Company on track to meet annual production and
cost guidance; balance sheet remains strongTasiast Phase One
construction complete; three U.S. projects proceeding well and on
schedule
Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its
results for the second-quarter ended June 30, 2018.
(This news release contains forward-looking
information about expected future events and financial and
operating performance of the Company. We refer to the risks and
assumptions set out in our Cautionary Statement on Forward-Looking
Information located on page 19 of this release. All dollar amounts
are expressed in U.S. dollars, unless otherwise noted.)
2018 second-quarter
highlights:
- Production1: 602,049 gold equivalent ounces
(Au eq. oz.), compared with 694,874 Au eq. oz. in Q2 2017.
- Revenue: $775.0 million, compared with $868.6
million in Q2 2017.
- Production cost of sales2:
$767 per Au eq. oz., compared with $660 in Q2 2017.
- All-in sustaining cost2:
$1,018 per Au eq. oz. sold, compared with $910 in Q2 2017. All-in
sustaining cost per gold ounce (Au oz.) sold on a by-product basis
was $1,011 in Q2 2018, compared with $901 in Q2 2017.
- Operating cash flow: $184.5 million, compared
with $179.7 million in Q2 2017.
- Adjusted operating cash
flow2: $231.5 million, compared with
$230.8 million in Q2 2017.
- Reported net earnings3: $2.4
million, or $0.00 per share, compared with net earnings of $33.1
million, or $0.03 per share, in Q2 2017.
- Adjusted net earnings2,3:
$37.8 million, or $0.03 per share, compared with adjusted net
earnings of $54.9 million, or $0.04 per share, in Q2 2017.
- Organic projects and development
opportunities:
- Tasiast Phase One construction is now
complete, first ore has gone through the SAG mill, commissioning is
in the final stages, and the project has been transferred to
Operations.
- Kinross is pausing Phase Two activities and is
analyzing alternative throughput expansion options at Tasiast as it
continues to engage with the Government of Mauritania regarding its
activities in the country. The Company remains committed to
disciplined capital allocation as it seeks additional clarity on
the matter.
- The Round Mountain Phase W project is
progressing well and on budget, with pre-stripping commencing and
good progress being made on the new heap leach area. Initial ore is
expected mid-2019.
- Development of the Fort Knox Gilmore project
in Alaska has commenced, and early works on the new heap leach pad
have been initiated. Initial production is expected in early
2020.
- The Bald Mountain Vantage Complex project is
proceeding on schedule and on budget, with construction well
underway. Commissioning of the heap leach pad and processing
facilities are on schedule to commence in Q1 2019.
- In Russia, the Moroshka project located near
Kupol is on schedule to begin stoping high-grade ore in early Q4
2018.
- A feasibility study has been initiated at the La Coipa
Restart project, along with a scoping study at the nearby
Lobo Marte project, to evaluate the potential for
a return to production in Chile.
- Outlook unchanged: Kinross expects to produce
2.5 million Au eq. oz. (+/- 5%) at a production cost of sales per
Au eq. oz. of $730 (+/- 5%) and all-in sustaining cost of $975 (+/-
5%) per ounce sold on both a gold equivalent and by-product basis
for 2018. Total capital expenditures are forecast to be
approximately $1,075 million (+/- 5%).
- Balance sheet: As of June 30, 2018, Kinross
had cash and cash equivalents of $918.7 million and available
credit of $1,566.4 million, for total liquidity of approximately
$2.5 billion, and no debt maturities until 2021.
____________1 Unless otherwise stated, production figures in
this news release are based on Kinross’ 90% share of Chirano
production.2 These figures are non-GAAP financial measures and are
defined and reconciled on pages 14 to 18 of this news
release. 3 Net earnings/loss figures in this release represent
“net earnings (loss) from continuing operations attributable to
common shareholders”.
CEO Commentary
J. Paul Rollinson, President and CEO, made the
following comments in relation to 2018 second-quarter results:
“Our portfolio of mines performed well during
the quarter, contributing to a strong first half performance. As a
result, we remain on track to meet both our annual production and
cost guidance. We achieved solid cash flow and maintained our
strong balance sheet as we continued to advance our development
projects across the Company.
“At Tasiast, construction was completed at the
Phase One expansion, with first ore now through the SAG mill. The
project has been transferred to Operations and is in the final
stages of commissioning. We have decided to pause activities at
Phase Two and, to maintain optionality, are analyzing alternative
throughput approaches to expand Tasiast as we continue to engage
with the Government of Mauritania regarding our activities in the
country. The completion of our evaluation of alternative
approaches, and a Phase Two re-start decision, are subject to our
ongoing engagement with the Government. We remain committed to
disciplined capital allocation as we seek additional clarity on the
matter.
“Our projects in the U.S. continue to make
excellent progress, as the Fort Knox Gilmore, Round Mountain Phase
W and Bald Mountain Vantage Complex projects remain on budget. We
have also initiated a feasibility study for the La Coipa Restart
project, and a scoping study for Lobo Marte, to potentially return
to production in Chile. In Russia, we expect production to commence
at the Moroshka satellite deposit near Kupol early in the fourth
quarter.”
Financial results
Summary of financial and operating
results
|
Three months
ended |
Six months ended |
|
June 30, |
June 30, |
(in millions, except ounces, per share amounts, and per
ounce amounts) |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Operating
Highlights |
|
|
|
|
Total gold equivalent ounces(a) |
|
|
|
|
Produced(c) |
|
607,906 |
|
700,452 |
|
1,267,861 |
|
1,378,233 |
Sold(c) |
|
593,296 |
|
689,362 |
|
1,267,957 |
|
1,341,878 |
|
|
|
|
|
Attributable gold equivalent ounces(a) |
|
|
|
|
Produced(c) |
|
602,049 |
|
694,874 |
|
1,255,986 |
|
1,366,830 |
Sold(c) |
|
587,556 |
|
683,584 |
|
1,255,773 |
|
1,329,530 |
|
|
|
|
|
Financial
Highlights |
|
|
|
|
Metal sales |
$ |
775.0 |
$ |
868.6 |
$ |
1,672.2 |
$ |
1,664.7 |
Production cost of sales |
$ |
454.9 |
$ |
456.6 |
$ |
899.5 |
$ |
915.4 |
Depreciation, depletion and amortization |
$ |
190.3 |
$ |
204.0 |
$ |
383.4 |
$ |
421.5 |
Operating earnings |
$ |
46.3 |
$ |
104.9 |
$ |
224.2 |
$ |
153.5 |
Net earnings attributable to common shareholders |
$ |
2.4 |
$ |
33.1 |
$ |
108.5 |
$ |
167.7 |
Basic earnings per share attributable to common
shareholders |
$ |
0.00 |
$ |
0.03 |
$ |
0.09 |
$ |
0.13 |
Diluted earnings per share attributable to common
shareholders |
$ |
0.00 |
$ |
0.03 |
$ |
0.09 |
$ |
0.13 |
Adjusted net earnings attributable to common
shareholders(b) |
$ |
37.8 |
$ |
54.9 |
$ |
163.0 |
$ |
78.3 |
Adjusted net earnings per share(b) |
$ |
0.03 |
$ |
0.04 |
$ |
0.13 |
$ |
0.06 |
Net cash flow provided from operating activities |
$ |
184.5 |
$ |
179.7 |
$ |
478.0 |
$ |
387.5 |
Adjusted operating cash flow(b) |
$ |
231.5 |
$ |
230.8 |
$ |
595.2 |
$ |
481.7 |
Capital expenditures |
$ |
247.1 |
$ |
200.7 |
$ |
494.0 |
$ |
379.6 |
Average realized gold price per ounce(d) |
$ |
1,306 |
$ |
1,260 |
$ |
1,319 |
$ |
1,241 |
Consolidated production cost of sales per equivalent
ounce(c) sold(b) |
$ |
767 |
$ |
662 |
$ |
709 |
$ |
682 |
Attributable(a) production cost of sales per equivalent
ounce(c) sold(b) |
$ |
767 |
$ |
660 |
$ |
709 |
$ |
680 |
Attributable(a) production cost of sales per ounce sold
on a by-product basis(b) |
$ |
754 |
$ |
645 |
$ |
696 |
$ |
665 |
Attributable(a) all-in sustaining cost per ounce sold
on a by-product basis(b) |
$ |
1,011 |
$ |
901 |
$ |
918 |
$ |
922 |
Attributable(a) all-in sustaining cost per equivalent
ounce(c) sold(b) |
$ |
1,018 |
$ |
910 |
$ |
926 |
$ |
931 |
Attributable(a) all-in cost per ounce sold on a
by-product basis(b) |
$ |
1,343 |
$ |
1,098 |
$ |
1,226 |
$ |
1,100 |
Attributable(a) all-in cost per equivalent ounce(c)
sold(b) |
$ |
1,342 |
$ |
1,102 |
$ |
1,228 |
$ |
1,103 |
- "Total" includes 100% of Chirano production. "Attributable"
includes Kinross' share of Chirano (90%) production.
- The definition and reconciliation of these non-GAAP financial
measures is included on pages 14 to 18 of this news release.
- "Gold equivalent ounces" include silver ounces produced and
sold converted to a gold equivalent based on a ratio of the average
spot market prices for the commodities for each period. The ratio
for the second quarter of 2018 was 79.00:1 (second quarter of 2017
- 73.01:1). The ratio for the first six months of 2018 was 79.12:1
(first six months of 2017 - 71.46:1).
- The definition of this non-GAAP financial measure is included
on page 18 of this news release.
The following operating and financial results
are based on second quarter 2018 gold equivalent production.
Production and cost measures are on an attributable basis:
Production: Kinross produced
602,049 attributable Au eq. oz. in the second quarter of 2018,
compared with 694,874 Au eq. oz. in Q2 2017.
Production cost of sales:
Production cost of sales per Au eq. oz.2 was $767 for the second
quarter of 2018, compared with $660 for Q2 2017, mainly as a result
of higher cost of sales per ounce sold at Fort Knox and
Tasiast.
Production cost of sales per Au oz. on a
by-product basis2 was $754 in Q2 2018, compared with $645 in Q2
2017, based on Q2 2018 attributable gold sales of 574,444 ounces
and attributable silver sales of 1,035,675 ounces.
All-in sustaining cost: All-in
sustaining cost per Au eq. oz. sold2 was $1,018 in Q2 2018,
compared with $910 in Q2 2017. All-in sustaining cost per Au oz.
sold on a by-product basis2 was $1,011 in Q2 2018, compared with
$901 in Q2 2017.
Revenue: Revenue from metal
sales was $775.0 million in the second quarter of 2018, compared
with $868.6 million during the same period in 2017, due to a
decrease in gold equivalent ounces sold, partially offset by a
higher average realized gold price.
Average realized gold price4:
The average realized gold price in Q2 2018 increased to $1,306 per
ounce, compared with $1,260 per ounce in Q2 2017.
Margins: Kinross’ attributable
margin per Au eq. oz. sold5 was $539 per Au eq. oz. for the second
quarter of 2018, compared with the Q2 2017 margin of $600 per Au
eq. oz.
Operating cash flow: Adjusted
operating cash flow2 was $231.5 million for the second quarter of
2018, compared with $230.8 million for Q2 2017.
Net operating cash flow increased to $184.5
million for the second quarter of 2018, compared with $179.7
million for Q2 2017.
Earnings: Adjusted net
earnings2,3 was $37.8 million, or $0.03 per share, for Q2 2018,
compared with adjusted net earnings of $54.9 million, or $0.04 per
share, for Q2 2017.
Reported net earnings3 was $2.4 million, or
$0.00 per share, for Q2 2018, compared with earnings of $33.1
million, or $0.03 per share, in Q2 2017. The decrease was mainly
due to lower margins.
Capital expenditures: Capital
expenditures increased to $247.1 million for Q2 2018, compared with
$200.7 million for the same period last year, mainly due to
increased spending at Round Mountain and Bald Mountain.
____________4 Average realized gold price is a non-GAAP
financial measure and is defined as gold metal sales divided by the
total number of gold ounces sold.5 Attributable margin per
equivalent ounce sold is a non-GAAP financial measure defined as
“average realized gold price per ounce” less “attributable
production cost of sales per gold equivalent ounce sold.”
Operating results Mine-by-mine summaries for
2018 second-quarter operating results may be found on pages nine
and 13 of this news release. Highlights include the following:
Americas
At Fort Knox, lower grades and
a minor pit wall failure in Q1 2018 impacted second quarter
performance. Production declined quarter-over-quarter and
year-over-year primarily due to a decrease in grades. Cost of sales
per ounce sold was higher compared with the previous quarter
largely due to a decline in mill grades and the timing of ounces
processed through the mill in Q1 2018, and increased compared with
Q2 2017 mainly due to the higher volume of operating waste mined
and lower mill grades.
At Round Mountain, production
was in line with the previous quarter but was down year-over-year
mainly due to lower recoveries from the heap leach pads related to
a decrease in tonnes of ore placed on the pads. Higher mill
production, as a result of an increase in mill grade and
recoveries, helped mitigate the year-over-year decline. Cost of
sales per ounce sold was higher quarter-over-quarter and
year-over-year primarily due to timing of ounces recovered from the
pads. Increased fuel costs also contributed to the higher cost of
sales per ounce sold year-over-year.
At Bald Mountain, production
decreased compared with the previous quarter mainly due to timing
of ounces recovered from the heap leach pad as fewer tonnes of ore
were placed on the pads in Q1 2018. Production was higher
year-over-year largely as a result of an increase in ore mined and
increased recoveries from the heap leach pads. Cost of sales per
ounce sold was at its lowest level since Kinross acquired the mine
and was largely in line quarter-over-quarter. Cost of sales per
ounce sold decreased year-over-year primarily due to more ounces
placed and recovered from the heap leach pads and lower operating
waste mined.
At Paracatu, production was
down slightly compared with the previous quarter primarily due to
timing of ounces processed through the mill, and decreased compared
with Q2 2017 mainly due to lower grades, partially offset by higher
mill throughput. Cost of sales per ounce sold was lower
quarter-over-quarter mainly due to a decrease in operating waste
mined. Cost of sales per ounce sold increased year-over-year mainly
due to the decrease in grades as well as higher fuel costs.
At Maricunga, gold production
was strong, as the Company continued to rinse heap materials placed
on the pads prior to the suspension of mining activities. Cost of
sales per ounce sold increased year-over-year mainly due to timing
of gold sales in Q2 2017.
Russia
At Kupol and
Dvoinoye, production was largely in line with Q1
2018, and decreased compared with Q2 2017 mainly due to the planned
mining of lower grade ore at Dvoinoye. Cost of sales per ounce sold
was higher quarter-over-quarter mainly due to timing of ounces
processed through the mill, partially offset by favourable foreign
exchange movements, while lower grades led to the year-over-year
increase in cost of sales per ounce sold.
West Africa
At Tasiast, production was
lower compared with the previous quarter and year-over-year mainly
due to the slower than anticipated ramp up of the mining rate which
delayed access to higher-grade material resulting in lower grades,
and down time at the mill due to Phase One project tie-ins. Cost of
sales per ounce sold was higher quarter-over-quarter and
year-over-year as result of lower grades, an increase in operating
waste mined, and higher fuel costs.
At Chirano, production was
mainly in line with Q1 2018 and higher than Q2 2017, primarily due
to better mill performance and timing of ounces processed through
the mill. Cost of sales per ounce sold was higher
quarter-over-quarter mainly on account of higher consumption of
milling supplies and the timing of ounces sold in Q1 2018. Cost of
sales per ounce sold decreased year-over-year primarily due to the
cessation of open pit mining in Q2 2017 and lower overhead
costs.
Organic development projects and
opportunities
Tasiast two-phased
expansion
Tasiast Phase One construction
is now complete, first ore has gone through the SAG mill, and the
project has been transferred to the Operations team. The CIL plant,
primary crusher and conveyor are fully commissioned and the SAG
mill is in the final stages of commissioning. During the past
month, throughput has continued to ramp up and has peaked at 12,000
t/d.
Click here to view completed Tasiast
Phase One
expansion: https://youtu.be/45eg8TEL-cg
The Company has advanced project financing for
Tasiast Phase One and is targeting approximately $300 million in
financing. During the second quarter, Kinross signed a mandate
letter with the International Finance Corporation, a division of
the World Bank, confirming its interest in participating, subject
to further due diligence. The Company is also finalizing a mandate
letter, subject to further due diligence, with Export Development
Canada. Commercial banks have also expressed interest in the
financing.
As previously disclosed, in early May 2018, the
Company received a letter from the Government of Mauritania
(“Government”) stating a desire to enter into discussions with
respect to the Company’s activities in the country, which the
Company understood as seeking greater benefits for the country.
The Company continues to engage with the
Government on this matter and has paused Phase Two
activities. To maintain optionality, the Company is also analyzing
alternative intermediate throughput approaches to expand the
Tasiast mine. The completion of the Company’s evaluation of
throughput alternatives, and a decision on the next steps for Phase
Two, are subject to the ongoing engagement with the Government. The
Company remains committed to disciplined capital allocation as it
seeks additional clarity on the matter.
Round Mountain Phase W
The Round Mountain Phase W
project is progressing well and is on budget, with initial Phase W
ore expected to be encountered in mid-2019. Pre-stripping is
proceeding well and the new dewatering pond is complete. Earthworks
to prepare for the new infrastructure area and preparations for
construction of the new heap leach are both largely complete.
Initial construction activities for the vertical CIC
(carbon-in-column) plant have commenced, and the remaining
construction and procurement contracts are progressing well.
Detailed engineering is now 95% complete.
Fort Knox Gilmore project
On June 12, 2018, the Company announced that it
will proceed with the initial Fort Knox Gilmore
expansion project in Alaska. The project is expected to extend mine
life at Fort Knox to 2030 at a low capital cost, generate an
internal rate of return of 17% at a $1,200/oz. gold price, and
increase life-of-mine production by approximately 1.5 million Au
eq. oz.
Early works on the new heap leach pad have been
initiated and permitting is now complete. Initial production from
Gilmore is expected in early 2020.
The Company is also continuing to explore the
prospectivity and upside potential of the Fort Knox area, as the
overall orebody has not yet been fully delineated to the west,
south and east.
Bald Mountain Vantage
Complex
The Bald Mountain Vantage
Complex project is proceeding well and remains on schedule
and on budget, with commissioning for the heap leach pad and
processing facilities expected to commence in Q1 2019. Construction
is well underway and engineering is now 95% complete. All major
equipment and construction packages have now been awarded.
Russia satellite deposits
Development of the Russian satellite deposits
continues to progress well, with development of the twin declines
at the Moroshka project proceeding on schedule and
portal infrastructure now largely complete. Stoping of high-grade
ore at Moroshka, which is located approximately four kilometres
east of Kupol, is expected to commence in early Q4 2018. At the
Dvoinoye Zone 1 deposit, portal construction is
complete, and mine and surface infrastructure development are
progressing as planned. Production at the project is expected to
commence in mid-2019.
La Coipa Restart project
The Company continues to evaluate the potential
for a return to production in Chile and has initiated a feasibility
study for the La Coipa Restart project. The
feasibility study will contemplate refurbishments of the existing
plant and infrastructure and processing of high-grade material from
the Phase 7 deposit. The feasibility study is expected to be
completed in the second half of 2019.
The Company has also initiated a scoping study
for the Lobo Marte project, located approximately
80 kilometres from La Coipa. The scoping study will assess the
potential for a production start at Lobo Marte at the end of La
Coipa’s mine life and is expected to be completed in the first half
of 2019. Both studies will also assess the potential to share
resources and leverage synergies between the projects.
Exploration
Kinross’ exploration efforts continued to focus
within the footprint of existing mines and the immediate
surrounding districts. During the first half of the year, a total
of approximately 118,000 metres of drilling was completed for
brownfield exploration, representing 40% of the 2018 brownfield
drilling program. The majority of drilling at the Company’s North
American sites is scheduled to be completed in the second half of
2018, as drilling had a slow start at the beginning of the
year.
Highlights from the first half of 2018
include:
- Bald Mountain: Initial results from the 2018
$10-million Bald Mountain drilling program have been encouraging,
with a total of approximately 18,300 metres now drilled mainly
focusing on the North area of the property. The Company is
analyzing results and continuing the program with the goal of
potential mineral resource additions and mineral reserve
conversions at year end from the Top, Redbird and Winrock deposits.
Generative exploration drilling in the JV area and in the South
area of the property is ongoing and encouraging results have been
received from some of the target areas.
- Kupol: Exploration at the Kupol property is a
high priority for Kinross in 2018, and initial results for
potential mineral resource additions to extend mine life have been
promising. The Company has completed substantial drilling in the
first half of the year and continues to explore the main Kupol vein
and mineralization to the north and south along trend. Drilling at
the North Extension continues to confirm mineralization and vein
widths as intercepted in 2017. At Zone 650 in the Southeast
Extension, drilling is indicating potential mineralization at depth
beneath the current resource. Drilling in the second half of the
year will continue to probe the depth extensions and hanging walls
to the main Kupol vein.
- Chirano: The drilling program at Chirano
remains focused on potential incremental additions to mine life. A
total of approximately 14,700 metres have been drilled at Akwaaba
and Paboase, prioritizing depth extensions, which have yielded
encouraging results. Model updates are ongoing with the goal of
converting mineral resources to mineral reserves at year end.
Studies are also ongoing to determine the potential for open pit
mining at Mamnao where recent metallurgical studies have shown a
potential for high-process recovery for the oxide and transition
materials.
- Tasiast: Drilling was conducted in the El
Gaicha area, which is located south of the mine but north of
Tasiast Sud. Initial results have been encouraging and the Company
expects to continue drilling high-potential targets during the
second half of 2018.
- Fort Knox: Drilling at the East Wall extension
is ongoing and has yielded encouraging results from the first few
holes. Generative exploration work has started in and around the
Fort Knox property and the review of the Gil Sourdough resource is
also underway to evaluate potential synergies with the ongoing
operations at Fort Knox.
Balance sheet and financial flexibility
As of June 30, 2018, Kinross had cash and cash
equivalents of $918.7 million, compared with $1,025.8 million at
December 31, 2017. The Company also had available credit of
$1,566.4 million, for total liquidity of approximately $2.5
billion, and no debt maturities until 2021.
Effective July 1, 2018, the Company extended its
$300 million letter of credit facility with Export Development
Canada by two years to June 2020. On July 23, 2018, the Company
also extended the maturity date of its $1.5 billion credit facility
by one year to August 2023.
Acquisition of power plants in Brazil
On July 31, 2018, Kinross Brasil Mineração, a
subsidiary of the Company, completed the previously announced
transaction to acquire two hydro electric power plants in Brazil
for $253.7 million6. The power plants are expected to secure a
long-term supply of power and lower production costs over life of
the mine at Paracatu. Given the strength of the Company’s balance
sheet, Kinross funded the transaction with cash while continuing to
consider future debt financing to fund the initial capital used for
the acquisition.
____________6 Acquisition price of $835 million Brazilian reais.
$253.7 million based on exchange rate of 3.29 Brazilian reais to
the U.S. dollar.
Outlook
The following section of the news release
represents forward-looking information and users are cautioned that
actual results may vary. We refer to the risks and assumptions
contained in the Cautionary Statement on Forward-Looking
Information on page 19 of this news release.
As previously disclosed, Kinross expects to
produce 2.5 million Au eq. oz. (+/- 5%) for the year, at a
production cost of sales of $730 per Au eq. oz. (+/- 5%) and all-in
sustaining cost of $975 (+/- 5%) per ounce sold on both a gold
equivalent and by-product basis.
The Company also expects to meet its 2018
capital expenditure forecast of approximately $1,075 million (+/-),
which includes sustaining capital of $355 million and
non-sustaining capital of approximately $680 million.
Conference call details
In connection with the release, Kinross will
hold a conference call and audio webcast on Thursday, August 2,
2018 at 8:00 a.m. ET. to discuss the results, followed by a
question-and-answer session. To access the call, please dial:
Canada & US toll-free –
(866) 393-4306; Conference ID: 1689433Outside of Canada
& US – +1 (734) 385-2616; Conference ID: 1689433
Replay (available up to 14 days after the
call):
Canada & US toll-free –
(855) 859-2056; Conference ID: 1689433Outside of Canada
& US – +1 (404) 537-3406; Conference ID: 1689433
You may also access the conference call on a
listen-only basis via webcast at our website www.kinross.com. The
audio webcast will be archived on www.kinross.com.
This news release should be read in conjunction
with Kinross’ 2018 second-quarter unaudited Financial
Statements and Management’s Discussion and Analysis report at
www.kinross.com. Kinross’ 2018 second-quarter
unaudited Financial Statements and Management’s Discussion and
Analysis have been filed with Canadian securities regulators
(available at www.sedar.com) and furnished to the U.S. Securities
and Exchange Commission (available at www.sec.gov). Kinross
shareholders may obtain a copy of the financial statements free of
charge upon request to the Company.
About Kinross Gold
Corporation
Kinross is a Canadian-based senior gold mining
company with mines and projects in the United States, Brazil,
Russia, Mauritania, Chile and Ghana. Kinross maintains listings on
the Toronto Stock Exchange (symbol:K) and the New York Stock
Exchange (symbol:KGC).
Media Contact Louie
DiazDirector, Corporate Communicationsphone:
416-369-6469louie.diaz@kinross.com
Investor Relations ContactTom
Elliott
Senior Vice-President, Investor Relations and Corporate
Developmentphone:
416-365-3390
tom.elliott@kinross.com
Review of operations
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|
|
|
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|
|
|
|
|
|
|
Three months ended June
30, |
|
Gold equivalent ounces |
|
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost of sales
($millions) |
|
Production cost ofsales/equivalent
ounce sold |
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
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|
2018 |
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|
2017 |
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|
2018 |
|
2017 |
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|
|
|
|
|
|
|
|
Fort Knox |
71,463 |
|
91,848 |
|
|
72,340 |
|
91,237 |
|
|
$ |
70.1 |
|
$ |
57.9 |
|
|
$ |
969 |
$ |
635 |
Round Mountain |
97,650 |
|
115,191 |
|
|
95,432 |
|
108,811 |
|
|
|
72.0 |
|
|
69.7 |
|
|
|
754 |
|
641 |
Bald Mountain |
71,435 |
|
49,881 |
|
|
60,730 |
|
54,308 |
|
|
|
27.7 |
|
|
41.4 |
|
|
|
456 |
|
762 |
Kettle River - Buckhorn |
- |
|
30,966 |
|
|
- |
|
30,858 |
|
|
|
- |
|
|
12.4 |
|
|
|
- |
|
402 |
Paracatu |
121,226 |
|
138,869 |
|
|
117,043 |
|
137,056 |
|
|
|
100.4 |
|
|
99.5 |
|
|
|
858 |
|
726 |
Maricunga |
19,866 |
|
15,624 |
|
|
17,764 |
|
7,415 |
|
|
|
11.7 |
|
|
1.9 |
|
|
|
659 |
|
256 |
Americas Total |
381,640 |
|
442,379 |
|
|
363,309 |
|
429,685 |
|
|
|
281.9 |
|
|
282.8 |
|
|
|
776 |
|
658 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
120,418 |
|
146,013 |
|
|
124,179 |
|
149,187 |
|
|
|
73.6 |
|
|
80.5 |
|
|
|
593 |
|
540 |
Russia Total |
120,418 |
|
146,013 |
|
|
124,179 |
|
149,187 |
|
|
|
73.6 |
|
|
80.5 |
|
|
|
593 |
|
540 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
47,276 |
|
56,278 |
|
|
48,409 |
|
52,703 |
|
|
|
54.8 |
|
|
42.1 |
|
|
|
1,132 |
|
799 |
Chirano (100%) |
58,572 |
|
55,782 |
|
|
57,399 |
|
57,787 |
|
|
|
44.6 |
|
|
51.2 |
|
|
|
777 |
|
886 |
West Africa Total |
105,848 |
|
112,060 |
|
|
105,808 |
|
110,490 |
|
|
|
99.4 |
|
|
93.3 |
|
|
|
939 |
|
844 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
607,906 |
|
700,452 |
|
|
593,296 |
|
689,362 |
|
|
|
454.9 |
|
|
456.6 |
|
|
|
767 |
|
662 |
Less Chirano non-controlling interest (10%) |
(5,857 |
) |
(5,578 |
) |
|
(5,740 |
) |
(5,778 |
) |
|
|
(4.5 |
) |
|
(5.1 |
) |
|
|
|
Attributable Total |
602,049 |
|
694,874 |
|
|
587,556 |
|
683,584 |
|
|
$ |
450.4 |
|
$ |
451.5 |
|
|
$ |
767 |
$ |
660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, |
|
Gold equivalent ounces |
|
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost of sales
($millions) |
|
Production cost ofsales/equivalent
ounce sold |
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
151,391 |
|
184,886 |
|
|
151,951 |
|
185,978 |
|
|
$ |
112.3 |
|
$ |
116.4 |
|
|
$ |
739 |
$ |
626 |
Round Mountain |
194,733 |
|
217,940 |
|
|
193,213 |
|
212,909 |
|
|
|
138.6 |
|
|
145.2 |
|
|
|
717 |
|
682 |
Bald Mountain |
164,875 |
|
96,958 |
|
|
158,872 |
|
95,955 |
|
|
|
73.8 |
|
|
75.2 |
|
|
|
465 |
|
784 |
Kettle River - Buckhorn |
- |
|
55,532 |
|
|
927 |
|
55,753 |
|
|
|
- |
|
|
26.1 |
|
|
|
- |
|
468 |
Paracatu |
249,426 |
|
246,965 |
|
|
245,322 |
|
240,332 |
|
|
|
216.3 |
|
|
197.4 |
|
|
|
882 |
|
821 |
Maricunga |
42,032 |
|
51,625 |
|
|
40,118 |
|
15,986 |
|
|
|
27.2 |
|
|
4.9 |
|
|
|
678 |
|
307 |
Americas Total |
802,457 |
|
853,906 |
|
|
790,403 |
|
806,913 |
|
|
|
568.2 |
|
|
565.2 |
|
|
|
719 |
|
700 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
240,599 |
|
289,391 |
|
|
246,803 |
|
292,668 |
|
|
|
138.2 |
|
|
152.3 |
|
|
|
560 |
|
520 |
Russia Total |
240,599 |
|
289,391 |
|
|
246,803 |
|
292,668 |
|
|
|
138.2 |
|
|
152.3 |
|
|
|
560 |
|
520 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
106,054 |
|
120,901 |
|
|
108,912 |
|
118,815 |
|
|
|
101.6 |
|
|
89.1 |
|
|
|
933 |
|
750 |
Chirano (100%) |
118,751 |
|
114,035 |
|
|
121,839 |
|
123,482 |
|
|
|
91.5 |
|
|
108.8 |
|
|
|
751 |
|
881 |
West Africa Total |
224,805 |
|
234,936 |
|
|
230,751 |
|
242,297 |
|
|
|
193.1 |
|
|
197.9 |
|
|
|
837 |
|
817 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
1,267,861 |
|
1,378,233 |
|
|
1,267,957 |
|
1,341,878 |
|
|
|
899.5 |
|
|
915.4 |
|
|
|
709 |
|
682 |
Less Chirano non-controlling interest (10%) |
(11,875 |
) |
(11,403 |
) |
|
(12,184 |
) |
(12,348 |
) |
|
|
(9.2 |
) |
|
(10.9 |
) |
|
|
|
Attributable Total |
1,255,986 |
|
1,366,830 |
|
|
1,255,773 |
|
1,329,530 |
|
|
$ |
890.3 |
|
$ |
904.5 |
|
|
$ |
709 |
$ |
680 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance sheets
(unaudited expressed in millions of United States dollars,
except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
June 30, |
|
December 31, |
|
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash equivalents |
|
$ |
918.7 |
|
|
$ |
1,025.8 |
|
|
Restricted cash |
|
|
12.2 |
|
|
|
12.1 |
|
|
Accounts receivable and other assets |
|
|
125.0 |
|
|
|
91.3 |
|
|
Current income tax recoverable |
|
|
30.2 |
|
|
|
43.9 |
|
|
Inventories |
|
|
1,074.3 |
|
|
|
1,094.3 |
|
|
Unrealized fair value of derivative assets |
|
|
15.8 |
|
|
|
17.0 |
|
|
|
|
|
2,176.2 |
|
|
|
2,284.4 |
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
|
5,071.7 |
|
|
|
4,887.2 |
|
|
Goodwill |
|
|
162.7 |
|
|
|
162.7 |
|
|
Long-term investments |
|
|
148.7 |
|
|
|
188.0 |
|
|
Investments in joint ventures |
|
|
24.1 |
|
|
|
23.7 |
|
|
Unrealized fair value of derivative assets |
|
|
6.6 |
|
|
|
3.9 |
|
|
Other long-term assets |
|
|
603.0 |
|
|
|
574.0 |
|
|
Deferred tax assets |
|
|
30.8 |
|
|
|
33.3 |
|
|
Total assets |
|
$ |
8,223.8 |
|
|
$ |
8,157.2 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
433.3 |
|
|
$ |
482.6 |
|
|
Current income tax payable |
|
|
20.2 |
|
|
|
35.1 |
|
|
Current portion of provisions |
|
|
46.7 |
|
|
|
66.5 |
|
|
Current portion of unrealized fair value of derivative
liabilities |
|
|
56.3 |
|
|
|
1.1 |
|
|
Deferred payment obligation |
|
|
30.0 |
|
|
|
- |
|
|
|
|
|
586.5 |
|
|
|
585.3 |
|
|
Non-current liabilities |
|
|
|
|
|
Long-term debt |
|
|
1,733.8 |
|
|
|
1,732.6 |
|
|
Provisions |
|
|
846.0 |
|
|
|
830.5 |
|
|
Other long-term liabilities |
|
|
150.5 |
|
|
|
134.0 |
|
|
Deferred tax liabilities |
|
|
257.8 |
|
|
|
255.6 |
|
|
Total liabilities |
|
|
3,574.6 |
|
|
|
3,538.0 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Common shareholders' equity |
|
|
|
|
|
Common share capital |
|
$ |
14,913.4 |
|
|
$ |
14,902.5 |
|
|
Contributed surplus |
|
|
232.8 |
|
|
|
240.7 |
|
|
Accumulated deficit |
|
|
(10,415.9 |
) |
|
|
(10,580.7 |
) |
|
Accumulated other comprehensive income (loss) |
|
|
(116.5 |
) |
|
|
21.1 |
|
|
Total common shareholders' equity |
|
|
4,613.8 |
|
|
|
4,583.6 |
|
|
Non-controlling interest |
|
|
35.4 |
|
|
|
35.6 |
|
|
Total equity |
|
|
4,649.2 |
|
|
|
4,619.2 |
|
|
Total liabilities and equity |
|
$ |
8,223.8 |
|
|
$ |
8,157.2 |
|
|
|
|
|
|
|
|
Common
shares |
|
|
|
|
|
Authorized |
|
|
Unlimited |
|
|
|
Unlimited |
|
|
Issued and outstanding |
|
|
1,250,228,821 |
|
|
|
1,247,003,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statements of operations
(unaudited expressed in millions of United States
dollars, except share and per share amounts) |
|
|
|
Three months ended |
|
Six months ended |
|
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
Metal sales |
|
$ |
775.0 |
|
|
$ |
868.6 |
|
|
$ |
1,672.2 |
|
|
$ |
1,664.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
|
|
Production cost of sales |
|
|
454.9 |
|
|
|
456.6 |
|
|
|
899.5 |
|
|
|
915.4 |
|
|
Depreciation, depletion and amortization |
|
|
190.3 |
|
|
|
204.0 |
|
|
|
383.4 |
|
|
|
421.5 |
|
|
Total cost of sales |
|
|
645.2 |
|
|
|
660.6 |
|
|
|
1,282.9 |
|
|
|
1,336.9 |
|
|
Gross profit |
|
|
129.8 |
|
|
|
208.0 |
|
|
|
389.3 |
|
|
|
327.8 |
|
|
Other operating expense |
|
|
29.4 |
|
|
|
46.2 |
|
|
|
54.8 |
|
|
|
61.2 |
|
|
Exploration and business development |
|
|
23.8 |
|
|
|
24.9 |
|
|
|
44.3 |
|
|
|
45.9 |
|
|
General and administrative |
|
|
30.3 |
|
|
|
32.0 |
|
|
|
66.0 |
|
|
|
67.2 |
|
|
Operating earnings |
|
|
46.3 |
|
|
|
104.9 |
|
|
|
224.2 |
|
|
|
153.5 |
|
|
Other income (expense) - net |
|
|
1.8 |
|
|
|
10.7 |
|
|
|
7.7 |
|
|
|
124.7 |
|
|
Equity in losses of joint ventures and associate |
|
|
(0.1 |
) |
|
|
(0.5 |
) |
|
|
(0.2 |
) |
|
|
(0.9 |
) |
|
Finance income |
|
|
3.2 |
|
|
|
2.6 |
|
|
|
6.6 |
|
|
|
6.1 |
|
|
Finance expense |
|
|
(24.7 |
) |
|
|
(28.0 |
) |
|
|
(51.6 |
) |
|
|
(57.0 |
) |
|
Earnings before tax |
|
|
26.5 |
|
|
|
89.7 |
|
|
|
186.7 |
|
|
|
226.4 |
|
|
Income tax expense - net |
|
|
(24.4 |
) |
|
|
(58.0 |
) |
|
|
(78.4 |
) |
|
|
(60.9 |
) |
|
Net earnings |
|
$ |
2.1 |
|
|
$ |
31.7 |
|
|
$ |
108.3 |
|
|
$ |
165.5 |
|
|
Net earnings (loss) attributable
to: |
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
$ |
(0.3 |
) |
|
$ |
(1.4 |
) |
|
$ |
(0.2 |
) |
|
$ |
(2.2 |
) |
|
Common shareholders |
|
$ |
2.4 |
|
|
$ |
33.1 |
|
|
$ |
108.5 |
|
|
$ |
167.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share attributable to common
shareholders |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.00 |
|
|
$ |
0.03 |
|
|
$ |
0.09 |
|
|
$ |
0.13 |
|
|
Diluted |
|
$ |
0.00 |
|
|
$ |
0.03 |
|
|
$ |
0.09 |
|
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding (millions) |
|
|
|
|
|
|
|
|
|
Basic |
|
|
1,250.2 |
|
|
|
1,247.0 |
|
|
|
1,248.7 |
|
|
|
1,246.2 |
|
|
Diluted |
|
|
1,259.3 |
|
|
|
1,257.4 |
|
|
|
1,258.3 |
|
|
|
1,256.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statements of cash flows
(unaudited expressed in millions of United States
dollars) |
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
Net inflow (outflow) of cash related to the
following activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating: |
|
|
|
|
|
|
|
|
Net earnings |
$ |
2.1 |
|
|
$ |
31.7 |
|
|
$ |
108.3 |
|
|
$ |
165.5 |
|
|
Adjustments to reconcile net earnings to net cash
provided from operating activities: |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
190.3 |
|
|
|
204.0 |
|
|
|
383.4 |
|
|
|
421.5 |
|
|
Gain on disposition of associate and other interests -
net |
|
- |
|
|
|
(11.0 |
) |
|
|
- |
|
|
|
(11.0 |
) |
|
Reversal of impairment charges |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(97.0 |
) |
|
Equity in losses of joint ventures and associate |
|
0.1 |
|
|
|
0.5 |
|
|
|
0.2 |
|
|
|
0.9 |
|
|
Share-based compensation expense |
|
3.5 |
|
|
|
3.3 |
|
|
|
7.5 |
|
|
|
6.6 |
|
|
Finance expense |
|
24.7 |
|
|
|
28.0 |
|
|
|
51.6 |
|
|
|
57.0 |
|
|
Deferred tax expense (recovery) |
|
15.9 |
|
|
|
(4.1 |
) |
|
|
27.3 |
|
|
|
(17.2 |
) |
|
Foreign exchange losses (gains) and other |
|
(5.1 |
) |
|
|
(21.6 |
) |
|
|
16.9 |
|
|
|
(44.6 |
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable and other assets |
|
(41.7 |
) |
|
|
(7.1 |
) |
|
|
(44.1 |
) |
|
|
43.1 |
|
|
Inventories |
|
21.2 |
|
|
|
(10.8 |
) |
|
|
(1.8 |
) |
|
|
(5.1 |
) |
|
Accounts payable and accrued liabilities |
|
7.2 |
|
|
|
57.0 |
|
|
|
(16.0 |
) |
|
|
(17.8 |
) |
|
Cash flow provided from operating
activities |
|
218.2 |
|
|
|
269.9 |
|
|
|
533.3 |
|
|
|
501.9 |
|
|
Income taxes paid |
|
(33.7 |
) |
|
|
(90.2 |
) |
|
|
(55.3 |
) |
|
|
(114.4 |
) |
|
Net cash flow provided from operating
activities |
|
184.5 |
|
|
|
179.7 |
|
|
|
478.0 |
|
|
|
387.5 |
|
|
|
|
|
|
|
|
|
|
|
Investing: |
|
|
|
|
|
|
|
|
Additions to property, plant and equipment |
|
(247.1 |
) |
|
|
(200.7 |
) |
|
|
(494.0 |
) |
|
|
(379.6 |
) |
|
Acquisition |
|
- |
|
|
|
- |
|
|
|
(35.1 |
) |
|
|
- |
|
|
Net additions to long-term investments and other
assets |
|
(15.9 |
) |
|
|
(5.5 |
) |
|
|
(30.2 |
) |
|
|
(15.1 |
) |
|
Net proceeds from the sale of property, plant and
equipment |
|
1.0 |
|
|
|
3.7 |
|
|
|
4.0 |
|
|
|
4.8 |
|
|
Net proceeds from disposition of associate and other
interests |
|
- |
|
|
|
267.5 |
|
|
|
- |
|
|
|
267.5 |
|
|
Decrease (increase) in restricted cash |
|
0.6 |
|
|
|
(0.3 |
) |
|
|
(0.1 |
) |
|
|
(1.1 |
) |
|
Interest received and other |
|
2.4 |
|
|
|
1.2 |
|
|
|
5.0 |
|
|
|
3.3 |
|
|
Net cash flow provided from (used in) investing
activities |
|
(259.0 |
) |
|
|
65.9 |
|
|
|
(550.4 |
) |
|
|
(120.2 |
) |
|
Financing: |
|
|
|
|
|
|
|
|
Issuance of common shares on exercise of
options |
|
0.1 |
|
|
|
0.7 |
|
|
|
0.5 |
|
|
|
0.8 |
|
|
Interest paid |
|
- |
|
|
|
(2.8 |
) |
|
|
(30.0 |
) |
|
|
(34.5 |
) |
|
Other |
|
(0.1 |
) |
|
|
(0.5 |
) |
|
|
(0.1 |
) |
|
|
(0.5 |
) |
|
Net cash flow used in financing
activities |
|
- |
|
|
|
(2.6 |
) |
|
|
(29.6 |
) |
|
|
(34.2 |
) |
|
Effect of exchange rate changes on cash and
cash equivalents |
|
(4.7 |
) |
|
|
(0.7 |
) |
|
|
(5.1 |
) |
|
|
1.2 |
|
|
Increase (decrease) in cash and cash
equivalents |
|
(79.2 |
) |
|
|
242.3 |
|
|
|
(107.1 |
) |
|
|
234.3 |
|
|
Cash and cash equivalents, beginning of
period |
|
997.9 |
|
|
|
819.0 |
|
|
|
1,025.8 |
|
|
|
827.0 |
|
|
Cash and cash equivalents, end of
period |
$ |
918.7 |
|
|
$ |
1,061.3 |
|
|
$ |
918.7 |
|
|
$ |
1,061.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
ofsales |
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 |
Q2 2018 |
100 |
4,620 |
3,106 |
4,279 |
0.44 |
0.18 |
80 |
% |
71,463 |
72,340 |
$ |
70.1 |
$ |
969 |
$ |
16.8 |
$ |
38.8 |
Q1 2018 |
100 |
9,075 |
3,110 |
5,839 |
0.70 |
0.20 |
82 |
% |
79,928 |
79,611 |
|
42.2 |
|
530 |
|
9.6 |
|
23.0 |
Q4 2017 |
100 |
8,276 |
3,239 |
4,464 |
0.96 |
0.23 |
82 |
% |
95,182 |
94,724 |
|
58.7 |
|
620 |
|
27.3 |
|
23.6 |
Q3 2017 |
100 |
7,490 |
3,228 |
6,088 |
0.78 |
0.26 |
81 |
% |
101,047 |
101,077 |
|
64.8 |
|
641 |
|
25.4 |
|
20.5 |
Q2 2017 |
100 |
5,353 |
3,069 |
5,830 |
0.86 |
0.26 |
84 |
% |
91,848 |
91,237 |
|
57.9 |
|
635 |
|
21.4 |
|
20.0 |
Round Mountain |
Q2 2018 |
100 |
4,721 |
853 |
4,361 |
1.44 |
0.37 |
86 |
% |
97,650 |
95,432 |
$ |
72.0 |
$ |
754 |
$ |
43.6 |
$ |
13.9 |
Q1 2018 |
100 |
7,893 |
832 |
8,175 |
1.62 |
0.28 |
86 |
% |
97,083 |
97,781 |
|
66.6 |
|
681 |
|
26.4 |
|
14.8 |
Q4 2017 |
100 |
5,429 |
864 |
4,201 |
1.46 |
0.46 |
84 |
% |
98,249 |
104,198 |
|
81.6 |
|
783 |
|
66.2 |
|
15.3 |
Q3 2017 |
100 |
6,906 |
865 |
5,177 |
1.73 |
0.50 |
81 |
% |
120,743 |
120,944 |
|
75.7 |
|
626 |
|
14.7 |
|
34.9 |
Q2 2017 |
100 |
8,136 |
979 |
5,685 |
1.35 |
0.52 |
78 |
% |
115,191 |
108,811 |
|
69.7 |
|
641 |
|
8.6 |
|
28.3 |
Bald Mountain
(8) |
Q2 2018 |
100 |
7,109 |
- |
7,109 |
- |
0.48 |
nm |
71,435 |
60,730 |
$ |
27.7 |
$ |
456 |
$ |
44.9 |
$ |
20.8 |
Q1 2018 |
100 |
5,333 |
- |
5,333 |
- |
0.38 |
nm |
93,440 |
98,142 |
|
46.1 |
|
470 |
|
20.4 |
|
27.2 |
Q4 2017 |
100 |
5,691 |
- |
5,691 |
- |
0.72 |
nm |
105,080 |
99,363 |
|
47.0 |
|
473 |
|
46.6 |
|
28.6 |
Q3 2017 |
100 |
7,090 |
- |
7,105 |
- |
1.09 |
nm |
80,677 |
67,598 |
|
46.7 |
|
691 |
|
12.6 |
|
24.6 |
Q2 2017 |
100 |
5,174 |
- |
5,159 |
- |
0.58 |
nm |
49,881 |
54,308 |
|
41.4 |
|
762 |
|
15.6 |
|
16.2 |
Kettle River-
Buckhorn |
Q2 2018 |
100 |
- |
- |
- |
- |
- |
- |
|
- |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
Q1 2018 |
100 |
- |
- |
- |
- |
- |
- |
|
- |
927 |
|
- |
|
- |
|
- |
|
- |
Q4 2017 |
100 |
- |
- |
- |
- |
- |
- |
|
3,906 |
3,949 |
|
0.4 |
|
101 |
|
- |
|
- |
Q3 2017 |
100 |
- |
43 |
- |
4.36 |
- |
67 |
% |
17,132 |
17,385 |
|
10.3 |
|
592 |
|
- |
|
0.1 |
Q2 2017 |
100 |
91 |
95 |
- |
11.45 |
- |
90 |
% |
30,966 |
30,858 |
|
12.4 |
|
402 |
|
- |
|
0.1 |
Paracatu |
Q2 2018 |
100 |
11,677 |
14,074 |
- |
0.37 |
- |
75 |
% |
121,226 |
117,043 |
$ |
100.4 |
$ |
858 |
$ |
23.7 |
$ |
30.8 |
Q1 2018 |
100 |
11,988 |
13,041 |
- |
0.36 |
- |
77 |
% |
128,200 |
128,279 |
|
115.9 |
|
903 |
|
15.5 |
|
34.2 |
Q4 2017 |
100 |
6,895 |
8,331 |
- |
0.40 |
- |
75 |
% |
66,023 |
62,843 |
|
59.8 |
|
952 |
|
32.5 |
|
26.2 |
Q3 2017 |
100 |
227 |
4,067 |
- |
0.42 |
- |
69 |
% |
46,971 |
53,076 |
|
53.0 |
|
999 |
|
32.6 |
|
30.6 |
Q2 2017 |
100 |
10,422 |
13,333 |
- |
0.43 |
- |
77 |
% |
138,869 |
137,056 |
|
99.5 |
|
726 |
|
31.4 |
|
36.7 |
Maricunga (8) |
Q2 2018 |
100 |
- |
- |
- |
- |
- |
nm |
19,866 |
17,764 |
$ |
11.7 |
$ |
659 |
$ |
- |
$ |
0.8 |
Q1 2018 |
100 |
- |
- |
- |
- |
- |
nm |
22,166 |
22,354 |
|
15.5 |
|
693 |
|
- |
|
1.5 |
Q4 2017 |
100 |
- |
- |
- |
- |
- |
nm |
19,039 |
11,201 |
|
6.9 |
|
616 |
|
1.3 |
|
1.1 |
Q3 2017 |
100 |
- |
- |
- |
- |
- |
nm |
20,463 |
14,129 |
|
8.1 |
|
573 |
|
- |
|
1.7 |
Q2 2017 |
100 |
- |
- |
- |
- |
- |
nm |
15,624 |
7,415 |
|
1.9 |
|
256 |
|
0.1 |
|
0.6 |
Russia |
Kupol
(3)(4)(6) |
Q2 2018 |
100 |
412 |
430 |
- |
8.42 |
- |
95 |
% |
120,418 |
124,179 |
$ |
73.6 |
$ |
593 |
$ |
11.2 |
$ |
33.0 |
Q1 2018 |
100 |
412 |
427 |
- |
8.58 |
- |
95 |
% |
120,181 |
122,624 |
|
64.6 |
|
527 |
|
10.8 |
|
38.4 |
Q4 2017 |
100 |
487 |
425 |
- |
10.38 |
- |
95 |
% |
145,301 |
141,518 |
|
73.8 |
|
521 |
|
19.1 |
|
43.3 |
Q3 2017 |
100 |
491 |
451 |
- |
9.69 |
- |
95 |
% |
145,759 |
142,821 |
|
74.8 |
|
524 |
|
14.4 |
|
41.4 |
Q2 2017 |
100 |
489 |
440 |
- |
9.78 |
- |
95 |
% |
146,013 |
149,187 |
|
80.5 |
|
540 |
|
15.4 |
|
44.5 |
West Africa |
Tasiast |
Q2 2018 |
100 |
966 |
750 |
755 |
1.88 |
0.29 |
91 |
% |
47,276 |
48,409 |
$ |
54.8 |
$ |
1,132 |
$ |
101.4 |
$ |
18.9 |
Q1 2018 |
100 |
1,786 |
736 |
279 |
2.26 |
0.36 |
93 |
% |
58,778 |
60,503 |
|
46.8 |
|
774 |
|
157.8 |
|
19.0 |
Q4 2017 |
100 |
2,534 |
807 |
318 |
2.28 |
0.69 |
92 |
% |
60,274 |
54,993 |
|
43.0 |
|
782 |
|
119.3 |
|
17.8 |
Q3 2017 |
100 |
2,139 |
764 |
576 |
2.42 |
0.67 |
93 |
% |
62,065 |
62,448 |
|
46.1 |
|
738 |
|
93.8 |
|
16.7 |
Q2 2017 |
100 |
975 |
728 |
87 |
2.35 |
0.59 |
93 |
% |
56,278 |
52,703 |
|
42.1 |
|
799 |
|
95.2 |
|
18.8 |
Chirano -
100% |
Q2 2018 |
90 |
458 |
873 |
- |
2.23 |
- |
92 |
% |
58,572 |
57,399 |
$ |
44.6 |
$ |
777 |
$ |
5.0 |
$ |
31.4 |
Q1 2018 |
90 |
523 |
885 |
- |
2.34 |
- |
92 |
% |
60,179 |
64,440 |
|
46.9 |
|
728 |
|
6.4 |
|
33.3 |
Q4 2017 |
90 |
496 |
878 |
- |
2.52 |
- |
92 |
% |
66,285 |
61,973 |
|
43.3 |
|
699 |
|
10.9 |
|
32.5 |
Q3 2017 |
90 |
456 |
886 |
- |
2.51 |
- |
92 |
% |
65,707 |
65,757 |
|
48.0 |
|
730 |
|
7.7 |
|
34.8 |
Q2 2017 |
90 |
613 |
822 |
- |
2.48 |
- |
92 |
% |
55,782 |
57,787 |
|
51.2 |
|
886 |
|
10.1 |
|
36.8 |
Chirano - 90% |
Q2 2018 |
90 |
458 |
873 |
- |
2.23 |
- |
92 |
% |
52,715 |
51,659 |
$ |
40.1 |
$ |
776 |
$ |
4.5 |
$ |
28.3 |
Q1 2018 |
90 |
523 |
885 |
- |
2.34 |
- |
92 |
% |
54,161 |
57,996 |
|
42.2 |
|
728 |
|
5.8 |
|
30.0 |
Q4 2017 |
90 |
496 |
878 |
- |
2.52 |
- |
92 |
% |
59,656 |
55,776 |
|
39.0 |
|
699 |
|
9.8 |
|
29.3 |
Q3 2017 |
90 |
456 |
886 |
- |
2.51 |
- |
92 |
% |
59,136 |
59,181 |
|
43.2 |
|
730 |
|
6.9 |
|
31.3 |
Q2 2017 |
90 |
613 |
822 |
- |
2.48 |
- |
92 |
% |
50,204 |
52,009 |
|
46.1 |
|
886 |
|
9.1 |
|
33.1 |
- Tonnes of ore mined and processed represent 100% Kinross for
all periods presented.
- 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.
- The Kupol segment includes the Kupol and Dvoinoye
mines.
- Kupol silver grade and recovery were as follows: Q2 2018: 68.65
g/t, 84%; Q1 2018: 69.35 g/t, 81.0%; Q4 2017: 81.85 g/t, 82.8%; Q3
2017: 81.50 g/t, 85.8%; Q2 2017: 78.20 g/t, 85.0%.
- Gold equivalent ounces include silver ounces produced and sold
converted to a gold equivalent based on the ratio of the average
spot market prices for the commodities for each period. The ratios
for the quarters presented are as follows: Q2 2018: 79.00:1; Q1
2018: 79.25:1; Q4 2017: 76.22:1; Q3 2017: 75.91:1; Q2 2017:
73.01:1.
- Dvoinoye ore processed and grade were as follows: Q2 2018:
121,739, 9.22 g/t; Q1 2018: 103,369, 10.13 g/t; Q4 2017: 127,671
tonnes, 13.44 g/t; Q3 2017: 111,330 tonnes, 15.37 g/t; Q2 2017:
111,664 tonnes, 15.79 g/t.
- Capital expenditures are presented on a cash basis, consistent
with the statement of cash flows.
- "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 |
(in millions, except per share amounts) |
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Net earnings attributable to common
shareholders - as reported |
$ |
2.4 |
|
$ |
33.1 |
|
|
$ |
108.5 |
|
$ |
167.7 |
|
Adjusting items: |
|
|
|
|
|
|
Foreign exchange
(gains) losses |
|
(3.4 |
) |
|
(0.2 |
) |
|
|
(3.9 |
) |
|
2.4 |
|
|
Gain (loss)
on disposition of associate and interests and other assets -
net |
|
0.9 |
|
|
(9.1 |
) |
|
|
0.1 |
|
|
(9.6 |
) |
|
Foreign
exchange losses on translation of tax basis and foreign exchange on
deferred income taxes within income tax expense |
|
28.1 |
|
|
5.6 |
|
|
|
28.3 |
|
|
1.2 |
|
|
Impairment
reversal(a) |
|
- |
|
|
- |
|
|
|
- |
|
|
(97.0 |
) |
|
Taxes in respect of
prior years |
|
(0.1 |
) |
|
24.4 |
|
|
|
20.0 |
|
|
29.1 |
|
|
Reclamation
and remediation expense |
|
4.5 |
|
|
- |
|
|
|
4.5 |
|
|
- |
|
|
Tasiast
Phase One commissioning costs |
|
6.4 |
|
|
- |
|
# |
|
6.4 |
|
|
- |
|
|
Chile
weather event related costs |
|
- |
|
|
1.6 |
|
|
|
- |
|
|
1.6 |
|
|
Insurance
recoveries |
|
- |
|
|
- |
|
|
|
- |
|
|
(17.5 |
) |
|
Other(b) |
|
0.6 |
|
|
1.6 |
|
|
|
0.9 |
|
|
1.2 |
|
|
Tax effect
of the above adjustments |
|
(1.6 |
) |
|
(2.1 |
) |
|
|
(1.8 |
) |
|
(0.8 |
) |
|
|
|
35.4 |
|
|
21.8 |
|
|
|
54.5 |
|
|
(89.4 |
) |
Adjusted net earnings attributable to
common shareholders |
$ |
37.8 |
|
$ |
54.9 |
|
|
$ |
163.0 |
|
$ |
78.3 |
|
Weighted average number of common shares
outstanding - Basic |
|
1,250.2 |
|
|
1,247.0 |
|
|
|
1,248.7 |
|
|
1,246.2 |
|
Adjusted net earnings per share |
$ |
0.03 |
|
$ |
0.04 |
|
|
$ |
0.13 |
|
$ |
0.06 |
|
|
|
|
|
|
|
|
- During the six months ended June 30, 2017, the Company
recognized a reversal of impairment charges related to the disposal
of its 25% interest in Cerro Casale.
- “Other” includes non-hedge derivatives losses (gains).
The Company makes reference to a non-GAAP
measure for adjusted operating cash flow. Adjusted operating cash
flow is defined as cash flow from operations excluding certain
impacts which the Company believes are not reflective of the
Company’s regular operating cash flow, and excluding changes in
working capital. Working capital can be volatile due to numerous
factors, including the timing of tax payments, and in the case of
Kupol, a build-up of inventory due to transportation logistics. The
Company uses adjusted operating cash flow internally as a measure
of the underlying operating cash flow performance and future
operating cash flow-generating capability of the Company. However,
the adjusted operating cash flow measure is not necessarily
indicative of net cash flow from operations as determined under
IFRS.
The following table provides a reconciliation of
adjusted operating cash flow for the periods presented:
|
|
|
|
|
|
|
|
|
Adjusted Operating Cash
Flow |
(in millions) |
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Net cash flow provided from operating
activities - as reported |
$ |
184.5 |
|
$ |
179.7 |
|
|
$ |
478.0 |
|
$ |
387.5 |
|
|
|
|
|
|
|
|
Adjusting items: |
|
|
|
|
|
|
Working capital
changes: |
|
|
|
|
|
|
Accounts
receivable and other assets |
|
41.7 |
|
|
7.1 |
|
|
|
44.1 |
|
|
(43.1 |
) |
|
Inventories |
|
(21.2 |
) |
|
10.8 |
|
|
|
1.8 |
|
|
5.1 |
|
|
Accounts
payable and other liabilities, including taxes |
|
26.5 |
|
|
33.2 |
|
|
|
71.3 |
|
|
132.2 |
|
|
|
|
47.0 |
|
|
51.1 |
|
|
|
117.2 |
|
|
94.2 |
|
Adjusted operating cash flow |
$ |
231.5 |
|
$ |
230.8 |
|
|
$ |
595.2 |
|
$ |
481.7 |
|
|
|
|
|
|
|
|
Consolidated production cost of sales per gold
equivalent ounce sold is a non-GAAP measure and is defined as
production cost of sales as per the consolidated financial
statements divided by the total number of gold equivalent ounces
sold. This measure converts the Company’s non-gold production into
gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold
equivalent ounce sold is a non-GAAP measure and is defined as
attributable production cost of sales divided by the attributable
number of gold equivalent ounces sold. This measure converts the
Company’s non-gold production into gold equivalent ounces and
credits it to total production.
Management uses these measures to monitor and
evaluate the performance of its operating properties. The following
table presents a reconciliation of consolidated and attributable
production cost of sales per equivalent ounce sold for the periods
presented:
|
|
|
|
|
Consolidated and Attributable
Production Cost of SalesPer Equivalent Ounce
Sold |
(in millions, except ounces and production
cost of sales per equivalent ounce) |
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
454.9 |
|
$ |
456.6 |
|
|
$ |
899.5 |
|
$ |
915.4 |
|
Less: portion attributable to Chirano non-controlling
interest |
|
(4.5 |
) |
|
(5.1 |
) |
|
|
(9.2 |
) |
|
(10.9 |
) |
Attributable production cost of sales |
$ |
450.4 |
|
$ |
451.5 |
|
|
$ |
890.3 |
|
$ |
904.5 |
|
|
|
|
|
|
|
|
Gold equivalent ounces sold |
|
593,296 |
|
|
689,362 |
|
|
|
1,267,957 |
|
|
1,341,878 |
|
Less: portion attributable to Chirano non-controlling
interest |
|
(5,740 |
) |
|
(5,778 |
) |
|
|
(12,184 |
) |
|
(12,348 |
) |
Attributable gold equivalent ounces sold |
|
587,556 |
|
|
683,584 |
|
|
|
1,255,773 |
|
|
1,329,530 |
|
Consolidated production cost of sales per
equivalent ounce sold |
$ |
767 |
|
$ |
662 |
|
|
$ |
709 |
|
$ |
682 |
|
Attributable production cost of sales per
equivalent ounce sold |
$ |
767 |
|
$ |
660 |
|
|
$ |
709 |
|
$ |
680 |
|
|
|
|
|
|
|
Attributable production cost of sales per ounce
sold on a by-product basis is a non-GAAP measure which calculates
the Company’s non-gold production as a credit against its per ounce
production costs, rather than converting its non-gold production
into gold equivalent ounces and crediting it to total production,
as is the case in co-product accounting. Management believes that
this measure provides investors with the ability to better evaluate
Kinross’ production cost of sales per ounce on a comparable basis
with other major gold producers who routinely calculate their cost
of sales per ounce using by-product accounting rather than
co-product accounting.
The following table provides a reconciliation of
attributable production cost of sales per ounce sold on a
by-product basis for the periods presented:
|
|
|
|
|
|
|
|
|
Attributable Production Cost of
Sales Per Ounce Sold on a By-Product
Basis |
(in millions, except ounces and production cost of
sales per ounce) |
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
454.9 |
|
$ |
456.6 |
|
|
$ |
899.5 |
|
$ |
915.4 |
|
Less: portion attributable to Chirano non-controlling
interest |
|
(4.5 |
) |
|
(5.1 |
) |
|
|
(9.2 |
) |
|
(10.9 |
) |
Less: attributable silver revenues |
|
(17.2 |
) |
|
(22.3 |
) |
|
|
(35.5 |
) |
|
(45.2 |
) |
Attributable production cost of sales net
of silver by-product revenue |
$ |
433.2 |
|
$ |
429.2 |
|
|
$ |
854.8 |
|
$ |
859.3 |
|
|
|
|
|
|
|
|
Gold ounces sold |
|
580,173 |
|
|
671,625 |
|
|
|
1,241,057 |
|
|
1,305,431 |
|
Less: portion attributable to Chirano non-controlling
interest |
|
(5,729 |
) |
|
(5,767 |
) |
|
|
(12,162 |
) |
|
(12,324 |
) |
Attributable gold ounces sold |
|
574,444 |
|
|
665,858 |
|
|
|
1,228,895 |
|
|
1,293,107 |
|
Attributable production cost of sales per
ounce sold on a by-product basis |
$ |
754 |
|
$ |
645 |
|
|
$ |
696 |
|
$ |
665 |
|
|
|
|
|
|
|
|
In June 2013, the World Gold Council (“WGC”)
published its guidelines for reporting all-in sustaining costs and
all-in costs. The WGC is a market development organization
for the gold industry and is an association whose membership
comprises leading gold mining companies including Kinross.
Although the WGC is not a mining industry regulatory organization,
it worked closely with its member companies to develop these
non-GAAP measures. Adoption of the all-in sustaining cost and
all-in cost metrics is voluntary and not necessarily standard, and
therefore, these measures presented by the Company may not be
comparable to similar measures presented by other issuers.
The Company believes that the all-in sustaining cost and all-in
cost measures complement existing measures reported by Kinross.
All-in sustaining cost includes both operating
and capital costs required to sustain gold production on an ongoing
basis. The value of silver sold is deducted from the total
production cost of sales as it is considered residual
production. Sustaining operating costs represent expenditures
incurred at current operations that are considered necessary to
maintain current production. Sustaining capital represents
capital expenditures at existing operations comprising mine
development costs and ongoing replacement of mine equipment and
other capital facilities, and does not include capital expenditures
for major growth projects or enhancement capital for significant
infrastructure improvements at existing operations.
All-in cost is comprised of all-in sustaining
cost as well as operating expenditures incurred at locations with
no current operation, or costs related to other non-sustaining
activities, and capital expenditures for major growth projects or
enhancement capital for significant infrastructure improvements at
existing operations.
Attributable all-in sustaining cost and all-in
cost per ounce sold on a by-product basis are calculated by
adjusting total production cost of sales, as reported on the
consolidated statement of operations, as follows:
|
|
|
|
|
Attributable All-In Sustaining
Cost and All-In Cost Per Ounce Sold on a By-Product
Basis |
(in millions, except ounces and costs per ounce) |
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
454.9 |
|
$ |
456.6 |
|
|
$ |
899.5 |
|
$ |
915.4 |
|
Less: portion attributable to Chirano
non-controlling interest(1) |
|
(4.5 |
) |
|
(5.1 |
) |
|
|
(9.2 |
) |
|
(10.9 |
) |
Less: attributable(2) silver
revenues(3) |
|
(17.2 |
) |
|
(22.3 |
) |
|
|
(35.5 |
) |
|
(45.2 |
) |
Attributable(2) production cost of sales
net of silver by-product revenue |
$ |
433.2 |
|
$ |
429.2 |
|
|
$ |
854.8 |
|
$ |
859.3 |
|
Adjusting items on an attributable(2)
basis: |
|
|
|
|
|
General and administrative(4) |
|
30.3 |
|
|
32.0 |
|
|
|
66.0 |
|
|
67.2 |
|
Other operating expense - sustaining(5) |
|
9.6 |
|
|
13.9 |
|
|
|
16.4 |
|
|
20.1 |
|
Reclamation and remediation - sustaining(6) |
|
13.6 |
|
|
21.4 |
|
|
|
28.8 |
|
|
42.2 |
|
Exploration and business development -
sustaining(7) |
|
13.6 |
|
|
14.0 |
|
|
|
25.9 |
|
|
24.9 |
|
Additions to property, plant and equipment -
sustaining(8) |
|
80.6 |
|
|
89.4 |
|
|
|
135.7 |
|
|
179.1 |
|
All-in Sustaining Cost on a by-product
basis - attributable(2) |
$ |
580.9 |
|
$ |
599.9 |
|
|
$ |
1,127.6 |
|
$ |
1,192.8 |
|
Other operating expense - non-sustaining(5) |
|
13.5 |
|
|
13.0 |
|
|
|
21.6 |
|
|
19.5 |
|
Reclamation and remediation -
non-sustaining(6) |
|
1.4 |
|
|
1.5 |
|
|
|
2.7 |
|
|
3.1 |
|
Exploration - non-sustaining(7) |
|
10.1 |
|
|
10.7 |
|
|
|
18.2 |
|
|
20.7 |
|
Additions to property, plant and equipment -
non-sustaining(8) |
|
165.3 |
|
|
106.2 |
|
|
|
336.8 |
|
|
185.7 |
|
All-in Cost on a by-product basis -
attributable(2) |
$ |
771.2 |
|
$ |
731.3 |
|
|
$ |
1,506.9 |
|
$ |
1,421.8 |
|
Gold ounces sold |
|
|
580,173 |
|
|
671,625 |
|
|
|
1,241,057 |
|
|
1,305,431 |
|
Less: portion attributable to Chirano non-controlling
interest(9) |
|
|
(5,729 |
) |
|
(5,767 |
) |
|
|
(12,162 |
) |
|
(12,324 |
) |
Attributable(2) gold ounces sold |
|
574,444 |
|
|
665,858 |
|
|
|
1,228,895 |
|
|
1,293,107 |
|
Attributable(2) all-in sustaining cost per
ounce sold on a by-product basis |
$ |
1,011 |
|
$ |
901 |
|
|
$ |
918 |
|
$ |
922 |
|
Attributable(2) all-in cost per ounce sold
on a by-product basis |
$ |
1,343 |
|
$ |
1,098 |
|
|
$ |
1,226 |
|
$ |
1,100 |
|
|
|
|
|
|
|
|
The Company also assesses its all-in sustaining cost and all-in
cost on a gold equivalent ounce basis. Under these non-GAAP
measures, the Company’s production of silver is converted into gold
equivalent ounces and credited to total production.
Attributable all-in sustaining cost and all-in
cost per equivalent ounce sold are calculated by adjusting total
production cost of sales, as reported on the consolidated statement
of operations, as follows:
|
|
|
|
|
Attributable All-In Sustaining
Cost and All-In Cost Per Equivalent Ounce
Sold |
(in millions, except ounces and costs per equivalent ounce) |
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
454.9 |
|
$ |
456.6 |
|
|
$ |
899.5 |
|
$ |
915.4 |
|
Less: portion attributable to Chirano
non-controlling interest(1) |
|
(4.5 |
) |
|
(5.1 |
) |
|
|
(9.2 |
) |
|
(10.9 |
) |
Attributable(2) production cost of
sales |
$ |
450.4 |
|
$ |
451.5 |
|
|
$ |
890.3 |
|
$ |
904.5 |
|
Adjusting items on an attributable(2)
basis: |
|
|
|
|
|
General and administrative(4) |
|
30.3 |
|
|
32.0 |
|
|
|
66.0 |
|
|
67.2 |
|
Other operating expense - sustaining(5) |
|
9.6 |
|
|
13.9 |
|
|
|
16.4 |
|
|
20.1 |
|
Reclamation and remediation - sustaining(6) |
|
13.6 |
|
|
21.4 |
|
|
|
28.8 |
|
|
42.2 |
|
Exploration and business development -
sustaining(7) |
|
13.6 |
|
|
14.0 |
|
|
|
25.9 |
|
|
24.9 |
|
Additions to property, plant and equipment -
sustaining(8) |
|
80.6 |
|
|
89.4 |
|
|
|
135.7 |
|
|
179.1 |
|
All-in Sustaining Cost -
attributable(2) |
$ |
598.1 |
|
$ |
622.2 |
|
|
$ |
1,163.1 |
|
$ |
1,238.0 |
|
Other operating expense - non-sustaining(5) |
|
13.5 |
|
|
13.0 |
|
|
|
21.6 |
|
|
19.5 |
|
Reclamation and remediation -
non-sustaining(6) |
|
1.4 |
|
|
1.5 |
|
|
|
2.7 |
|
|
3.1 |
|
Exploration - non-sustaining(7) |
|
10.1 |
|
|
10.7 |
|
|
|
18.2 |
|
|
20.7 |
|
Additions to property, plant and equipment -
non-sustaining(8) |
|
165.3 |
|
|
106.2 |
|
|
|
336.8 |
|
|
185.7 |
|
All-in Cost - attributable(2) |
$ |
788.4 |
|
$ |
753.6 |
|
|
$ |
1,542.4 |
|
$ |
1,467.0 |
|
Gold equivalent ounces sold |
|
593,296 |
|
|
689,362 |
|
|
|
1,267,957 |
|
|
1,341,878 |
|
Less: portion attributable to Chirano
non-controlling interest(9) |
|
(5,740 |
) |
|
(5,778 |
) |
|
|
(12,184 |
) |
|
(12,348 |
) |
Attributable(2) gold equivalent ounces
sold |
|
587,556 |
|
|
683,584 |
|
|
|
1,255,773 |
|
|
1,329,530 |
|
Attributable(2) all-in sustaining cost per
equivalent ounce sold |
$ |
1,018 |
|
$ |
910 |
|
|
$ |
926 |
|
$ |
931 |
|
Attributable(2) all-in cost per equivalent
ounce sold |
$ |
1,342 |
|
$ |
1,102 |
|
|
$ |
1,228 |
|
$ |
1,103 |
|
|
|
|
|
|
|
|
- "Portion attributable to Chirano non-controlling interest"
represents the non-controlling interest (10%) in the production
cost of sales for the Chirano mine.
- “Attributable” includes Kinross' share of Chirano (90%)
production.
- “Attributable silver revenues” represents the attributable
portion of metal sales realized from the production of the
secondary or by-product metal (i.e. silver). Revenue from the sale
of silver, which is produced as a by-product of the process used to
produce gold, effectively reduces the cost of gold production.
- “General and administrative” expenses is as reported on the
consolidated statement of operations, net of certain severance
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.
- “Other operating expense – sustaining” is calculated as “Other
operating expense” as reported on the consolidated statement of
operations, less other operating and reclamation and remediation
expenses related to non-sustaining activities as well as other
items not reflective of the underlying operating performance of our
business. Other operating expenses are classified as either
sustaining or non-sustaining based on the type and location of the
expenditure incurred. The majority of other operating expenses that
are incurred at existing operations are considered costs necessary
to sustain operations, and are therefore classified as sustaining.
Other operating expenses incurred at locations where there is no
current operation or related to other non-sustaining activities are
classified as non-sustaining.
- “Reclamation and remediation - sustaining” is calculated as
current period accretion related to reclamation and remediation
obligations plus current period amortization of the corresponding
reclamation and remediation assets, and is intended to reflect the
periodic cost of reclamation and remediation for currently
operating mines. Reclamation and remediation costs for development
projects or closed mines are excluded from this amount and
classified as non-sustaining.
- “Exploration and business development – sustaining” is
calculated as “Exploration and business development” expenses as
reported on the consolidated statement of operations, less
non-sustaining exploration expenses. Exploration expenses are
classified as either sustaining or non-sustaining based on a
determination of the type and location of the exploration
expenditure. Exploration expenditures within the footprint of
operating mines are considered costs required to sustain current
operations and so are included in sustaining costs. Exploration
expenditures focused on new ore bodies near existing mines (i.e.
brownfield), new exploration projects (i.e. greenfield) or for
other generative exploration activity not linked to existing mining
operations are classified as non-sustaining. Business development
expenses are considered sustaining costs as they are required for
general operations.
- “Additions to property, plant and equipment – sustaining”
represents the majority of capital expenditures at existing
operations including capitalized exploration costs, capitalized
stripping and underground mine development costs, ongoing
replacement of mine equipment and other capital facilities and
other capital expenditures and is calculated as total additions to
property, plant and equipment (as reported on the consolidated
statements of cash flows), less capitalized interest and
non-sustaining capital. Non-sustaining capital represents capital
expenditures for major growth projects as well as enhancement
capital for significant infrastructure improvements at existing
operations. Non-sustaining capital expenditures during the three
and six months ended June 30, 2018, primarily relate to projects at
Tasiast, Round Mountain, and Bald Mountain.
- “Portion attributable to Chirano non-controlling interest”
represents the non-controlling interest (10%) in the ounces sold
from the Chirano mine.
- "Average realized gold price" is a non-GAAP financial measure
and is defined as gold metal sales divided by the total number of
gold ounces sold. This measure is intended to enable Management to
better understand the price realized in each reporting period. The
realized price measure does not have any standardized definition
under IFRS and should not be considered a substitute for measure of
performance prepared in accordance with IFRS.
Cautionary statement on forward-looking
information
All statements, other than statements of
historical fact, contained or incorporated by reference in this
news release including, but not limited to, any information as to
the future financial or operating performance of Kinross,
constitute ‘‘forward-looking information’’ or ‘‘forward-looking
statements’’ within the meaning of certain securities laws,
including the provisions of the Securities Act (Ontario) and the
provisions for ‘‘safe harbor’’ under the United States Private
Securities Litigation Reform Act of 1995 and are based on
expectations, estimates and projections as of the date of this news
release. Forward-looking statements contained in this news release,
include, but are not limited to, those under the headings (or
headings that include): “2018 second-quarter highlights”, “CEO
Commentary”, “Operating results”, “Organic development projects and
opportunities”, “Exploration”, “Balance sheet and financial
flexibility”, “Outlook” and “Acquisition of power plants in Brazil”
and include, without limitation, statements with respect to our
guidance for production, production costs of sales, all-in
sustaining cost and capital expenditures; the schedules and budgets
for the Company’s development projects; and continuous improvement
initiatives, as well as references to other possible events,
the future price of gold and silver, the timing and amount of
estimated future production, costs of production, capital
expenditures, costs and timing of the development of projects and
new deposits, success of exploration, development and mining
activities, currency fluctuations, capital requirements, project
studies, mine life extensions, permit applications and conversions,
restarting suspended or disrupted operations; continuous
improvement initiatives; and resolution of pending litigation. The
words “advance”, “anticipate”, “assumption”, “believe”,
“estimates”, ‘‘expects’’, “forecast”, “focus”, “forward”,
“guidance”, “initiative”, “measures”, “on budget”, “outlook”,
“opportunity”, “plan”, “potential”, “progress”, “project”,
“projection”, “well positioned”, or variations of or similar such
words and phrases or statements that certain actions, events or
results may, could, should or will be achieved, received or taken,
or will occur or result and similar such expressions identify
forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by Kinross as of the date of such
statements, are inherently subject to significant business,
economic and competitive uncertainties and contingencies. The
estimates, models and assumptions of Kinross referenced, contained
or incorporated by reference in this news release, which may prove
to be incorrect, include, but are not limited to, the various
assumptions set forth herein and in our most recently filed Annual
Information Form and our Management’s Discussion and Analysis as
well as: (1) there being no significant disruptions affecting the
operations of the Company, whether due to extreme weather events
(including, without limitation, excessive or lack of rainfall, in
particular, the potential for further production curtailments at
Paracatu resulting from insufficient rainfall) and other or related
natural disasters, labour disruptions (including but not limited to
workforce reductions), supply disruptions, power disruptions,
damage to equipment or otherwise; (2) permitting, development,
operations and production from the Company’s operations and
development projects being consistent with Kinross’ current
expectations including, without limitation, the maintenance of
existing permits and approvals and the timely receipt of all
permits and authorizations necessary for the development and
operation of the Tasiast Phase One and Phase Two expansions or any
such alternate expansion that the Company decides to pursue and the
Round Mountain Phase W expansion including, without limitation,
work permits, necessary import authorizations for goods and
equipment; commissioning and operation of the SAG mill at Tasiast;
exploration license conversions at Tasiast; and land acquisitions
and permitting for the construction and operation of the new
tailings facility, water and power supply and launch of the new
tailings reprocessing facility at Paracatu; (3) political and legal
developments in any jurisdiction in which the Company operates
being consistent with its current expectations including, without
limitation, the impact of any political tensions and uncertainty in
the Russian Federation and Ukraine or any related sanctions and any
other similar restrictions or penalties imposed, or actions taken,
by any government, including but not limited to amendments to the
mining laws, and potential power rationing and tailings facility
regulations in Brazil, potential amendments to water laws and/or
other water use restrictions and regulatory actions in Chile, new
dam safety regulations, and potential amendments to minerals and
mining laws and energy levies laws, and the enforcement of labor
laws in Ghana, new regulations relating to work permits, potential
amendments to customs and mining laws (including but not limited
amendments to the VAT) and the potential implementation of a new
tax code, in Mauritania, and satisfactory resolution of the
discussions with the Mauritanian government regarding the Company’s
activities in Mauritania, the potential passing of Environmental
Protection Agency regulations in the US relating to the provision
of financial assurances under the Comprehensive Environmental
Response, Compensation and Liability Act, the European Union’s
General Data Protection Regulation and potential amendments to and
enforcement of tax laws in Russia (including, but not limited to,
the interpretation, implementation, application and enforcement of
any such laws and amendments thereto), and the impact of any trade
tariffs being consistent with Kinross’ current expectations; (4)
the completion of studies, including optimization studies, scoping
studies and prefeasibility and feasibility studies, on the
timelines currently expected and the results of those studies being
consistent with Kinross’ current expectations; (5) the exchange
rate between the Canadian dollar, Brazilian real, Chilean peso,
Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S.
dollar being approximately consistent with current levels; (6)
certain price assumptions for gold and silver; (7) prices for
diesel, natural gas, fuel oil, electricity and other key supplies
being approximately consistent with current levels; (8) production
and cost of sales forecasts for the Company meeting expectations;
(9) the accuracy of the current mineral reserve and mineral
resource estimates of the Company (including but not limited to ore
tonnage and ore grade estimates) and mine plans for the Company’s
mining operations (including but not limited to throughput and
recoveries being affected by metallurgical characteristics at
Paracatu); (10) labour and materials costs increasing on a basis
consistent with Kinross’ current expectations; (11) the terms and
conditions of the legal and fiscal stability agreements for the
Tasiast and Chirano operations being interpreted and applied in a
manner consistent with their intent and Kinross’ expectations and
without amendment or formal dispute; (12) goodwill and/or asset
impairment potential; (13) the regulatory and legislative regime
regarding mining, electricity production and transmission
(including rules related to power tariffs) in Brazil being
consistent with Kinross’ current expectations; (14) access to
capital markets, including but not limited to maintaining a debt
rating consistent with the Company’s current expectations; and (15)
that Kinross will integrate the Brazilian power plants, and that
they will operate, in a manner consistent with our current
expectations. Known and unknown factors could cause actual results
to differ materially from those projected in the forward-looking
statements. Such factors include, but are not limited to: sanctions
(any other similar restrictions or penalties) now or subsequently
imposed, other actions taken, by, against, in respect of or
otherwise impacting any jurisdiction in which the Company is
domiciled or operates (including but not limited to the Russian
Federation, Canada, the European Union and the United States), or
any government or citizens of, persons or companies domiciled in,
or the Company’s business, operations or other activities in, any
such jurisdiction; fluctuations in the currency markets;
fluctuations in the spot and forward price of gold or certain other
commodities (such as fuel and electricity); changes in the discount
rates applied to calculate the present value of net future cash
flows based on country-specific real weighted average cost of
capital; changes in the market valuations of peer group gold
producers and the Company, and the resulting impact on market price
to net asset value multiples; changes in various market variables,
such as interest rates, foreign exchange rates, gold or silver
prices and lease rates, or global fuel prices, that could impact
the mark-to-market value of outstanding derivative instruments and
ongoing payments/receipts under any financial obligations; risks
arising from holding derivative instruments (such as credit risk,
market liquidity risk and mark-to-market risk); changes in national
and local government legislation, taxation (including but not
limited to income tax, advance income tax, stamp tax, withholding
tax, capital tax, tariffs, value-added or sales tax, capital
outflow tax, capital gains tax, windfall or windfall profits tax,
royalty, excise tax, customs/import or export taxes/duties, asset
taxes, asset transfer tax, property use or other real estate tax,
together with any related fine, penalty, surcharge, or interest
imposed in connection with such taxes), controls, policies and
regulations; the security of personnel and assets; political or
economic developments in Canada, the United States, Chile, Brazil,
Russia, Mauritania, Ghana, or other countries in which Kinross does
business or may carry on business; business opportunities that may
be presented to, or pursued by, us; our ability to successfully
integrate acquisitions and complete divestitures; operating or
technical difficulties in connection with mining or development
activities; employee relations; litigation or other claims against,
or regulatory investigations and/or any enforcement actions or
sanctions in respect of the Company (and/or its directors,
officers, or employees) including, but not limited to, securities
class action litigation in Canada and/or the United States, or any
investigations, enforcement actions and/or sanctions under any
applicable anti-corruption, international sanctions and/or
anti-money laundering laws and regulations in Canada, the United
States or any other applicable jurisdiction; the speculative nature
of gold exploration and development including, but not limited to,
the risks of obtaining necessary licenses and permits; diminishing
quantities or grades of reserves; adverse changes in our credit
rating; and contests over title to properties, particularly title
to undeveloped properties. In addition, there are risks and hazards
associated with the business of gold exploration, development and
mining, including environmental hazards, industrial accidents,
unusual or unexpected formations, pressures, cave-ins, flooding and
gold bullion losses (and the risk of inadequate insurance, or the
inability to obtain insurance, to cover these risks). Many of these
uncertainties and contingencies can directly or indirectly affect,
and could cause, Kinross’ actual results to differ materially from
those expressed or implied in any forward-looking statements made
by, or on behalf of, Kinross,including but not limited to resulting
in an impairment charge on goodwill and/or assets. There can be no
assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of
providing information about management’s expectations and plans
relating to the future. All of the forward-looking statements made
in this news release are qualified by these cautionary statements
and those made in our other filings with the securities regulators
of Canada and the United States including, but not limited to, the
cautionary statements made in the ‘‘Risk Factors’’ section of our
most recently filed Annual Information Form and the “Risk Analysis”
section of our full year 2017 and second quarter 2018 MD&A.
These factors are not intended to represent a complete list of the
factors that could affect Kinross. Kinross disclaims any intention
or obligation to update or revise any forward-looking statements or
to explain any material difference between subsequent actual events
and such forward-looking statements, except to the extent required
by applicable law.
Other informationWhere we say ‘‘we’’, ‘‘us’’,
‘‘our’’, the ‘‘Company’’, or ‘‘Kinross’’ in this news release, we
mean Kinross Gold Corporation and/or one or more or all of its
subsidiaries, as may be applicable.
The technical information about the Company’s mineral properties
contained in this news release has been prepared under the
supervision of Mr. John Sims, an officer of the Company who is a
“qualified person” within the meaning of National Instrument
43-101.
Source: Kinross Gold Corporation
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