GAAP
financial measure and is defined as gold metal sales divided by the
total number of gold ounces sold.
6) Net debt is a non-GAAP financial measure
defined as “Long-term debt and credit facilities” less “Cash and
cash equivalents”.
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.
Review of operations
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, (unaudited) |
|
Gold equivalent ounces |
|
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost of sales ($millions) |
|
Production cost of sales/equivalent ounce
sold |
|
2020 |
|
2019 |
|
|
2020 |
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
51,667 |
|
37,613 |
|
|
50,768 |
|
37,937 |
|
|
$ |
64.6 |
|
$ |
38.8 |
|
|
$ |
1,272 |
$ |
1,023 |
Round Mountain |
84,465 |
|
85,135 |
|
|
85,715 |
|
83,614 |
|
|
|
56.1 |
|
|
56.0 |
|
|
|
654 |
|
670 |
Bald Mountain |
42,087 |
|
47,255 |
|
|
42,376 |
|
43,230 |
|
|
|
35.7 |
|
|
29.2 |
|
|
|
842 |
|
675 |
Paracatu |
124,367 |
|
146,776 |
|
|
121,197 |
|
146,397 |
|
|
|
87.5 |
|
|
94.9 |
|
|
|
722 |
|
648 |
Maricunga |
- |
|
10,716 |
|
|
1,311 |
|
7,624 |
|
|
|
0.8 |
|
|
4.8 |
|
|
|
610 |
|
630 |
Americas Total |
302,586 |
|
327,495 |
|
|
301,367 |
|
318,802 |
|
|
|
244.7 |
|
|
223.7 |
|
|
|
812 |
|
702 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
120,885 |
|
130,088 |
|
|
122,024 |
|
130,414 |
|
|
|
76.9 |
|
|
78.0 |
|
|
|
630 |
|
598 |
Russia Total |
120,885 |
|
130,088 |
|
|
122,024 |
|
130,414 |
|
|
|
76.9 |
|
|
78.0 |
|
|
|
630 |
|
598 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
103,837 |
|
101,358 |
|
|
93,950 |
|
99,758 |
|
|
|
51.9 |
|
|
66.0 |
|
|
|
552 |
|
662 |
Chirano (100%) |
44,465 |
|
52,322 |
|
|
39,335 |
|
54,083 |
|
|
|
47.8 |
|
|
44.0 |
|
|
|
1,215 |
|
814 |
West Africa Total |
148,302 |
|
153,680 |
|
|
133,285 |
|
153,841 |
|
|
|
99.7 |
|
|
110.0 |
|
|
|
748 |
|
715 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
571,773 |
|
611,263 |
|
|
556,676 |
|
603,057 |
|
|
|
421.3 |
|
|
411.7 |
|
|
|
757 |
|
683 |
Less Chirano non-controlling interest (10%) |
(4,446 |
) |
(5,232 |
) |
|
(3,934 |
) |
(5,408 |
) |
|
|
(4.8 |
) |
|
(4.4 |
) |
|
|
|
Attributable Total |
567,327 |
|
606,031 |
|
|
552,742 |
|
597,649 |
|
|
$ |
416.5 |
|
$ |
407.3 |
|
|
$ |
754 |
$ |
682 |
Interim condensed consolidated balance
sheets
(unaudited,
expressed in millions of U.S. dollars, except share amounts) |
|
|
|
|
|
|
|
|
|
|
As at |
|
|
March
31, |
|
December 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
$ |
1,138.6 |
|
|
$ |
575.1 |
|
|
Restricted cash |
|
13.4 |
|
|
|
15.2 |
|
|
Accounts receivable and other assets |
|
89.5 |
|
|
|
137.4 |
|
|
Current income tax recoverable |
|
144.8 |
|
|
|
43.2 |
|
|
Inventories |
|
1,023.3 |
|
|
|
1,053.8 |
|
|
|
|
2,409.6 |
|
|
|
1,824.7 |
|
|
Non-current assets |
|
|
|
|
Property, plant and equipment |
|
6,632.2 |
|
|
|
6,340.0 |
|
|
Goodwill |
|
158.8 |
|
|
|
158.8 |
|
|
Long-term investments |
|
68.2 |
|
|
|
126.2 |
|
|
Investment in joint venture |
|
18.4 |
|
|
|
18.4 |
|
|
Other long-term assets |
|
539.4 |
|
|
|
572.7 |
|
|
Deferred tax assets |
|
- |
|
|
|
35.2 |
|
|
Total assets |
$ |
9,826.6 |
|
|
$ |
9,076.0 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable and accrued liabilities |
$ |
391.0 |
|
|
$ |
469.3 |
|
|
Current income tax payable |
|
32.7 |
|
|
|
68.0 |
|
|
Current portion of provisions |
|
50.4 |
|
|
|
57.9 |
|
|
Other current liabilities |
|
57.5 |
|
|
|
20.3 |
|
|
Deferred payment obligation |
|
141.5 |
|
|
|
- |
|
|
|
|
673.1 |
|
|
|
615.5 |
|
|
Non-current liabilities |
|
|
|
|
Long-term debt and credit facilities |
|
2,488.0 |
|
|
|
1,837.4 |
|
|
Provisions |
|
841.0 |
|
|
|
838.6 |
|
|
Long-term lease liabilities |
|
35.6 |
|
|
|
38.9 |
|
|
Unrealized fair value of derivative liabilities |
|
22.8 |
|
|
|
0.8 |
|
|
Other long-term liabilities |
|
92.2 |
|
|
|
107.7 |
|
|
Deferred tax liabilities |
|
322.7 |
|
|
|
304.5 |
|
|
Total liabilities |
|
4,475.4 |
|
|
|
3,743.4 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
Common shareholders' equity |
|
|
|
|
Common share capital |
$ |
14,941.5 |
|
|
$ |
14,926.2 |
|
|
Contributed surplus |
|
230.4 |
|
|
|
242.1 |
|
|
Accumulated deficit |
|
(9,706.7 |
) |
|
|
(9,829.4 |
) |
|
Accumulated other comprehensive income (loss) |
|
(128.7 |
) |
|
|
(20.4 |
) |
|
Total common shareholders' equity |
|
5,336.5 |
|
|
|
5,318.5 |
|
|
Non-controlling interest |
|
14.7 |
|
|
|
14.1 |
|
|
Total equity |
|
5,351.2 |
|
|
|
5,332.6 |
|
|
Total liabilities and equity |
$ |
9,826.6 |
|
|
$ |
9,076.0 |
|
|
|
|
|
|
|
Common shares |
|
|
|
|
Authorized |
Unlimited |
|
|
Unlimited |
|
|
Issued and outstanding |
|
1,257,220,950 |
|
|
|
1,253,765,724 |
|
|
|
|
|
|
|
Interim condensed consolidated statements of
operations
(unaudited,
expressed in millions of U.S. dollars, except share and per share
amounts) |
|
|
|
|
|
Three months ended |
|
|
March
31, |
|
March 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
Revenue |
|
|
|
|
Metal sales |
$ |
879.8 |
|
|
$ |
786.2 |
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
Production cost of sales |
|
421.3 |
|
|
|
411.7 |
|
|
Depreciation, depletion and amortization |
|
193.1 |
|
|
|
164.1 |
|
|
Total cost of sales |
|
614.4 |
|
|
|
575.8 |
|
|
Gross profit |
|
265.4 |
|
|
|
210.4 |
|
|
Other operating expense |
|
21.9 |
|
|
|
32.9 |
|
|
Exploration and business development |
|
19.1 |
|
|
|
19.5 |
|
|
General and administrative |
|
31.8 |
|
|
|
42.6 |
|
|
Operating earnings |
|
192.6 |
|
|
|
115.4 |
|
|
Other income (expense) - net |
|
(0.6 |
) |
|
|
2.7 |
|
|
Finance income |
|
2.0 |
|
|
|
2.1 |
|
|
Finance expense |
|
(25.7 |
) |
|
|
(27.5 |
) |
|
Earnings before tax |
|
168.3 |
|
|
|
92.7 |
|
|
Income tax expense - net |
|
(45.0 |
) |
|
|
(28.1 |
) |
|
Net earnings |
$ |
123.3 |
|
|
$ |
64.6 |
|
|
Net earnings (loss) attributable to: |
|
|
|
|
Non-controlling interest |
$ |
0.6 |
|
|
$ |
(0.1 |
) |
|
Common shareholders |
$ |
122.7 |
|
|
$ |
64.7 |
|
|
|
|
|
|
|
Earnings per share attributable to common
shareholders |
|
|
|
|
Basic |
$ |
0.10 |
|
|
$ |
0.05 |
|
|
Diluted |
$ |
0.10 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
(millions) |
|
|
|
|
Basic |
|
1,254.6 |
|
|
|
1,250.6 |
|
|
Diluted |
|
1,265.3 |
|
|
|
1,259.1 |
|
|
Interim condensed consolidated statements of cash
flows
(unaudited,
expressed in millions of U.S. dollars) |
|
|
|
|
|
Three months ended |
|
|
March
31, |
|
March 31, |
|
|
|
2020 |
|
|
|
2019 |
|
|
Net inflow (outflow) of cash related to the following
activities: |
|
|
|
|
Operating: |
|
|
|
|
Net earnings |
$ |
123.3 |
|
|
$ |
64.6 |
|
|
Adjustments to reconcile net earnings to net cash provided from
operating activities: |
|
|
|
|
Depreciation, depletion and amortization |
|
193.1 |
|
|
|
164.1 |
|
|
Share-based compensation expense |
|
4.5 |
|
|
|
4.6 |
|
|
Finance expense |
|
25.7 |
|
|
|
27.5 |
|
|
Deferred tax expense (recovery) |
|
68.4 |
|
|
|
(37.2 |
) |
|
Foreign exchange losses and other |
|
3.6 |
|
|
|
7.2 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable and other assets |
|
(78.6 |
) |
|
|
14.6 |
|
|
Inventories |
|
7.7 |
|
|
|
37.4 |
|
|
Accounts payable and accrued liabilities |
|
15.8 |
|
|
|
(14.2 |
) |
|
Cash flow provided from operating activities |
|
363.5 |
|
|
|
268.6 |
|
|
Income taxes paid |
|
(63.9 |
) |
|
|
(17.0 |
) |
|
Net cash flow provided from operating
activities |
|
299.6 |
|
|
|
251.6 |
|
|
Investing: |
|
|
|
|
Additions to property, plant and equipment |
|
(191.4 |
) |
|
|
(243.9 |
) |
|
Interest paid capitalized to property, plant and equipment |
|
(22.3 |
) |
|
|
(20.9 |
) |
|
Acquisitions |
|
(128.3 |
) |
|
|
(30.0 |
) |
|
Net additions to long-term investments and other assets |
|
(1.9 |
) |
|
|
(6.4 |
) |
|
Net proceeds from the sale of property, plant and equipment |
|
1.5 |
|
|
|
0.9 |
|
|
Decrease (increase) in restricted cash |
|
1.8 |
|
|
|
(0.6 |
) |
|
Interest received and other - net |
|
1.0 |
|
|
|
0.9 |
|
|
Net cash flow used in investing activities |
|
(339.6 |
) |
|
|
(300.0 |
) |
|
Net cash flow of discontinued operations provided from
investing activities |
|
|
|
|
Financing: |
|
|
|
|
Proceeds from drawdown of debt |
|
750.0 |
|
|
|
160.0 |
|
|
Repayment of debt |
|
(100.0 |
) |
|
|
(25.0 |
) |
|
Interest paid |
|
(25.6 |
) |
|
|
(27.3 |
) |
|
Payment of lease liabilities |
|
(4.7 |
) |
|
|
(3.3 |
) |
|
Other - net |
|
(6.6 |
) |
|
|
0.2 |
|
|
Net cash flow provided from financing
activities |
|
613.1 |
|
|
|
104.6 |
|
|
Effect of exchange rate changes on cash and cash
equivalents |
|
(9.6 |
) |
|
|
1.7 |
|
|
Increase in cash and cash equivalents |
|
563.5 |
|
|
|
57.9 |
|
|
Cash and cash equivalents, beginning of
period |
|
575.1 |
|
|
|
349.0 |
|
|
Cash and cash equivalents, end of period |
$ |
1,138.6 |
|
|
$ |
406.9 |
|
|
Operating Summary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mine |
Period |
Ownership |
Tonnes Ore Mined (1) |
Ore Processed (Milled) (1) |
Ore Processed (Heap Leach)
(1) |
Grade (Mill) |
Grade (Heap Leach) |
Recovery (2) |
Gold Eq Production (5) |
Gold Eq Sales (5) |
Production cost of sales |
Production cost of sales/oz |
Cap Ex (7) |
DD&A |
|
|
|
(%) |
('000 tonnes) |
('000 tonnes) |
('000 tonnes) |
(g/t) |
(g/t) |
(%) |
(ounces) |
(ounces) |
($ millions) |
($/ounce) |
($ millions) |
($ millions) |
Americas |
Fort Knox |
Q1 2020 |
100 |
6,795 |
1,859 |
5,694 |
0.60 |
0.23 |
80 |
% |
51,667 |
50,768 |
$ |
64.6 |
$ |
1,272 |
$ |
19.1 |
$ |
22.8 |
Q4 2019 |
100 |
7,648 |
2,615 |
5,498 |
0.43 |
0.20 |
81 |
% |
53,183 |
55,040 |
|
65.9 |
$ |
1,197 |
|
37.1 |
|
25.0 |
Q3 2019 |
100 |
7,094 |
2,097 |
5,250 |
0.52 |
0.21 |
83 |
% |
54,027 |
51,606 |
|
58.3 |
$ |
1,130 |
|
37.4 |
|
24.7 |
Q2 2019 |
100 |
4,829 |
1,811 |
3,440 |
0.59 |
0.20 |
81 |
% |
55,440 |
55,740 |
|
50.7 |
$ |
910 |
|
34.9 |
|
22.6 |
Q1 2019 |
100 |
5,796 |
1,556 |
4,295 |
0.72 |
0.22 |
84 |
% |
37,613 |
37,937 |
|
38.8 |
$ |
1,023 |
|
26.0 |
|
18.0 |
Round Mountain |
Q1 2020 |
100 |
3,700 |
954 |
3,594 |
0.83 |
0.43 |
83 |
% |
84,465 |
85,715 |
$ |
56.1 |
$ |
654 |
$ |
41.8 |
$ |
12.6 |
Q4 2019 |
100 |
7,408 |
882 |
7,140 |
1.00 |
0.36 |
82 |
% |
103,501 |
108,402 |
|
79.3 |
$ |
732 |
|
62.7 |
|
12.6 |
Q3 2019 |
100 |
7,128 |
1,004 |
7,557 |
1.05 |
0.32 |
85 |
% |
82,195 |
81,617 |
|
57.5 |
$ |
705 |
|
43.1 |
|
9.1 |
Q2 2019 |
100 |
4,074 |
909 |
3,910 |
1.17 |
0.33 |
86 |
% |
90,833 |
87,106 |
|
57.8 |
$ |
664 |
|
58.7 |
|
10.2 |
Q1 2019 |
100 |
3,904 |
845 |
3,557 |
1.31 |
0.38 |
86 |
% |
85,135 |
83,614 |
|
56.0 |
$ |
670 |
|
57.0 |
|
7.9 |
Bald Mountain (8) |
Q1 2020 |
100 |
3,254 |
- |
3,254 |
- |
0.55 |
nm |
42,087 |
42,376 |
$ |
35.7 |
$ |
842 |
$ |
31.5 |
$ |
26.7 |
Q4 2019 |
100 |
2,928 |
- |
3,007 |
- |
0.48 |
nm |
66,147 |
65,381 |
|
49.8 |
$ |
762 |
|
54.6 |
|
36.3 |
Q3 2019 |
100 |
6,494 |
- |
6,494 |
- |
0.41 |
nm |
33,995 |
37,644 |
|
30.6 |
$ |
813 |
|
38.9 |
|
14.8 |
Q2 2019 |
100 |
3,725 |
- |
4,138 |
- |
0.36 |
nm |
40,564 |
31,547 |
|
27.0 |
$ |
856 |
|
57.3 |
|
12.2 |
Q1 2019 |
100 |
2,659 |
- |
2,836 |
- |
0.48 |
nm |
47,255 |
43,230 |
|
29.2 |
$ |
675 |
|
60.4 |
|
16.2 |
Paracatu |
Q1 2020 |
100 |
12,350 |
13,224 |
- |
0.39 |
- |
75 |
% |
124,367 |
121,197 |
$ |
87.5 |
$ |
722 |
$ |
14.4 |
$ |
37.7 |
Q4 2019 |
100 |
12,393 |
14,168 |
- |
0.38 |
- |
76 |
% |
140,224 |
140,430 |
|
111.1 |
$ |
791 |
|
21.4 |
|
42.8 |
Q3 2019 |
100 |
12,442 |
14,731 |
- |
0.38 |
- |
78 |
% |
146,396 |
145,662 |
|
99.5 |
$ |
683 |
|
36.8 |
|
39.5 |
Q2 2019 |
100 |
12,307 |
14,439 |
- |
0.48 |
- |
80 |
% |
186,167 |
186,520 |
|
106.8 |
$ |
573 |
|
34.5 |
|
45.2 |
Q1 2019 |
100 |
12,393 |
14,283 |
- |
0.38 |
- |
80 |
% |
146,776 |
146,397 |
|
94.9 |
$ |
648 |
|
15.0 |
|
35.9 |
Maricunga (8) |
Q1 2020 |
100 |
- |
- |
- |
- |
- |
nm |
- |
1,311 |
$ |
0.8 |
$ |
610 |
$ |
- |
$ |
0.3 |
Q4 2019 |
100 |
- |
- |
- |
- |
- |
nm |
3,221 |
17,455 |
|
11.7 |
$ |
670 |
|
- |
|
0.4 |
Q3 2019 |
100 |
- |
- |
- |
- |
- |
nm |
18,016 |
9,203 |
|
7.0 |
$ |
761 |
|
- |
|
0.4 |
Q2 2019 |
100 |
- |
- |
- |
- |
- |
nm |
6,648 |
9,474 |
|
8.0 |
$ |
844 |
|
- |
|
0.5 |
Q1 2019 |
100 |
- |
- |
- |
- |
- |
nm |
10,716 |
7,624 |
|
4.8 |
$ |
630 |
|
- |
|
0.4 |
Russia |
Kupol (3)(4)(6) |
Q1 2020 |
100 |
500 |
425 |
- |
8.73 |
- |
95 |
% |
120,885 |
122,024 |
$ |
76.9 |
$ |
630 |
$ |
5.6 |
$ |
34.4 |
Q4 2019 |
100 |
468 |
435 |
- |
9.14 |
- |
95 |
% |
132,009 |
135,083 |
|
83.3 |
$ |
617 |
|
15.8 |
|
34.8 |
Q3 2019 |
100 |
338 |
431 |
- |
9.65 |
- |
95 |
% |
137,562 |
136,088 |
|
82.6 |
$ |
607 |
|
7.6 |
|
32.2 |
Q2 2019 |
100 |
431 |
432 |
- |
9.23 |
- |
94 |
% |
127,684 |
124,873 |
|
70.2 |
$ |
562 |
|
8.3 |
|
30.7 |
Q1 2019 |
100 |
362 |
425 |
- |
9.62 |
- |
93 |
% |
130,088 |
130,414 |
|
78.0 |
$ |
598 |
|
7.6 |
|
27.4 |
West Africa |
Tasiast |
Q1 2020 |
100 |
1,160 |
1,467 |
- |
2.31 |
- |
95 |
% |
103,837 |
93,950 |
$ |
51.9 |
$ |
552 |
$ |
69.2 |
$ |
40.3 |
Q4 2019 |
100 |
1,129 |
1,379 |
- |
2.39 |
- |
96 |
% |
102,973 |
101,940 |
|
50.4 |
$ |
494 |
|
86.1 |
|
35.0 |
Q3 2019 |
100 |
1,010 |
1,297 |
- |
2.37 |
- |
97 |
% |
93,865 |
86,357 |
|
55.1 |
$ |
638 |
|
68.2 |
|
32.0 |
Q2 2019 |
100 |
819 |
1,281 |
- |
2.19 |
- |
97 |
% |
92,901 |
94,748 |
|
58.9 |
$ |
622 |
|
74.9 |
|
32.2 |
Q1 2019 |
100 |
1,962 |
1,269 |
- |
2.37 |
- |
97 |
% |
101,358 |
99,758 |
|
66.0 |
$ |
662 |
|
71.6 |
|
31.0 |
Chirano - 100% |
Q1 2020 |
90 |
690 |
873 |
- |
1.73 |
- |
88 |
% |
44,465 |
39,335 |
$ |
47.8 |
$ |
1,215 |
$ |
5.1 |
$ |
15.9 |
Q4 2019 |
90 |
737 |
844 |
- |
2.00 |
- |
91 |
% |
48,984 |
47,186 |
|
49.0 |
$ |
1,038 |
|
8.0 |
|
21.4 |
Q3 2019 |
90 |
714 |
801 |
- |
2.02 |
- |
92 |
% |
46,641 |
49,458 |
|
50.0 |
$ |
1,011 |
|
4.8 |
|
22.0 |
Q2 2019 |
90 |
619 |
904 |
- |
1.95 |
- |
92 |
% |
53,349 |
51,141 |
|
46.7 |
$ |
913 |
|
2.7 |
|
23.8 |
Q1 2019 |
90 |
499 |
908 |
- |
1.97 |
- |
92 |
% |
52,322 |
54,083 |
|
44.0 |
$ |
814 |
|
3.3 |
|
25.4 |
Chirano - 90% |
Q1 2020 |
90 |
690 |
873 |
- |
1.73 |
- |
88 |
% |
40,019 |
35,401 |
$ |
43.0 |
$ |
1,215 |
$ |
4.7 |
$ |
14.3 |
Q4 2019 |
90 |
737 |
844 |
- |
2.00 |
- |
91 |
% |
44,086 |
42,468 |
|
44.1 |
$ |
1,038 |
|
7.2 |
|
19.3 |
Q3 2019 |
90 |
714 |
801 |
- |
2.02 |
- |
92 |
% |
41,977 |
44,512 |
|
45.0 |
$ |
1,011 |
|
4.3 |
|
19.8 |
Q2 2019 |
90 |
619 |
904 |
- |
1.95 |
- |
92 |
% |
48,014 |
46,027 |
|
42.0 |
$ |
913 |
|
2.4 |
|
21.4 |
Q1 2019 |
90 |
499 |
908 |
- |
1.97 |
- |
92 |
% |
47,090 |
48,675 |
|
39.6 |
$ |
814 |
|
3.0 |
|
22.9 |
(1) |
Tonnes of ore mined and processed represent 100% Kinross for all
periods presented. |
(2) |
Due to
the nature of heap leach operations, recovery rates at Maricunga
and Bald Mountain cannot be accurately measured on a quarterly
basis. Recovery rates at Fort Knox, Round Mountain and Tasiast
represent mill recovery only. |
(3) |
The Kupol
segment includes the Kupol and Dvoinoye mines. |
(4) |
Kupol
silver grade and recovery were as follows: Q1 2020: 80.02 g/t,
84.1% Q4 2019: 65.63 g/t, 84.8%; Q3 2019: 67.44 g/t, 87.8%; Q2
2019: 75.29 g/t, 84.9%; Q1 2019: 69.61 g/t, 82.1% |
(5) |
Gold
equivalent ounces include silver ounces produced and sold converted
to a gold equivalent based on the ratio of the average spot market
prices for the commodities for each period. The ratios for the
quarters presented are as follows: Q1 2020: 93.63:1, Q4 2019:
85.59:1; Q3 2019: 86.73:1; Q2 2019: 87.98:1; Q1 2019: 83.74:1. |
(6) |
Dvoinoye
ore processed and grade were as follows: Q1 2020: 117,502, 9.24
g/t; Q4 2019: 100,685, 9.89 g/t; Q3 2019: 113,497, 9.82 g/t; Q2
2019: 113,872, 9.24 g/t; Q1 2019: 135,529, 7.46 g/t. |
(7) |
“Capital
expenditures” is as reported as “Additions to property, plant and
equipment” on the interim condensed consolidated statement of cash
flows and excludes “Interest paid capitalized to property, plant
and equipment”. |
(8) |
"nm"
means not meaningful. |
Reconciliation of non-GAAP financial
measures
The Company has included certain non-GAAP
financial measures in this document. These measures are not defined
under IFRS and should not be considered in isolation. The Company
believes that these measures, together with measures determined in
accordance with IFRS, provide investors with an improved ability to
evaluate the underlying performance of the Company. The inclusion
of these measures is meant to provide additional information and
should not be used as a substitute for performance measures
prepared in accordance with IFRS. These measures are not
necessarily standard and therefore may not be comparable to other
issuers.
Adjusted net earnings attributable to common
shareholders and adjusted net earnings per share are non-GAAP
measures which determine the performance of the Company, excluding
certain impacts which the Company believes are not reflective of
the Company’s underlying performance for the reporting period, such
as the impact of foreign exchange gains and losses, reassessment of
prior year taxes and/or taxes otherwise not related to the current
period, impairment charges (reversals), gains and losses and other
one-time costs related to acquisitions, dispositions and other
transactions, and non-hedge derivative gains and losses. Although
some of the items are recurring, the Company believes that they are
not reflective of the underlying operating performance of its
current business and are not necessarily indicative of future
operating results. Management believes that these measures, which
are used internally to assess performance and in planning and
forecasting future operating results, provide investors with the
ability to better evaluate underlying performance, particularly
since the excluded items are typically not included in public
guidance. However, adjusted net earnings and adjusted net earnings
per share measures are not necessarily indicative of net earnings
and earnings per share measures as determined under IFRS.
The following table provides a reconciliation of
net earnings to adjusted net earnings for the periods
presented:
|
|
|
|
|
|
Adjusted Net Earnings |
(unaudited, expressed in millions of U.S dollars, except per share
amounts) |
Three months ended |
March 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
Net earnings attributable to common shareholders - as reported |
$ |
122.7 |
|
$ |
64.7 |
|
Adjusting items: |
|
|
|
Foreign
exchange losses (gains) |
|
2.3 |
|
|
(2.1 |
) |
|
Foreign
exchange losses (gains) on translation of tax basis and foreign
exchange on deferred income taxes within income tax expense |
|
26.3 |
|
|
(1.2 |
) |
|
Taxes in
respect of prior periods |
|
(3.0 |
) |
|
5.7 |
|
|
Fort Knox
pit wall slide related costs |
|
- |
|
|
6.5 |
|
|
Restructuring costs |
|
- |
|
|
9.2 |
|
|
U.S. CARES
Act net benefit |
|
(20.4 |
) |
|
- |
|
|
Other |
|
(0.2 |
) |
|
1.9 |
|
|
Tax effect
of the above adjustments |
|
(0.3 |
) |
|
(1.4 |
) |
|
|
|
4.7 |
|
|
18.6 |
|
Adjusted net earnings attributable to common shareholders |
$ |
127.4 |
|
$ |
83.3 |
|
Weighted average number of common shares outstanding - Basic |
|
1,254.6 |
|
|
1,250.6 |
|
Adjusted net earnings per share |
$ |
0.10 |
|
$ |
0.07 |
|
|
|
|
|
The Company makes reference to a non-GAAP
measure for adjusted operating cash flow. Adjusted operating cash
flow is defined as cash flow from operations excluding certain
impacts which the Company believes are not reflective of the
Company’s regular operating cash flow, and excluding changes in
working capital. Working capital can be volatile due to numerous
factors, including the timing of tax payments, and in the case of
Kupol, a build-up of inventory due to transportation logistics. The
Company uses adjusted operating cash flow internally as a measure
of the underlying operating cash flow performance and future
operating cash flow-generating capability of the Company. However,
the adjusted operating cash flow measure is not necessarily
indicative of net cash flow from operations as determined under
IFRS.
The following table provides a reconciliation of
adjusted operating cash flow for the periods presented:
|
|
|
|
|
|
Adjusted Operating Cash Flow |
(unaudited, expressed in millions of U.S dollars, except per share
amounts) |
Three months ended |
March 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
Net cash flow provided from operating activities - as reported |
$ |
299.6 |
|
$ |
251.6 |
|
|
|
|
|
Adjusting items: |
|
|
|
Working
capital changes: |
|
|
|
Accounts receivable and other assets |
|
78.6 |
|
|
(14.6 |
) |
|
Inventories |
|
(7.7 |
) |
|
(37.4 |
) |
|
Accounts payable and other liabilities, including income taxes
paid |
|
48.1 |
|
|
31.2 |
|
|
|
|
119.0 |
|
|
(20.8 |
) |
Adjusted operating cash flow |
$ |
418.6 |
|
$ |
230.8 |
|
|
|
|
|
Consolidated production cost of sales per gold
equivalent ounce sold is a non-GAAP measure and is defined as
production cost of sales as per the interim condensed consolidated
financial statements divided by the total number of gold equivalent
ounces sold. This measure converts the Company’s non-gold
production into gold equivalent ounces and credits it to total
production.
Attributable production cost of sales per gold
equivalent ounce sold is a non-GAAP measure and is defined as
attributable production cost of sales divided by the attributable
number of gold equivalent ounces sold. This measure converts the
Company’s non-gold production into gold equivalent ounces and
credits it to total production.
Management uses these measures to monitor and
evaluate the performance of its operating properties. The following
table presents a reconciliation of consolidated and attributable
production cost of sales per equivalent ounce sold for the periods
presented:
|
Consolidated and Attributable Production Cost of Sales Per
Equivalent Ounce Sold |
(unaudited, expressed in millions of U.S. dollars, except ounces
and production cost of sales per equivalent ounce) |
Three months ended |
March 31, |
|
|
2020 |
|
|
2019 |
|
|
|
|
Production cost of sales - as reported |
$ |
421.3 |
|
$ |
411.7 |
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.8 |
) |
|
(4.4 |
) |
Attributable(2) production cost of sales |
$ |
416.5 |
|
$ |
407.3 |
|
|
|
|
Gold equivalent ounces sold |
|
556,676 |
|
|
603,057 |
|
Less: portion attributable to Chirano non-controlling
interest(10) |
|
(3,934 |
) |
|
(5,408 |
) |
Attributable(2) gold equivalent ounces sold |
|
552,742 |
|
|
597,649 |
|
Consolidated production cost of sales per equivalent ounce
sold |
$ |
757 |
|
$ |
683 |
|
Attributable(2) production cost of sales per equivalent ounce
sold |
$ |
754 |
|
$ |
682 |
|
|
|
|
Attributable production cost of sales per ounce
sold on a by-product basis is a non-GAAP measure which calculates
the Company’s non-gold production as a credit against its per ounce
production costs, rather than converting its non-gold production
into gold equivalent ounces and crediting it to total production,
as is the case in co-product accounting. Management believes that
this measure provides investors with the ability to better evaluate
Kinross’ production cost of sales per ounce on a comparable basis
with other major gold producers who routinely calculate their cost
of sales per ounce using by-product accounting rather than
co-product accounting.
The following table provides a reconciliation of
attributable production cost of sales per ounce sold on a
by-product basis for the periods presented:
|
|
|
|
Attributable Production Cost of Sales Per Ounce Sold on a
By-Product Basis |
(unaudited, expressed in millions of U.S. dollars, except ounces
and production cost of sales per ounce) |
Three months ended |
March 31, |
|
|
2020 |
|
|
2019 |
|
|
|
|
Production cost of sales - as reported |
$ |
421.3 |
|
$ |
411.7 |
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.8 |
) |
|
(4.4 |
) |
Less: attributable(2) silver revenue(3) |
|
(16.4 |
) |
|
(17.1 |
) |
Attributable(2) production cost of sales net of silver by-product
revenue |
$ |
400.1 |
|
$ |
390.2 |
|
|
|
|
Gold ounces sold |
|
545,967 |
|
|
589,825 |
|
Less: portion attributable to Chirano non-controlling
interest(10) |
|
(3,924 |
) |
|
(5,398 |
) |
Attributable(2) gold ounces sold |
|
542,043 |
|
|
584,427 |
|
Attributable(2) production cost of sales per ounce sold on a
by-product basis |
$ |
738 |
|
$ |
668 |
|
|
|
|
In November 2018, the World Gold Council (“WGC”)
published updates to its guidelines for reporting all-in sustaining
costs and all-in costs to address how the costs associated with
leases, after a company’s adoption of IFRS 16, should be treated.
The WGC is a market development organization for the gold industry
and is an association whose membership comprises leading gold
mining companies including Kinross. Although the WGC is not a
mining industry regulatory organization, it worked closely with its
member companies to develop these non-GAAP measures. Adoption of
the all-in sustaining cost and all-in cost metrics is voluntary and
not necessarily standard, and therefore, these measures presented
by the Company may not be comparable to similar measures presented
by other issuers. The Company believes that the all-in sustaining
cost and all-in cost measures complement existing measures reported
by Kinross.
All-in sustaining cost includes both operating
and capital costs required to sustain gold production on an ongoing
basis. The value of silver sold is deducted from the total
production cost of sales as it is considered residual production.
Sustaining operating costs represent expenditures incurred at
current operations that are considered necessary to maintain
current production. Sustaining capital represents capital
expenditures at existing operations comprising mine development
costs and ongoing replacement of mine equipment and other capital
facilities, and does not include capital expenditures for major
growth projects or enhancement capital for significant
infrastructure improvements at existing operations.
All-in cost is comprised of all-in sustaining
cost as well as operating expenditures incurred at locations with
no current operation, or costs related to other non-sustaining
activities, and capital expenditures for major growth projects or
enhancement capital for significant infrastructure improvements at
existing operations.
Attributable all-in sustaining cost and all-in
cost per ounce sold on a by-product basis are calculated by
adjusting total production cost of sales, as reported on the
interim condensed consolidated statement of operations, as
follows:
|
|
Attributable All-In Sustaining Cost and All-In Cost Per
Ounce Sold on a By-Product Basis |
|
|
(unaudited, expressed in millions of U.S. dollars, except ounces
and costs per ounce) |
Three months ended |
March 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
Production cost of sales - as reported |
$ |
421.3 |
|
$ |
411.7 |
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.8 |
) |
|
(4.4 |
) |
Less: attributable(2) silver revenue(3) |
|
(16.4 |
) |
|
(17.1 |
) |
Attributable(2) production cost of sales net of silver by-product
revenue |
$ |
400.1 |
|
$ |
390.2 |
|
Adjusting items on an attributable(2) basis: |
|
|
|
General and
administrative(4) |
|
31.8 |
|
|
33.4 |
|
|
Other
operating expense - sustaining(5) |
|
4.4 |
|
|
5.5 |
|
|
Reclamation
and remediation - sustaining(6) |
|
13.5 |
|
|
11.4 |
|
|
Exploration
and business development - sustaining(7) |
|
11.9 |
|
|
13.9 |
|
|
Additions to
property, plant and equipment - sustaining(8) |
|
66.4 |
|
|
78.4 |
|
|
Lease
payments - sustaining(9) |
|
4.3 |
|
|
2.9 |
|
All-in Sustaining Cost on a by-product basis - attributable(2) |
$ |
532.4 |
|
$ |
535.7 |
|
|
Other
operating expense - non-sustaining(5) |
|
10.9 |
|
|
16.2 |
|
|
Reclamation
and remediation - non-sustaining(6) |
|
1.3 |
|
|
1.7 |
|
|
Exploration
- non-sustaining(7) |
|
7.0 |
|
|
5.5 |
|
|
Additions to
property, plant and equipment - non-sustaining(8) |
|
122.9 |
|
|
164.7 |
|
|
Lease
payments - non-sustaining(9) |
|
0.4 |
|
|
0.4 |
|
All-in Cost on a by-product basis - attributable(2) |
$ |
674.9 |
|
$ |
724.2 |
|
Gold ounces sold |
|
545,967 |
|
|
589,825 |
|
Less: portion attributable to Chirano non-controlling
interest(10) |
|
(3,924 |
) |
|
(5,398 |
) |
Attributable(2) gold ounces sold |
|
542,043 |
|
|
584,427 |
|
Attributable(2) all-in sustaining cost per ounce sold on a
by-product basis |
$ |
982 |
|
$ |
917 |
|
Attributable(2) all-in cost per ounce sold on a by-product
basis |
$ |
1,245 |
|
$ |
1,239 |
|
|
|
|
|
The Company also assesses its all-in sustaining
cost and all-in cost on a gold equivalent ounce basis. Under these
non-GAAP measures, the Company’s production of silver is converted
into gold equivalent ounces and credited to total production.
Attributable all-in sustaining cost and all-in
cost per equivalent ounce sold are calculated by adjusting total
production cost of sales, as reported on the interim condensed
consolidated statement of operations, as follows:
|
|
Attributable All-In Sustaining Cost and All-In Cost Per
Equivalent Ounce Sold |
(unaudited, expressed in millions of U.S. dollars, except ounces
and costs per equivalent ounce) |
Three months ended |
March 31, |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
Production cost of sales - as reported |
$ |
421.3 |
|
$ |
411.7 |
|
Less: portion attributable to Chirano non-controlling
interest(1) |
|
(4.8 |
) |
|
(4.4 |
) |
Attributable(2) production cost of sales |
$ |
416.5 |
|
$ |
407.3 |
|
Adjusting items on an attributable(2) basis: |
|
|
|
General and
administrative(4) |
|
31.8 |
|
|
33.4 |
|
|
Other
operating expense - sustaining(5) |
|
4.4 |
|
|
5.5 |
|
|
Reclamation
and remediation - sustaining(6) |
|
13.5 |
|
|
11.4 |
|
|
Exploration
and business development - sustaining(7) |
|
11.9 |
|
|
13.9 |
|
|
Additions to
property, plant and equipment - sustaining(8) |
|
66.4 |
|
|
78.4 |
|
|
Lease
payments - sustaining(9) |
|
4.3 |
|
|
2.9 |
|
All-in Sustaining Cost - attributable(2) |
$ |
548.8 |
|
$ |
552.8 |
|
|
Other
operating expense - non-sustaining(5) |
|
10.9 |
|
|
16.2 |
|
|
Reclamation
and remediation - non-sustaining(6) |
|
1.3 |
|
|
1.7 |
|
|
Exploration
- non-sustaining(7) |
|
7.0 |
|
|
5.5 |
|
|
Additions to
property, plant and equipment - non-sustaining(8) |
|
122.9 |
|
|
164.7 |
|
|
Lease
payments - non-sustaining(9) |
|
0.4 |
|
|
0.4 |
|
All-in Cost - attributable(2) |
$ |
691.3 |
|
$ |
741.3 |
|
Gold equivalent ounces sold |
|
556,676 |
|
|
603,057 |
|
Less: portion attributable to Chirano non-controlling
interest(10) |
|
(3,934 |
) |
|
(5,408 |
) |
Attributable(2) gold equivalent ounces sold |
|
552,742 |
|
|
597,649 |
|
Attributable(2) all-in sustaining cost per equivalent ounce
sold |
$ |
993 |
|
$ |
925 |
|
Attributable(2) all-in cost per equivalent ounce sold |
$ |
1,251 |
|
$ |
1,240 |
|
|
|
|
|
(1) |
The portion attributable to Chirano non-controlling interest
represents the non-controlling interest (10%) in the production
cost of sales for the Chirano mine. |
(2) |
“Attributable” includes Kinross' share of Chirano (90%)
production. |
(3) |
“Attributable silver 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. |
(4) |
“General
and administrative” expenses is as reported on the interim
condensed consolidated statement of operations, net of certain
restructuring expenses. General and administrative expenses are
considered sustaining costs as they are required to be absorbed on
a continuing basis for the effective operation and governance of
the Company. |
(5) |
“Other
operating expense – sustaining” is calculated as “Other operating
expense” as reported on the interim condensed consolidated
statement of operations, less other operating and reclamation and
remediation expenses related to non-sustaining activities as well
as other items not reflective of the underlying operating
performance of our business. Other operating expenses are
classified as either sustaining or non-sustaining based on the type
and location of the expenditure incurred. The majority of other
operating expenses that are incurred at existing operations are
considered costs necessary to sustain operations, and are therefore
classified as sustaining. Other operating expenses incurred at
locations where there is no current operation or related to other
non-sustaining activities are classified as non-sustaining. |
(6) |
“Reclamation and remediation - sustaining” is calculated as current
period accretion related to reclamation and remediation obligations
plus current period amortization of the corresponding reclamation
and remediation assets, and is intended to reflect the periodic
cost of reclamation and remediation for currently operating mines.
Reclamation and remediation costs for development projects or
closed mines are excluded from this amount and classified as
non-sustaining. |
(7) |
“Exploration and business development – sustaining” is calculated
as “Exploration and business development” expenses as reported on
the interim condensed consolidated statement of operations, less
non-sustaining exploration expenses. Exploration expenses are
classified as either sustaining or non-sustaining based on a
determination of the type and location of the exploration
expenditure. Exploration expenditures within the footprint of
operating mines are considered costs required to sustain current
operations and so are included in sustaining costs. Exploration
expenditures focused on new ore bodies near existing mines (i.e.
brownfield), new exploration projects (i.e. greenfield) or for
other generative exploration activity not linked to existing mining
operations are classified as non-sustaining. Business development
expenses are considered sustaining costs as they are required for
general operations. |
(8) |
“Additions to property, plant and equipment – sustaining”
represents the majority of capital expenditures at existing
operations including capitalized exploration costs, 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 three months ended
March 31, 2020, primarily related to major projects at Tasiast,
Round Mountain and Fort Knox. Non-sustaining capital expenditures
during the three months ended March 31, 2019, primarily related to
major projects at Round Mountain, Bald Mountain and Fort Knox. |
(9) |
“Lease
payments – sustaining” represents the majority of lease payments as
reported on the interim condensed consolidated statements of cash
flows and is made up of the principal and financing components of
such cash payments, less non-sustaining lease payments. Lease
payments for development projects or closed mines are classified as
non-sustaining. |
(10) |
“Portion
attributable to Chirano non-controlling interest” represents the
non-controlling interest (10%) in the ounces sold from the Chirano
mine. |
(11) |
“Average
realized gold price per ounce” is a non-GAAP financial measure and
is defined as gold metal sales divided by the total number of gold
ounces sold. This measure is intended to enable Management to
better understand the price realized in each reporting period. The
realized price measure does not have any standardized definition
under IFRS and should not be considered a substitute for measure of
performance prepared in accordance with IFRS |
Cautionary statement on forward-looking
information
All statements, other than statements of
historical fact, contained or incorporated by reference in this
news release including, but not limited to, any information as to
the future financial or operating performance of Kinross,
constitute ‘‘forward-looking information’’ or ‘‘forward-looking
statements’’ within the meaning of certain securities laws,
including the provisions of the Securities Act (Ontario) and the
provisions for ‘‘safe harbor’’ under the United States Private
Securities Litigation Reform Act of 1995 and are based on
expectations, estimates and projections as of the date of this news
release. Forward-looking statements contained in this news release,
include, but are not limited to, those under the headings (or
headings that include) “CEO Commentary”, “Development Projects”,
“COVID-19 Response” and “2020 Guidance” and include, without
limitation, statements with respect to our guidance for production,
production costs of sales, all-in sustaining cost and capital
expenditures; the schedules and budgets for the Company’s
development projects; mine life; and continuous improvement
initiatives, as well as references to other possible events, the
future price of gold and silver, the timing and amount of estimated
future production, costs of production, capital expenditures, costs
and timing of the development of projects and new deposits,
estimates and the realization of such estimates (such as mineral or
gold reserves and resources or mine life), success of exploration,
development and mining, currency fluctuations, capital
requirements, project studies, mine life extensions, government
regulation permit applications and conversions, restarting
suspended or disrupted operations; environmental risks and
proceedings; and resolution of pending litigation. The words
“anticipate”, “assumption” “believe”, “budget”, “continue”, ,
“estimates”, “expects”, “focus”, “forward”, “goal”, “guidance”,
“initiate”, “mitigation”, “on budget”, “on schedule”, ,
“opportunity”, “outlook”, “plan”, “potential”, “progress”,
“schedule”, “target”, or variations of or similar such words and
phrases or statements that certain actions, events or results may,
could, should or will be achieved, received or taken, or will occur
or result and similar such expressions identify forward-looking
statements. Forward-looking statements are necessarily based upon a
number of estimates and assumptions that, while considered
reasonable by Kinross as of the date of such statements, are
inherently subject to significant business, economic and
competitive uncertainties and contingencies. The estimates, models
and assumptions of Kinross referenced, contained or incorporated by
reference in this news release, which may prove to be incorrect,
include, but are not limited to, the various assumptions set forth
herein and in our MD&A for the year ended December 31, 2019,
and the Annual Information Form dated March 30, 2020 as well as:
(1) there being no significant disruptions affecting the operations
of the Company, whether due to extreme weather events (including,
without limitation, excessive or lack of rainfall, in particular,
the potential for further production curtailments at Paracatu
resulting from insufficient rainfall and the operational challenges
at Fort Knox and Bald Mountain resulting from excessive rainfall,
which can impact costs and/or production) and other or related
natural disasters, labour disruptions (including but not limited to
strikes or workforce reductions), supply disruptions, power
disruptions, damage to equipment, pit wall slides (in particular
that the effects of the pit wall slides at Fort Knox and Round
Mountain are consistent with the Company’s expectations) or
otherwise; (2) permitting, development, operations and production
from the Company’s operations and development projects being
consistent with Kinross’ current expectations including, without
limitation: the maintenance of existing permits and approvals and
the timely receipt of all permits and authorizations necessary for
the operation of the Tasiast Phase One expansion, and the
development and operation of the 24k Project; operation of the SAG
mill at Tasiast; land acquisitions and permitting for the
construction and operation of the new tailings facility, water and
power supply and continued operation of the tailings reprocessing
facility at Paracatu; and the parliamentary ratification of the
Chirano mining permit in a manner consistent with the Company’s
expectations; (3) political and legal developments in any
jurisdiction in which the Company operates being consistent with
its current expectations including, without limitation, the impact
of any political tensions and uncertainty in the Russian Federation
and Ukraine or any related sanctions and any other similar
restrictions or penalties imposed, or actions taken, by any
government, including but not limited to amendments to the mining
laws, and potential power rationing and tailings facility
regulations in Brazil, potential amendments to water laws and/or
other water use restrictions and regulatory actions in Chile, new
dam safety regulations, and potential amendments to minerals and
mining laws and energy levies laws, and the enforcement of labour
laws in Ghana, new regulations relating to work permits, potential
amendments to customs and mining laws (including but not limited to
amendments to the VAT) and the pending implementation of revisions
to the tax code in Mauritania, and satisfactory resolution of the
discussions with the Mauritanian government regarding the Company’s
activities in Mauritania including those related to Tasiast Sud,
VAT and fuel duty exonerations and the sharing of economic benefits
from the operation, the European Union’s General Data Protection
Regulation or similar legislation in other jurisdictions and
potential amendments to and enforcement of tax laws in Russia
(including, but not limited to, the interpretation, implementation,
application and enforcement of any such laws and amendments
thereto), and the impact of any trade tariffs being consistent with
Kinross’ current expectations; (4) the completion of studies,
including optimization studies, scoping studies and prefeasibility
and feasibility studies, on the timelines currently expected and
the results of those studies being consistent with Kinross’ current
expectations, including the completion of the La Coipa feasibility
study and the Lobo-Marte 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 but not
limited to ore tonnage and ore grade estimates), mine plans for the
Company’s mining operations, and the Company’s internal models;
(10) labour and materials costs increasing on a basis consistent
with Kinross’ current expectations; (11) the terms and conditions
of the legal and fiscal stability agreements for the Tasiast and
Chirano operations being interpreted and applied in a manner
consistent with their intent and Kinross’ expectations and without
material amendment or formal dispute (including without limitation
the application of tax, customs and duties exemptions and
royalties); (12) goodwill and/or asset impairment potential; (13)
the regulatory and legislative regime regarding mining, electricity
production and transmission (including rules related to power
tariffs) in Brazil being consistent with Kinross’ current
expectations; (14) access to capital markets, including but not
limited to maintaining our current credit ratings consistent with
the Company’s current expectations; (15) that the Brazilian power
plants will operate in a manner consistent with our current
expectations; (16) that drawdown of remaining funds under the
Tasiast project financing will proceed in a manner consistent with
our current expectations; (17) potential direct or indirect
operational impacts resulting from infectious diseases or pandemics
such as the ongoing COVID-19 pandemic; and (18) litigation and
regulatory proceedings and the potential ramifications thereof
being concluded in a manner consistent with the Company’s
expectations (including without limitation the ongoing litigation
in Chile relating to the alleged damage of wetlands and the scope
of any remediation plan or other environmental obligations arising
therefrom, the ongoing litigation with the Russian tax authorities
regarding dividend withholding tax and the ongoing Sunnyside
litigation regarding potential CERCLA liability). Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking statements. Such factors include,
but are not limited to: sanctions (any other similar restrictions
or penalties) now or subsequently imposed, other actions taken, by,
against, in respect of or otherwise impacting any jurisdiction in
which the Company is domiciled or operates (including but not
limited to the Russian Federation, Canada, the European Union and
the United States), or any government or citizens of, persons or
companies domiciled in, or the Company’s business, operations or
other activities in, any such jurisdiction; reductions in the
ability of the Company to transport and refine doré; fluctuations
in the currency markets; fluctuations in the spot and forward price
of gold or certain other commodities (such as fuel and
electricity); changes in the discount rates applied to calculate
the present value of net future cash flows based on
country-specific real weighted average cost of capital; changes in
the market valuations of peer group gold producers and the Company,
and the resulting impact on market price to net asset value
multiples; changes in various market variables, such as interest
rates, foreign exchange rates, gold or silver prices and lease
rates, or global fuel prices, that could impact the mark-to-market
value of outstanding derivative instruments and ongoing
payments/receipts under any financial obligations; risks arising
from holding derivative instruments (such as credit risk, market
liquidity risk and mark-to-market risk); changes in national and
local government legislation, taxation (including but not limited
to income tax, advance income tax, stamp tax, withholding tax,
capital tax, tariffs, value-added or sales tax, capital outflow
tax, capital gains tax, windfall or windfall profits tax,
production royalties, excise tax, customs/import or export
taxes/duties, asset taxes, asset transfer tax, property use or
other real estate tax, together with any related fine, penalty,
surcharge, or interest imposed in connection with such taxes),
controls, policies and regulations; the security of personnel and
assets; political or economic developments in Canada, the United
States, Chile, Brazil, Russia, Mauritania, Ghana, or other
countries in which Kinross does business or may carry on business;
business opportunities that may be presented to, or pursued by, us;
our ability to successfully integrate acquisitions and complete
divestitures; operating or technical difficulties in connection
with mining or development activities; employee relations;
litigation or other claims against, or regulatory investigations
and/or any enforcement actions, administrative orders or sanctions
in respect of the Company (and/or its directors, officers, or
employees) including, but not limited to, securities class action
litigation in Canada and/or the United States, environmental
litigation or regulatory proceedings or any investigations,
enforcement actions and/or sanctions under any applicable
anti-corruption, international sanctions and/or anti-money
laundering laws and regulations in Canada, the United States or any
other applicable jurisdiction; the speculative nature of gold
exploration and development including, but not limited to, the
risks of obtaining necessary licenses and permits; diminishing
quantities or grades of reserves; adverse changes in our credit
ratings; and contests over title to properties, particularly title
to undeveloped properties. In addition, there are risks and hazards
associated with the business of gold exploration, development and
mining, including environmental hazards, industrial accidents,
unusual or unexpected formations, pressures, cave-ins, flooding and
gold bullion losses (and the risk of inadequate insurance, or the
inability to obtain insurance, to cover these risks). Many of these
uncertainties and contingencies can directly or indirectly affect,
and could cause, Kinross’ actual results to differ materially from
those expressed or implied in any forward-looking statements made
by, or on behalf of, Kinross, including but not limited to
resulting in an impairment charge on goodwill and/or assets. There
can be no assurance that forward-looking statements will prove to
be accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of
providing information about management’s expectations and plans
relating to the future. All of the forward-looking statements made
in this news release are qualified by this cautionary statement and
those made in our other filings with the securities regulators of
Canada and the United States including, but not limited to, the
cautionary statements made in the “Risk Analysis” section of our
MD&A for the year ended December 31, 2019 and the Annual
Information Form dated March 30, 2020. These factors are not
intended to represent a complete list of the factors that could
affect Kinross. Kinross disclaims any intention or obligation to
update or revise any forward-looking statements or to explain any
material difference between subsequent actual events and such
forward-looking statements, except to the extent required by
applicable law.
Key Sensitivities
Approximately 70%-80% of the Company's costs are
denominated in U.S. dollars.
A 10% change in foreign currency exchange rates
would be expected to result in an approximate $14 impact on
production cost of sales per ounce.7
Specific to the Russian rouble, a 10% change in
the exchange rate would be expected to result in an approximate $15
impact on Russian production cost of sales per ounce.
Specific to the Brazilian real, a 10% change in
the exchange rate would be expected to result in an approximate $25
impact on Brazilian production cost of sales per ounce.
A $10 per barrel change in the price of oil
would be expected to result in an approximate $2 impact on
production cost of sales per ounce.
A $100 change in the price of gold would be
expected to result in an approximate $4 impact on production cost
of sales per ounce as a result of a change in royalties.
Other information
Where we say "we", "us", "our", the "Company",
or "Kinross" in this news release, we mean Kinross Gold Corporation
and/or one or more or all of its subsidiaries, as may be
applicable.
The technical information about the Company’s
mineral properties contained in this news release has been prepared
under the supervision of Mr. John Sims, an officer of the Company
who is a “qualified person” within the meaning of National
Instrument 43-101.
Source: Kinross Gold Corporation
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