SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of June, 2023
Commission File Number: 001-13382
KINROSS GOLD CORPORATION
(Translation of registrant's name into English)
17th Floor, 25 York Street
Toronto, Ontario M5J 2V5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form
20-F ¨ Form 40-F x
EXPLANATORY NOTE
This Current Report on Form 6-K, dated August 2, 2023, is being furnished
for the sole purpose of providing a copy of the Consolidated Financial Statements and Management’s Discussion and Analysis for the
period ended June 30, 2023.
This current report is specifically incorporated by reference into
Kinross Gold Corporation’s Registration Statements on Form S-8 (Registration Nos. 333-180822, 333-180823, 333-180824 filed on April
19, 2012, Registration No. 333-217099 filed on April 3, 2017 and Registration No. 333-262966 filed on February 24, 2022).
EXHIBITS
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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KINROSS GOLD CORPORATION |
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By: |
/s/ Kar Ng |
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Name: |
Kar Ng |
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Title: |
Vice-President, Finance |
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Date: |
August 2, 2023 |
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Exhibit 99.1
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
This
management's discussion and analysis ("MD&A"), prepared as of August 2, 2023, relates to the financial condition and
results of operations of Kinross Gold Corporation together with its wholly owned subsidiaries, as at June 30, 2023 and for the three
and six months then ended, and is intended to supplement and complement Kinross Gold Corporation’s
unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 2023 and the notes thereto
(the “interim financial statements”). Readers are cautioned that the MD&A contains forward-looking statements about expected
future events and financial and operating performance of the Company, and that actual events may vary from management's expectations.
Readers are encouraged to read the Cautionary Statement on Forward Looking Information included with this MD&A and to consult Kinross
Gold Corporation's annual audited consolidated financial statements for 2022 and corresponding notes to the financial statements which
are available on the Company's web site at www.kinross.com and
on www.sedar.com. The interim financial statements and MD&A
are presented in U.S. dollars. The interim financial statements have been prepared in accordance with International Accounting Standard
34 “Interim Financial Reporting” as issued by the International Accounting Standards Board (“IASB”). This discussion
addresses matters we consider important for an understanding of our financial condition and results of operations as at and for the three
and six months ended June 30, 2023, as well as our outlook.
This MD&A contains forward-looking
statements and should be read in conjunction with the risk factors described in "Risk Analysis" and in the “Cautionary
Statement on Forward-Looking Information” on pages 33 – 35 of this MD&A. In certain instances, references are made
to relevant notes in the interim financial statements for additional information.
Where
we say "we", "us", "our", the "Company" or "Kinross", we mean Kinross Gold Corporation
or Kinross Gold Corporation and/or one or more or all of its subsidiaries, as it may apply. Where we refer to the "industry",
we mean the gold mining industry.
| 1. | DESCRIPTION OF THE BUSINESS |
Kinross
is engaged in gold mining and related activities, including exploration and acquisition of gold-bearing properties, the extraction and
processing of gold-containing ore, and reclamation of gold mining properties. Kinross’ gold production and exploration activities
are carried out principally in Canada, the United States, Brazil, Chile and Mauritania. Gold is produced in the form of doré,
which is shipped to refineries for final processing. Kinross also produces and sells a quantity of silver.
The
profitability and operating cash flow of Kinross are affected by various factors, including the amount of gold and silver produced, the
market prices of gold and silver, operating costs, interest rates, regulatory and environmental compliance, the level of exploration
activity and capital expenditures, general and administrative costs, and other discretionary costs and activities. Kinross is also exposed
to fluctuations in currency exchange rates, political risks, and varying levels of taxation that can impact profitability and cash flow.
Kinross seeks to manage the risks associated with its business operations; however, many of the factors affecting these risks are beyond
the Company’s control.
Commodity
prices continue to be volatile as economies around the world continue to experience economic challenges along with political changes
and uncertainties. Volatility in the price of gold and silver impacts the Company's revenue, while volatility in the price of input costs,
such as oil, and foreign exchange rates, particularly the Brazilian real, Chilean peso, Mauritanian ouguiya and Canadian dollar, may
have an impact on the Company's operating costs and capital expenditures.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Consolidated
Financial and Operating Highlights
| |
Three months ended June
30, | | |
Six months ended June
30, | |
(in millions, except
ounces, per share amounts and per ounce amounts) | |
2023 | | |
2022 | | |
Change | | |
%
Change(h) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(h) | |
Operating Highlights | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Total gold equivalent ounces from continuing operations(a),(b) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Produced | |
| 555,036 | | |
| 453,978 | | |
| 101,058 | | |
| 22 | % | |
| 1,021,058 | | |
| 832,399 | | |
| 188,659 | | |
23 | % |
Sold | |
| 552,969 | | |
| 439,078 | | |
| 113,891 | | |
| 26 | % | |
| 1,043,299 | | |
| 812,806 | | |
| 230,493 | | |
28 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Financial Highlights from Continuing
Operations(a) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Metal sales | |
$ | 1,092.3 | | |
$ | 821.5 | | |
$ | 270.8 | | |
| 33 | % | |
$ | 2,021.6 | | |
$ | 1,522.4 | | |
$ | 499.2 | | |
33 | % |
Production cost of sales | |
$ | 497.9 | | |
$ | 450.8 | | |
$ | 47.1 | | |
| 10 | % | |
$ | 981.8 | | |
$ | 813.9 | | |
$ | 167.9 | | |
21 | % |
Depreciation, depletion and amortization | |
$ | 239.3 | | |
$ | 180.5 | | |
$ | 58.8 | | |
| 33 | % | |
$ | 451.2 | | |
$ | 347.0 | | |
$ | 104.2 | | |
30 | % |
Operating earnings | |
$ | 237.8 | | |
$ | 64.0 | | |
$ | 173.8 | | |
| nm | | |
$ | 381.7 | | |
$ | 166.5 | | |
$ | 215.2 | | |
129 | % |
Net earnings (loss) from continuing operations attributable
to common shareholders | |
$ | 151.0 | | |
$ | (9.3 | ) | |
$ | 160.3 | | |
| nm | | |
$ | 241.2 | | |
$ | 72.0 | | |
$ | 169.2 | | |
nm | |
Basic earnings (loss) per share from continuing operations
attributable to common shareholders | |
$ | 0.12 | | |
$ | (0.01 | ) | |
$ | 0.13 | | |
| nm | | |
$ | 0.20 | | |
$ | 0.06 | | |
$ | 0.14 | | |
nm | |
Diluted earnings (loss) per share from continuing operations
attributable to common shareholders | |
$ | 0.12 | | |
$ | (0.01 | ) | |
$ | 0.13 | | |
| nm | | |
$ | 0.20 | | |
$ | 0.06 | | |
$ | 0.14 | | |
nm | |
Adjusted net earnings from continuing operations attributable
to common shareholders(c) | |
$ | 167.6 | | |
$ | 37.4 | | |
$ | 130.2 | | |
| nm | | |
$ | 255.2 | | |
$ | 106.2 | | |
$ | 149.0 | | |
140 | % |
Adjusted net earnings from continuing operations per share(c) | |
$ | 0.14 | | |
$ | 0.03 | | |
$ | 0.11 | | |
| nm | | |
$ | 0.21 | | |
$ | 0.08 | | |
$ | 0.13 | | |
163 | % |
Net cash flow of continuing operations provided from operating
activities | |
$ | 528.6 | | |
$ | 257.1 | | |
$ | 271.5 | | |
| 106 | % | |
$ | 787.6 | | |
$ | 355.0 | | |
$ | 432.6 | | |
122 | % |
Adjusted operating cash flow from continuing operations(c) | |
$ | 459.1 | | |
$ | 251.9 | | |
$ | 207.2 | | |
| 82 | % | |
$ | 791.9 | | |
$ | 501.0 | | |
$ | 290.9 | | |
58 | % |
Capital expenditures from continuing operations(d)
| |
$ | 281.9 | | |
$ | 149.4 | | |
$ | 132.5 | | |
| 89 | % | |
$ | 503.1 | | |
$ | 250.1 | | |
$ | 253.0 | | |
101 | % |
Free cash flow from continuing operations(c) | |
$ | 246.7 | | |
$ | 107.7 | | |
$ | 139.0 | | |
| 129 | % | |
$ | 284.5 | | |
$ | 104.9 | | |
$ | 179.6 | | |
171 | % |
Average realized gold price per ounce from continuing
operations(e) | |
$ | 1,976 | | |
$ | 1,872 | | |
$ | 104 | | |
| 6 | % | |
$ | 1,937 | | |
$ | 1,874 | | |
$ | 63 | | |
3 | % |
Production cost of sales from continuing operations per
equivalent ounce(b) sold(f) | |
$ | 900 | | |
$ | 1,027 | | |
$ | (127 | ) | |
| (12 | )% | |
$ | 941 | | |
$ | 1,001 | | |
$ | (60 | ) | |
(6 | )% |
Production cost of sales from continuing operations per
ounce sold on a by-product basis(c) | |
$ | 845 | | |
$ | 1,018 | | |
$ | (173 | ) | |
| (17 | )% | |
$ | 885 | | |
$ | 994 | | |
$ | (109 | ) | |
(11 | )% |
All-in sustaining cost from continuing operations per
ounce sold on a by-product basis(c) | |
$ | 1,262 | | |
$ | 1,335 | | |
$ | (73 | ) | |
| (5 | )% | |
$ | 1,272 | | |
$ | 1,285 | | |
$ | (13 | ) | |
(1 | )% |
All-in sustaining cost from continuing operations per
equivalent ounce(b) sold(c) | |
$ | 1,296 | | |
$ | 1,341 | | |
$ | (45 | ) | |
| (3 | )% | |
$ | 1,308 | | |
$ | 1,290 | | |
$ | 18 | | |
1 | % |
Attributable all-in cost(g) from continuing
operations per ounce sold on a by-product basis(c) | |
$ | 1,596 | | |
$ | 1,596 | | |
$ | - | | |
| 0 | % | |
$ | 1,606 | | |
$ | 1,536 | | |
$ | 70 | | |
5 | % |
Attributable all-in cost(g)
from continuing operations per equivalent ounce(b) sold(c) | |
$ | 1,614 | | |
$ | 1,599 | | |
$ | 15 | | |
| 1 | % | |
$ | 1,624 | | |
$ | 1,539 | | |
$ | 85 | | |
6 | % |
(a) | Results
for the three and six months ended June 30, 2023 and 2022 are from continuing operations
and exclude results from the Company’s Chirano and Russian operations due to the classification
of these operations as discontinued and their sale in 2022. |
(b) | “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 and first six months of 2023 was 81.88:1 and 82.85:1,
respectively (second quarter and first six months of 2022 – 82.76:1 and 80.36:1, respectively). |
(c) | The
definition and reconciliation of these non-GAAP financial measures and ratios is included
in Section 11. Non-GAAP financial measures and ratios have no standardized meaning under
IFRS and therefore, may not be comparable to similar measures presented by other issuers. |
(d) | “Capital
expenditures from continuing operations” is
as reported as “Additions to property, plant and equipment” on the interim condensed
consolidated statements of cash flows. |
(e) | “Average
realized gold price per ounce from continuing operations” is defined as gold metal
sales from continuing operations divided by total gold ounces sold from continuing operations. |
(f) | “Production
cost of sales from continuing operations per equivalent ounce sold” is defined as production
cost of sales divided by total gold equivalent ounces sold from continuing operations. |
(g) | “Attributable
all-in cost” includes Kinross’ share of Manh Choh (70%) costs. |
(h) | “nm”
means not meaningful. |
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Consolidated
Financial Performance
This
Consolidated Financial Performance section references production cost of sales from continuing operations per ounce sold on a by-product
basis, adjusted net earnings from continuing operations attributable to common shareholders and adjusted net earnings from continuing
operations per share, adjusted operating cash flow from continuing operations, free cash flow from continuing operations, all-in sustaining
cost from continuing operations per equivalent ounce sold and per ounce sold on a by-product basis, and attributable all-in cost from
continuing operations per equivalent ounce sold and per ounce sold on a by-product basis, all of which are non-GAAP financial measures
or ratios. The definitions and reconciliations of these non-GAAP financial measures and ratios are included in Section 11 of this
MD&A.
Second
quarter 2023 vs. Second quarter 2022
Kinross’ production from continuing
operations increased by 22% compared to the second quarter of 2022, primarily due to higher production at La Coipa due to the restart
and ramp up in the second half of 2022 as well as higher grades and recoveries at both Paracatu and Tasiast. These increases were partially
offset by lower production at Bald Mountain due to fewer tonnes placed on the heap leach pads and lower grades.
Metal
sales from continuing operations increased by 33%, compared to the second quarter of 2022, due to
increases in gold equivalent ounces sold and the average realized gold price. Gold equivalent ounces sold from continuing operations
increased to 552,969 ounces in the second quarter of 2023 compared to 439,078 ounces in the second quarter of 2022, primarily due to
the increase in production as described above. The average realized gold price from continuing operations increased to $1,976 per ounce
in the second quarter of 2023 from $1,872 per ounce in the same period in 2022.
Production
cost of sales from continuing operations increased by 10% in the second quarter of 2023, compared
to 2022, largely as a result of the restart and ramp up of production at La Coipa.
Production cost of sales from continuing
operations per equivalent ounce sold and per ounce sold on a by-product basis decreased by 12% and 17%, respectively, in the second quarter
of 2023, compared to the same period in 2022. The decreases were due to the increase in production and sales at Tasiast, Paracatu, and
La Coipa, which are lower cost operations.
In
the second quarter of 2023, depreciation, depletion and amortization from continuing operations
increased by 33% compared to the same period in 2022, primarily due to the increase in gold equivalent ounces sold, largely from the
restart and ramp up of production at La Coipa, and changes to the life-of-mine plan at Round Mountain in the fourth quarter of 2022.
Operating
earnings from continuing operations increased to $237.8 million in the second quarter of 2023 from
$64.0 million in the same period in 2022. This increase was primarily due to an increase in margins (metal sales less production cost
of sales), partially offset by the increase in depreciation, depletion and amortization, as described above.
In the second quarter
of 2023, the Company recorded an income tax expense from continuing operations of $62.0 million, compared to $52.7 million in the second
quarter of 2022. Changes in income tax expense in the second quarter of 2023 compared to the second quarter of 2022 are due to differences
in the level of income in the Company’s operating jurisdictions. The $62.0 million income tax expense recognized in the second quarter
of 2023 included $18.5 million of deferred tax recovery, compared to $4.2 million of deferred tax expense in the second quarter of 2022,
resulting from the net foreign currency translation of tax deductions related to the Company’s operations in Brazil and Mauritania.
Kinross' combined federal and provincial statutory tax rate for the second quarters of both 2023 and 2022 was 26.5%.
Net
earnings from continuing operations attributable to common shareholders in the second quarter of
2023 were $151.0 million, or $0.12 per share, compared to net loss from continuing operations attributable to common shareholders of
$9.3 million, or $0.01 per share, in the same period in 2022. The change was primarily as a result of the increase in operating earnings
from continuing operations, as described above, partially offset by the increase in income tax expense in the second quarter of 2023.
Adjusted
net earnings from continuing operations attributable to common shareholders in the second quarter of 2023 were $167.6
million, or $0.14 per share, compared to $37.4 million, or $0.03 per share, for the same period in 2022. The increase was primarily due
to the increase in operating earnings from continuing operations, as described above.
Net
cash flow of continuing operations provided from operating activities increased to $528.6 million
in the second quarter of 2023 from $257.1 million in the second quarter of 2022, primarily due to the increase in margins and favourable
working capital movements.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
In
the second quarter of 2023, adjusted operating cash flow from continuing operations increased to $459.1
million compared to $251.9 million in the same period of 2022, primarily due to the increase in margins.
Capital
expenditures from continuing operations increased to $281.9 million from $149.4 million in the second
quarter of 2022, due to an increase in capital stripping at Tasiast, Fort Knox and Bald Mountain and increased expenditures for development
activities at the Manh Choh project.
Free
cash flow from continuing operations increased to $246.7 million from $107.7 million in the second
quarter of 2022, due to the increase in net cash flow of continuing operations provided from operating activities, partially offset by
higher capital expenditures, as described above.
In
the second quarter of 2023, compared to the same period in 2022, all-in sustaining cost from continuing
operations per equivalent ounce sold and per ounce sold on a by-product basis decreased by 3% and 5%, respectively, primarily due to
the increase in gold equivalent ounces sold, partially offset by the increase in capital expenditures. Attributable all-in cost from
continuing operations per equivalent ounce sold and per ounce sold on a by-product basis in the second quarter of 2023 were comparable
to the same period in 2022.
First
six months of 2023 vs. First six months of 2022
Kinross’
production from continuing operations in the first six months of 2023 increased by 23% compared
to the same period in 2022 primarily due to higher production at La Coipa due to the restart and ramp up in the second half of 2022,
higher throughput, grades and recoveries at Paracatu and higher grades at Tasiast. These increases were partially offset by lower production
at Bald Mountain due to fewer tonnes placed on the heap leach pads and lower grades.
Metal
sales from continuing operations increased by 33% in the first six months of 2023, compared to the
same period in 2022, due to increases in gold equivalent ounces sold and the average realized gold price. Total gold equivalent ounces
sold from continuing operations in the first six months of 2023 increased to 1,043,299 ounces from 812,806 ounces in the same period
in 2022, primarily due to the increase in production as described above. The average realized gold price from continuing operations increased
to $1,937 per ounce in the first six months of 2023 from $1,874 per ounce in the same period in 2022.
Production
cost of sales from continuing operations increased by 21% in in the first six months of 2023, compared
to 2022, largely as a result of the restart and ramp up of production at La Coipa, and an increase in gold equivalent ounces sold and
lower capital development at Round Mountain.
Production cost of sales from continuing
operations per equivalent ounce sold and per ounce sold on a by-product basis decreased by 6% and 11%, respectively, in the first six
months of 2023, compared to the same period in 2022. The decreases were due to the increase in production and sales at Tasiast, Paracatu,
and La Coipa, which are lower cost operations.
In
the first six months of 2023, depreciation, depletion and amortization from continuing operations
increased by 30%, compared to the same period in 2022, primarily due to the increase in gold equivalent ounces sold, largely from the
restart and ramp up of production at La Coipa, and changes to the life-of-mine plan at Round Mountain in the fourth quarter of 2022.
Operating
earnings from continuing operations increased to $381.7 million from $166.5 million in the same period
in 2022. This increase was primarily due to an increase in margins (metal sales less production cost of sales), partially offset by the
increase in depreciation, depletion and amortization, as described above.
In
the first six months of 2023, the Company recorded an income tax expense from continuing operations
of $101.8 million compared to $48.2 million in the same period in 2022. Changes in income tax expense in the first six months of 2023
compared to the same period in 2022 are due to differences in the level of income in the Company’s operating jurisdictions. The
$101.8 million income tax expense recognized in the first six months of 2023 included $31.7 million of deferred tax recovery, compared
to a deferred tax recovery of $11.5 million in the first six months of 2022, resulting from the net foreign currency translation of tax
deductions related to the Company’s operations in Brazil and Mauritania. Kinross' combined federal and provincial statutory tax
rate for the first six months of both 2023 and 2022 was 26.5%.
Net
earnings from continuing operations attributable to common shareholders in the first six months
of 2023 were $241.2 million, or $0.20 per share, compared to $72.0 million, or $0.06 per share, in the first six months of 2022. The
increase is primarily as a result of the increase in operating earnings from continuing operations, as described above, partially offset
by the increase in income tax expense in the first six months of 2023.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Adjusted
net earnings from continuing operations attributable to common shareholders in the first six months
of 2023 were $255.2 million, or $0.21 per share, compared to $106.2 million, or $0.08 per share, for the same period in 2022. The increase
was primarily due to the increase in operating earnings from continuing operations, as described above.
Net
cash flow of continuing operations provided from operating activities increased to $787.6 million
in the first six months of 2023, from $355.0 million during the same period in 2022, mainly due to the increase in margins, favourable
working capital movements and a decrease in income taxes paid.
In
the first six months of 2023, adjusted operating cash flow from continuing operations increased
to $791.9 million from $501.0 million in the same period in 2022, primarily due to the increase in margins.
Capital
expenditures from continuing operations increased to $503.1 million from $250.1 million in the first
six months of 2022, due to an increase in capital stripping at Tasiast, Fort Knox and Bald Mountain and increased expenditures for development
activities at the Manh Choh project.
Free
cash flow from continuing operations increased to $284.5 million from $104.9 million in the first
six months of 2022, due to the increase in net cash flow of continuing operations provided from operating activities, as described above,
partially offset by higher capital expenditures.
All-in
sustaining cost from continuing operations per equivalent ounce sold and per ounce sold on a by-product
basis in the first six months of 2023 were comparable to the same period in 2022. Attributable all-in cost from continuing operations
per equivalent ounce sold and per ounce sold on a by-product basis increased by 6% and 5%, respectively, compared to the first six months
in 2022, primarily due to the increase in capital expenditures.
| 2. | IMPACT
OF KEY ECONOMIC TRENDS |
Kinross’
2022 annual MD&A contains a discussion of key economic trends that affect the Company and its financial statements. Please refer
to the MD&A for the year ended December 31, 2022, which is available on the Company's website www.kinross.com and on
www.sedar.com or is available upon request from the Company. Included in this MD&A is an update reflecting significant changes
since the preparation of the 2022 annual MD&A.
Price
of Gold
The price of gold is the single largest
factor in determining profitability and cash flow from operations, therefore, the financial performance of the Company has been, and
is expected to continue to be, closely linked to the price of gold. During the second quarter of 2023, the average price of gold was
$1,976 per ounce, with gold trading between $1,900 and $2,048 per ounce based on the LBMA Gold Price PM benchmark. This compares to an
average of $1,871 per ounce during the second quarter of 2022, with gold trading between $1,810 per ounce and $1,977 per ounce. During
the second quarter of 2023, Kinross realized an average price of $1,976 per ounce from continuing operations, compared to $1,872 per
ounce for the same period in 2022. Major influences on the gold price during the second quarter of 2023 included safe haven flows following
the recent banking and debt ceiling crisis, and rising interest rates.
For
the first six months of 2023, the price of gold averaged $1,932 per
ounce compared to $1,874 in the same period of 2022. In the first six months of 2023, Kinross realized an average price of $1,937
per ounce compared to $1,874 per ounce in the first six months of 2022.
Cost
Sensitivity
The
Company’s profitability is subject to industry-wide cost pressures on development and operating costs with respect to labour, energy,
capital expenditures and consumables in general. Since mining is generally an energy intensive activity, especially in open pit mining,
energy prices have a significant impact on operations. The Company is also affected by current ongoing inflationary pressures and volatility.
A significant portion of the upward pressure to date on prices has been attributed to the rising costs of labour and energy, including
its upstream impacts on consumables, as well as continuing global supply-chain disruptions experienced to date.
The
cost of fuel as a percentage of operating costs varies amongst the Company’s mines, and overall, operations experienced relative
fuel price decreases in the second quarter and first six months of 2023, compared to the second quarter and first six months of 2022.
Kinross manages its exposure to fuel costs by entering into various hedge positions from time to time – refer to Section 6
- Liquidity and Capital Resources for details.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Currency
Fluctuations
At the Company’s non-U.S. mining
operations and exploration activities, which are primarily located in Brazil, Chile, Mauritania, and Canada, a portion of operating costs
and capital expenditures are denominated in their respective local currencies. Generally, as the U.S. dollar strengthens, these currencies
weaken, and as the U.S. dollar weakens, these foreign currencies strengthen. During the three months ended June 30, 2023, the U.S. dollar,
on average, was stronger relative to the Canadian dollar and Brazilian real and was weaker relative to the Chilean peso and Mauritanian
ouguiya, compared to the same period in 2022. During the six months ended June 30, 2023, the U.S. dollar, on average, was stronger relative
to the Canadian dollar and was weaker relative to the Chilean peso, Mauritanian ouguiya and Brazilian real, compared to the six months
ended June 30, 2022. As at June 30, 2023, the U.S. dollar was weaker compared to the December 31, 2022 spot exchange rates of the Canadian
dollar, Chilean peso and Mauritanian ouguiya and Brazilian real. In order to manage this risk, the Company uses currency hedges for certain
foreign currency exposures – refer to Section 6 - Liquidity and Capital Resources for details.
The following section of this MD&A
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 pages 33 – 35 of this MD&A.
This
Outlook section references all-in sustaining cost per equivalent ounce sold, which is a non-GAAP ratio with no standardized meaning under
IFRS and therefore, may not be comparable to similar measures presented by other issuers. The definition of this non-GAAP ratio and comparable
reconciliation is included in Section 11 of this MD&A.
The
Company is on track to meet its 2023 production guidance of 2.1 million gold equivalent ounces (+/- 5%). Production increased in the
second quarter, as planned, and is expected to remain strong for the remainder of 2023. Kinross’ annual production is expected
to remain stable in 2024 and 2025 at 2.1 million and 2.0 million attributable1 gold equivalent ounces (+/- 5%), respectively.
The
Company is also on track to meet its 2023 guidance for production cost of sales, all-in sustaining cost and attributable2
capital expenditures.
| 4. | PROJECT
UPDATES AND NEW DEVELOPMENTS |
Tasiast
Tasiast 24k construction and initial
commissioning is now complete, on schedule and on budget. The successful tie-in of the new pre-classification circuit was completed in
June, all components of the 24k project are in operation with the ramp-up process underway. The process plant has regularly achieved the
designed 24,000 tonnes per day (“t/d”) throughput for sustained periods of time. The operation is expected to ramp-up for
the balance of the year to consistently achieve 24,000 t/d (average) on an annual basis.
The 34MW Tasiast solar power plant
continues to advance and is on schedule for completion by the end of the year. Civil works are nearly complete and mechanical works are
well advanced with a focus on the installation of the photovoltaic modules. Electrical works are underway and planning for commissioning
has begun.
Great
Bear
The Company continues to make excellent
progress at the Great Bear project in Red Lake, Ontario. In the second quarter, Kinross drilled approximately 56,000 metres as part of
its robust exploration and infill drilling program. Kinross’ focus this year is on inferred drilling in the area half a kilometre
to one kilometre below surface. This work will be complemented by exploration drilling along strike of the LP Fault zone and around the
Hinge and Limb zones that have seen little exploration drilling for new mineralization beyond the known zones, with the goal of further
delineating the deposit at depth as well as adding inferred resource ounces. Drilling-to-date has demonstrated potential for a meaningful
increase in the underground resource and Kinross expects to declare a resource update as part of its year-end results.
Since
its last update on May 9, 2023, the Company has received additional assay results. Results-to-date continue to support the view
of a high-grade deposit that underpins the prospect of a large, long-life mining complex with the recent results continuing to demonstrate
the high-grade nature of the mineralization.
1
Attributable production guidance includes Kinross’ share of Manh Choh (70%) production.
2
Attributable capital expenditure guidance includes Kinross’ share of Manh Choh (70%) capital expenditures. Actual results as reported
for the three and six months ended June 30, 2023, are on a total basis and include 100% of Manh Choh capital expenditures.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
The Company recently began using directional
core drilling at Great Bear, which allows multiple drill holes to branch off from a single pilot hole. This decreases the amount of drilling
required to reach deep targets, thereby reducing costs, improving productivity, and enabling the precise targeting of the resource from
different angles. Initial trials earlier this year were highly successful, and the system is now being used on 6 of the 11 drills on site
to target the LP Fault and Hinge zones.
The Company is also progressing studies
and permitting for an advanced exploration program that would establish an underground decline to obtain a bulk sample and allow for more
efficient exploration of deeper areas of the LP Fault zone, along with the nearby Hinge and Limb gold zones. Feasibility level engineering
for advanced exploration infrastructure is approximately 70% complete, including geophysics and soils geotechnical drilling, and the procurement
process for long-lead items such as the camp, power infrastructure and water treatment plant has been initiated.
Further, on July 19th, the Company
together with the Wabauskang and Lac Seul First Nations signed an updated Advanced Exploration Agreement (the “AEX Agreement”),
which replaces the existing Exploration Agreement. The AEX Agreement is designed to better reflect the changing nature of project activities
in anticipation of the development of the underground decline. The AEX Agreement also reflects the importance of building positive and
strong relationships through meaningful dialogue and consultation and continues the process of strengthening our partnership. Kinross
is targeting a potential start of the surface construction for the advanced exploration program in 2024, subject to receipt of permits.
For the main project, Kinross continues
to advance technical studies, including engineering and field testwork campaigns, with plans to release the results of this work in the
form of a preliminary economic assessment in 2024. Metallurgical testwork is underway, as well as geochemical work that includes static
testing, humidity cells, column testing, tailings residue sampling and field leach barrels. An extensive field bedrock and soils geotechnical
drilling and testing program is planned to kickoff in August.
A comprehensive baseline study program
encompassing air, noise, hydrogeology, geochemistry, archeology, water quality and a number of other metrics is progressing well. There
are over 60 water monitoring wells installed around the site, as well as 25 surface water stations and 11 hydrometric stations which
together enable understanding of the water quality and flow of water in and around the site. Permitting activities are progressing well,
including pre-submission engagement with the Impact Assessment Agency of Canada (IAAC) in preparation for the Initial Project Description
submission.
Manh
Choh
At
the 70%-owned Manh Choh project, activities remain on schedule and on budget, and the mine’s operating permits were received in
May. Construction activities at the mine area have commenced and continue to ramp-up with the mobilization of the mining business partner
and construction companies to install the site facilities. Contracting and procurement activities are now complete for the Manh Choh
site. Construction activities have commenced on the mill modifications at Fort Knox, where the Manh Choh ore will be processed. The Kinross
operations team is now fully staffed while onboarding of key business partners to support the mining and ore transport is ongoing. As
a key priority, all parties remain focused on local hiring and training opportunities to support the local towns and villages including
long-term skills for individuals after mining concludes at Manh Choh.
The
Company announced on July 27, 2022, that it was proceeding with the Manh Choh project as the operator of the joint venture. Initial
production from Manh Choh is expected in the second half of 2024 and is expected to add approximately 640,000 attributable gold equivalent
ounces to the Company’s production profile over its approximately 4.5 year life-of-mine. Including Manh Choh, the Company expects
to produce an average of approximately 400,000 attributable gold equivalent ounces per year from 2024 to 2027 from its Alaskan assets.
Round Mountain and Gold Hill exploration
and studies
At Round Mountain, the Company has
completed Phase W1 and is continuing to mine Phase W2 while progressing optimization work on Phase S open pit and focusing on exploration
and studies of the underground options at Phase X and Gold Hill.
The recent
optimization work at Phase S has shown positive initial results, reducing the capital spend and strip ratio and improving economics.
The Company will continue to study Phase S, and the associated ounces remain in reserves for potential future mining.
Construction of
the Phase X exploration decline is progressing well, with 350 metres developed so far, and remains on plan to start definition drilling
in early 2024.
In terms of sequencing, Round Mountain
could potentially transition open pit mining from Phase W2 to Phase S while developing and ramping up the Phase X underground, which could
then be concurrently exploited with Phase S in the second half of the decade. Gold Hill underground development could follow Phase X,
adding higher grade mill feed to supplement production from Phase S and Phase X towards the end of the decade.
The Gold Hill exploration 2023 drill
program tested continuity within the mid-Atlantic vein zone and confirmed an 800 metre west strike extension with multiple high-grade
intercepts within the Jersey vein zone.
The new strike extensions, including
the best intercept received to date in hole D-1195, demonstrate this robust system continues and still remains open to the west at depth.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Chile
Kinross’ activities in Chile
are currently focused on La Coipa and potential opportunities to extend its mine life. The Lobo-Marte project continues to provide optionality
as a potential large, low-cost mine upon the conclusion of mining at La Coipa. While the Company focuses its technical resources on La
Coipa, it will continue to engage and build relationships with communities related to Lobo-Marte and government stakeholders.
Curlew Basin exploration
At the Curlew Basin exploration project
in Washington State, underground exploration drill results continue to confirm vein extensions and continuity within high priority target
areas. Exploration drilling will continue throughout the third quarter with the aim to build on the resource through proximal growth and
to test the area of upside potential.
Results-to-date demonstrate thicker
intervals of mineralization and are adding volume in key portions of the system. Hole 1148, which represents the best Curlew intercept
in 10 years, tested the southern edge of K5 and documented a major change in vein orientation, resulting in a new open zone of higher-grade
veins. Previous tests of K5-South from surface showed the zone had limited growth potential, and now this intercept and follow-up drilling
unlock a new search space. Year-after-year, exploration continues to define new veins, proving the thesis there is more to explore within
the entire Curlew Basin.
Other developments
Return of capital
In accordance with the parameters of
the share buyback program, Kinross has paused share repurchases to prioritize debt reduction in the near term. Going forward, the Company
will continue to assess its capital allocation priorities dependent on market conditions and other relevant factors.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
| 5. | CONSOLIDATED
RESULTS OF OPERATIONS |
Operating
Highlights
| |
Three
months ended June 30, | | |
Six
months ended June 30, | |
(in millions,
except ounces and per ounce amounts) | |
2023 | | |
2022 | | |
Change | | |
%
Change(d) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(d) | |
Operating
Statistics(a) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total
gold equivalent ounces from continuing operations(b) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Produced | |
| 555,036 | | |
| 453,978 | | |
| 101,058 | | |
| 22 | % | |
| 1,021,058 | | |
| 832,399 | | |
| 188,659 | | |
| 23 | % |
Sold | |
| 552,969 | | |
| 439,078 | | |
| 113,891 | | |
| 26 | % | |
| 1,043,299 | | |
| 812,806 | | |
| 230,493 | | |
| 28 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gold ounces - sold from continuing
operations | |
| 525,921 | | |
| 434,086 | | |
| 91,835 | | |
| 21 | % | |
| 987,617 | | |
| 805,421 | | |
| 182,196 | | |
| 23 | % |
Silver ounces - sold from continuing
operations (000's) | |
| 2,215 | | |
| 413 | | |
| 1,802 | | |
| nm | | |
| 4,615 | | |
| 600 | | |
| 4,015 | | |
| nm | |
Average
realized gold price per ounce from continuing operations(c) | |
$ | 1,976 | | |
$ | 1,872 | | |
$ | 104 | | |
| 6 | % | |
$ | 1,937 | | |
$ | 1,874 | | |
$ | 63 | | |
| 3 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Financial data from Continuing
Operations | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Metal sales | |
$ | 1,092.3 | | |
$ | 821.5 | | |
$ | 270.8 | | |
| 33 | % | |
$ | 2,021.6 | | |
$ | 1,522.4 | | |
$ | 499.2 | | |
| 33 | % |
Production cost of sales | |
$ | 497.9 | | |
$ | 450.8 | | |
$ | 47.1 | | |
| 10 | % | |
$ | 981.8 | | |
$ | 813.9 | | |
$ | 167.9 | | |
| 21 | % |
Depreciation, depletion and amortization | |
$ | 239.3 | | |
$ | 180.5 | | |
$ | 58.8 | | |
| 33 | % | |
$ | 451.2 | | |
$ | 347.0 | | |
$ | 104.2 | | |
| 30 | % |
Operating earnings | |
$ | 237.8 | | |
$ | 64.0 | | |
$ | 173.8 | | |
| nm | | |
$ | 381.7 | | |
$ | 166.5 | | |
$ | 215.2 | | |
| 129 | % |
Net earnings (loss) from continuing
operations attributable to common shareholders | |
$ | 151.0 | | |
$ | (9.3 | ) | |
$ | 160.3 | | |
| nm | | |
$ | 241.2 | | |
$ | 72.0 | | |
$ | 169.2 | | |
| nm | |
| (a) | Results
for the three and six months ended June 30, 2023 and 2022 are from continuing operations
and exclude results from the Company’s Chirano and Russian operations due to the classification
of these operations as discontinued and their sale in 2022. |
| (b) | “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 and first six months of 2023 was 81.88:1 and 82.85:1, respectively (second quarter and first six months of 2022 –
82.76:1 and 80.36:1, respectively). |
| (c) | “Average
realized gold price per ounce from continuing operations” is defined as gold metal
sales from continuing operations divided by total gold ounces sold from continuing operations. |
| (d) | “nm”
means not meaningful. |
Operating
Earnings (Loss) from Continuing Operations by Segment
|
|
Three
months ended June 30, | | |
Six
months ended June 30, |
|
(in millions) | |
2023 | | |
2022 | | |
Change | | |
%
Change(b) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(b) |
|
Operating segments |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Tasiast |
|
$ | 126.4 | | |
$ | 51.4 | | |
$ | 75.0 | | |
| 146 | % | |
$ | 221.6 | | |
$ | 130.8 | | |
$ | 90.8 | | |
69 |
% |
Paracatu |
|
| 127.9 | | |
| 73.4 | | |
| 54.5 | | |
| 74 | % | |
| 210.3 | | |
| 115.5 | | |
| 94.8 | | |
82 |
% |
La Coipa |
|
| 36.5 | | |
| 10.1 | | |
| 26.4 | | |
| nm | | |
| 70.8 | | |
| 14.3 | | |
| 56.5 | | |
nm |
|
Fort Knox |
|
| 31.4 | | |
| 24.9 | | |
| 6.5 | | |
| 26 | % | |
| 56.7 | | |
| 33.4 | | |
| 23.3 | | |
70 |
% |
Round Mountain |
|
| (15.7 | ) | |
| 6.4 | | |
| (22.1 | ) | |
| nm | | |
| (44.4 | ) | |
| 28.9 | | |
| (73.3 | ) | |
nm |
|
Bald Mountain |
|
| 2.9 | | |
| 7.8 | | |
| (4.9 | ) | |
| (63 | )% | |
| (0.5 | ) | |
| 7.1 | | |
| (7.6 | ) | |
(107 |
)% |
Non-operating segments |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Great Bear |
|
| (14.2 | ) | |
| (16.1 | ) | |
| 1.9 | | |
| nm | | |
| (25.4 | ) | |
| (20.1 | ) | |
| (5.3 | ) | |
nm |
|
Corporate
and other(a) |
|
| (57.4 | ) | |
| (93.9 | ) | |
| 36.5 | | |
| nm | | |
| (107.4 | ) | |
| (143.4 | ) | |
| 36.0 | | |
nm |
|
Total |
|
$ | 237.8 | | |
$ | 64.0 | | |
$ | 173.8 | | |
| nm | | |
$ | 381.7 | | |
$ | 166.5 | | |
$ | 215.2 | | |
129 |
% |
| (a) | “Corporate
and other” includes operating costs which are not directly related to individual mining
properties such as overhead expenses, gains and losses on disposal of assets and investments,
and other costs relating to corporate, shutdown, and other non-operating assets (including
Kettle River-Buckhorn, Lobo-Marte, the Manh Choh project and Maricunga). |
| (b) | “nm”
means not meaningful. |
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Mining
Operations
Tasiast
(100% ownership and operator) – Mauritania
|
|
Three
months ended June 30, | | |
Six
months ended June 30, |
|
|
|
2023 | | |
2022 | | |
Change | | |
%
Change | | |
2023 | | |
2022 | | |
Change | | |
%
Change |
|
Operating
Statistics |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Tonnes
ore mined (000's) |
|
| 1,688 | | |
| 3,053 | | |
| (1,365 | ) | |
| (45 | )% | |
| 3,378 | | |
| 6,515 | | |
| (3,137 | ) | |
(48 |
)% |
Tonnes
processed (000's) |
|
| 1,663 | | |
| 1,680 | | |
| (17 | ) | |
| (1 | )% | |
| 2,871 | | |
| 3,204 | | |
| (333 | ) | |
(10 |
)% |
Grade
(grams/tonne) |
|
| 3.25 | | |
| 2.51 | | |
| 0.74 | | |
| 29 | % | |
| 3.35 | | |
| 2.53 | | |
| 0.82 | | |
32 |
% |
Recovery |
|
| 92.5 | % | |
| 89.1 | % | |
| 3.4 | % | |
| 4 | % | |
| 92.0 | % | |
| 91.6 | % | |
| 0.4 | % | |
0 |
% |
Gold
equivalent ounces: |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Produced
|
|
| 157,844 | | |
| 129,140 | | |
| 28,704 | | |
| 22 | % | |
| 288,889 | | |
| 262,835 | | |
| 26,054 | | |
10 |
% |
Sold |
|
| 152,564 | | |
| 114,064 | | |
| 38,500 | | |
| 34 | % | |
| 281,043 | | |
| 244,259 | | |
| 36,784 | | |
15 |
% |
|
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Financial
Data (in millions) |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Metal
sales |
|
$ | 301.6 | | |
$ | 213.2 | | |
$ | 88.4 | | |
| 41 | % | |
$ | 547.4 | | |
$ | 460.6 | | |
$ | 86.8 | | |
19 |
% |
Production
cost of sales |
|
| 99.5 | | |
| 93.3 | | |
| 6.2 | | |
| 7 | % | |
| 187.9 | | |
| 189.1 | | |
| (1.2 | ) | |
(1 |
)% |
Depreciation,
depletion and amortization |
|
| 58.6 | | |
| 56.4 | | |
| 2.2 | | |
| 4 | % | |
| 104.8 | | |
| 113.5 | | |
| (8.7 | ) | |
(8 |
)% |
|
|
| 143.5 | | |
| 63.5 | | |
| 80.0 | | |
| 126 | % | |
| 254.7 | | |
| 158.0 | | |
| 96.7 | | |
61 |
% |
Other
operating expense |
|
| 16.1 | | |
| 10.6 | | |
| 5.5 | | |
| 52 | % | |
| 31.4 | | |
| 24.8 | | |
| 6.6 | | |
27 |
% |
Exploration
and business development |
|
| 1.0 | | |
| 1.5 | | |
| (0.5 | ) | |
| (33 | )% | |
| 1.7 | | |
| 2.4 | | |
| (0.7 | ) | |
(29 |
)% |
Segment
operating earnings |
|
$ | 126.4 | | |
$ | 51.4 | | |
$ | 75.0 | | |
| 146 | % | |
$ | 221.6 | | |
$ | 130.8 | | |
$ | 90.8 | | |
69 |
% |
Second
quarter 2023 vs. Second quarter 2022
Mine sequencing at Tasiast involved
an increase in capital stripping relating to West Branch 5 and a higher-grade section of West Branch 4, resulting in a 45% decrease in
tonnes of ore mined and a 29% increase in mill grades in the second quarter of 2023 compared to the same period in 2022. Tasiast continued
to focus on overall plant performance in the second quarter of 2023, with additional tie-ins and maintenance activities, as efforts continued
in the ramp-up towards sustainable average throughput of 24,000 t/d. The higher mill grades and recovery drove increases in gold equivalent
ounces produced and sold of 22% and 34% in the second quarter of 2023, respectively, compared to the same period in 2022. Gold equivalent
ounces sold in the second quarter of 2023 were lower than production due to timing of sales.
In
the second quarter of 2023, metal sales increased by 41% compared to the second quarter of 2022, due to the increases in gold equivalent
ounces sold and average metal prices realized. Production cost of sales increased by 7% in the second quarter of 2023, compared to the
same period in 2022, due to the increase in gold equivalent ounces sold, partially offset by lower
operating waste mined. Depreciation, depletion and amortization increased by 4% in the second quarter of 2023, primarily due to the increase
in gold equivalent ounces sold, partially offset by an increase in capitalized depreciation as a result of the increase in capital development.
First
six months of 2023 vs. First six months of 2022
Mine
sequencing at Tasiast involved an increase in capital stripping relating to West Branch 5 and a higher-grade section of West Branch 4,
resulting in a 48% decrease in tonnes of ore mined and a 32% increase in mill grades in the first
six months of 2023 compared to the same period in 2022. Tasiast had a planned plant shutdown in February 2023 for 24K project tie-ins
and other maintenance, resulting in a 10% decrease in tonnes of ore processed in the first six months of 2023 compared to the first six
months of 2022. The lower throughput due to the planned shutdown was largely offset by higher grades, resulting in increases in gold equivalent
ounces produced and sold of 10% and 15%, respectively, in the first six months of 2023, compared to the same period in 2022.
Metal
sales in the first six months of 2023 increased by 19%, compared to the first six months of 2022,
due to the increases in gold equivalent ounces sold and average metal prices realized. Production cost of sales was comparable to the
same period in 2022, due to the increase in gold equivalent ounces sold, offset by lower operating waste mined. Depreciation, depletion
and amortization decreased by 8%, compared to the first six months of 2022, due to an increase in capitalized depreciation as a result
of the increase in capital development, partially offset by the increase in gold equivalent ounces sold.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Paracatu
(100% ownership and operator) – Brazil
|
|
Three
months ended June 30, | | |
Six
months ended June 30, |
|
|
|
2023 | | |
2022 | | |
Change | | |
%
Change(a) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(a) |
|
Operating
Statistics |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Tonnes
ore mined (000's) |
|
| 14,199 | | |
| 11,011 | | |
| 3,188 | | |
| 29 | % | |
| 22,255 | | |
| 17,176 | | |
| 5,079 | | |
30 |
% |
Tonnes
processed (000's) |
|
| 15,104 | | |
| 15,133 | | |
| (29 | ) | |
| (0 | )% | |
| 30,234 | | |
| 28,778 | | |
| 1,456 | | |
5 |
% |
Grade
(grams/tonne) |
|
| 0.42 | | |
| 0.35 | | |
| 0.07 | | |
| 20 | % | |
| 0.40 | | |
| 0.34 | | |
| 0.06 | | |
18 |
% |
Recovery |
|
| 80.1 | % | |
| 75.1 | % | |
| 5.0 | % | |
| 7 | % | |
| 79.3 | % | |
| 75.0 | % | |
| 4.3 | % | |
6 |
% |
Gold
equivalent ounces: |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Produced |
|
| 164,243 | | |
| 129,423 | | |
| 34,820 | | |
| 27 | % | |
| 287,577 | | |
| 237,432 | | |
| 50,145 | | |
21 |
% |
Sold |
|
| 163,889 | | |
| 133,472 | | |
| 30,417 | | |
| 23 | % | |
| 292,233 | | |
| 235,358 | | |
| 56,875 | | |
24 |
% |
|
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Financial
Data (in millions) |
|
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
|
|
|
Metal
sales |
|
$ | 322.9 | | |
$ | 250.0 | | |
$ | 72.9 | | |
| 29 | % | |
$ | 565.5 | | |
$ | 439.7 | | |
$ | 125.8 | | |
29 |
% |
Production
cost of sales |
|
| 135.2 | | |
| 129.6 | | |
| 5.6 | | |
| 4 | % | |
| 253.2 | | |
| 236.2 | | |
| 17.0 | | |
7 |
% |
Depreciation,
depletion and amortization |
|
| 49.8 | | |
| 46.0 | | |
| 3.8 | | |
| 8 | % | |
| 90.2 | | |
| 85.6 | | |
| 4.6 | | |
5 |
% |
|
|
| 137.9 | | |
| 74.4 | | |
| 63.5 | | |
| 85 | % | |
| 222.1 | | |
| 117.9 | | |
| 104.2 | | |
88 |
% |
Other
operating expense |
|
| 8.9 | | |
| 0.8 | | |
| 8.1 | | |
| nm | | |
| 9.8 | | |
| 1.9 | | |
| 7.9 | | |
nm |
|
Exploration
and business development |
|
| 1.1 | | |
| 0.2 | | |
| 0.9 | | |
| nm | | |
| 2.0 | | |
| 0.5 | | |
| 1.5 | | |
nm |
|
Segment
operating earnings |
|
$ | 127.9 | | |
$ | 73.4 | | |
$ | 54.5 | | |
| 74 | % | |
$ | 210.3 | | |
$ | 115.5 | | |
$ | 94.8 | | |
82 |
% |
| (a) | “nm”
means not meaningful. |
Second
quarter 2023 vs. Second quarter 2022
Planned
mine sequencing at Paracatu, which involved less waste mined in the quarter, resulted in a 29% increase in tonnes of ore mined and a
20% increase in grade in the second quarter of 2023 compared to the second quarter of 2022. Gold equivalent ounces produced and sold
increased by 27% and 23%, respectively, compared to the same period in 2022, primarily due to higher grades and recoveries.
Metal
sales increased by 29% compared to the second quarter of 2022, due to the increases in gold equivalent ounces sold and average metal
prices realized. Production cost of sales increased by 4% compared to the same period in 2022, largely due to inflationary pressures
on consumables, contractors and maintenance costs, partially offset by lower fuel costs. Depreciation, depletion and amortization increased
by 8%, compared to the same period in 2022, due to the increases in gold equivalent ounces sold and an increase in the depreciable asset
base.
First
six months of 2023 vs. First six months of 2022
Planned
mine sequencing at Paracatu, which involved less waste mined in the first half of 2023, resulted in a 30% increase in tonnes of ore mined
and a 18% increase in grade in the first six months of 2023 compared to the first six months of 2022. Tonnes of ore processed increased
by 5% compared to the first six months of 2022, mainly due to an increase in mill availability and a decrease in ore hardness. The increases
in throughput and grades, as well as higher recoveries resulted in an increase in gold equivalent ounces produced and sold of 21% and
24%, respectively, compared to the same period in 2022. Gold equivalent ounces sold in the in the first six months of 2023 were higher
than production due to timing of sales.
Metal
sales for the first six months of 2023 increased by 29% compared to the same period in 2022, due to the increases in gold equivalent
ounces sold and average metal prices realized. In the first six months of 2023, production cost of sales increased by 7%, compared to
the same period in 2022, largely due to inflationary pressures on consumables and maintenance costs, partially offset by lower fuel costs.
Depreciation, depletion and amortization increased by 5% in the first six months of 2023, compared to the same period in 2022, due to
the increases in gold equivalent ounces sold and an increase in the depreciable asset base.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
La
Coipa (100% ownership and operator) – Chile
| |
Three
months ended June 30, | | |
Six
months ended June 30, | |
| |
2023 | | |
2022 | | |
Change | | |
%
Change(b) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(b) | |
Operating Statistics | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Tonnes ore mined (000's) | |
| 869 | | |
| 550 | | |
| 319 | | |
| 58 | % | |
| 1,617 | | |
| 724 | | |
| 893 | | |
123 | % |
Tonnes processed (000's) | |
| 971 | | |
| 321 | | |
| 650 | | |
| nm | | |
| 1,662 | | |
| 379 | | |
| 1,283 | | |
nm | |
Grade (grams/tonne): | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Gold | |
| 1.62 | | |
| 0.74 | | |
| 0.88 | | |
| 119 | % | |
| 1.64 | | |
| 0.69 | | |
| 0.95 | | |
138 | % |
Silver | |
| 109.84 | | |
| 56.04 | | |
| 53.80 | | |
| 96 | % | |
| 116.46 | | |
| 51.90 | | |
| 64.56 | | |
124 | % |
Recovery: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Gold | |
| 81.3 | % | |
| 68.7 | % | |
| 12.6 | % | |
| 18 | % | |
| 84.1 | % | |
| 69.9 | % | |
| 14.2 | % | |
20 | % |
Silver | |
| 56.0 | % | |
| 42.7 | % | |
| 13.3 | % | |
| 31 | % | |
| 61.8 | % | |
| 41.4 | % | |
| 20.4 | % | |
49 | % |
Gold
equivalent ounces:(a) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Produced | |
| 66,744 | | |
| 7,414 | | |
| 59,330 | | |
| nm | | |
| 120,340 | | |
| 7,938 | | |
| 112,402 | | |
nm | |
Sold | |
| 67,378 | | |
| 7,099 | | |
| 60,279 | | |
| nm | | |
| 129,158 | | |
| 7,099 | | |
| 122,059 | | |
nm | |
Silver ounces: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Produced (000's) | |
| 1,998 | | |
| 219 | | |
| 1,779 | | |
| nm | | |
| 3,881 | | |
| 235 | | |
| 3,646 | | |
nm | |
Sold (000's) | |
| 2,025 | | |
| 214 | | |
| 1,811 | | |
| nm | | |
| 4,237 | | |
| 214 | | |
| 4,023 | | |
nm | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Financial Data (in millions) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Metal sales | |
$ | 132.0 | | |
$ | 13.1 | | |
$ | 118.9 | | |
| nm | | |
$ | 249.8 | | |
$ | 13.1 | | |
$ | 236.7 | | |
nm | |
Production cost of sales | |
| 43.6 | | |
| 5.6 | | |
| 38.0 | | |
| nm | | |
| 88.5 | | |
| 5.6 | | |
| 82.9 | | |
nm | |
Depreciation,
depletion and amortization | |
| 48.3 | | |
| - | | |
| 48.3 | | |
| nm | | |
| 84.7 | | |
| - | | |
| 84.7 | | |
nm | |
| |
| 40.1 | | |
| 7.5 | | |
| 32.6 | | |
| nm | | |
| 76.6 | | |
| 7.5 | | |
| 69.1 | | |
nm | |
Other operating expense (income) | |
| 0.2 | | |
| (3.2 | ) | |
| 3.4 | | |
| 106 | % | |
| 0.4 | | |
| (7.5 | ) | |
| 7.9 | | |
105 | % |
Exploration
and business development | |
| 3.4 | | |
| 0.6 | | |
| 2.8 | | |
| nm | | |
| 5.4 | | |
| 0.7 | | |
| 4.7 | | |
nm | |
Segment operating
earnings | |
$ | 36.5 | | |
$ | 10.1 | | |
$ | 26.4 | | |
| nm | | |
$ | 70.8 | | |
$ | 14.3 | | |
$ | 56.5 | | |
nm | |
| (a) | “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 and first six months of 2023 was 81.88:1 and 82.85:1, respectively (second quarter and first six months of 2022 – 82.76:1
and 80.36:1, respectively). |
| (b) | “nm”
means not meaningful. |
Second
quarter and first six months 2023 vs. Second quarter and first six months 2022
Production
at La Coipa began in February 2022 and continued to increase throughout 2022 as throughput continued to ramp up and as grades and
recoveries increased. Mining in 2023 continues to focus on the Phase 7 and capital development of the Puren deposit. Tonnes of ore processed
in the first six months of 2023 were impacted by a planned mill shutdown in February 2023 for maintenance work aimed at increasing
reliability to sustain higher throughput levels. Gold equivalent ounces sold were higher than production
in the second quarter and first six months of 2023 due to timing of sales.
The
Company continues to focus on optimizing the plant and maintaining the outperformance on recovery, and production at La Coipa remains
on plan for the year.
Exploration
activities in Chile are currently focused on La Coipa and potential opportunities to extend its mine life through additional pushbacks
at Phase 7 and the Puren pit, as well as other nearby pits.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Fort
Knox (100% ownership and operator) – USA
| |
Three months
ended June 30, | | |
Six months
ended June 30, | |
| |
2023 | | |
2022 | | |
Change | | |
%
Change(c) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(c) | |
Operating Statistics | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Tonnes ore mined (000's) | |
| 7,624 | | |
| 14,591 | | |
| (6,967 | ) | |
| (48 | )% | |
| 15,036 | | |
| 28,334 | | |
| (13,298 | ) | |
(47 | )% |
Tonnes
processed (000's)(a) | |
| 8,912 | | |
| 15,045 | | |
| (6,133 | ) | |
| (41 | )% | |
| 16,850 | | |
| 29,907 | | |
| (13,057 | ) | |
(44 | )% |
Grade
(grams/tonne)(b) | |
| 0.82 | | |
| 0.72 | | |
| 0.10 | | |
| 14 | % | |
| 0.80 | | |
| 0.69 | | |
| 0.11 | | |
16 | % |
Recovery(b) | |
| 81.5 | % | |
| 80.8 | % | |
| 0.7 | % | |
| 1 | % | |
| 81.7 | % | |
| 80.4 | % | |
| 1.3 | % | |
2 | % |
Gold equivalent ounces: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Produced | |
| 69,438 | | |
| 77,184 | | |
| (7,746 | ) | |
| (10 | )% | |
| 134,825 | | |
| 131,987 | | |
| 2,838 | | |
2 | % |
Sold | |
| 69,206 | | |
| 77,698 | | |
| (8,492 | ) | |
| (11 | )% | |
| 134,610 | | |
| 130,511 | | |
| 4,099 | | |
3 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Financial Data (in millions) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Metal sales | |
$ | 136.9 | | |
$ | 145.4 | | |
$ | (8.5 | ) | |
| (6 | )% | |
$ | 260.0 | | |
$ | 243.5 | | |
$ | 16.5 | | |
7 | % |
Production cost of sales | |
| 79.3 | | |
| 92.6 | | |
| (13.3 | ) | |
| (14 | )% | |
| 156.9 | | |
| 160.0 | | |
| (3.1 | ) | |
(2 | )% |
Depreciation,
depletion and amortization | |
| 22.1 | | |
| 26.1 | | |
| (4.0 | ) | |
| (15 | )% | |
| 40.7 | | |
| 47.0 | | |
| (6.3 | ) | |
(13 | )% |
| |
| 35.5 | | |
| 26.7 | | |
| 8.8 | | |
| 33 | % | |
| 62.4 | | |
| 36.5 | | |
| 25.9 | | |
71 | % |
Other operating expense | |
| 0.2 | | |
| - | | |
| 0.2 | | |
| nm | | |
| 0.6 | | |
| 0.2 | | |
| 0.4 | | |
nm | |
Exploration
and business development | |
| 3.9 | | |
| 1.8 | | |
| 2.1 | | |
| 117 | % | |
| 5.1 | | |
| 2.9 | | |
| 2.2 | | |
76 | % |
Segment operating
earnings | |
$ | 31.4 | | |
$ | 24.9 | | |
$ | 6.5 | | |
| 26 | % | |
$ | 56.7 | | |
$ | 33.4 | | |
$ | 23.3 | | |
70 | % |
| (a) | Includes
6,837,000 and 12,809,000 tonnes placed on the heap leach pad during the second quarter and
first six months of 2023, respectively (second quarter and first six months of 2022 - 12,785,000
and 25,795,000 tonnes, respectively). |
| (b) | Amount
represents mill grade and recovery only. Ore placed on the heap leach pads had an average
grade of 0.24 and 0.23 grams per tonne during the second quarter and first six months of
2023, respectively (second quarter and first six months of 2022 - 0.19 and 0.18 grams per
tonne, respectively). Due to the nature of heap leach operations, point-in-time recovery
rates are not meaningful. |
| (c) | "nm"
means not meaningful. |
Second
quarter 2023 vs. Second quarter 2022
Planned
mine sequencing at Fort Knox included Phase 10 capital development and a decrease in ore placed on the Barnes Creek heap leach facility,
resulting in a 48% decrease in tonnes of ore mined and a 41% decrease in tonnes of ore processed in the second quarter of 2023 compared
to the second quarter of 2022. Planned mine sequencing also resulted in an increase in mill grades of 14%. Gold
equivalent ounces produced and sold decreased by 10% and 11%, respectively, compared to the second quarter of 2022, primarily due to
fewer tonnes placed on the heap leach pads, partially offset by the higher grade.
During
the second quarter of 2023, metal sales decreased by 6% compared to the same period in 2022, due to the decrease in gold equivalent ounces
sold, partially offset by the increase in average metal prices realized. Production cost of sales
decreased by 14% compared to the second quarter of 2022, primarily due to the decrease in gold equivalent ounces sold, a decrease in
operating waste mined and lower reagent and fuel costs. Depreciation, depletion, and amortization decreased by 15% in the second quarter
of 2022 compared to the same period in 2022 due to the decrease in gold equivalent
ounces sold and an increase in capitalized depreciation as a result of the increase in capital development.
First
six months of 2023 vs. First six months of 2022
Planned
mine sequencing at Fort Knox included the start of Phase 10 capital development and a decrease in ore placed on the Barnes Creek heap
leach facility, resulting in a 47% decrease in tonnes of ore mined and a 44% decrease in tonnes of ore processed in the first six months
of 2023 compared to the first six months of 2022. Planned mine sequencing also resulted in an increase in mill grades of 16%. Gold
equivalent ounces produced and sold increased by 2% and 3%, respectively, compared to the first six months of 2022, primarily due to
the increase in grades, partially offset by fewer tonnes placed on the heap leach pads.
Metal sales increased by 7% in the
first six months of 2023, compared to the same period in 2022, due to the increases in gold equivalent ounces sold and average metal
prices realized. Production cost of sales decreased by 2% in the first six months of 2023, compared to the same period in 2022, primarily
due to the decrease in operating waste mined as well as lower reagents, partially offset by the increase in gold equivalent ounces sold.
Depreciation, depletion, and amortization decreased by 13% in the first six months of 2023, compared to the same period in 2022, due
to the increase in capitalized depreciation as a result of the increase in capital development, partially offset by the increase in gold
equivalent ounces sold.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Round
Mountain (100% ownership and operator) – USA
| |
Three
months ended June 30, | | |
Six
months ended June 30, | |
| |
2023 | | |
2022 | | |
Change | | |
%
Change(c) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(c) | |
Operating Statistics | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Tonnes ore mined
(000's) | |
| 10,496 | | |
| 6,702 | | |
| 3,794 | | |
| 57 | % | |
| 15,515 | | |
| 10,469 | | |
| 5,046 | | |
48 | % |
Tonnes
processed (000's)(a) | |
| 11,049 | | |
| 7,460 | | |
| 3,589 | | |
| 48 | % | |
| 16,294 | | |
| 11,597 | | |
| 4,697 | | |
41 | % |
Grade
(grams/tonne)(b) | |
| 0.67 | | |
| 0.67 | | |
| - | | |
| 0 | % | |
| 0.74 | | |
| 0.73 | | |
| 0.01 | | |
1 | % |
Recovery(b) | |
| 76.3 | % | |
| 78.1 | % | |
| (1.8 | )% | |
| (2 | )% | |
| 77.4 | % | |
| 78.4 | % | |
| (1.0 | )% | |
(1 | )% |
Gold equivalent ounces: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Produced | |
| 57,446 | | |
| 56,709 | | |
| 737 | | |
| 1 | % | |
| 116,278 | | |
| 102,028 | | |
| 14,250 | | |
14 | % |
Sold | |
| 57,412 | | |
| 51,455 | | |
| 5,957 | | |
| 12 | % | |
| 115,638 | | |
| 98,414 | | |
| 17,224 | | |
18 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Financial Data (in
millions) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Metal sales | |
$ | 114.4 | | |
$ | 96.0 | | |
$ | 18.4 | | |
| 19 | % | |
$ | 223.5 | | |
$ | 183.6 | | |
$ | 39.9 | | |
22 | % |
Production cost of sales | |
| 85.5 | | |
| 74.8 | | |
| 10.7 | | |
| 14 | % | |
| 182.0 | | |
| 127.1 | | |
| 54.9 | | |
43 | % |
Depreciation,
depletion and amortization | |
| 33.5 | | |
| 11.7 | | |
| 21.8 | | |
| 186 | % | |
| 68.1 | | |
| 23.8 | | |
| 44.3 | | |
186 | % |
| |
| (4.6 | ) | |
| 9.5 | | |
| (14.1 | ) | |
| (148 | )% | |
| (26.6 | ) | |
| 32.7 | | |
| (59.3 | ) | |
(181 | )% |
Other operating expense | |
| - | | |
| 1.3 | | |
| (1.3 | ) | |
| nm | | |
| 1.7 | | |
| 1.7 | | |
| - | | |
0 | % |
Exploration and business development | |
| 11.1 | | |
| 1.8 | | |
| 9.3 | | |
| nm | | |
| 16.1 | | |
| 2.1 | | |
| 14.0 | | |
nm | |
Segment operating (loss) earnings | |
$ | (15.7 | ) | |
$ | 6.4 | | |
$ | (22.1 | ) | |
| nm | | |
$ | (44.4 | ) | |
$ | 28.9 | | |
$ | (73.3 | ) | |
nm | |
(a) | Includes
10,028,000 and 14,395,000 tonnes placed on the heap leach pads during the second quarter
and first six months of 2023, respectively (second quarter and first six months of 2022 –
6,515,000 and 9,723,000 tonnes, respectively). |
(b) | Amount
represents mill grade and recovery only. Ore placed on the heap leach pads had an average
grade of 0.35 and 0.38 grams per tonne during the second quarter and first six months of
2023 (second quarter and first six months of 2022 – 0.32 and 0.34 grams per tonne,
respectively). Due to the nature of heap leach operations, point-in-time recovery rates are
not meaningful. |
(c) | “nm”
means not meaningful. |
Second
quarter 2023 vs Second quarter 2022
Tonnes of ore mined increased by 57%
as a result of planned mine sequencing based on the optimization program completed in the third quarter of 2022. Tonnes of ore processed
increased by 48%, compared to the second quarter of 2022, due to the increase in tonnes of ore mined and then placed on the heap leach
pads. Gold equivalent ounces produced were comparable to the same period in 2022. Gold equivalent ounces sold were higher by 12% compared
to the second quarter of 2022, due to timing of sales.
Metal
sales increased by 19% in the second quarter of 2023 compared to the same period in 2022, due to the increases in gold equivalent
ounces sold and average metal prices realized. Production cost of sales increased by 14% compared to the second quarter of 2022, primarily
due to the increase in gold equivalent ounces sold and lower capital development. Depreciation, depletion and amortization increased
from $11.7 million to $33.5 million in the second quarter of 2023 compared to the same period in 2022, due to the increase in gold equivalent
ounces sold, decrease in mineral reserves at the end of 2022, and changes to the life-of-mine plan in the fourth quarter of 2022. These
increases were partially offset by a decrease in the depreciable asset base as a result of the impairment charge recognized in the fourth
quarter of 2022.
Exploration
activities continued to focus primarily on progressing underground opportunities at Phase X. Construction of the exploration decline
at Phase X started in the first quarter of 2023 and underground development is progressing to start definition drilling in early 2024.
The Company is also advancing studies and permitting for a potential underground mine at Phase X in parallel with the underground development
to advance our path to production.
First
six months of 2023 vs. First six months of 2022
Tonnes
of ore mined increased by 48% as a result of planned mine sequencing based on the optimization program completed in the third
quarter of 2022. Tonnes of ore processed increased by 41%, compared to the second quarter of 2022 due to the increase in tonnes of ore
mined and then placed on the heap leach pads. Gold equivalent ounces produced and sold increased by 14% and 18%, respectively, compared
to the first six months of 2022, due to an increase in ounces recovered from the heap leach pads.
Metal
sales increased by 22% in the first six months of 2023 compared to same period in 2022, due to the increases in gold equivalent
ounces sold and average metal prices realized. Production cost of sales increased by 43% in the first six months of 2023 compared to
same period 2022, primarily due to the increase in gold equivalent ounces sold, which included higher cost ounces from the heap leach
pads that were impacted by inflationary pressures in the prior year, lower capital development and higher power, reagent and maintenance
costs. Depreciation, depletion and amortization increased from $23.8 million to $68.1 million compared to the same period in 2022, due
to the increase in gold equivalent ounces sold, decrease in mineral reserves at the end of 2022, and changes to the life-of-mine plan
in the fourth quarter of 2022. These increases were partially offset by a decrease in the depreciable asset base as a result of the impairment
charge recognized in the fourth quarter of 2022.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Bald
Mountain (100% ownership and operator) – USA
| |
Three
months ended June 30, | | |
Six
months ended June 30, | |
| |
2023 | | |
2022 | | |
Change | | |
%
Change | | |
2023 | | |
2022 | | |
Change | | |
%
Change | |
Operating Statistics | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Tonnes ore mined
(000's) | |
| 4,142 | | |
| 4,945 | | |
| (803 | ) | |
| (16 | )% | |
| 6,006 | | |
| 8,815 | | |
| (2,809 | ) | |
(32 | )% |
Tonnes processed (000's) | |
| 4,119 | | |
| 4,945 | | |
| (826 | ) | |
| (17 | )% | |
| 5,976 | | |
| 8,815 | | |
| (2,839 | ) | |
(32 | )% |
Grade
(grams/tonne)(a) | |
| 0.42 | | |
| 0.60 | | |
| (0.18 | ) | |
| (30 | )% | |
| 0.44 | | |
| 0.61 | | |
| (0.17 | ) | |
(28 | )% |
Gold equivalent ounces: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Produced | |
| 39,321 | | |
| 54,108 | | |
| (14,787 | ) | |
| (27 | )% | |
| 73,149 | | |
| 90,179 | | |
| (17,030 | ) | |
(19 | )% |
Sold | |
| 42,181 | | |
| 54,472 | | |
| (12,291 | ) | |
| (23 | )% | |
| 89,464 | | |
| 95,489 | | |
| (6,025 | ) | |
(6 | )% |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Financial Data (in
millions) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| |
Metal sales | |
$ | 83.7 | | |
$ | 102.3 | | |
$ | (18.6 | ) | |
| (18 | )% | |
$ | 173.1 | | |
$ | 178.8 | | |
$ | (5.7 | ) | |
(3 | )% |
Production cost of sales | |
| 54.5 | | |
| 54.5 | | |
| - | | |
| - | | |
| 112.5 | | |
| 94.8 | | |
| 17.7 | | |
19 | % |
Depreciation,
depletion and amortization | |
| 25.6 | | |
| 38.4 | | |
| (12.8 | ) | |
| (33 | )% | |
| 59.5 | | |
| 73.5 | | |
| (14.0 | ) | |
(19 | )% |
| |
| 3.6 | | |
| 9.4 | | |
| (5.8 | ) | |
| (62 | )% | |
| 1.1 | | |
| 10.5 | | |
| (9.4 | ) | |
(90 | )% |
Other operating expense | |
| 0.3 | | |
| 0.3 | | |
| - | | |
| - | | |
| 0.9 | | |
| 0.8 | | |
| 0.1 | | |
13 | % |
Exploration
and business development | |
| 0.4 | | |
| 1.3 | | |
| (0.9 | ) | |
| (69 | )% | |
| 0.7 | | |
| 2.6 | | |
| (1.9 | ) | |
(73 | )% |
Segment
operating earnings (loss) | |
$ | 2.9 | | |
$ | 7.8 | | |
$ | (4.9 | ) | |
| (63 | )% | |
$ | (0.5 | ) | |
$ | 7.1 | | |
$ | (7.6 | ) | |
(107 | )% |
(a) | Due to the nature of heap leach operations, point-in-time
recovery rates are not meaningful. |
Second
quarter 2023 vs. Second quarter 2022
Planned
mine sequencing at Bald Mountain resulted in a 16% and 17% decrease in tonnes of ore mined and processed, respectively, as well as a
decrease in grades of 30% in the second quarter of 2023 compared to the second quarter of 2022. Gold equivalent ounces produced and sold
decreased by 27% and 23%, respectively, compared to the second quarter of 2022 due to fewer tonnes placed on the heap leach pads and
lower grades. Gold equivalent ounces sold were higher than production due to timing of sales.
In
the second quarter of 2023, metal sales decreased by 18% compared to the same period in 2022, due to the decrease in gold equivalent
ounces sold, partially offset by the increase in average metal prices realized. Production cost of sales were comparable to the same
period in 2022 as the decrease in gold equivalent ounces sold was offset by higher contractor, reagent, and maintenance costs. Depreciation,
depletion and amortization decreased by 33% compared to the second quarter of 2022, due to the decrease in gold equivalent ounces sold
and an increase in capitalized depreciation as a result of the increase in capital development.
First
six months of 2023 vs. First six months of 2022
Planned
mine sequencing at Bald Mountain and the impacts of extremely harsh winter conditions in northern Nevada resulted in a 32% decrease in
tonnes of ore mined and processed in the first six months of 2023 compared to the first six months of 2022. Planned mine sequencing also
resulted in a decrease in grades of 28%. Gold equivalent ounces produced and sold decreased by 19% and 6%, respectively, compared to
the first six months of 2022 due to fewer tonnes placed on the heap leach pads and lower grades. Gold equivalent ounces sold were higher
than production due to timing of sales.
In
the first six months of 2023, metal sales decreased by 3% compared to the same period in 2022, due to the decreases in gold
equivalent ounces sold, partially offset by the increase in average metal prices realized. Production cost of sales in the first six
months of 2023 increased by 19% compared to the same period in 2022, due to higher cost ounces on the heap leach pads that
were impacted by inflationary pressures in the prior year, and higher contractor, reagent and maintenance costs, partially offset by
the decrease in gold equivalent ounces sold. Depreciation, depletion and amortization decreased by 19% compared to the first six
months of 2022, due to the decrease in gold equivalent ounces sold and an increase in capitalized depreciation as a result of the
increase in capital development.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Discontinued
operations
Russian
operations (100% ownership and operator) – Russian Federation
On June 15,
2022, the Company announced that it had completed the sale of its Russian operations to the Highland Gold Mining group of companies for
total cash consideration of $340.0 million, of which $300.0 million was received on closing and the remaining $40.0 million was received
during the second quarter of 2023. The Company’s Russian operations were classified as discontinued operations in 2022.
In connection
with the sale, the Company recognized an impairment charge of $671.0 million, which included $158.8 million related to goodwill, and
a loss on disposition of $80.9 million during the year ended December 31, 2022.
Chirano
(90% ownership and operator) – Ghana
On August 10,
2022, the Company announced that it had completed the sale of its 90% interest in the Chirano mine in Ghana to Asante Gold Corporation
(“Asante”) for total consideration of $225.0 million in cash and shares. In accordance with the sale agreement, the Company
received $60.0 million in cash and 34,962,584 Asante shares on closing, and the remaining cash consideration is receivable, with $55.0
million due on the six-month anniversary of closing, and $36.9 million due on each of the one-year and two-year anniversaries of closing.
The Company’s Chirano operations were classified as discontinued operations in 2022.
In connection
with the sale, the Company recognized a gain on disposition of $0.5 million during the year ended December 31, 2022.
On
February 10, 2023, the Company and Asante amended the sale agreement in respect of the deferred payment consideration of $55.0 million
due on February 10, 2023. Under the amended agreement, the receivable was due in the second quarter of 2023 with interest, at a
rate of prime plus 5%, accruing until payment is received. In addition, the Company received 5.0 million Asante warrants, valued at $2.5
million, on closing of the amended agreement. As at June 30, 2023, the Company has received $5.0 million in respect of the deferred
payment consideration. The total deferred consideration is secured through pledges by Asante of equity interests in certain acquired
entities holding an indirect interest in the Chirano mine.
Exploration
and Business Development
| |
Three
months ended June 30, | | |
Six months
ended June 30, | |
(in millions) | |
2023 | | |
2022 | | |
Change | | |
% Change | | |
2023 | | |
2022 | | |
Change | | |
% Change | |
Exploration and business
development | |
$ | 49.3 | | |
$ | 39.9 | | |
$ | 9.4 | | |
| 24 | % | |
$ | 83.3 | | |
$ | 63.3 | | |
$ | 20.0 | | |
| 32 | % |
Included
in total exploration and business development expense are expenditures on exploration and technical evaluations totaling $43.8
million and $72.0 million in the second quarter and first six months of 2023, respectively. This is an increase compared to the $35.3
million and $53.6 million in the second quarter and first six months of 2022, respectively, with the increase primarily as a result of
spending at Great Bear and Round Mountain Phase X. Capitalized exploration expenses, including capitalized evaluation expenditures and
capitalized interest, totaled $22.5 million and $38.0 million for the second quarter and first six months of 2023, respectively, compared
to $10.9 million and $19.0 million for the second quarter and first six months of 2022, respectively.
Kinross
was active on 9 mine sites, near-mine and greenfield initiatives with a total of 78,607 metres and 144,875 metres drilled in the
second quarter and first six months of 2023, respectively. In the second quarter and first six months of 2022, Kinross was active on
8 and 11 mine sites, near-mine and greenfield initiatives, respectively, with a total of 27,890 metres and 46,226 metres drilled, respectively.
General
and Administrative
| |
Three
months ended June 30, | | |
Six months
ended June 30, | |
(in millions) | |
2023 | | |
2022 | | |
Change | | |
% Change | | |
2023 | | |
2022 | | |
Change | | |
% Change | |
General and administrative | |
$ | 32.0 | | |
$ | 30.0 | | |
$ | 2.0 | | |
| 7 | % | |
$ | 56.4 | | |
$ | 60.2 | | |
$ | (3.8 | ) | |
| (6 | )% |
General
and administrative costs include expenses related to the overall management of the business which are not part of direct mine operating
costs. These are costs that are incurred at corporate offices located in Canada, U.S., Brazil, Chile, the Netherlands, and Spain.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Other (Expense) Income
– Net
| |
Three
months ended June 30, | | |
Six months
ended June 30, | |
(in millions) | |
2023 | | |
2022 | | |
Change | | |
%
Change(a) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(a) | |
Foreign exchange losses - net | |
$ | (10.1 | ) | |
$ | (1.7 | ) | |
$ | (8.4 | ) | |
| nm | | |
$ | (6.3 | ) | |
$ | (5.8 | ) | |
$ | (0.5 | ) | |
| (9 | )% |
(Loss) gain on disposition of assets and other - net | |
| (0.3 | ) | |
| 2.4 | | |
| (2.7 | ) | |
| (113 | )% | |
| 0.3 | | |
| (0.2 | ) | |
| 0.5 | | |
| nm | |
Other (expense) income - net | |
$ | (10.4 | ) | |
$ | 0.7 | | |
$ | (11.1 | ) | |
| nm | | |
$ | (6.0 | ) | |
$ | (6.0 | ) | |
$ | - | | |
| 0 | % |
(a) | "nm" means not meaningful. |
Other
(expense) income - net was an expense of $10.4 million and $6.0 million in the second quarter and first six months of 2023, respectively,
compared to income of $0.7 million and an expense of $6.0 million in the same periods in 2022. Changes are primarily due to foreign exchange
losses resulting from the appreciation of various foreign currencies and their resulting impact on foreign denominated expenditures.
Finance Expense
| |
Three
months ended June 30, | | |
Six months
ended June 30, | |
(in
millions) | |
2023 | | |
2022 | | |
Change | | |
% Change | | |
2023 | | |
2022 | | |
Change | | |
% Change | |
Accretion
of reclamation and remediation obligations | |
$ | 11.6 | | |
$ | 6.2 | | |
$ | 5.4 | | |
| 87 | % | |
$ | 20.7 | | |
$ | 10.2 | | |
$ | 10.5 | | |
| 103 | % |
Interest expense,
including accretion of lease liabilities | |
| 14.4 | | |
| 17.3 | | |
| (2.9 | ) | |
| (17 | )% | |
| 32.8 | | |
| 34.5 | | |
| (1.7 | ) | |
| (5 | )% |
Finance expense | |
$ | 26.0 | | |
$ | 23.5 | | |
$ | 2.5 | | |
| 11 | % | |
$ | 53.5 | | |
$ | 44.7 | | |
$ | 8.8 | | |
| 20 | % |
Accretion
of reclamation and remediation obligations in the second quarter and first six months of 2023 increased by $5.4 million and $10.5 million,
respectively, compared to the same periods in 2022, as a result of increases in the discount rates for the Company’s reclamation
and remediation obligations.
Interest
expense in the second quarter and first six months of 2023 decreased by $2.9 million and $1.7 million, respectively, compared to the
same periods in 2022. Interest capitalized in the second quarter and first six months of 2023 increased to $27.6 million, and $50.9 million,
respectively, compared to $14.0 million and $24.0 million in the second quarter and first six months of 2022.
Income
and Other Taxes
Kinross
is subject to tax in various jurisdictions including Canada, the United States, Brazil, Chile and Mauritania.
The
Company recorded an income tax expense from continuing operations of $62.0 million in the second quarter of 2023 (second quarter
of 2022 – $52.7 million), including a $18.5 million deferred tax recovery (second quarter of 2022 – $4.2 million of deferred
tax expense), mainly resulting from the foreign currency translation of tax deductions related to the Company’s operations in Brazil
and Mauritania. Kinross' combined federal and provincial statutory tax rate for the second quarters of both 2023 and 2022 was 26.5%.
There
are a number of factors that can significantly impact the Company’s effective tax rate, including geographical distribution of
income, varying rates in different jurisdictions, the non-recognition of tax assets, mining allowance, mining specific taxes, foreign
currency exchange movements, changes in tax laws, and the impact of specific transactions and assessments.
Kinross’
tax records, transactions and filing positions may be subject to examination by the tax authorities in the countries in which the Company
has operations. The tax authorities may review the Company’s transactions in respect of the year, or multiple years, which they
have chosen for examination. The tax authorities may interpret the tax implications of a transaction, in form or in fact, differently
from the interpretation reached by the Company.
In circumstances
where the Company and the tax authority cannot reach a consensus on the tax impact, there are processes and procedures which both parties
may undertake in order to reach a resolution, which may span many years in the future. The Company assesses the expected outcome of examination
of transactions by the tax authorities, and accrues the expected outcome in accordance with International Financial Reporting Standards
(“IFRS”).
Uncertainty
in the interpretation and application of applicable tax laws, regulations or the relevant sections of Mining Conventions by the tax authorities,
or the failure of relevant Governments or tax authorities to honour tax laws, regulations or the relevant sections of Mining Conventions
could adversely affect Kinross.
Due to
the number of factors that can potentially impact the effective tax rate and the sensitivity of the tax provision to these factors, as
discussed above, it is expected that the Company's effective tax rate will fluctuate in future periods.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
6. | LIQUIDITY AND CAPITAL RESOURCES |
The following
table summarizes Kinross’ cash flow activity:
| |
Three
months ended June 30, | | |
Six months
ended June 30, | |
(in millions) | |
2023 | | |
2022 | | |
Change | | |
%
Change(c) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(c) | |
Cash
Flow:(a) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Of continuing operations provided from operating activities | |
$ | 528.6 | | |
$ | 257.1 | | |
$ | 271.5 | | |
| 106 | % | |
$ | 787.6 | | |
$ | 355.0 | | |
$ | 432.6 | | |
| 122 | % |
Of discontinued
operations (used in) provided from operating activities | |
| - | | |
| (49.2 | ) | |
| 49.2 | | |
| nm | | |
| - | | |
| 49.2 | | |
| (49.2 | ) | |
| nm | |
Of continuing operations used in investing activities | |
| (294.4 | ) | |
| (171.0 | ) | |
| (123.4 | ) | |
| nm | | |
| (536.7 | ) | |
| (1,324.3 | ) | |
| 787.6 | | |
| nm | |
Of discontinued
operations provided from investing activities | |
| 40.0 | | |
| 269.9 | | |
| (229.9 | ) | |
| (85 | )% | |
| 45.0 | | |
| 252.9 | | |
| (207.9 | ) | |
| (82 | )% |
Of continuing operations (used in) provided from financing activities | |
| (267.7 | ) | |
| (162.7 | ) | |
| (105.0 | ) | |
| nm | | |
| (237.0 | ) | |
| 871.8 | | |
| (1,108.8 | ) | |
| (127 | )% |
Of discontinued operations used in financing activities | |
| - | | |
| - | | |
| - | | |
| nm | | |
| - | | |
| - | | |
| - | | |
| nm | |
Effect of exchange
rate changes on cash and cash equivalents of continuing operations | |
| 0.9 | | |
| (0.4 | ) | |
| 1.3 | | |
| nm | | |
| 1.4 | | |
| (0.4 | ) | |
| 1.8 | | |
| nm | |
Effect
of exchange rate changes on cash and cash equivalents of discontinued operations | |
| - | | |
| 5.7 | | |
| (5.7 | ) | |
| nm | | |
| - | | |
| 1.9 | | |
| (1.9 | ) | |
| nm | |
Increase in
cash and cash equivalents | |
| 7.4 | | |
| 149.4 | | |
| (142.0 | ) | |
| (95 | )% | |
| 60.3 | | |
| 206.1 | | |
| (145.8 | ) | |
| (71 | )% |
Cash and cash
equivalents, beginning of period | |
| 471.0 | | |
| 454.2 | | |
| 16.8 | | |
| 4 | % | |
| 418.1 | | |
| 531.5 | | |
| (113.4 | ) | |
| (21 | )% |
Cash and cash
equivalents of assets held for sale, beginning of period | |
| - | | |
| 134.0 | | |
| (134.0 | ) | |
| nm | | |
| - | | |
| - | | |
| - | | |
| nm | |
Reclassified
to assets held for sale(b) | |
| - | | |
| (18.5 | ) | |
| 18.5 | | |
| nm | | |
| - | | |
| (18.5 | ) | |
| 18.5 | | |
| nm | |
Cash
and cash equivalents, end of period | |
$ | 478.4 | | |
$ | 719.1 | | |
$ | (240.7 | ) | |
| (33 | )% | |
$ | 478.4 | | |
$ | 719.1 | | |
$ | (240.7 | ) | |
| (33 | )% |
(a) | Results for the three and six months ended June 30,
2023 and 2022 are from continuing operations and exclude results from the Company’s Chirano
and Russian operations due to the classification of these operations as discontinued and their
sale in 2022. |
(b) | As at June 30, 2022, cash and cash equivalents of the
Company’s Chirano operations were classified to assets held for sale. |
(c) | “nm” means not meaningful. |
In the
second quarter and first six months of 2023, cash and cash equivalent balances increased by $7.4 million and $60.3 million, respectively,
compared to increases of $149.4 million and $206.1 million in the second quarter and first six months of 2022, respectively. Detailed
discussions regarding cash flow movements are noted below.
Operating
Activities
Second
quarter 2023 vs. Second quarter 2022
Net cash
flow of continuing operations provided from operating activities increased by $271.5 million compared to the second quarter of 2022,
mainly due to the increase in margins and favourable working capital movements.
First
six months of 2023 vs. First six months of 2022
In the
first six months of 2023, net cash flow of continuing operations provided from operating activities increased by $432.6 million compared
to the same period in 2022, mainly due to the increase in margins, favourable working capital movements and a decrease in income taxes
paid.
Investing
Activities
Second
quarter 2023 vs. Second quarter 2022
Net cash
flow of continuing operations used in investing activities was $294.4 million in the second quarter of 2023 compared to $171.0 million
in the second quarter of 2022.
In
the second quarter of 2023, cash was primarily used for capital expenditures of $281.9 million (second quarter of 2022 –
$149.4 million). Interest paid capitalized to property, plant and equipment was $8.5 million in the second quarter of 2023 compared to
$5.6 million in the same period in 2022.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
First
six months of 2023 vs. First six months of 2022
Net cash
flow of continuing operations used in investing activities was $536.7 million in the first six months of 2023 compared to $1,324.3 million
in the first six months of 2022.
In the
first six months of 2023, the primary uses of cash were for capital expenditures of $503.1 million. In the first six months of 2022,
the primary uses of cash were for the acquisition of Great Bear ($1,027.5 million, net of cash acquired) and capital expenditures of
$250.1 million. Interest paid capitalized to property, plant and equipment was $46.8 million in the first six months of 2023 compared
to $16.2 million in the same period in 2022.
The following
table presents a breakdown of capital expenditures(a) from continuing operations(b) on a cash basis:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
(in millions) | |
2023 | | |
2022 | | |
Change | | |
%
Change(d) | | |
2023 | | |
2022 | | |
Change | | |
%
Change(d) | |
Operating segments | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Tasiast | |
$ | 81.9 | | |
$ | 24.3 | | |
$ | 57.6 | | |
| nm | | |
$ | 146.5 | | |
$ | 43.7 | | |
$ | 102.8 | | |
| nm | |
Paracatu | |
| 39.7 | | |
| 31.2 | | |
| 8.5 | | |
| 27 | % | |
| 67.5 | | |
| 47.2 | | |
| 20.3 | | |
| 43 | % |
La Coipa | |
| 23.3 | | |
| 39.0 | | |
| (15.7 | ) | |
| (40 | )% | |
| 48.7 | | |
| 74.8 | | |
| (26.1 | ) | |
| (35 | )% |
Fort Knox | |
| 58.2 | | |
| 13.1 | | |
| 45.1 | | |
| nm | | |
| 97.3 | | |
| 16.0 | | |
| 81.3 | | |
| nm | |
Round Mountain | |
| 10.5 | | |
| 20.6 | | |
| (10.1 | ) | |
| (49 | )% | |
| 17.9 | | |
| 36.6 | | |
| (18.7 | ) | |
| (51 | )% |
Bald Mountain | |
| 31.4 | | |
| 16.2 | | |
| 15.2 | | |
| 94 | % | |
| 56.6 | | |
| 22.0 | | |
| 34.6 | | |
| 157 | % |
Non-operating segments | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Great Bear | |
| 4.0 | | |
| - | | |
| 4.0 | | |
| nm | | |
| 5.5 | | |
| - | | |
| 5.5 | | |
| nm | |
Corporate
and other(c) | |
| 32.9 | | |
| 5.0 | | |
| 27.9 | | |
| nm | | |
| 63.1 | | |
| 9.8 | | |
| 53.3 | | |
| nm | |
Total | |
$ | 281.9 | | |
$ | 149.4 | | |
$ | 132.5 | | |
| 89 | % | |
$ | 503.1 | | |
$ | 250.1 | | |
$ | 253.0 | | |
| 101 | % |
(a) | “Capital
expenditures” is as reported as “Additions to property, plant and equipment”
on the interim condensed consolidated statements of cash flows. |
(b) | Results for the three and six months ended June 30,
2023 and 2022 are from continuing operations and exclude results from the Company’s Chirano
and Russian operations due to the classification of these operations as discontinued and their
sale in 2022. |
(c) | “Corporate
and other” includes corporate and other non-operating assets (including
Kettle River-Buckhorn, Lobo-Marte, the Manh Choh project and Maricunga). |
(d) | “nm” means not meaningful. |
In
the second quarter and first six months of 2023, capital expenditures increased by $132.5 million and $253.0 million, respectively, compared
to the same periods in 2022, primarily due to an increase in capital stripping at Tasiast, Fort Knox and Bald Mountain and increased
expenditures for development activities at the Manh Choh project.
Financing
Activities
Second
quarter 2023 vs. Second quarter 2022
Net cash
flow of continuing operations used in financing activities was $267.7 million in the second quarter of 2023 compared with $162.7 million
in the second quarter of 2022.
In the
second quarter of 2023, net cash flow of continuing operations used in financing activities included total debt repayments of $220.0
million and dividends paid to common shareholders of $36.9 million. In the second quarter of 2022, net cash flow of continuing operations
used in financing activities included total debt repayments of $120.0 million and dividends paid to common shareholders of $39.0 million.
First
six months of 2023 vs. First six months of 2022
Net cash
flow of continuing operations used in financing activities was $237.0 million in the first six months of 2023 compared with net cash
flow provided from financing activities of $871.8 million in the first six months of 2022.
In
the first six months of 2023, net cash flow of continuing operations used in financing activities included net debt repayments
of $120.0 million, dividends paid to common shareholders of $73.7 million and interest paid of $26.5 million. In
the first six months of 2022, net cash flow of continuing operations provided from financing activities included proceeds from
the drawdown of debt of $1,097.6 million related to the acquisition of Great Bear, offset by total debt repayments of $120.0 million,
dividends paid to common shareholders of $77.9 million and interest paid of $25.6 million.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Balance
Sheets
| |
As at, | |
| |
June 30, | | |
December 31, | |
(in millions) | |
2023 | | |
2022 | |
Cash and cash equivalents | |
$ | 478.4 | | |
$ | 418.1 | |
Current assets | |
$ | 1,939.0 | | |
$ | 1,852.6 | |
Total assets | |
$ | 10,546.7 | | |
$ | 10,396.4 | |
Current liabilities, including current portion of long-term
debt | |
$ | 1,232.9 | | |
$ | 751.5 | |
Total debt and credit facilities, including current portion | |
$ | 2,475.4 | | |
$ | 2,592.9 | |
Total liabilities | |
$ | 4,456.5 | | |
$ | 4,514.2 | |
Common shareholders' equity | |
$ | 5,997.8 | | |
$ | 5,823.7 | |
Non-controlling interests | |
$ | 92.4 | | |
$ | 58.5 | |
As
at June 30, 2023, Kinross had cash and cash equivalents of $478.4 million, an increase of $60.3 million from the balance as at December 31,
2022. The increase is primarily due to cash flow provided from operating activities of $787.6 million, partially offset by additions
to property, plant and equipment of $503.1 million, net debt repayments of $120.0 million, dividends paid to common shareholders of $73.7
million and total interest paid of $73.3 million. Current assets increased by $86.4 million to $1,939.0 million mainly due to increases
in inventories and cash and cash equivalents, partially offset by a decrease in accounts receivable and other assets. Total assets increased
by $150.3 million to $10,546.7 million, mainly due to the increase in current assets, as described above, and an increase in property,
plant and equipment. Current liabilities increased by $481.4 million to $1,232.9 million, primarily due to the reclassification of the
$500.0 million senior notes due in March 2024 to current, partially offset by decreases in current income tax payable. Total liabilities
decreased by $57.7 million to $4,456.5 million, mainly due to net debt repayments of $120.0 million in the first six months of 2023 and
an increase in provisions, partially offset by the decrease in current income tax payable.
As of August 1,
2023, there were 1,227.6 million common shares of the Company issued and outstanding. In addition, at the same date, the Company had
2.0 million share purchase options outstanding under its share option plan.
On
August 2, 2023, the Board of Directors declared a dividend of $0.03 per common share payable on September 8, 2023 to
shareholders of record on August 24, 2023.
Financings
and Credit Facilities
Total debt of $2,475.4 million as
at June 30, 2023 consists of $1,244.0 million related to the senior notes, $100.0 million related to the revolving credit facility, $998.7
million related to the term loan and $132.7 million related to the Tasiast loan. The current portion of this debt relates to the $500.0
million senior notes due in March 2024, which the Company expects to redeem on August 10, 2023, and the semi-annual principal repayments
on the Tasiast loan totaling $32.0 million due in the next 12 months.
Senior
notes
The Company’s
$1,250.0 million of senior notes consist of $500.0 million principal amount of 5.950% notes due in March 2024, $500.0 million principal
amount of 4.50% notes due in 2027 and $250.0 million principal amount of 6.875% notes due in 2041.
On
July 5, 2023, the Company completed a $500.0 million offering of debt securities consisting of 6.250% senior notes due in 2033. On
July 11, 2023, the Company announced that it will redeem all outstanding 5.950% senior notes due March 15, 2024 on
August 10, 2023 which have an aggregate principal amount of $500.0 million outstanding. These notes will be redeemed at a
redemption price determined in accordance with the terms of the notes and will include accrued and unpaid interest to, but not
including, the redemption date.
Revolving
credit facility and term loan
As at
June 30, 2023, the Company had utilized $106.7 million (December 31, 2022 - $206.7 million) of its $1,500.0 million revolving
credit facility, of which $6.7 million was used for letters of credit. The revolving credit facility matures on August 4, 2027.
During the second quarter of 2023, the Company repaid $200.0 million of the outstanding balance on the revolving credit facility.
Kinross
Gold Corporation
management’s
discussion and analysis
For the three and six months ended June 30,
2023
Loan interest on the revolving credit facility
and term loan is variable and is dependent on the Company’s credit rating. Based on the Company’s credit rating at June 30,
2023, interest charges and fees are as follows:
Type of credit | |
|
Revolving credit facility | |
SOFR plus 1.45% |
Term loan | |
SOFR plus 1.25% |
Letters of credit | |
0.967-1.45% |
Standby fee applicable to unused availability | |
0.29% |
The revolving
credit facility agreement and the term loan agreement contain various covenants including limits on indebtedness, asset sales and liens.
The Company was in compliance with its financial covenant in the credit agreements at June 30, 2023.
Tasiast
loan
The asset
recourse loan matures in December 2027, has a floating interest rate of LIBOR plus a weighted average margin of 4.38%, with semi-annual
interest and principal payments to be made in each of June and December for the term of the loan. The Company made $20.0 million
of scheduled principal payments during the second quarter of 2023, resulting in a balance of $140.0 million as at June 30, 2023.
As
at June 30, 2023, the Company held $25.0 million (December 31, 2022 - $27.8 million) in a separate bank account as required
under the Tasiast loan agreement. This cash, which is subject to fluctuations over time depending on the next scheduled principal and
interest payments, is required to remain in the bank account for the duration of the loan and is therefore recorded as restricted cash
in other long-term assets.
Other
The
Company has a $300.0 million Letter of Credit guarantee facility with Export Development Canada (“EDC”) with a maturity date
of June 30, 2024. Total fees related to letters of credit under this facility were 0.75% of the utilized amount. As at June 30,
2023, $230.7 million (December 31, 2022 - $230.4 million) was utilized under this facility.
In
addition, at June 30, 2023, the Company had $307.8 million (December 31, 2022 - $267.5 million) in letters of credit and surety
bonds outstanding in respect of its operations in Brazil, Mauritania, United States and Chile, as well as its discontinued operations
in Ghana, which have been issued pursuant to arrangements with certain international banks and incur average fees of 0.80%.
As
at June 30, 2023, $362.6 million (December 31, 2022 - $318.0 million) of surety bonds were outstanding with respect to Kinross’
properties in the United States. These surety bonds were issued pursuant to arrangements with international insurance companies and incur
average fees of 0.55%.
The following
table outlines the credit facility utilizations and availabilities:
| |
As at, | |
| |
June 30, | | |
December 31, | |
(in millions) | |
2023 | | |
2022 | |
Utilization of revolving credit facility | |
$ | (106.7 | ) | |
$ | (206.7 | ) |
Utilization of EDC facility | |
| (230.7 | ) | |
| (230.4 | ) |
Borrowings | |
$ | (337.4 | ) | |
$ | (437.1 | ) |
| |
| | | |
| | |
Available under revolving credit facility | |
$ | 1,393.3 | | |
$ | 1,293.3 | |
Available under EDC credit facility | |
| 69.3 | | |
| 69.6 | |
Available credit | |
$ | 1,462.6 | | |
$ | 1,362.9 | |
Liquidity
Outlook
As at
June 30, 2023, debt repayments due in the next 12 months include the $500.0 million 5.950% senior notes and $32.0 million related
to the Tasiast loan. On August 10, 2023, the Company expects to redeem all the outstanding $500.0 million 5.950% senior notes using
the net proceeds received from the $500.0 million debt offering completed on July 5, 2023.
Kinross
Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
We
believe that the Company’s existing cash and cash equivalents balance of $478.4 million, available credit of $1,462.6 million,
expected operating cash flows based on current assumptions (noted in Section 3 - Outlook) and proceeds from the debt offering
received subsequent to the quarter will be sufficient to fund operations, our forecast exploration and capital expenditures (noted in
Section 3 - Outlook), debt repayments noted above, reclamation and remediation obligations, lease liabilities, and working
capital requirements currently estimated for the next 12 months. Prior to any debt repayments and capital investments, consideration is
given to the cost and availability of various sources of capital resources.
With respect to longer term capital
expenditure funding requirements, the Company has discussions with lending institutions that have been active in the jurisdictions in
which the Company’s development projects are located. Some of the jurisdictions in which the Company operates have seen the participation
of additional lenders that include export credit agencies, development banks and multi-lateral agencies. The Company believes the capital
from these institutions combined with traditional bank loans and capital available through debt capital market transactions may fund a
portion of the Company’s longer term capital expenditure requirements. Another possible source of capital could be proceeds from
the sale of non-core assets. These capital sources together with operating cash flow and the Company’s active management of its
operations and development activities will enable the Company to maintain an appropriate overall liquidity position.
Contractual Obligations and Commitments
The Company manages its exposure to
fluctuations in input commodity prices, currency exchange rates and interest rates, by entering into derivative financial instruments
from time to time, in accordance with the Company's risk management policy.
The following table provides a summary
of derivative contracts outstanding at June 30, 2023 and their respective maturities:
Foreign currency | |
2023 | | |
2024 | | |
2025 | |
Brazilian real zero cost collars (in millions of U.S. dollars) | |
$ | 67.2 | | |
$ | 27.6 | | |
$ | - | |
Average put strike (Brazilian real) | |
| 5.11 | | |
| 5.55 | | |
| - | |
Average call strike (Brazilian real) | |
| 6.98 | | |
| 9.01 | | |
| - | |
Canadian dollar forward buy contracts (in millions of U.S. dollars) | |
$ | 54.3 | | |
$ | - | | |
$ | - | |
Average rate (Canadian dollar) | |
| 1.35 | | |
| - | | |
| - | |
Chilean peso zero cost collars (in millions of U.S. dollars) | |
$ | 35.7 | | |
$ | - | | |
$ | - | |
Average put strike (Chilean peso) | |
| 808 | | |
| - | | |
| - | |
Average call strike (Chilean peso) | |
| 987 | | |
| - | | |
| - | |
Energy | |
| | | |
| | | |
| | |
WTI oil swap contracts (barrels) | |
| 510,600 | | |
| 546,000 | | |
| 205,200 | |
Average price | |
$ | 56.05 | | |
$ | 68.89 | | |
$ | 63.50 | |
The
Company enters into total return swaps (“TRS”) as economic hedges of the Company’s deferred share units and
cash-settled restricted share units. Hedge accounting was not applied to the TRSs. At June 30, 2023, 4,365,000 TRS units were outstanding.
In order to manage short-term metal
price risk, the Company may enter into derivative contracts in relation to metal sales that it believes are highly likely to occur within
a given quarter. No such contracts were outstanding at June 30, 2023 or December 31, 2022.
Fair value of derivative instruments
The fair values of derivative instruments
are noted in the table below:
| |
As at, | |
| |
June 30, | | |
December 31, | |
(in millions) | |
2023 | | |
2022 | |
Asset (liability) | |
| | | |
| | |
Foreign currency forward and collar contracts | |
$ | 9.6 | | |
$ | 2.8 | |
Energy swap contracts | |
| 7.4 | | |
| 21.5 | |
Other contracts | |
| 2.0 | | |
| 1.9 | |
| |
$ | 19.0 | | |
$ | 26.2 | |
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
Other legal matters
The Company is from time to time involved
in legal proceedings, arising in the ordinary course of its business. Typically, the amount of ultimate liability with respect to these
actions will not, in the opinion of management, materially affect Kinross’ financial position, results of operations or cash flows.
Maricunga regulatory proceedings
In May 2015, Chilean environmental
enforcement authority (“SMA”) commenced an administrative proceeding against Compania Minera Maricunga (“CMM”)
alleging that pumping of groundwater to support the Maricunga operation had impacted area wetlands and, on March 18, 2016, issued
a resolution alleging that CMM’s pumping was impacting the “Valle Ancho” wetland. Beginning in May 2016, the SMA
issued a series of resolutions ordering CMM to temporarily curtail pumping from its wells.
In response, CMM suspended mining
and crushing activities and reduced water consumption to minimal levels. CMM contested these resolutions, but its efforts were unsuccessful
and, except for a short period of time in July 2016, CMM’s operations have remained suspended. On June 24, 2016, the
SMA amended its initial sanction (the “Amended Sanction”) and effectively required CMM to cease operations and close the
mine, with water use from its wells curtailed to minimal levels. On July 9, 2016, CMM appealed the sanctions and, on August 30,
2016, submitted a request to the Environmental Tribunal that it issue an injunction suspending the effectiveness of the Amended Sanction
pending a final decision on the merits of CMM’s appeal. On September 16, 2016, the Environmental Tribunal rejected CMM’s
injunction request and on August 7, 2017, upheld the SMA’s Amended Sanction and curtailment orders on procedural grounds.
On October 9, 2018, the Supreme Court affirmed the Environmental Tribunal’s ruling on procedural grounds and dismissed CMM’s
appeal.
On June 2, 2016, CMM was served
with two separate lawsuits filed by the Chilean State Defense Counsel (“CDE”). Both lawsuits, filed with the Environmental
Tribunal, alleged that pumping from the Maricunga groundwater wells caused environmental damage to area wetlands. One action relates
to the “Pantanillo” wetland and the other action relates to the Valle Ancho wetland (described above). On November 23,
2018, the Tribunal ruled in favor of CMM in the Pantanillo case and against CMM in the Valle Ancho case. In the Valle Ancho case, the
Tribunal required CMM to, among other things, submit a restoration plan to the SMA for approval. CMM appealed the Valle Ancho ruling
to the Supreme Court. The CDE appealed to the Supreme Court in both cases and asserted in the Valle Ancho matter that the Environmental
Tribunal erred by not ordering a complete shutdown of Maricunga’s groundwater wells. On January 7, 2022, the Supreme Court
annulled the Tribunal’s rulings in both cases on procedural grounds and remanded the matters to the Tribunal for further proceedings.
The cases before the Tribunal are currently stayed pending ongoing settlement discussions.
Kettle River-Buckhorn regulatory
proceedings
Crown Resources Corporation (“Crown”)
is the holder of a waste discharge permit (the “Permit”) in respect of the Buckhorn Mine, which authorizes and regulates
mine-related discharges from the mine and its water treatment plant. On February 27, 2014, the Washington Department of Ecology
(the “WDOE”) renewed Buckhorn Mine’s National Pollution Discharge Elimination System Permit (the “Renewed Permit”),
with an effective date of March 1, 2014. The Renewed Permit contained conditions that were more restrictive than the original discharge
permit. In addition, Crown felt that the Renewed Permit was internally inconsistent, technically unworkable and inconsistent with existing
agreements in place with the WDOE, including a settlement agreement previously entered into by Crown and the WDOE in June 2013 (the
“Settlement Agreement”). On February 28, 2014, Crown filed an appeal of the Renewed Permit with the Washington Pollution
Control Hearings Board (“PCHB”). In addition, on January 15, 2015, Crown filed a lawsuit against the WDOE in Ferry County
Superior Court, Washington, claiming that the WDOE breached the Settlement Agreement by including various unworkable compliance terms
in the Renewed Permit (the “Crown Action”). On July 30, 2015, the PCHB upheld the Renewed Permit. Crown filed a Petition
for Review in Ferry County Superior Court, Washington, on August 27, 2015, seeking to have the PCHB decision overturned. On March 13,
2017, the Ferry County Superior Court upheld the PCHB’s decision. On April 12, 2017, Crown appealed the Ferry County Superior
Court’s ruling to the State of Washington Court of Appeals. On October 8, 2019, the Court of Appeals affirmed the Superior
Court’s decision and the PCHB’s decision. On December 31, 2019, the Court of Appeals denied Crown’s Motion for
Reconsideration and to Supplement the Record. Crown did not petition the Washington Supreme Court for review and, as a result, appeal
of this matter has been exhausted.
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
On July 19, 2016, the WDOE issued
an Administrative Order (“AO”) to Crown and Kinross Gold Corporation asserting that the companies had exceeded the discharge
limits in the Renewed Permit a total of 931 times and has also failed to maintain the capture zone required under the Renewed Permit.
The AO orders the companies to develop an action plan to capture and treat water escaping the capture zone, undertake various investigations
and studies, revise its Adaptive Management Plan, and report findings by various deadlines in the fourth quarter 2016. The companies
timely made the required submittals. On August 17, 2016, the companies filed an appeal of the AO with the PCHB (the “AO Appeal”).
Because the AO Appeal raises many of the same issues that have been raised in the Appeal and Crown Action, the companies and the WDOE
agreed to stay the AO Appeal indefinitely to allow these matters to be resolved. The PCHB granted the request for stay on August 26,
2016, which stay has been subsequently extended. On June 2, 2020, the PCHB dismissed the appeal based on a Joint Stipulation of
Voluntary Dismissal filed by the parties. The basis for the dismissal was the exhaustion of appeals as to the Renewed Permit and Crown’s
satisfaction of the AO.
On November 30, 2017, the WDOE
issued a Notice of Violation (“NOV”) to Crown and Kinross asserting that the companies had exceeded the discharge limits
in the Permit a total of 113 times during the third quarter of 2017 and also failed to maintain the capture zone as required under the
Permit. The NOV ordered the companies to file a report with the WDOE identifying the steps which have been and are being taken to “control
such waste or pollution or otherwise comply with this determination,” which report was timely filed. Following its review of this
report, the WDOE may issue an AO or other directives to the Company.
Beginning in April 2018, the
WDOE has issued a NOV to Crown and, on one occasion, also to Kinross, asserting that the companies had exceeded the discharge limits
in the Permit and have failed to maintain the capture zone as required under the Permit. The most recent NOV, dated May 10, 2021,
asserted 133 alleged violations had occurred in the first quarter of 2021. The NOVs order the companies to file a report with WDOE within
30 days identifying the steps which have been and are being taken to “control such waste or pollution or otherwise comply with
this determination,” which reports have been timely filed. Following its review of these reports, WDOE may issue an AO or other
directives to the Company. The NOVs are not immediately appealable, but any subsequent AO or other directive relating to the NOV may
be appealed, as appropriate.
On April 10, 2020, the Okanogan
Highlands Alliance (“OHA”) filed a citizen’s suit against Crown and Kinross Gold U.S.A., Inc. (“KGUSA”)
under the Clean Water Act (“CWA”) for alleged failure to adequately capture and treat mine-impacted groundwater and surface
water at the site in violation of the Permit and renewed Permit. The suit seeks injunctive relief and civil penalties in the amount of
up to $55,800 per day per violation. Crown filed a counterclaim seeking an accounting of how OHA spent funds paid out under a prior settlement.
OHA succeeded in obtaining a dismissal of this claim. Crown refiled the claim in state court where proceedings have been stayed by mutual
agreement of the parties. On May 7, 2020, the Attorney General for the State of Washington filed suit against Crown and KGUSA under
the CWA and the state Water Pollution Control Act alleging the same alleged permit violations and seeking similar relief as OHA. These
lawsuits have been consolidated. On June 16, 2021, the Court granted the plaintiffs’ motion for partial summary judgment as
to certain of Crown and KGUSA’s defenses. On July 9, 2021, Crown and KGUSA filed a motion for certification of this ruling
for immediate appeal, which motion was denied on November 30, 2021. On October 18, 2022, the Court granted a stipulated motion
finding Crown liable under the CWA for certain exceedances of the Permit. The Order provides that Crown maintains its right to appeal
the Court’s June 16, 2021 order and to contest penalties for these Permit exceedances. On April 19, 2023, the Court stayed
the action pending further order of the Court to enable the parties to pursue settlement through a court-ordered mediation which process
is underway and continuing.
Kinross Brasil Mineração
S.A. (“KBM”)
On February 27, 2023, the State
Public Attorney (“SPA”) in Brazil filed a civil action against KBM seeking, among other things, to compel KBM to cease depositing
mine tailings into its two onsite tailings facilities (“TSFs”), decommission the TSFs and to obtain 100 million Brazilian
Reals (approximately $20.0 million) from KBM to ensure money is available to address the requested relief. The SPA sought an immediate
injunction to obtain this relief, which was denied by the Lower Court. In its ruling, the Lower Court found that the TSFs are properly
permitted, regularly monitored and inspected, and that the SPA produced no evidence, technical or otherwise, that the TSFs are unsafe.
The Lower Court further noted that a generalized concern about the size of the TSFs does not provide a legal basis for the relief sought.
On March 17, 2023, the SPA filed an interlocutory appeal before the Appellate Court of the State of Minas Gerais challenging the
Lower Court’s Decision. The interlocutory appeal was denied by the Appellate Court on March 27, 2023. The case remains pending
before the Lower Court, but all proceedings have been stayed at the request of the parties to allow them to discuss potential resolution
of the matter. If the case is not resolved amicably, KBM intends to continue its vigorous defense against the SPA’s claims.
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
Guarantor summarized financial
information
The obligations of the Company under
the senior notes were guaranteed at June 30, 2023 by the following 100% owned and consolidated subsidiaries of the Company (the
“guarantor subsidiaries”): Round Mountain Gold Corporation, Kinross Brasil Mineração S.A., Fairbanks Gold Mining, Inc.,
Melba Creek Mining, Inc., KG Mining (Round Mountain) Inc., KG Mining (Bald Mountain) Inc., Great Bear Resources Ltd, and Compania
Minera Mantos de Oro. Compania Minera Mantos de Oro was added as a guarantor during the three and six months ended June 30, 2023.
Comparative information has been retrospectively adjusted with Compania Minera Mantos de Oro included as a guarantor. All guarantees
by the guarantor subsidiaries are joint and several, and full and unconditional, subject to certain customary release provisions contained
in the indenture governing the senior notes. The guarantees are unsecured senior obligations of the respective guarantor subsidiaries
and rank equally with all other unsecured senior obligations. The guarantees are effectively subordinated to any secured indebtedness
and other secured liabilities of the respective guarantor subsidiaries. The obligations of each guarantor subsidiary under its respective
guarantee is limited to an amount not to exceed the maximum amount that can be guaranteed by law or without resulting in its obligations
under such guarantee being voidable or unenforceable under applicable laws relating to fraudulent transfer, or under similar laws affecting
the rights of creditors generally.
The summarized financial information
of Kinross Gold Corporation, as issuer of the senior notes, and the guarantor subsidiaries is presented on a combined basis with intercompany
balances and transactions between Kinross Gold Corporation and the guarantor subsidiaries eliminated. Kinross Gold Corporation’s
or the guarantor subsidiaries' equity in the earnings (losses) of and other gains from, intercompany receivables and payables with, and
investments in non-guarantor subsidiaries are presented separately in, and have been excluded from, the accompanying supplemental summarized
combined financial information. As a result of the divestitures of the Company’s Russian and Chirano operations, the related equity
in the earnings (losses) of and other gains from, non-guarantor subsidiaries has been split out between non-guarantor continuing and
discontinued subsidiaries for the current year and comparative period.
Summarized combined statements
of operations information
| |
Six months ended | | |
Year ended | |
(in millions) | |
June 30, 2023 | | |
December 31, 2022 | |
Revenue | |
$ | 1,474.2 | | |
$ | 2,520.4 | |
Cost of sales | |
| 1,145.4 | | |
| 2,336.8 | |
Gross profit | |
| 328.8 | | |
| 183.6 | |
Operating earnings (loss) | |
| 202.9 | | |
| (55.2 | ) |
Net earnings (loss) before equity in the earnings (losses) of, and other gains from, non-guarantor subsidiaries | |
| 131.3 | | |
| (195.4 | ) |
Equity in the earnings of, and other gains from, non-guarantor continuing subsidiaries | |
| 109.9 | | |
| 120.8 | |
Equity in the earnings (losses) of, and other gains from, non-guarantor discontinued subsidiaries | |
| - | | |
| (530.6 | ) |
Net earnings (loss) | |
| 241.2 | | |
| (605.2 | ) |
Net earnings (loss) attributable to common shareholders | |
$ | 241.2 | | |
$ | (605.2 | ) |
Summarized combined balance sheet
information
| |
As at | |
(in millions) | |
June 30, 2023 | | |
December 31, 2022 | |
Current assets | |
$ | 1,217.4 | | |
$ | 1,179.1 | |
Current assets – with non-guarantor subsidiaries | |
| 1,774.8 | | |
| 1,802.6 | |
Non-current assets | |
| 5,666.7 | | |
| 5,684.9 | |
Non-current assets – with non-guarantor subsidiaries | |
| 2,830.2 | | |
| 2,842.7 | |
Current liabilities | |
| 999.7 | | |
| 531.5 | |
Current liabilities – with non-guarantor subsidiaries | |
| 584.5 | | |
| 584.3 | |
Non-current liabilities | |
| 2,827.3 | | |
| 3,388.7 | |
Non-current liabilities – with non-guarantor subsidiaries | |
| 1,079.8 | | |
| 1,181.1 | |
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
7. | SUMMARY OF QUARTERLY INFORMATION |
| |
2023 | | |
2022 | | |
2021(a) | |
(in millions, except per share amounts) | |
Q2 | | |
Q1 | | |
Q4 | | |
Q3 | | |
Q2 | | |
Q1 | | |
Q4 | | |
Q3 | |
Metal sales | |
$ | 1,092.3 | | |
$ | 929.3 | | |
$ | 1,076.2 | | |
$ | 856.5 | | |
$ | 821.5 | | |
$ | 700.9 | | |
$ | 614.9 | | |
$ | 582.4 | |
Net earnings (loss) from continuing operations attributable to common shareholders | |
$ | 151.0 | | |
$ | 90.2 | | |
$ | (106.0 | ) | |
$ | 65.9 | | |
$ | (9.3 | ) | |
$ | 81.3 | | |
$ | (66.2 | ) | |
$ | (72.9 | ) |
Basic earnings (loss) per share from continuing operations attributable to common shareholders | |
$ | 0.12 | | |
$ | 0.07 | | |
$ | (0.08 | ) | |
$ | 0.05 | | |
$ | (0.01 | ) | |
$ | 0.06 | | |
$ | (0.05 | ) | |
$ | (0.06 | ) |
Diluted earnings (loss) per share from continuing operations attributable to common shareholders | |
$ | 0.12 | | |
$ | 0.07 | | |
$ | (0.08 | ) | |
$ | 0.05 | | |
$ | (0.01 | ) | |
$ | 0.06 | | |
$ | (0.05 | ) | |
$ | (0.06 | ) |
Net (loss) earnings from discontinued operations attributable to common shareholders | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | (1.0 | ) | |
$ | (31.0 | ) | |
$ | (605.1 | ) | |
$ | 63.5 | | |
$ | 28.0 | |
Net earnings (loss) attributable to common shareholders | |
$ | 151.0 | | |
$ | 90.2 | | |
$ | (106.0 | ) | |
$ | 64.9 | | |
$ | (40.3 | ) | |
$ | (523.8 | ) | |
$ | (2.7 | ) | |
$ | (44.9 | ) |
Basic earnings (loss) per share attributable to common shareholders | |
$ | 0.12 | | |
$ | 0.07 | | |
$ | (0.08 | ) | |
$ | 0.05 | | |
$ | (0.03 | ) | |
$ | (0.41 | ) | |
$ | - | | |
$ | (0.04 | ) |
Diluted earnings (loss) per share attributable to common shareholders | |
$ | 0.12 | | |
$ | 0.07 | | |
$ | (0.08 | ) | |
$ | 0.05 | | |
$ | (0.03 | ) | |
$ | (0.41 | ) | |
$ | - | | |
$ | (0.04 | ) |
Net cash flow of continuing operations provided from operating activities | |
$ | 528.6 | | |
$ | 259.0 | | |
$ | 474.3 | | |
$ | 173.2 | | |
$ | 257.1 | | |
$ | 97.9 | | |
$ | 148.0 | | |
$ | 140.3 | |
(a) | The quarterly results were updated
retrospectively to reflect the impact of Chirano and Russian discontinued operations. |
The Company’s
results over the past several quarters have been driven primarily by fluctuations in the gold price, input costs and changes in gold
equivalent ounces sold. Fluctuations in the silver price and foreign exchange rates have also affected results.
On June 15, 2022, the Company
announced that it had completed the sale of its Russian operations, which includes the Kupol and Dvoinoye mines and the Udinsk project.
On August 10, 2022, the Company announced that it had completed the sale of its Chirano mine in Ghana. The comparative quarterly
results have been updated retrospectively to reflect the impact of the classification of the Russian and Chirano operations as discontinued.
During the
second quarter of 2023, revenue from continuing operations was $1,092.3 million on sales of 552,969 total gold equivalent ounces from
continuing operations compared to $821.5 million on sales of 439,078 total gold equivalent ounces from continuing operations during the
second quarter of 2022. The average gold price realized in the second quarter of 2023 was $1,976 per ounce compared to $1,872 per ounce
in the second quarter of 2022.
Production cost of sales from continuing
operations in the second quarter of 2023 increased by 10% compared to the second quarter of 2022, largely as a result of the restart and
ramp up of production at La Coipa.
Depreciation,
depletion and amortization varied between each of the above quarters largely due to changes in gold equivalent ounces sold and depreciable
asset bases. In addition, changes in mineral reserves as well as reversals of impairment charges during some of these periods affected
depreciation, depletion and amortization for quarters in subsequent periods.
Net cash flow of continuing operations
provided from operating activities increased to $528.6 million in the second quarter of 2023 from $257.1 million in the second quarter
of 2022, mainly due to the increase in margins and favourable working capital movements.
In
the fourth quarter of 2022, the Company recorded after-tax impairment charges of $289.3 million related to metal inventory and property,
plant and equipment at Round Mountain. The after-tax inventory impairment charge of $87.9 million related to a reduction in the estimate
of recoverable ounces on the Round Mountain heap leach pads due to changes in recovery rates resulting from changes to the life-of-mine
plan. The after-tax property, plant and equipment impairment charge of $201.4 million was a result of changes to the life-of-mine plan
and slope design, as well as increased costs due to inflationary pressure experienced in the state of Nevada. In the fourth quarter
of 2021, the Company recorded after-tax impairment and asset derecognition charges
of $106.1 million related to metal inventory and property, plant and equipment at Bald Mountain. The after-tax inventory impairment charge
of $69.9 million resulted from a reduction in the estimate of recoverable ounces on the Vantage heap leach pad at December 31, 2021
due to the presence of carbonaceous ore. Property, plant and equipment related to the Vantage heap leach pad was also derecognized, resulting
in an after-tax charge of $36.2 million.
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
8. | DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL
OVER FINANCIAL REPORTING |
Pursuant
to regulations adopted by the U.S. Securities and Exchange Commission, under the U.S. Sarbanes-Oxley Act of 2002 and those of
the Canadian Securities Administrators, Kinross' management evaluates the effectiveness of the design and operation of the Company's
disclosure controls and procedures, and internal control over financial reporting. This evaluation is done under the supervision of,
and with the participation of, the Chief Executive Officer and the Chief Financial Officer.
For the quarter ended June 30,
2023, the Chief Executive Officer and the Chief Financial Officer concluded that Kinross’ disclosure controls and procedures, and
internal control over financial reporting are designed to provide reasonable assurance regarding the reliability of information disclosed
in its filings, including its interim financial statements prepared in accordance with IFRS. There has been no change in the Company’s
internal control over financial reporting during the quarter ended June 30, 2023, that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial reporting.
Limitations of Controls and Procedures
Kinross’ management, including
the Chief Executive Officer and the Chief Financial Officer, believes that any disclosure controls and procedures and internal control
over financial reporting, no matter how well designed and operated, can have inherent limitations. Therefore, even those systems determined
to be effective can provide only reasonable assurance that the objectives of the control system are met.
9. | CRITICAL ACCOUNTING POLICIES, ESTIMATES AND ACCOUNTING
CHANGES |
Critical Accounting Policies and Estimates
The preparation of the Company’s
consolidated financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes. The critical estimates, assumptions and judgments applied in the preparation
of the Company’s interim financial statements are consistent with those applied and disclosed in Note 5 of the Company’s
annual audited consolidated financial statements for the year ended December 31, 2022.
Accounting Changes
The accounting policies applied in
the preparation of the Company’s interim financial statements are consistent with those used in the Company’s annual audited
consolidated financial statements for the year ended December 31, 2022, except for the adoption of amendments to IAS 1 “Presentation
of Financial Statements”, IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” and 12 “Income
Taxes” as disclosed in Note 3 of the Company’s interim financial statements for this interim period.
The
business of Kinross contains significant risk due to the nature of mining, exploration, and development activities. Certain risk factors
are similar across the mining industry while others are specific to Kinross. For a discussion of these risk factors, please refer to
the MD&A for the year ended December 31, 2022 and for additional information please refer to the Annual Information Form for
the year ended December 31, 2022, each of which is available on the Company's website www.kinross.com and on www.sedar.com
or is available upon request from the Company.
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
11. | SUPPLEMENTAL INFORMATION |
Reconciliation of Non-GAAP Financial
Measures and Ratios
The Company has included certain non-GAAP
financial measures and ratios in this document. These financial measures and ratios are not defined under IFRS and should not be considered
in isolation. The Company believes that these financial measures and ratios, together with financial measures and ratios determined in
accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion
of these financial measures and ratios is meant to provide additional information and should not be used as a substitute for performance
measures prepared in accordance with IFRS. These financial measures and ratios are not necessarily standard and therefore may not be
comparable to other issuers.
All the non-GAAP financial measures
and ratios in this document are from continuing operations and exclude results from the Company’s Chirano and Russian operations
due to the classification of these operations as discontinued. As a result of the exclusion of Chirano, the following non-GAAP financial
measures and ratios are no longer on an attributable basis, but on a total basis: production cost of sales from continuing operations
per ounce sold on a by-product basis and all-in-sustaining cost from continuing operations per equivalent ounce sold and per ounce sold
on a by-product basis.
Adjusted Net Earnings from Continuing
Operations Attributable to Common Shareholders and Adjusted Net Earnings from Continuing Operations per Share
Adjusted net earnings from continuing
operations attributable to common shareholders and adjusted net earnings from continuing operations per share are non-GAAP financial
measures and ratios 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 and ratios, 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 from continuing operations and adjusted net earnings from continuing operations per share measures and ratios are
not necessarily indicative of net earnings from continuing operations and earnings per share measures and ratios as determined under
IFRS.
The following table provides a reconciliation of net earnings (loss)
from continuing operations to adjusted net earnings from continuing operations for the periods presented:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
(in millions, except per share amounts) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net earnings (loss) from continuing operations attributable to common shareholders - as reported | |
$ | 151.0 | | |
$ | (9.3 | ) | |
$ | 241.2 | | |
$ | 72.0 | |
Adjusting items: | |
| | | |
| | | |
| | | |
| | |
Foreign exchange losses | |
| 10.1 | | |
| 1.7 | | |
| 6.3 | | |
| 5.8 | |
Foreign exchange (gains) losses on translation of tax basis and foreign exchange on deferred income taxes within income tax expense | |
| (18.5 | ) | |
| 4.2 | | |
| (31.7 | ) | |
| (11.5 | ) |
Taxes in respect of prior periods | |
| 16.6 | | |
| 5.1 | | |
| 28.6 | | |
| 10.8 | |
Reclamation expense | |
| - | | |
| 33.7 | | |
| 4.0 | | |
| 23.9 | |
Other(a) | |
| 11.6 | | |
| 1.0 | | |
| 10.4 | | |
| 4.5 | |
Tax effects of the above adjustments | |
| (3.2 | ) | |
| 1.0 | | |
| (3.6 | ) | |
| 0.7 | |
| |
| 16.6 | | |
| 46.7 | | |
| 14.0 | | |
| 34.2 | |
Adjusted net earnings from continuing operations attributable to common shareholders | |
$ | 167.6 | | |
$ | 37.4 | | |
$ | 255.2 | | |
$ | 106.2 | |
Weighted average number of common shares outstanding - Basic | |
| 1,227.6 | | |
| 1,299.2 | | |
| 1,226.3 | | |
| 1,282.0 | |
Adjusted net earnings from continuing operations per share | |
$ | 0.14 | | |
$ | 0.03 | | |
$ | 0.21 | | |
$ | 0.08 | |
Basic earnings (loss) from continuing
operations per share attributable to common shareholders - as reported | |
$ | 0.12 | | |
$ | (0.01 | ) | |
$ | 0.20 | | |
$ | 0.06 | |
(a) | Other includes various impacts,
such as one-time costs at sites, and gains and losses on hedges and the sale of assets, which
the Company believes are not reflective of the Company’s underlying performance for
the reporting period. |
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
Free Cash Flow from Continuing
Operations
Free cash flow from continuing operations
is a non-GAAP financial measure and is defined as net cash flow of continuing operations provided from operating activities less additions
to property, plant and equipment. The Company believes that this measure, which is used internally to evaluate the Company’s underlying
cash generation performance and the ability to repay creditors and return cash to shareholders, provides investors with the ability to
better evaluate the Company’s underlying performance. However, the free cash flow from continuing operations measure is not necessarily
indicative of operating earnings or net cash flow of continuing operations provided from operating activities as determined under IFRS.
The following table provides a reconciliation
of free cash flow from continuing operations for the periods presented:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
(in millions) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net cash flow of continuing operations provided from operating activities - as reported | |
$ | 528.6 | | |
$ | 257.1 | | |
$ | 787.6 | | |
$ | 355.0 | |
Less: Additions to property, plant and equipment | |
| (281.9 | ) | |
| (149.4 | ) | |
| (503.1 | ) | |
| (250.1 | ) |
Free cash flow from continuing operations | |
$ | 246.7 | | |
$ | 107.7 | | |
$ | 284.5 | | |
$ | 104.9 | |
Adjusted Operating Cash Flow from
Continuing Operations
Adjusted operating cash flow from
continuing operations is a non-GAAP financial measure and is defined as net cash flow of continuing operations provided from operating
activities 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.
The Company uses adjusted operating cash flow from continuing operations 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 from continuing
operations measure is not necessarily indicative of net cash flow of continuing operations provided from operating activities as determined
under IFRS.
The following table provides a reconciliation
of adjusted operating cash flow from continuing operations for the periods presented:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
(in millions) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net cash flow of continuing operations provided from operating activities - as reported | |
$ | 528.6 | | |
$ | 257.1 | | |
$ | 787.6 | | |
$ | 355.0 | |
Adjusting items: | |
| | | |
| | | |
| | | |
| | |
Working capital changes: | |
| | | |
| | | |
| | | |
| | |
Accounts receivable and other assets | |
| (42.2 | ) | |
| (14.3 | ) | |
| (87.6 | ) | |
| (62.6 | ) |
Inventories | |
| 39.9 | | |
| 63.1 | | |
| 83.1 | | |
| 152.4 | |
Accounts payable and other liabilities, including income taxes paid | |
| (67.2 | ) | |
| (54.0 | ) | |
| 8.8 | | |
| 56.2 | |
Total working capital changes | |
| (69.5 | ) | |
| (5.2 | ) | |
| 4.3 | | |
| 146.0 | |
Adjusted operating cash flow from continuing operations | |
$ | 459.1 | | |
$ | 251.9 | | |
$ | 791.9 | | |
$ | 501.0 | |
Production Cost of Sales from Continuing
Operations per Ounce Sold on a By-Product Basis
Production cost of sales from continuing
operations per ounce sold on a by-product basis is a non-GAAP ratio 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 ratio 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 production cost of sales from continuing operations per ounce sold on a by-product basis for the periods presented:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
(in millions, except ounces and production cost of sales per ounce) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Production cost of sales from continuing operations - as reported | |
$ | 497.9 | | |
$ | 450.8 | | |
$ | 981.8 | | |
$ | 813.9 | |
Less: silver revenue(a) | |
| (53.3 | ) | |
| (9.0 | ) | |
| (108.2 | ) | |
| (13.4 | ) |
Production cost of sales from continuing operations net of silver by-product revenue | |
$ | 444.6 | | |
$ | 441.8 | | |
$ | 873.6 | | |
$ | 800.5 | |
Gold ounces sold from continuing operations | |
| 525,921 | | |
| 434,086 | | |
| 987,617 | | |
| 805,421 | |
Total gold equivalent ounces sold from continuing operations | |
| 552,969 | | |
| 439,078 | | |
| 1,043,299 | | |
| 812,806 | |
Production cost of sales from continuing operations per equivalent ounce sold(b) | |
$ | 900 | | |
$ | 1,027 | | |
$ | 941 | | |
$ | 1,001 | |
Production cost of sales from continuing operations per ounce sold on a by-product basis | |
$ | 845 | | |
$ | 1,018 | | |
$ | 885 | | |
$ | 994 | |
See page 33 of this MD&A for details of the footnotes referenced within
the table above.
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
All-In Sustaining Cost and Attributable
All-In Cost from Continuing Operations per Ounce Sold on a By-Product Basis
All-in sustaining cost and attributable
all-in cost from continuing operations per ounce sold on a by-product basis are non-GAAP financial measures and ratios, as applicable,
calculated based on guidance published by the World Gold Council (“WGC”). 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 metrics. Adoption of the all-in
sustaining cost and all-in cost metrics is voluntary and not necessarily standard, and therefore, these measures and ratios presented
by the Company may not be comparable to similar measures and ratios presented by other issuers. The Company believes that the all-in sustaining
cost and all-in cost measures complement existing measures and ratios 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, i.e. a by-product. 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, including capitalized stripping, 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.
All-in sustaining cost and attributable
all-in cost from continuing operations per ounce sold on a by-product basis are calculated by adjusting production cost of sales from
continuing operations, as reported on the interim condensed consolidated statements of operations, as follows:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
(in millions, except ounces and costs per ounce) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Production cost of sales from continuing operations - as reported | |
$ | 497.9 | | |
$ | 450.8 | | |
$ | 981.8 | | |
$ | 813.9 | |
Less: silver revenue from continuing operations(a) | |
| (53.3 | ) | |
| (9.0 | ) | |
| (108.2 | ) | |
| (13.4 | ) |
Production cost of sales from continuing operations net of silver by-product revenue | |
$ | 444.6 | | |
$ | 441.8 | | |
$ | 873.6 | | |
$ | 800.5 | |
Adjusting items: | |
| | | |
| | | |
| | | |
| | |
General and administrative(d) | |
| 32.0 | | |
| 30.0 | | |
| 56.4 | | |
| 60.2 | |
Other operating expense - sustaining(e) | |
| 5.0 | | |
| 6.2 | | |
| 11.5 | | |
| 11.8 | |
Reclamation and remediation - sustaining(f) | |
| 18.3 | | |
| 10.0 | | |
| 32.6 | | |
| 17.8 | |
Exploration and business development - sustaining(g) | |
| 9.5 | | |
| 8.6 | | |
| 16.1 | | |
| 15.5 | |
Additions to property, plant and equipment - sustaining(h) | |
| 148.6 | | |
| 77.6 | | |
| 245.1 | | |
| 118.7 | |
Lease payments - sustaining(i) | |
| 5.5 | | |
| 5.5 | | |
| 20.7 | | |
| 10.7 | |
All-in Sustaining Cost on a by-product basis | |
$ | 663.5 | | |
$ | 579.7 | | |
$ | 1,256.0 | | |
$ | 1,035.2 | |
Adjusting items on an attributable(c) basis: | |
| | | |
| | | |
| | | |
| | |
Other operating expense - non-sustaining(e) | |
| 10.0 | | |
| 8.9 | | |
| 18.7 | | |
| 21.1 | |
Reclamation and remediation - non-sustaining(f) | |
| 2.4 | | |
| 2.1 | | |
| 4.3 | | |
| 3.3 | |
Exploration and business development - non-sustaining(g) | |
| 39.7 | | |
| 31.1 | | |
| 67.3 | | |
| 47.6 | |
Additions to property, plant and equipment - non-sustaining(h) | |
| 123.7 | | |
| 70.9 | | |
| 239.8 | | |
| 129.6 | |
Lease payments - non-sustaining(i) | |
| 0.1 | | |
| 0.2 | | |
| 0.4 | | |
| 0.4 | |
All-in Cost on a by-product basis - attributable(c) | |
$ | 839.4 | | |
$ | 692.9 | | |
$ | 1,586.5 | | |
$ | 1,237.2 | |
Gold ounces sold from continuing operations | |
| 525,921 | | |
| 434,086 | | |
| 987,617 | | |
| 805,421 | |
Production cost of sales from continuing operations per equivalent ounce sold(b) | |
$ | 900 | | |
$ | 1,027 | | |
$ | 941 | | |
$ | 1,001 | |
All-in sustaining cost from continuing operations per ounce sold on a by-product basis | |
$ | 1,262 | | |
$ | 1,335 | | |
$ | 1,272 | | |
$ | 1,285 | |
Attributable(c) all-in cost from continuing operations per ounce sold on a by-product basis | |
$ | 1,596 | | |
$ | 1,596 | | |
$ | 1,606 | | |
$ | 1,536 | |
See page 33 of this MD&A for details of the footnotes referenced within
the table above.
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
All-In Sustaining Cost and Attributable
All-In Cost from Continuing Operations per Equivalent Ounce Sold
The Company also assesses its all-in
sustaining cost and attributable all-in cost from continuing operations on a gold equivalent ounce basis. Under these non-GAAP financial
measures and ratios, the Company’s production of silver is converted into gold equivalent ounces and credited to total production.
All-in sustaining cost and attributable
all-in cost from continuing operations per equivalent ounce sold are calculated by adjusting production cost of sales from continuing
operations, as reported on the interim condensed consolidated statements of operations, as follows:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
(in millions, except ounces and costs per equivalent ounce) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Production cost of sales from continuing operations - as reported | |
$ |
497.9 | | |
$ |
450.8 | | |
$ |
981.8 | | |
$ |
813.9 | |
Adjusting items: | |
| | | |
| | | |
| | | |
| | |
General and administrative(d) | |
| 32.0 | | |
| 30.0 | | |
| 56.4 | | |
| 60.2 | |
Other operating expense - sustaining(e) | |
| 5.0 | | |
| 6.2 | | |
| 11.5 | | |
| 11.8 | |
Reclamation and remediation - sustaining(f) | |
| 18.3 | | |
| 10.0 | | |
| 32.6 | | |
| 17.8 | |
Exploration and business development- sustaining(g) | |
| 9.5 | | |
| 8.6 | | |
| 16.1 | | |
| 15.5 | |
Additions to property, plant and equipment - sustaining(h) | |
| 148.6 | | |
| 77.6 | | |
| 245.1 | | |
| 118.7 | |
Lease payments - sustaining(i) | |
| 5.5 | | |
| 5.5 | | |
| 20.7 | | |
| 10.7 | |
All-in Sustaining Cost | |
$ | 716.8 | | |
$ | 588.7 | | |
$ | 1,364.2 | | |
$ | 1,048.6 | |
Adjusting items on an attributable(c) basis: | |
| | | |
| | | |
| | | |
| | |
Other operating expense - non-sustaining(e) | |
| 10.0 | | |
| 8.9 | | |
| 18.7 | | |
| 21.1 | |
Reclamation and remediation - non-sustaining(f) | |
| 2.4 | | |
| 2.1 | | |
| 4.3 | | |
| 3.3 | |
Exploration and business development - non-sustaining(g) | |
| 39.7 | | |
| 31.1 | | |
| 67.3 | | |
| 47.6 | |
Additions to property, plant and equipment - non-sustaining(h) | |
| 123.7 | | |
| 70.9 | | |
| 239.8 | | |
| 129.6 | |
Lease payments - non-sustaining(i) | |
| 0.1 | | |
| 0.2 | | |
| 0.4 | | |
| 0.4 | |
All-in Cost - attributable(c) | |
$ | 892.7 | | |
$ | 701.9 | | |
$ | 1,694.7 | | |
$ | 1,250.6 | |
Gold equivalent ounces sold from continuing operations | |
| 552,969 | | |
| 439,078 | | |
| 1,043,299 | | |
| 812,806 | |
Production cost of sales from continuing operations per equivalent ounce sold(b) | |
$ | 900 | | |
$ | 1,027 | | |
$ | 941 | | |
$ | 1,001 | |
All-in sustaining cost from continuing operations per equivalent ounce sold | |
$ | 1,296 | | |
$ | 1,341 | | |
$ | 1,308 | | |
$ | 1,290 | |
Attributable(c) all-in cost from continuing operations per equivalent ounce sold | |
$ | 1,614 | | |
$ | 1,599 | | |
$ | 1,624 | | |
$ | 1,539 | |
See page 33 of this MD&A for details of the footnotes referenced within
the table above.
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
Capital Expenditures From Continuing
Operations
Capital expenditures are classified
as either sustaining capital expenditures or non-sustaining capital expenditures, depending on the nature of the expenditure. Sustaining
capital expenditures typically represent capital expenditures at existing operations including capitalized exploration costs and capitalized
stripping unless related to major projects, ongoing replacement of mine equipment and other capital facilities and other capital expenditures
and is calculated as total additions to property, plant and equipment (as reported on the interim condensed consolidated statements of
cash flows), less non-sustaining capital expenditures. Non-sustaining capital expenditures represent 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. Management believes this to be a useful indicator of the purpose
of capital expenditures and this distinction is an input into the calculation of all-in sustaining costs from continuing operations per
ounce and attributable all-in costs from continuing operations per ounce. The categorization of sustaining capital expenditures and non-sustaining
capital expenditures is consistent with the definitions under the WGC all-in cost standard. Sustaining capital expenditures and non-sustaining
capital expenditures are not defined under IFRS, however, the sum of these two measures total to additions to property, plant and equipment
as disclosed under IFRS on the interim condensed consolidated statements of cash flows.
The following table provides a reconciliation
of the classification of capital expenditures for the periods presented:
Three months ended
June 30, 2023: | |
Tasiast
(Mauritania) | |
Paracatu
(Brazil) | |
La
Coipa (Chile) | |
Fort
Knox (USA) | |
Round
Mountain (USA) | |
Bald
Mountain (USA) | |
Manh
Choh (USA)(a) | |
Total
USA | |
Other | |
Total | |
Sustaining
capital expenditures | |
$ | 9.1 | |
$ | 39.7 | |
$ | 19.9 | |
$ | 52.1 | |
$ | 10.5 | |
$ | 16.5 | |
$ | - | |
$ | 79.1 | |
$ | 0.8 | |
$ | 148.6 | |
Non-sustaining
capital expenditures | |
| 72.8 | |
| - | |
| 3.4 | |
| 6.1 | |
| - | |
| 14.9 | |
| 32.1 | |
| 53.1 | |
| 4.0 | |
| 133.3 | |
Additions to property, plant
and equipment - per cash flow | |
$ | 81.9 | |
$ | 39.7 | |
$ | 23.3 | |
$ | 58.2 | |
$ | 10.5 | |
$ | 31.4 | |
$ | 32.1 | |
$ | 132.2 | |
$ | 4.8 | |
$ | 281.9 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Three months ended June 30, 2022: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Sustaining
capital expenditures | |
$ | 6.8 | |
$ | 31.2 | |
$ | 1.6 | |
$ | 12.1 | |
$ | 20.5 | |
$ | 5.1 | |
$ | - | |
$ | 37.7 | |
$ | - | |
$ | 77.3 | |
Non-sustaining
capital expenditures | |
| 17.5 | |
| - | |
| 37.4 | |
| 1.0 | |
| 0.1 | |
| 11.1 | |
| 3.2 | |
| 15.4 | |
| 1.8 | |
| 72.1 | |
Additions to property, plant
and equipment - per cash flow | |
$ | 24.3 | |
$ | 31.2 | |
$ | 39.0 | |
$ | 13.1 | |
$ | 20.6 | |
$ | 16.2 | |
$ | 3.2 | |
$ | 53.1 | |
$ | 1.8 | |
$ | 149.4 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Six months ended June 30,
2023: | |
Tasiast (Mauritania) | |
Paracatu (Brazil) | |
La Coipa (Chile) | |
Fort Knox (USA) | |
Round Mountain (USA) | |
Bald Mountain (USA) | |
Manh Choh (USA)(a) | |
Total USA | |
Other | |
Total | |
Sustaining
capital expenditures | |
$ | 23.7 | |
$ | 67.5 | |
$ | 21.5 | |
$ | 90.7 | |
$ | 17.9 | |
$ | 22.6 | |
$ | - | |
$ | 131.2 | |
$ | 1.2 | |
$ | 245.1 | |
Non-sustaining
capital expenditures | |
| 122.8 | |
| - | |
| 27.2 | |
| 6.6 | |
| - | |
| 34.0 | |
| 60.8 | |
| 101.4 | |
| 6.6 | |
| 258.0 | |
Additions to property, plant
and equipment - per cash flow | |
$ | 146.5 | |
$ | 67.5 | |
$ | 48.7 | |
$ | 97.3 | |
$ | 17.9 | |
$ | 56.6 | |
$ | 60.8 | |
$ | 232.6 | |
$ | 7.8 | |
$ | 503.1 | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Six months ended June 30, 2022: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Sustaining
capital expenditures | |
$ | 10.9 | |
$ | 47.2 | |
$ | 2.3 | |
$ | 13.8 | |
$ | 36.5 | |
$ | 7.8 | |
$ | - | |
$ | 58.1 | |
$ | 0.2 | |
$ | 118.7 | |
Non-sustaining
capital expenditures | |
| 32.8 | |
| - | |
| 72.5 | |
| 2.2 | |
| 0.1 | |
| 14.2 | |
| 6.1 | |
| 22.6 | |
| 3.5 | |
| 131.4 | |
Additions to property, plant
and equipment - per cash flow | |
$ | 43.7 | |
$ | 47.2 | |
$ | 74.8 | |
$ | 16.0 | |
$ | 36.6 | |
$ | 22.0 | |
$ | 6.1 | |
$ | 80.7 | |
$ | 3.7 | |
$ | 250.1 | |
(a) | Represents 100% of capital expenditures, of which 70% is Kinross’ share. |
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
(a) | “Silver revenue” represents the 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. |
(b) | “Production cost of sales from continuing operations per equivalent ounce sold” is defined
as production cost of sales from continuing operations divided by total gold equivalent ounces sold from continuing operations. |
(c) | “Attributable” includes Kinross’ share of Manh Choh (70%) costs. As Manh Choh is
a non-operating site, the attributable costs are non-sustaining costs and as such only impact the all-in-cost measures. |
(d) | “General and administrative” expenses are as reported on the interim condensed consolidated
statements of operations, net of certain restructuring expenses. General and administrative expenses are considered sustaining costs as
they are required to be absorbed on a continuing basis for the effective operation and governance of the Company. |
(e) | “Other operating expense – sustaining” is calculated as “Other operating expense”
as reported on the interim condensed consolidated statements of operations, less other operating and reclamation and remediation expenses
related to non-sustaining activities as well as other items not reflective of the underlying operating performance of our business. Other
operating expenses are classified as either sustaining or non-sustaining based on the type and location of the expenditure incurred. The
majority of other operating expenses that are incurred at existing operations are considered costs necessary to sustain operations, and
are therefore classified as sustaining. Other operating expenses incurred at locations where there is no current operation or related
to other non-sustaining activities are classified as non-sustaining. |
(f) | “Reclamation and remediation - sustaining” is calculated as current period accretion related
to reclamation and remediation obligations plus current period amortization of the corresponding reclamation and remediation assets, and
is intended to reflect the periodic cost of reclamation and remediation for currently operating mines. Reclamation and remediation costs
for development projects or closed mines are excluded from this amount and classified as non-sustaining. |
(g) | “Exploration and business development – sustaining” is calculated as “Exploration
and business development” expenses as reported on the interim condensed consolidated statements of operations, less non-sustaining
exploration and business development 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 classified as either sustaining or non-sustaining
based on a determination of the type of expense and requirement for general or growth related operations. |
(h) | “Additions to property, plant and equipment – sustaining and non-sustaining are as presented
on page 32 of this MD&A. Non-sustaining capital expenditures included in the calculation of attributable all-in-cost includes
Kinross’ share of Manh Choh (70%) costs. |
(i) | “Lease payments – sustaining” represents the majority of lease payments as reported
on the interim condensed consolidated statements of cash flows and is made up of the principal and financing components of such cash payments,
less non-sustaining lease payments. Lease payments for development projects or closed mines are classified as non-sustaining. |
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
Cautionary Statement on Forward-Looking Information
All statements, other than statements
of historical fact, contained or incorporated by reference in this MD&A 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 MD&A. Forward-looking statements contained in this MD&A, include, but are not limited to, those under the
headings (or headings that include) “Outlook”, “Project Updates and New Developments”, “Other Developments”
and “Liquidity Outlook” and include, without limitation, statements with respect to as well as statements with respect to
our guidance for production, cost guidance, including production costs of sales, all-in sustaining cost of sales, and capital expenditures;
statements with respect to our guidance for cash flow and free cash flow; the declaration, payment and sustainability of the Company’s
dividends or share repurchases; identification of additional resources and reserves; the Company’s liquidity; greenhouse gas reduction
initiatives and targets; the implementation and effectiveness of the Company’s ESG or Climate Change strategy; the schedules and
budgets for the Company’s development projects; budgets for and future prospects for exploration, development and operation at the
Company’s operations and projects, including the Great Bear project, the Tasiast 24k project, Manh Choh and the Tasiast solar project;
the Company’s liquidity outlook, as well as references to other possible events, the future price of gold and silver, the timing
and amount of estimated future production, costs of production, operating costs; price inflation; capital expenditures, costs and timing
of the development of projects and new deposits, estimates and the realization of such estimates (such as mineral or gold reserves and
resources or mine life), success of exploration, development and mining, currency fluctuations, capital requirements, project studies,
government regulation, permit applications, restarting suspended or disrupted operations; environmental risks and proceedings; and resolution
of pending litigation. The words “advance”, “believe”, “continue”, “estimates”, “expects”,
“focus”, “forecast”, “guidance”, “on schedule”, “on track”, “opportunity”
“outlook”, “plan”, “poised”, “potential”, “priority”, “prospect”,
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 MD&A, 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, 2022, and
the Annual Information Form dated March 31, 2023 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 snowfall, 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 or snowfall, 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 or otherwise; (2) permitting, development, operations and production from the Company’s operations
and development projects being consistent with Kinross’ current expectations including, without limitation: the maintenance of existing
permits and approvals and the timely receipt of all permits and authorizations necessary for the operation of Tasiast; water and power
supply and continued operation of the tailings reprocessing facility at Paracatu; permitting of the Great Bear project (including the
consultation process with Indigenous groups), permitting and development of the Lobo-Marte project; ramp-up of production at the La Coipa
project; in each case in a manner consistent with the Company’s expectations; and the successful completion of exploration consistent
with the Company’s expectations at the Company’s projects; (3) political and legal developments in any jurisdiction in which
the Company operates being consistent with its current expectations including, without limitation, 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 (including those related to financial assurance requirements), potential amendments to water laws and/or
other water use restrictions and regulatory actions in Chile, new dam safety regulations, potential amendments to minerals and mining
laws and energy levies laws, new regulations relating to work permits, potential amendments to customs and mining laws (including but
not limited to amendments to the VAT) and the potential application of the tax code in Mauritania, potential amendments to and enforcement
of tax laws in Mauritania (including, but not limited to, the interpretation, implementation, application and enforcement of any such
laws and amendments thereto), and the impact of any trade tariffs being consistent with Kinross’ current expectations; (4) the completion
of studies, including optimization studies, improvement studies; scoping studies and preliminary economic assessments, pre-feasibility
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, Mauritanian ouguiya 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) attributable
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 and Kinross’ analysis thereof being consistent with expectations (including but not limited to
ore tonnage and ore grade estimates), future mineral resource and mineral reserve estimates being consistent with preliminary work undertaken
by the Company, mine plans for the Company’s current and future mining operations, and the Company’s internal models; (10)
labour and materials costs increasing on a basis consistent with Kinross’ current expectations; (11) the terms and conditions of
the legal and fiscal stability agreements for Tasiast 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) 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) potential direct or indirect operational impacts resulting from infectious diseases or pandemics; (16) changes in national
and local government legislation or other government actions; (17) litigation, regulatory proceedings and audits, and the potential ramifications
thereof, being concluded in a manner consistent with the Corporation’s expectations (including without limitation litigation in
Chile relating to the alleged damage of wetlands and the scope of any remediation plan or other environmental obligations arising therefrom);
(18) the Company’s financial results, cash flows and future prospects being consistent with Company expectations in amounts sufficient
to permit sustained share repurchases and dividend payments; (19) the impacts of detected pit wall instability at Round Mountain and Bald
Mountain being consistent with the Company’s expectations; (20) the Company’s estimates regarding the timing of completion
of the Tasiast 24k project; and (21) that deferred payments in respect of the Ghana divestiture will be paid and, in the event any deferred
payment is not paid, the applicable security package will be realized and enforceable in a manner consistent with the Company’s
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: the inaccuracy of any of the foregoing assumptions; fluctuations in the currency markets;
fluctuations in the spot and forward price of gold or certain other commodities (such as fuel and electricity); price inflation of goods
and services; 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, Mauritania or other countries in which Kinross does business or may carry on business; business opportunities
that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or
technical difficulties in connection with mining, development or refining activities; employee relations; litigation or other claims against,
or regulatory investigations and/or any enforcement actions, administrative orders or sanctions in respect of the Company (and/or its
directors, officers, or employees) including, but not limited to, securities class action litigation in Canada and/or the United States,
environmental litigation or regulatory proceedings or any investigations, enforcement actions and/or sanctions under any applicable anti-corruption,
international sanctions and/or anti-money laundering laws and regulations in Canada, the United States or any other applicable jurisdiction;
the speculative nature of gold exploration and development including, but not limited to, the risks of obtaining and maintaining 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 MD&A 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, 2022, and the “Risk Factors” set forth in the Company’s
Annual Information Form dated March 31, 2023. 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.
Kinross Gold Corporation
management’s discussion
and analysis
For the three and six months ended June 30, 2023
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 $20 impact on production cost of sales per equivalent ounce sold3.
Specific
to the Brazilian real, a 10% change in the exchange rate would be expected to result in an approximate $30 impact on Brazilian
production cost of sales per equivalent ounce sold.
Specific
to the Chilean peso, a 10% change in the exchange rate would be expected to result in an approximate $50 impact on Chilean
production cost of sales per equivalent ounce sold.
A
$10 per barrel change in the price of oil would be expected to result in an approximate $3 impact on production cost of
sales per equivalent ounce sold.
A $100 change in the price of gold
would be expected to result in an approximate $4 impact on production cost of sales per equivalent ounce sold as a result of a change
in royalties.
Other information
Where we say ‘‘we’’, ‘‘us’’,
‘‘our’’, the ‘‘Company’’, or ‘‘Kinross’’ in this MD&A, 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 MD&A has been prepared under the supervision of Mr. John Sims who is a “qualified person”
within the meaning of National Instrument 43-101. Mr. Sims was an officer of Kinross until December 31, 2020. Mr. Sims
remains the Company’s qualified person as an external consultant.
3 Refers to all of the currencies in the countries where the
Company has mining operations, fluctuating simultaneously by 10% in the same direction, either appreciating or depreciating, taking into
consideration the impact of hedging and the weighting of each currency within our consolidated cost structure.
KINROSS GOLD CORPORATION
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, expressed in millions of United States dollars, except
share amounts)
| |
| |
As at | |
| |
| |
June 30, | | |
December 31, | |
| |
| |
2023 | | |
2022 | |
Assets | |
| |
| | | |
| | |
Current assets | |
| |
| | | |
| | |
Cash and cash equivalents | |
Note 6 | |
$ | 478.4 | | |
$ | 418.1 | |
Restricted cash | |
Note 6 | |
| 8.7 | | |
| 10.1 | |
Accounts receivable and other assets | |
Note 6 | |
| 240.2 | | |
| 318.2 | |
Current income tax recoverable | |
| |
| 5.5 | | |
| 8.5 | |
Inventories | |
Note 6 | |
| 1,189.3 | | |
| 1,072.2 | |
Unrealized fair value of derivative assets | |
Note 7 | |
| 16.9 | | |
| 25.5 | |
| |
| |
| 1,939.0 | | |
| 1,852.6 | |
Non-current assets | |
| |
| | | |
| | |
Property, plant and equipment | |
Note 6 | |
| 7,815.4 | | |
| 7,741.4 | |
Long-term investments | |
Note 6 | |
| 89.4 | | |
| 116.9 | |
Other long-term assets | |
Note 6 | |
| 696.4 | | |
| 680.9 | |
Deferred tax assets | |
| |
| 6.5 | | |
| 4.6 | |
Total assets | |
| |
$ | 10,546.7 | | |
$ | 10,396.4 | |
| |
| |
| | | |
| | |
Liabilities | |
| |
| | | |
| | |
Current liabilities | |
| |
| | | |
| | |
Accounts payable and accrued liabilities | |
Note 6 | |
$ | 556.4 | | |
$ | 550.0 | |
Current income tax payable | |
| |
| 71.8 | | |
| 89.4 | |
Current portion of long-term debt and credit facilities | |
Note 8 | |
| 531.5 | | |
| 36.0 | |
Current portion of provisions | |
Note 9 | |
| 53.4 | | |
| 50.8 | |
Other current liabilities | |
Note 6 | |
| 19.8 | | |
| 25.3 | |
| |
| |
| 1,232.9 | | |
| 751.5 | |
Non-current liabilities | |
| |
| | | |
| | |
Long-term debt and credit facilities | |
Note 8 | |
| 1,943.9 | | |
| 2,556.9 | |
Provisions | |
Note 9 | |
| 806.1 | | |
| 755.9 | |
Long-term lease liabilities | |
| |
| 19.5 | | |
| 23.1 | |
Other long-term liabilities | |
| |
| 133.3 | | |
| 125.3 | |
Deferred tax liabilities | |
| |
| 320.8 | | |
| 301.5 | |
Total liabilities | |
| |
$ | 4,456.5 | | |
$ | 4,514.2 | |
| |
| |
| | | |
| | |
Equity | |
| |
| | | |
| | |
Common shareholders' equity | |
| |
| | | |
| | |
Common share capital | |
Note 10 | |
$ | 4,480.2 | | |
$ | 4,449.5 | |
Contributed surplus | |
| |
| 10,643.1 | | |
| 10,667.5 | |
Accumulated deficit | |
| |
| (9,084.1 | ) | |
| (9,251.6 | ) |
Accumulated other comprehensive income (loss) | |
Note 6 | |
| (41.4 | ) | |
| (41.7 | ) |
Total common shareholders' equity | |
| |
| 5,997.8 | | |
| 5,823.7 | |
Non-controlling interests | |
| |
| 92.4 | | |
| 58.5 | |
Total equity | |
| |
$ | 6,090.2 | | |
$ | 5,882.2 | |
Commitments and contingencies | |
Note 14 | |
| | | |
| | |
Subsequent events | |
Notes 8 and 10 | |
| | | |
| | |
Total liabilities and equity | |
| |
$ | 10,546.7 | | |
$ | 10,396.4 | |
| |
| |
| | | |
| | |
Common shares | |
| |
| | | |
| | |
Authorized | |
| |
| Unlimited | | |
| Unlimited | |
Issued and outstanding | |
Note 10 | |
| 1,227,579,280 | | |
| 1,221,891,341 | |
The accompanying notes are an integral part of these interim condensed
consolidated financial statements.
KINROSS GOLD CORPORATION
interim cONDENSED Consolidated
Statements of Operations
(Unaudited, expressed in millions of United States dollars)
| |
| | |
Three months ended | | |
Six months ended | |
| |
| | |
June 30, | | |
June 30, | | |
June 30, | | |
June 30, | |
| |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Revenue | |
| | | |
| | | |
| | | |
| | | |
| | |
Metal sales | |
| | | |
$ | 1,092.3 | | |
$ | 821.5 | | |
$ | 2,021.6 | | |
$ | 1,522.4 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Cost of sales | |
| | | |
| | | |
| | | |
| | | |
| | |
Production cost of sales | |
| | | |
| 497.9 | | |
| 450.8 | | |
| 981.8 | | |
| 813.9 | |
Depreciation, depletion and amortization | |
| | | |
| 239.3 | | |
| 180.5 | | |
| 451.2 | | |
| 347.0 | |
Total cost of sales | |
| | | |
| 737.2 | | |
| 631.3 | | |
| 1,433.0 | | |
| 1,160.9 | |
Gross profit | |
| | | |
| 355.1 | | |
| 190.2 | | |
| 588.6 | | |
| 361.5 | |
Other operating expense | |
| | | |
| 36.0 | | |
| 56.3 | | |
| 67.2 | | |
| 71.5 | |
Exploration and business development | |
| | | |
| 49.3 | | |
| 39.9 | | |
| 83.3 | | |
| 63.3 | |
General and administrative | |
| | | |
| 32.0 | | |
| 30.0 | | |
| 56.4 | | |
| 60.2 | |
Operating earnings | |
| | | |
| 237.8 | | |
| 64.0 | | |
| 381.7 | | |
| 166.5 | |
Other (expense) income - net | |
| Note 6 | | |
| (10.4 | ) | |
| 0.7 | | |
| (6.0 | ) | |
| (6.0 | ) |
Finance income | |
| | | |
| 11.5 | | |
| 2.0 | | |
| 20.9 | | |
| 4.2 | |
Finance expense | |
| Note 6 | | |
| (26.0 | ) | |
| (23.5 | ) | |
| (53.5 | ) | |
| (44.7 | ) |
Earnings from continuing operations before tax | |
| | | |
| 212.9 | | |
| 43.2 | | |
| 343.1 | | |
| 120.0 | |
Income tax expense - net | |
| | | |
| (62.0 | ) | |
| (52.7 | ) | |
| (101.8 | ) | |
| (48.2 | ) |
Earnings (loss) from continuing operations after tax | |
| | | |
| 150.9 | | |
| (9.5 | ) | |
| 241.3 | | |
| 71.8 | |
Loss from discontinued operations after tax | |
| Note 5 | | |
| - | | |
| (30.3 | ) | |
| - | | |
| (635.5 | ) |
Net earnings (loss) | |
| | | |
$ | 150.9 | | |
$ | (39.8 | ) | |
$ | 241.3 | | |
$ | (563.7 | ) |
Net earnings (loss) from continuing operations attributable to: | |
| | | |
| | | |
| | | |
| | | |
| | |
Non-controlling interests | |
| | | |
$ | (0.1 | ) | |
$ | (0.2 | ) | |
$ | 0.1 | | |
$ | (0.2 | ) |
Common shareholders | |
| | | |
$ | 151.0 | | |
$ | (9.3 | ) | |
$ | 241.2 | | |
$ | 72.0 | |
Net earnings (loss) from discontinued operations attributable to: | |
| | | |
| | | |
| | | |
| | | |
| | |
Non-controlling interests | |
| | | |
$ | - | | |
$ | 0.7 | | |
$ | - | | |
$ | 0.6 | |
Common shareholders | |
| | | |
$ | - | | |
$ | (31.0 | ) | |
$ | - | | |
$ | (636.1 | ) |
Net earnings (loss) attributable to: | |
| | | |
| | | |
| | | |
| | | |
| | |
Non-controlling interests | |
| | | |
$ | (0.1 | ) | |
$ | 0.5 | | |
$ | 0.1 | | |
$ | 0.4 | |
Common shareholders | |
| | | |
$ | 151.0 | | |
$ | (40.3 | ) | |
$ | 241.2 | | |
$ | (564.1 | ) |
Earnings (loss) per share from continuing operations attributable to common shareholders | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
| | | |
$ | 0.12 | | |
$ | (0.01 | ) | |
$ | 0.20 | | |
$ | 0.06 | |
Diluted | |
| | | |
$ | 0.12 | | |
$ | (0.01 | ) | |
$ | 0.20 | | |
$ | 0.06 | |
Earnings (loss) per share from discontinued operations attributable to common shareholders | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
| | | |
$ | - | | |
$ | (0.02 | ) | |
$ | - | | |
$ | (0.50 | ) |
Diluted | |
| | | |
$ | - | | |
$ | (0.02 | ) | |
$ | - | | |
$ | (0.50 | ) |
Earnings (loss) per share attributable to common shareholders | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic | |
| | | |
$ | 0.12 | | |
$ | (0.03 | ) | |
$ | 0.20 | | |
$ | (0.44 | ) |
Diluted | |
| | | |
$ | 0.12 | | |
$ | (0.03 | ) | |
$ | 0.20 | | |
$ | (0.44 | ) |
The accompanying notes are an integral part of these interim condensed
consolidated financial statements.
KINROSS GOLD CORPORATION
INTERIM CONDENSED Consolidated
Statements of Comprehensive INCOME (loss)
(Unaudited, expressed in millions of United States dollars)
| |
| | |
Three months ended | | |
Six months ended | |
| |
| | |
June 30, | | |
June 30, | | |
June 30, | | |
June 30, | |
| |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net earnings (loss) | |
| | | |
$ | 150.9 | | |
$ | (39.8 | ) | |
$ | 241.3 | | |
$ | (563.7 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other comprehensive income (loss), net of tax: | |
| Note 6 | | |
| | | |
| | | |
| | | |
| | |
Items that will not be reclassified to profit or loss: | |
| | | |
| | | |
| | | |
| | | |
| | |
Equity investments at fair value through other comprehensive income ("FVOCI") - net change in fair value(a) | |
| | | |
| (1.4 | ) | |
| (23.0 | ) | |
| 6.3 | | |
| (16.1 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Items that are or may be reclassified to profit or loss in subsequent periods: | |
| | | |
| | | |
| | | |
| | | |
| | |
Cash flow hedges - effective portion of changes in fair value(b) | |
| | | |
| 0.4 | | |
| (2.9 | ) | |
| 2.2 | | |
| 18.2 | |
Cash flow hedges - reclassified out of accumulated other comprehensive income ("AOCI")(c) | |
| | | |
| (4.3 | ) | |
| (12.4 | ) | |
| (8.2 | ) | |
| (7.4 | ) |
| |
| | | |
| (5.3 | ) | |
| (38.3 | ) | |
| 0.3 | | |
| (5.3 | ) |
Total comprehensive income (loss) | |
| | | |
$ | 145.6 | | |
$ | (78.1 | ) | |
$ | 241.6 | | |
$ | (569.0 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Comprehensive income (loss) from continuing operations | |
| | | |
$ | 145.6 | | |
$ | (47.8 | ) | |
$ | 241.6 | | |
$ | 66.5 | |
Comprehensive (loss) from discontinued operations | |
| Note 5 | | |
| - | | |
| (30.3 | ) | |
| - | | |
| (635.5 | ) |
Total comprehensive income (loss) | |
| | | |
$ | 145.6 | | |
$ | (78.1 | ) | |
$ | 241.6 | | |
$ | (569.0 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Attributable to non-controlling interests | |
| | | |
$ | (0.1 | ) | |
$ | 0.5 | | |
$ | 0.1 | | |
$ | 0.4 | |
Attributable to common shareholders | |
| | | |
$ | 145.7 | | |
$ | (78.6 | ) | |
$ | 241.5 | | |
$ | (569.4 | ) |
| (a) | Net of tax expense of $nil, 3 months; $nil, 6 months (2022
- $nil, 3 months; $nil, 6 months). |
| (b) | Net of tax expense (recovery) of $0.6 million, 3 months;
$1.6 million, 6 months (2022 - $(1.2) million, 3 months; $6.4 million, 6 months). |
| (c) | Net of tax recovery of $(1.6) million, 3 months; $(2.9) million,
6 months (2022 - $(4.0) million, 3 months; $(1.9) million, 6 months). |
The accompanying notes are an integral part of these interim condensed
consolidated financial statements.
KINROSS GOLD CORPORATION
INTERIM CONDENSED 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, | |
| |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Net inflow (outflow) of cash related to the following activities: | |
| | | |
| | | |
| | | |
| | | |
| | |
Operating: | |
| | | |
| | | |
| | | |
| | | |
| | |
Earnings (loss) from continuing operations after tax | |
| | | |
$ | 150.9 | | |
$ | (9.5 | ) | |
$ | 241.3 | | |
$ | 71.8 | |
Adjustments to reconcile net earnings (loss) from continuing
operations to net cash provided from operating activities: | |
| | | |
| | | |
| | | |
| | | |
| | |
Depreciation, depletion and amortization | |
| | | |
| 239.3 | | |
| 180.5 | | |
| 451.2 | | |
| 347.0 | |
Share-based compensation expense | |
| | | |
| 2.0 | | |
| 3.0 | | |
| 1.4 | | |
| 6.0 | |
Finance expense | |
| | | |
| 26.0 | | |
| 23.5 | | |
| 53.5 | | |
| 44.7 | |
Deferred tax expense (recovery) | |
| | | |
| 9.7 | | |
| 14.8 | | |
| 18.7 | | |
| (2.1 | ) |
Foreign exchange losses and other | |
| | | |
| 31.2 | | |
| 5.9 | | |
| 21.8 | | |
| 9.7 | |
Reclamation expense | |
| | | |
| - | | |
| 33.7 | | |
| 4.0 | | |
| 23.9 | |
Changes in operating assets and liabilities: | |
| | | |
| | | |
| | | |
| | | |
| | |
Accounts receivable and other assets | |
| | | |
| 42.2 | | |
| 14.3 | | |
| 87.6 | | |
| 62.6 | |
Inventories | |
| | | |
| (39.9 | ) | |
| (63.1 | ) | |
| (83.1 | ) | |
| (152.4 | ) |
Accounts payable and accrued liabilities | |
| | | |
| 91.2 | | |
| 78.9 | | |
| 85.4 | | |
| 51.1 | |
Cash flow provided from operating activities | |
| | | |
| 552.6 | | |
| 282.0 | | |
| 881.8 | | |
| 462.3 | |
Income taxes paid | |
| | | |
| (24.0 | ) | |
| (24.9 | ) | |
| (94.2 | ) | |
| (107.3 | ) |
Net cash flow of continuing operations provided from operating activities | |
| | | |
| 528.6 | | |
| 257.1 | | |
| 787.6 | | |
| 355.0 | |
Net cash flow of discontinued operations (used in) provided from operating activities | |
| Note 5 | | |
| - | | |
| (49.2 | ) | |
| - | | |
| 49.2 | |
Investing: | |
| | | |
| | | |
| | | |
| | | |
| | |
Additions to property, plant and equipment | |
| | | |
| (281.9 | ) | |
| (149.4 | ) | |
| (503.1 | ) | |
| (250.1 | ) |
Interest paid capitalized to property, plant and equipment | |
| Note 8 | | |
| (8.5 | ) | |
| (5.6 | ) | |
| (46.8 | ) | |
| (16.2 | ) |
Acquisitions net of cash acquired | |
| Note 5 | | |
| - | | |
| - | | |
| - | | |
| (1,027.5 | ) |
Net (additions) disposals to long-term investments and other assets | |
| | | |
| (10.4 | ) | |
| (20.2 | ) | |
| 4.9 | | |
| (34.1 | ) |
Decrease (increase) in restricted cash - net | |
| | | |
| 2.2 | | |
| 0.6 | | |
| 1.4 | | |
| (1.1 | ) |
Interest received and other - net | |
| | | |
| 4.2 | | |
| 3.6 | | |
| 6.9 | | |
| 4.7 | |
Net cash flow of continuing operations used in investing activities | |
| | | |
| (294.4 | ) | |
| (171.0 | ) | |
| (536.7 | ) | |
| (1,324.3 | ) |
Net cash flow of discontinued operations provided from investing activities | |
| Note 5 | | |
| 40.0 | | |
| 269.9 | | |
| 45.0 | | |
| 252.9 | |
Financing: | |
| | | |
| | | |
| | | |
| | | |
| | |
Proceeds from drawdown of debt | |
| Note 8 | | |
| - | | |
| - | | |
| 100.0 | | |
| 1,097.6 | |
Repayment of debt | |
| Note 8 | | |
| (220.0 | ) | |
| (120.0 | ) | |
| (220.0 | ) | |
| (120.0 | ) |
Interest paid | |
| Note 8 | | |
| (2.3 | ) | |
| (0.9 | ) | |
| (26.5 | ) | |
| (25.6 | ) |
Payment of lease liabilities | |
| | | |
| (5.6 | ) | |
| (5.7 | ) | |
| (21.1 | ) | |
| (11.1 | ) |
Dividends paid to common shareholders | |
| Note 10 | | |
| (36.9 | ) | |
| (39.0 | ) | |
| (73.7 | ) | |
| (77.9 | ) |
Other - net | |
| | | |
| (2.9 | ) | |
| 2.9 | | |
| 4.3 | | |
| 8.8 | |
Net cash flow of continuing operations (used in) provided from financing activities | |
| | | |
| (267.7 | ) | |
| (162.7 | ) | |
| (237.0 | ) | |
| 871.8 | |
Net cash flow of discontinued operations provided from financing activities | |
| Note 5 | | |
| - | | |
| - | | |
| - | | |
| - | |
Effect of exchange rate changes on cash and cash equivalents of continuing operations | |
| | | |
| 0.9 | | |
| (0.4 | ) | |
| 1.4 | | |
| (0.4 | ) |
Effect of exchange rate changes on cash and cash equivalents of discontinued operations | |
| | | |
| - | | |
| 5.7 | | |
| - | | |
| 1.9 | |
Increase in cash and cash equivalents | |
| | | |
| 7.4 | | |
| 149.4 | | |
| 60.3 | | |
| 206.1 | |
Cash and cash equivalents, beginning of period | |
| | | |
| 471.0 | | |
| 454.2 | | |
| 418.1 | | |
| 531.5 | |
Cash and cash equivalents of assets held for sale, beginning of period | |
| Note 5 | | |
| - | | |
| 134.0 | | |
| - | | |
| - | |
Reclassified to assets held for sale | |
| Note 5 | | |
| - | | |
| (18.5 | ) | |
| - | | |
| (18.5 | ) |
Cash and cash equivalents, end of period | |
| | | |
$ | 478.4 | | |
$ | 719.1 | | |
$ | 478.4 | | |
$ | 719.1 | |
The accompanying notes are an integral part of these interim condensed
consolidated financial statements.
KINROSS GOLD CORPORATION
interim cONDENSED Consolidated
Statements of Equity
(Unaudited expressed in millions of United
States dollars)
| |
| | |
Three months ended | | |
Six months ended | |
| |
| | |
June 30, | | |
June 30, | | |
June 30, | | |
June 30, | |
| |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Common share capital | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at the beginning of the period | |
| | | |
$ | 4,480.2 | | |
$ | 4,710.2 | | |
$ | 4,449.5 | | |
$ | 4,427.7 | |
Common shares issued on acquisition of Great Bear | |
| Note 5 | | |
| - | | |
| - | | |
| - | | |
| 271.6 | |
Transfer from contributed surplus on exercise of restricted shares | |
| | | |
| - | | |
| 1.0 | | |
| 4.4 | | |
| 7.3 | |
Options exercised, including cash | |
| | | |
| - | | |
| 21.3 | | |
| 26.3 | | |
| 25.9 | |
Balance at the end of the period | |
| Note 10 | | |
$ | 4,480.2 | | |
$ | 4,732.5 | | |
$ | 4,480.2 | | |
$ | 4,732.5 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Contributed surplus | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at the beginning of the period | |
| | | |
$ | 10,641.1 | | |
$ | 10,698.4 | | |
$ | 10,667.5 | | |
$ | 10,664.4 | |
Share options issued on acquisition of Great Bear | |
| Note 5 | | |
| - | | |
| - | | |
| - | | |
| 39.5 | |
Contingent value rights issued on acquisition of Great Bear | |
| | | |
| - | | |
| - | | |
| - | | |
| 4.7 | |
Share-based compensation | |
| | | |
| 2.0 | | |
| 3.0 | | |
| 1.4 | | |
| 6.0 | |
Transfer of fair value of exercised options and restricted shares | |
| | | |
| - | | |
| (19.8 | ) | |
| (25.8 | ) | |
| (33.0 | ) |
Balance at the end of the period | |
| | | |
$ | 10,643.1 | | |
$ | 10,681.6 | | |
$ | 10,643.1 | | |
$ | 10,681.6 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated deficit | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at the beginning of the period | |
| | | |
$ | (9,198.2 | ) | |
$ | (9,055.1 | ) | |
$ | (9,251.6 | ) | |
$ | (8,492.4 | ) |
Dividends paid | |
| Note 10 | | |
| (36.9 | ) | |
| (39.0 | ) | |
| (73.7 | ) | |
| (77.9 | ) |
Net earnings (loss) attributable to common shareholders | |
| | | |
| 151.0 | | |
| (40.3 | ) | |
| 241.2 | | |
| (564.1 | ) |
Balance at the end of the period | |
| | | |
$ | (9,084.1 | ) | |
$ | (9,134.4 | ) | |
$ | (9,084.1 | ) | |
$ | (9,134.4 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Accumulated other comprehensive (loss) income | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at the beginning of the period | |
| | | |
$ | (36.1 | ) | |
$ | 14.2 | | |
$ | (41.7 | ) | |
$ | (18.8 | ) |
Other comprehensive income (loss), net of tax | |
| | | |
| (5.3 | ) | |
| (38.3 | ) | |
| 0.3 | | |
| (5.3 | ) |
Balance at the end of the period | |
| Note 6 | | |
$ | (41.4 | ) | |
$ | (24.1 | ) | |
$ | (41.4 | ) | |
$ | (24.1 | ) |
Total accumulated deficit and accumulated other comprehensive loss | |
| | | |
$ | (9,125.5 | ) | |
$ | (9,158.5 | ) | |
$ | (9,125.5 | ) | |
$ | (9,158.5 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total common shareholders' equity | |
| | | |
$ | 5,997.8 | | |
$ | 6,255.6 | | |
$ | 5,997.8 | | |
$ | 6,255.6 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Non-controlling interests | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at the beginning of the period | |
| | | |
$ | 68.8 | | |
$ | 70.1 | | |
$ | 58.5 | | |
$ | 68.7 | |
Net earnings (loss) attributable to non-controlling interests | |
| | | |
| (0.1 | ) | |
| 0.5 | | |
| 0.1 | | |
| 0.4 | |
Funding from non-controlling interest | |
| | | |
| 23.7 | | |
| - | | |
| 33.8 | | |
| 1.5 | |
Balance at the end of the period | |
| | | |
$ | 92.4 | | |
$ | 70.6 | | |
$ | 92.4 | | |
$ | 70.6 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total equity | |
| | | |
$ | 6,090.2 | | |
$ | 6,326.2 | | |
$ | 6,090.2 | | |
$ | 6,326.2 | |
The accompanying notes are an integral part of these interim condensed
consolidated financial statements.
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
1. | DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS |
Kinross Gold Corporation and its subsidiaries
and joint arrangements (collectively, "Kinross" or the "Company") are engaged in gold mining and related activities,
including exploration and acquisition of gold-bearing properties, extraction and processing of gold-containing ore and reclamation of
gold mining properties. Kinross Gold Corporation, the ultimate parent, is a public company incorporated and domiciled in Canada with its
registered office at 25 York Street, 17th floor, Toronto, Ontario, Canada, M5J 2V5. Kinross' gold production and exploration activities
are carried out principally in Canada, the United States, Brazil, Chile and Mauritania. Gold is produced in the form of doré, which
is shipped to refineries for final processing. Kinross also produces and sells a quantity of silver. The Company is listed on the Toronto
Stock Exchange and the New York Stock Exchange.
The interim condensed consolidated
financial statements of the Company for the period ended June 30, 2023 were authorized for issue in accordance with a resolution
of the board of directors on August 2, 2023.
These unaudited interim condensed consolidated
financial statements (“interim financial statements”) have been prepared in accordance with IAS 34 “Interim Financial
Reporting” as issued by the International Accounting Standards Board (“IASB”). The accounting policies applied in these
interim financial statements are consistent with those used in the annual audited consolidated financial statements for the year ended
December 31, 2022, except for the adoption of amendments to IAS 1 “Presentation of Financial Statements” (“IAS
1”), IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” (“IAS 8”) and “IAS
12 “Income Taxes” (“IAS 12”). See Note 3.
These interim financial statements
do not include all disclosures required by International Financial Reporting Standards (“IFRS”) for annual audited consolidated
financial statements and accordingly should be read in conjunction with the Company’s annual audited consolidated financial statements
for the year ended December 31, 2022 prepared in accordance with IFRS as issued by the IASB.
3. | CHANGES IN SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS |
i. | Changes in Significant Accounting Policies |
On January 1, 2023, the Company
adopted amendments to IAS 1 that requires companies to disclose material accounting policies instead of significant accounting policies.
The Company’s significant accounting policies are disclosed in Note 3 – Summary of Significant Accounting Policies within
the notes to the Company’s annual consolidated financial statements for the year ended December 31, 2022. The adoption of these
amendments did not have an impact on the Company’s interim financial statements. The Company’s annual consolidated financial
statements for the year ended December 31, 2023 will present only those policies which the Company considers material.
On January 1, 2023, the Company
adopted amendments to IAS 8 which provide greater clarity in the definition of accounting estimates to distinguish changes in accounting
estimates from changes in accounting policies. The Company will apply this definition of accounting estimates prospectively when assessing
such changes. As a result, the adoption of the amendments did not have an immediate impact on the Company’s financial statements.
On January 1, 2023, the Company
adopted amendments to IAS 12 to specify how companies should account for deferred tax on transactions such as leases and decommissioning
obligations. The amendments require companies to recognize deferred tax on transactions that, on initial recognition, give rise to equal
amounts of taxable and deductible temporary differences. The amendments did not have a significant impact on the Company’s financial
statements.
On May 23, 2023, the IASB issued amendments
to IAS 12 which introduce a temporary exception from accounting for deferred taxes arising from the implementation of the Organization
for Economic Co-operation and Development (“OECD”) Pillar Two model rules. The amendments provide relief from recognizing
deferred taxes related to the OECD Pillar two income taxes as well as any related disclosure. The Company has applied the exception immediately
upon issuance of the amendment and retrospectively in accordance with IAS 8 for the 2023 fiscal year.
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
ii. | Recent Accounting Pronouncements |
On January 23, 2020 and October 31,
2022, the IASB issued amendments to IAS 1 to clarify that the classification of liabilities as current or non-current should be based
on rights that exist at the end of the reporting period and that classification is unaffected by expectations about whether an entity
will exercise its right to defer settlement of a liability. For liabilities with covenants, the amendments clarify that only covenants
with which an entity is required to comply on or before the reporting date affect the classification as current or non-current. The Company
anticipates adopting the amendments to IAS 1 on January 1, 2024. These amendments are not expected to have a significant impact on
the Company’s statement of financial position on the date of adoption.
On September 22, 2022, the IASB
issued amendments to IFRS 16 to add subsequent measurement requirements for sale and leaseback transactions, particularly those with variable
lease payments. The amendments require the seller-lessee to subsequently measure lease liabilities in a way such that it does not recognize
any gain or loss relating to the right of use it retains. The amendments are effective on January 1, 2024 and are not expected to
have a significant impact on the Company’s financial statements.
On May 25, 2023, the IASB issued
amendments to IAS 7 requiring entities to provide qualitative and quantitative information about their supplier finance arrangements.
In connection with the amendments to IAS 7, the IASB also issued amendments to IFRS 7 requiring entities to disclose whether they have
accessed, or have access to, supplier finance arrangements that would provide the entity with extended payment terms or the suppliers
with early payment terms. These amendments are effective on January 1, 2024 and are not expected to have a significant impact on
the Company’s financial statements.
4. | SIGNIFICANT JUDGMENTS, ESTIMATES AND ASSUMPTIONS |
The preparation of these interim financial
statements requires the use of certain significant accounting estimates and judgments by management in applying the Company’s accounting
policies. The areas involving significant judgments, estimates and assumptions have been set out in and are consistent with Note 5 of
the Company’s annual audited consolidated financial statements for the year ended December 31, 2022.
5. | ACQUISITIONS, DIVESTITURES AND DISCONTINUED OPERATIONS |
i. | Acquisition of Great Bear Resources Ltd. |
On February 24, 2022, the Company
completed the acquisition of Great Bear Resources Ltd. through a plan of arrangement, whereby Kinross acquired all of the issued and outstanding
common shares of Great Bear. Consideration for the acquisition included an up-front cash payment, the issuance of 49.3 million Kinross
common shares and 9.9 million Kinross share options, and contingent consideration in the form of 59.3 million contingent value rights
(“CVR”). Each CVR entitles the holder to acquire 0.1330 of a Kinross share upon Kinross’ public announcement of commercial
production at the Great Bear project, provided that a cumulative total of at least 8.5 million gold ounces of mineral reserves and measured
and indicated mineral resources are disclosed.
The acquisition was accounted for as
an asset acquisition, with total consideration paid of $1,391.9 million, determined as follows:
Purchase price | |
| |
Cash consideration | |
$ | 1,061.5 | |
Common shares issued (49.3 million)(a) | |
| 271.6 | |
Fair value of options issued (9.9 million)(b) | |
| 39.5 | |
Fair value of contingent value rights issued (59.3 million) | |
| 4.7 | |
Acquisition costs | |
| 14.6 | |
Total purchase price | |
$ | 1,391.9 | |
(a) | Common shares issued were valued at the closing share price on February 23, 2022 of C$7.01. See
Note 10. |
(b) | Fair value of stock options was determined using the Black-Scholes option pricing model. |
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
The purchase price was allocated as
follows:
Purchase price allocation | |
| |
Mineral interests - pre-development properties | |
$ | 1,367.8 | |
Land, plant and equipment | |
| 0.6 | |
Total property, plant and equipment | |
| 1,368.4 | |
Net working capital | |
| 23.5 | |
Total purchase price | |
$ | 1,391.9 | |
ii. | Divestiture of Russian Discontinued Operations |
On June 15, 2022, the Company
announced that it had completed the sale of its Russian operations to the Highland Gold Mining group of companies for total cash consideration
of $340.0 million, of which $300.0 million was received on closing and the remaining $40.0 million was received during the second quarter
of 2023.
In
connection with the sale, the Company recognized an impairment charge of $671.0 million, which included $158.8 million related to goodwill,
and a loss on disposition of $80.9 million during the year ended December 31, 2022. The deferred payment consideration was
initially recorded at fair value using a discount rate of 20%, representing the significant financing component implicit in the sale agreement.
Loss from Russian Discontinued Operations
| |
Three months ended | | |
Six months ended | |
| |
June 30, | | |
June 30, | | |
June 30, | | |
June 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Results of discontinued operations | |
| | | |
| | | |
| | | |
| | |
Revenue | |
$ | - | | |
$ | 60.3 | | |
$ | - | | |
$ | 213.8 | |
Expenses(a) | |
| - | | |
| 77.5 | | |
| - | | |
| 794.8 | |
Loss before tax | |
| - | | |
| (17.2 | ) | |
| - | | |
| (581.0 | ) |
Income tax expense - net | |
| - | | |
| (19.0 | ) | |
| - | | |
| (61.2 | ) |
Loss and other comprehensive loss from discontinued operations after tax | |
$ | - | | |
$ | (36.2 | ) | |
$ | - | | |
$ | (642.2 |
) |
(a) | Includes an impairment charge of $671.0 million for the three months ended March 31, 2022, a loss
on disposition of $80.9 million during the three and six months ended June 30, 2022, as well as $18.8 million for the reclassification
of AOCI to earnings (loss) from discontinued operations on the discontinuation of hedge accounting for Russian rouble collar contracts
as at March 31, 2022. |
Cash flows from Russian Discontinued Operations
| |
Three months ended | | |
Six months ended | |
| |
June 30, | | |
June 30, | | |
June 30, | | |
June 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Cash flows of discontinued operations: | |
| | | |
| | | |
| | | |
| | |
Net cash flow (used in) provided from operating activities | |
$ | - | | |
$ | (54.6 | ) | |
$ | - | | |
$ | 36.8 | |
Net cash flow provided from investing activities(a) | |
| 40.0 | | |
| 274.7 | | |
| 40.0 | | |
| 263.5 | |
Effect of exchange rate changes on cash and cash equivalents | |
| - | | |
| 6.2 | | |
| - | | |
| 2.3 | |
Net cash flow of discontinued operations | |
$ | 40.0 | | |
$ | 226.3 | | |
$ | 40.0 | | |
$ | 302.6 | |
(a) | Net cash flows provided from investing activities for the three and six months ended June 30,
2023 is in regards to the receipt of the deferred payment consideration of $40.0 million (three and six months ended June 30, 2022
includes proceeds on completion of the sale of the Company’s Russian operations of $300.0 million, net of cash disposed). |
iii. | Divestiture of Chirano Discontinued Operations |
On August 10, 2022, the Company
announced that it had completed the sale of its 90% interest in the Chirano mine in Ghana to Asante Gold Corporation (“Asante”)
for total consideration of $225.0 million in cash and shares. In accordance with the sale agreement, the Company received $60.0 million
in cash and 34,962,584 Asante shares on closing, and the remaining cash consideration is receivable, with $55.0 million due on the six-month
anniversary of closing, and $36.9 million due on each of the one-year and two-year anniversaries of closing. The Company’s Chirano
operations were classified as discontinued operations in 2022.
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
In connection with the sale, the
Company recognized a gain on disposition of $0.5 million during the year ended December 31, 2022. The Asante shares received were
recorded at fair value based on the quoted market price on the closing date. The deferred payment consideration was initially
recorded at fair value using a discount rate of 10%, representing the significant financing component implicit in the sale
agreement.
On February 10, 2023, the Company
and Asante amended the sale agreement in respect of the deferred payment consideration of $55.0 million due on February 10, 2023.
Under the amended agreement, the receivable was due in the second quarter of 2023 with interest, at a rate of prime plus 5%, accruing until
payment is received. In addition, the Company received 5.0 million Asante warrants, valued at $2.5 million, on closing of the amended
agreement. As at June 30, 2023, the Company has received $5.0 million in respect of the deferred payment consideration.
As at June 30, 2023, the total
deferred payment consideration accreted to $120.9 million, of which $87.7 million is classified as current and $33.2 million is classified
as long-term. See Note 6iii and 6vii. The total deferred consideration is secured through pledges by Asante of equity interests in certain
acquired entities holding an indirect interest in the Chirano mine.
Earnings from Chirano Discontinued Operations
| |
Three months ended | | |
Six months ended | |
| |
June 30, | | |
June 30, | | |
June 30, | | |
June 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Results of discontinued operations | |
| | | |
| | | |
| | | |
| | |
Revenue | |
$ | - | | |
$ | 68.8 | | |
$ | - | | |
$ | 135.9 | |
Expenses | |
| - | | |
| 53.7 | | |
| - | | |
| 119.9 | |
Earnings before tax | |
| - | | |
| 15.1 | | |
| - | | |
| 16.0 | |
Income tax expense - net | |
| - | | |
| (9.2 | ) | |
| - | | |
| (9.3 | ) |
Earnings and other comprehensive income from discontinued operations after tax | |
$ | - | | |
$ | 5.9 | | |
$ | - | | |
$ | 6.7 | |
Cash flows from Chirano Discontinued Operations
| |
Three months ended | | |
Six months ended | |
| |
June 30, | | |
June 30, | | |
June 30, | | |
June 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Cash flows of discontinued operations: | |
| | | |
| | | |
| | | |
| | |
Net cash flow provided from operating activities | |
$ | - | | |
$ | 5.4 | | |
$ | - | | |
$ | 12.4 | |
Net cash flow provided from (used) in investing activities(a) | |
| - | | |
| (4.8 | ) | |
| 5.0 | | |
| (10.6 | ) |
Effect of exchange rate changes on cash and cash equivalents | |
| - | | |
| (0.5 | ) | |
| - | | |
| (0.4 | ) |
Net cash flow of discontinued operations | |
$ | - | | |
$ | 0.1 | | |
$ | 5.0 | | |
$ | 1.4 | |
6. | INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENT DETAILS |
Interim Condensed Consolidated Balance Sheets
i. | Cash and cash equivalents: |
| |
June 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
Cash | |
$ | 318.5 | | |
$ | 269.8 | |
Short-term deposits | |
| 159.9 | | |
| 148.3 | |
| |
$ | 478.4 | | |
$ | 418.1 | |
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
| |
June 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
Restricted cash | |
$ | 33.7 | | |
$ | 35.1 | |
Restricted cash - long-term(a) | |
| (25.0 | ) | |
| (25.0 | ) |
Restricted cash - current(b) | |
$ | 8.7 | | |
$ | 10.1 | |
(a) | Long-term restricted cash relates to the Tasiast loan (see Note 8iii) and is presented on the consolidated
balance sheet within other long-term assets. See Note 6vii. |
(b) | Includes loan escrow judicial deposits and environmental indemnity deposits. |
iii. | Accounts receivable and other assets: |
| |
June 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
Deferred payment consideration(a) | |
$ | 87.7 | | |
$ | 125.8 | |
VAT receivable(b) | |
| 54.3 | | |
| 90.9 | |
Prepaid expenses | |
| 28.5 | | |
| 33.8 | |
Deposits | |
| 8.8 | | |
| 7.9 | |
Other(c) | |
| 60.9 | | |
| 59.8 | |
| |
$ | 240.2 | | |
$ | 318.2 | |
(a) | As at June 30, 2023, deferred payment consideration includes $87.7 million related to the fair
value of the deferred payment consideration in connection with the sale of the Company’s Chirano operations (December 31, 2022
- $89.2 million). As at December 31, 2022, deferred payment consideration also includes $36.6 million related to the fair value of
the deferred payment consideration in connection with the sale of the Company’s Russian operations, which was received during the
three months ended June 30, 2023. See Note 5ii and 5iii. |
(b) | During the three months ended June 30, 2023, the Company received VAT recoveries totaling $41.3
million related to Tasiast and La Coipa. |
(c) | As at December 31, 2022, Other includes $17.1 million related to insurance recoveries for the
Tasiast mill fire in 2021, which were collected during the three months ended March 31, 2023. |
| |
June 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
Ore in stockpiles(a) | |
$ | 423.0 | | |
$ | 360.4 | |
Ore on leach pads(b) | |
| 677.1 | | |
| 643.2 | |
In-process | |
| 131.8 | | |
| 82.5 | |
Finished metal | |
| 26.8 | | |
| 62.0 | |
Materials and supplies | |
| 374.1 | | |
| 320.8 | |
| |
| 1,632.8 | | |
| 1,468.9 | |
Long-term portion of ore in stockpiles and ore on leach pads(a),(b) | |
| (443.5 | ) | |
| (396.7 | ) |
| |
$ | 1,189.3 | | |
$ | 1,072.2 | |
(a) | Ore in stockpiles relates to the Company’s operating mines. Low-grade material not scheduled
for processing within the next 12 months is included in other long-term assets. See Note 6vii. |
(b) | Ore on leach pads relates to the Company's Bald Mountain, Fort Knox, and Round Mountain mines. Based
on current mine plans, the Company expects to place the last tonne of ore on its leach pads at Round Mountain in 2024, at Bald Mountain
in 2025 and at Fort Knox in 2028. Material not scheduled for processing within the next 12 months is included in other long-term assets.
See Note 6vii. |
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
v. | Property, plant and equipment: |
| |
| | |
Mineral Interests | | |
| |
| |
Land, plant and
equipment(a) | | |
Development and
operating
properties(b) | | |
Pre-development
properties(c) | | |
Total | |
Cost | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, 2023 | |
$ | 9,515.2 | | |
$ | 8,222.6 | | |
$ | 1,402.9 | | |
$ | 19,140.7 | |
Additions | |
| 286.6 | | |
| 259.6 | | |
| - | | |
| 546.2 | |
Capitalized interest | |
| 12.0 | | |
| 8.0 | | |
| 30.9 | | |
| 50.9 | |
Disposals | |
| (37.1 | ) | |
| - | | |
| - | | |
| (37.1 | ) |
Change in reclamation and remediation obligations(d) | |
| - | | |
| 32.9 | | |
| - | | |
| 32.9 | |
Other | |
| 9.9 | | |
| (3.8 | ) | |
| - | | |
| 6.1 | |
Balance at June 30, 2023 | |
| 9,786.6 | | |
| 8,519.3 | | |
| 1,433.8 | | |
| 19,739.7 | |
| |
| | | |
| | | |
| | | |
| | |
Accumulated depreciation, depletion, and amortization | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, 2023 | |
$ | (6,165.5 | ) | |
$ | (5,233.8 | ) | |
$ | - | | |
$ | (11,399.3 | ) |
Depreciation, depletion and amortization | |
| (280.1 | ) | |
| (279.1 | ) | |
| - | | |
| (559.2 | ) |
Disposals | |
| 34.2 | | |
| - | | |
| - | | |
| 34.2 | |
Balance at June 30, 2023 | |
| (6,411.4 | ) | |
| (5,512.9 | ) | |
| - | | |
| (11,924.3 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net book value | |
$ | 3,375.2 | | |
$ | 3,006.4 | | |
$ | 1,433.8 | | |
$ | 7,815.4 | |
| |
| | | |
| | | |
| | | |
| | |
Amount included above as at June 30, 2023: | |
| | | |
| | | |
| | | |
| | |
Assets under construction | |
$ | 385.6 | | |
$ | 241.0 | | |
$ | - | | |
$ | 626.6 | |
Assets not being depreciated(e) | |
$ | 649.5 | | |
$ | 640.1 | | |
$ | 1,433.8 | | |
$ | 2,723.4 | |
(a) | Additions during the six months ended June 30, 2023 include $7.7 million of right-of-use (“ROU”)
assets for lease arrangements entered into. Depreciation, depletion and amortization during the six months ended June 30, 2023 includes
depreciation for ROU assets of $7.7 million. The net book value of property, plant and equipment includes ROU assets with an aggregate
net book value of $38.1 million as at June 30, 2023. |
(b) | As at June 30, 2023, the significant development and operating properties are Fort Knox, Round
Mountain, Bald Mountain, Paracatu, Tasiast, La Coipa, Lobo-Marte and the Manh Choh project. |
(c) | As at June 30, 2023, the significant pre-development properties includes $1.4 billion for the
Great Bear Project. |
(d) | See Note 9. |
(e) | Assets not being depreciated relate to land, capitalized exploration and evaluation (“E&E”)
costs, assets under construction, which relate to expansion projects, and other assets that are in various stages of being readied for
use. |
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
| |
| | |
Mineral Interests | | |
| |
| |
Land, plant and
equipment(a) | | |
Development and
operating
properties(b) | | |
Pre-development
properties(c) | | |
Total | |
Cost | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, 2022 | |
$ | 10,524.5 | | |
$ | 10,560.6 | | |
$ | 517.3 | | |
$ | 21,602.4 | |
Additions | |
| 463.9 | | |
| 310.1 | | |
| 7.1 | | |
| 781.1 | |
Acquisitions(d) | |
| 0.6 | | |
| - | | |
| 1,367.8 | | |
| 1,368.4 | |
Capitalized interest | |
| 17.9 | | |
| 18.9 | | |
| 29.7 | | |
| 66.5 | |
Disposals(e) | |
| (1,496.0 | ) | |
| (2,825.9 | ) | |
| (356.0 | ) | |
| (4,677.9 | ) |
Transfers(f) | |
| - | | |
| 161.8 | | |
| (161.8 | ) | |
| - | |
Change in reclamation and remediation obligations | |
| - | | |
| (6.4 | ) | |
| - | | |
| (6.4 | ) |
Other | |
| 4.3 | | |
| 3.5 | | |
| (1.2 | ) | |
| 6.6 | |
Balance at December 31, 2022 | |
| 9,515.2 | | |
| 8,222.6 | | |
| 1,402.9 | | |
| 19,140.7 | |
| |
| | | |
| | | |
| | | |
| | |
Accumulated depreciation, depletion, amortization and impairment charges | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, 2022 | |
$ | (6,886.3 | ) | |
$ | (7,098.4 | ) | |
$ | - | | |
$ | (13,984.7 | ) |
Depreciation, depletion and amortization | |
| (490.7 | ) | |
| (419.2 | ) | |
| - | | |
| (909.9 | ) |
Impairment charge(g) | |
| (115.1 | ) | |
| (128.1 | ) | |
| - | | |
| (243.2 | ) |
Disposals(e) | |
| 1,326.6 | | |
| 2,411.9 | | |
| - | | |
| 3,738.5 | |
Balance at December 31, 2022 | |
| (6,165.5 | ) | |
| (5,233.8 | ) | |
| - | | |
| (11,399.3 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net book value | |
$ | 3,349.7 | | |
$ | 2,988.8 | | |
$ | 1,402.9 | | |
$ | 7,741.4 | |
| |
| | | |
| | | |
| | | |
| | |
Amount included above as at December 31, 2022: | |
| | | |
| | | |
| | | |
| | |
Assets under construction | |
$ | 338.4 | | |
$ | 311.2 | | |
$ | - | | |
$ | 649.6 | |
Assets not being depreciated(h) | |
$ | 593.5 | | |
$ | 734.8 | | |
$ | 1,402.9 | | |
$ | 2,731.2 | |
(a) | Additions includes $14.8 million of ROU assets for lease arrangements entered into during the year
ended December 31, 2022. Depreciation, depletion and amortization includes depreciation for leased ROU assets of $20.1 million during
the year ended December 31, 2022. The net book value of property, plant and equipment includes leased ROU assets with an aggregate
net book value of $48.9 million as at December 31, 2022. |
(b) | As at December 31, 2022, the significant development and operating properties are Fort Knox, Round
Mountain, Bald Mountain, Paracatu, Tasiast, La Coipa, Lobo-Marte and the Manh Choh project. |
(c) | As at December 31, 2022, significant pre-development properties includes $1.4 billion for the
Great Bear project. |
(d) | On February 24, 2022, the Company acquired Great Bear. Land, plant, and equipment acquired included
$0.3 million of ROU assets. |
(e) | On June 15, 2022, the Company announced that it had completed the sale of its Russian operations
(see Note 5ii) and on August 10, 2022, the Company announced that it had completed the sale of its Chirano operations (see Note 5iii). |
(f) | During the year ended December 31, 2022, the Manh Choh project was transferred from pre-development
properties to development and operating properties upon demonstration of technical feasibility and commercial viability. |
(g) | As at December 31, 2022, an impairment charge relating to property, plant and equipment at Round
Mountain was recorded. |
(h) | Assets not being depreciated relate to land, capitalized E&E costs, assets under construction,
which relate to expansion projects, and other assets that are in various stages of being readied for use. |
Capitalized interest primarily relates
to qualifying capital expenditures at Great Bear, Tasiast and Manh Choh and had an annualized weighted average borrowing rate of 6.30%
for the six months ended June 30, 2023 (six months ended June 30, 2022 – 4.42%).
At June 30, 2023, $1,509.8 million
of E&E assets were included in mineral interests (December 31, 2022 - $1,476.3 million).
During the three and six months ended
June 30, 2023, $22.5 million and $38.0 million, respectively of E&E costs (three and six months ended June 30, 2022 - $10.9
million and $19.0 million, respectively), were capitalized and included in investing cash flows from continuing operations. During the
three and six months ended June 30, 2023, $19.8 million and $35.2 million of E&E costs (three and six months ended June 30,
2022 - $24.9 million and $36.3 million), were expensed and included in operating cash flows from continuing operations.
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
vi. | Long-term investments: |
Gains and losses on equity investments
at FVOCI are recorded in AOCI as follows:
| |
June 30, 2023 | | |
December 31, 2022 | |
| |
Fair value | | |
Gains (losses) in
AOCI(a) | | |
Fair value | | |
Gains (losses) in
AOCI(a) | |
Investments in an accumulated gain position | |
$ | 71.2 | | |
$ | 8.4 | | |
$ | 55.0 | | |
$ | 3.2 | |
Investments in an accumulated loss position | |
| 18.2 | | |
| (50.0 | ) | |
| 61.9 | | |
| (70.0 | ) |
Net realized (loss) gains | |
| - | | |
| (11.3 | ) | |
| - | | |
| 7.6 | |
| |
$ | 89.4 | | |
$ | (52.9 | ) | |
$ | 116.9 | | |
$ | (59.2 | ) |
(a) | See Note 6x for details of changes in fair values recognized in other comprehensive income during the
six months ended June 30, 2023 and year ended December 31, 2022. |
vii. | Other long-term assets: |
| |
June 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
Long-term portion of ore in stockpiles and ore
on leach pads(a) | |
$ | 443.5 | | |
$ | 396.7 | |
Long-term receivables(b) | |
| 103.7 | | |
| 143.7 | |
Advances for the purchase of capital equipment | |
| 63.8 | | |
| 60.1 | |
Restricted cash(c) | |
| 25.0 | | |
| 25.0 | |
Deferred charges, net of amortization | |
| 12.3 | | |
| 6.8 | |
Investment in joint venture - Puren(d) | |
| 5.1 | | |
| 6.1 | |
Unrealized fair value of derivative assets(e) | |
| 4.7 | | |
| 1.5 | |
Other | |
| 38.3 | | |
| 41.0 | |
| |
$ | 696.4 | | |
$ | 680.9 | |
(a) | Long-term portion of ore in stockpiles and ore on leach pads represents low-grade material not scheduled
for processing within the next 12 months. As at June 30, 2023, long-term ore in stockpiles was at the Company’s Paracatu, Tasiast
and La Coipa mines, and long-term ore on leach pads was at the Company’s Fort Knox and Round Mountain mines. |
(b) | As at June 30, 2023, Long-term receivables includes $33.2 million (December 31, 2022 - $31.6
million) related to the fair value of the deferred payment consideration in connection with the sale of the Company’s Chirano operations.
See Note 5iii. |
(c) | See Note 8iii for details of the Tasiast loan and cash restricted for future loan payments as at June 30,
2023. |
(d) | The Company’s Puren joint venture investment is accounted for under the equity method. There
are no publicly quoted market prices for Puren. |
(e) | See Note 7i for details of the non-current portion of unrealized fair value of derivative assets. |
viii. | Accounts payable and accrued liabilities: |
| |
June 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
Trade payables | |
$ | 102.6 | | |
$ | 119.1 | |
Accrued liabilities(a) | |
| 353.4 | | |
| 302.0 | |
Employee related accrued liabilities | |
| 100.4 | | |
| 128.9 | |
| |
$ | 556.4 | | |
$ | 550.0 | |
(a) | Includes accrued interest payable of $48.9 million as at June 30, 2023 (December 31, 2022
- $41.9). See Note 8v. |
ix. | Other current liabilities: |
| |
June 30, | | |
December 31, | |
| |
2023 | | |
2022 | |
Current portion of lease liabilities | |
$ | 17.5 | | |
$ | 24.5 | |
Current portion of unrealized fair value of derivative liabilities(a) and other | |
| 2.3 | | |
| 0.8 | |
| |
$ | 19.8 | | |
$ | 25.3 | |
(a) | See Note 7i for details of the current portion of unrealized fair value of derivative liabilities. |
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
x. | Accumulated other comprehensive income (loss): |
| |
Long-term
Investments | | |
Derivative
Contracts | | |
Total | |
Balance at December 31, 2021 | |
$ | (45.7 | ) | |
$ | 26.9 | | |
$ | (18.8 | ) |
Other comprehensive income (loss) before tax | |
| (13.5 | ) | |
| (12.0 | ) | |
| (25.5 | ) |
Tax | |
| - | | |
| 2.6 | | |
| 2.6 | |
Balance at December 31, 2022 | |
$ | (59.2 | ) | |
$ | 17.5 | | |
$ | (41.7 | ) |
Other comprehensive income (loss) before tax | |
| 6.3 | | |
| (7.3 | ) | |
| (1.0 | ) |
Tax | |
| - | | |
| 1.3 | | |
| 1.3 | |
Balance at June 30, 2023 | |
$ | (52.9 | ) | |
$ | 11.5 | | |
$ | (41.4 | ) |
Interim Condensed Consolidated Statements of Operations
xi. | Other (expense) income – net: |
| |
Three months ended June 30, | | |
Six months ended June 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Foreign exchange losses - net | |
$ | (10.1 | ) | |
$ | (1.7 | ) | |
$ | (6.3 | ) | |
$ | (5.8 | ) |
(Loss) gain on disposition of assets and other - net | |
| (0.3 | ) | |
| 2.4 | | |
| 0.3 | | |
| (0.2 | ) |
| |
$ | (10.4 | ) | |
$ | 0.7 | | |
$ | (6.0 | ) | |
$ | (6.0 | ) |
| |
Three months ended June 30, | | |
Six months ended June 30, | |
| |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Accretion of reclamation and remediation obligations | |
$ | (11.6 | ) | |
$ | (6.2 | ) | |
$ | (20.7 | ) | |
$ | (10.2 | ) |
Interest expense, including accretion of debt and lease liabilities(a), (b) | |
| (14.4 | ) | |
| (17.3 | ) | |
| (32.8 | ) | |
| (34.5 | ) |
| |
$ | (26.0 | ) | |
$ | (23.5 | ) | |
$ | (53.5 | ) | |
$ | (44.7 | ) |
(a) | During the three and six months ended June 30, 2023, $27.6 million and $50.9 million, respectively
of interest was capitalized to property, plant and equipment (three and six months ended June 30, 2022 - $14.0 million and $24.0
million, respectively). See Note 6v. |
(b) | During the three and six months ended June 30, 2023, accretion of lease liabilities was $0.6 million
and $1.2 million, respectively, (three and six months ended June 30, 2022 - $0.7 million and $1.4 million, respectively). |
Total interest paid, including interest
capitalized, during the three and six months ended June 30, 2023 was $10.8 million and $73.3 million, respectively (three and six
months ended June 30, 2022 - $6.5 million and $41.8 million, respectively).
(i) | Recurring fair value measurement |
Carrying
values for financial instruments carried at amortized cost, including cash and cash equivalents, restricted cash, short-term investments,
accounts receivable, and accounts payable and accrued liabilities, approximate fair values due to their short-term maturities.
Assets (liabilities) measured at fair
value on a recurring basis as at June 30, 2023 include:
| |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Aggregate
Fair Value | |
Equity investments at FVOCI | |
$ | 89.4 | | |
$ | - | | |
$ | - | | |
$ | 89.4 | |
Derivative contracts: | |
| | | |
| | | |
| | | |
| | |
Foreign currency forward and collar contracts | |
| - | | |
| 9.6 | | |
| - | | |
| 9.6 | |
Energy swap contracts | |
| - | | |
| 7.4 | | |
| - | | |
| 7.4 | |
Other | |
| - | | |
| 2.0 | | |
| - | | |
| 2.0 | |
| |
$ | 89.4 | | |
$ | 19.0 | | |
$ | - | | |
$ | 108.4 | |
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
The valuation techniques
that are used to measure fair value are as follows:
Equity investments at FVOCI
Equity investments at FVOCI include
shares in publicly traded companies listed on a stock exchange. The fair value of equity investments at FVOCI for shares in publicly traded
companies is determined based on a market approach reflecting the closing price of each particular security at the consolidated balance
sheet date. The closing price is a quoted market price obtained from the exchange that is the principal active market for the particular
security, and therefore these equity instruments are classified within Level 1 of the fair value hierarchy.
Derivative contracts
The Company’s derivative contracts
are valued using pricing models and the Company generally uses similar models to value similar instruments. Such pricing models require
a variety of inputs, including contractual cash flows, quoted market prices, applicable yield curves and credit spreads. The fair value
of derivative contracts is based on quoted market prices for comparable contracts and represents the amount the Company would have received
from, or paid to, a counterparty to unwind the contract at the quoted market rates in effect at the consolidated balance sheet date and
therefore derivative contracts are classified within Level 2 of the fair value hierarchy.
The
following table summarizes information about derivative contracts outstanding at June 30, 2023 and December 31, 2022:
| |
June 30, 2023 | | |
December 31, 2022 | |
| |
Asset Fair Value | | |
AOCI | | |
Asset Fair Value | | |
AOCI | |
Currency contracts | |
| | | |
| | | |
| | | |
| | |
Foreign currency forward and collar contracts(i) | |
$ | 9.6 | | |
$ | 5.9 | | |
$ | 2.8 | | |
$ | 1.3 | |
| |
| | | |
| | | |
| | | |
| | |
Commodity contracts | |
| | | |
| | | |
| | | |
| | |
Energy swap contracts(ii) | |
| 7.4 | | |
| 5.6 | | |
| 21.5 | | |
| 16.2 | |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Other contracts | |
| 2.0 | | |
| - | | |
| 1.9 | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Total all contracts | |
$ | 19.0 | | |
$ | 11.5 | | |
$ | 26.2 | | |
$ | 17.5 | |
| |
| | | |
| | | |
| | | |
| | |
Unrealized fair value of derivative assets | |
| | | |
| | | |
| | | |
| | |
Current | |
$ | 16.9 | | |
| | | |
$ | 25.5 | | |
| | |
Non-current(iii) | |
| 4.7 | | |
| | | |
| 1.5 | | |
| | |
| |
$ | 21.6 | | |
| | | |
$ | 27.0 | | |
| | |
Unrealized fair value of derivative liabilities | |
| | | |
| | | |
| | | |
| | |
Current(iv) | |
$ | (2.1 | ) | |
| | | |
$ | (0.8 | ) | |
| | |
Non-current | |
| (0.5 | ) | |
| | | |
| - | | |
| | |
| |
$ | (2.6 | ) | |
| | | |
$ | (0.8 | ) | |
| | |
Total net fair value | |
$ | 19.0 | | |
| | | |
$ | 26.2 | | |
| | |
(i) | Of the total amount recorded in AOCI as at June 30, 2023, $4.9 million will be reclassified out
of AOCI within the next 12 months as a result of settling the contracts. |
(ii) | Of the total amount recorded in AOCI as at June 30, 2023, $5.4 million will be reclassified out
of AOCI within the next 12 months as a result of settling the contracts. |
(iii) | See Note 6vii. |
(iv) | See Note 6ix. |
(ii) | Fair value of financial assets and liabilities not measured and recognized at fair value |
Long-term debt is measured at amortized
cost. The fair value of long-term debt is primarily measured using market determined variables, and therefore is classified within Level
2 of the fair value hierarchy. See Note 8.
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
8. | LONG-TERM DEBT AND CREDIT FACILITIES |
| |
| |
| |
June 30, 2023 | | |
December 31, 2022 | |
| |
| |
Interest Rates | |
Nominal
Amount | | |
Deferred
Financing
Costs | | |
Carrying
Amount(a) | | |
Fair Value(b) | | |
Carrying
Amount(a) | | |
Fair Value(b) | |
Senior notes | |
(i) | |
4.50%-6.875% | |
$ | 1,248.6 | | |
$ | (4.6 | ) | |
$ | 1,244.0 | | |
$ | 1,233.5 | | |
$ | 1,243.4 | | |
$ | 1,215.7 | |
Revolving credit facility | |
(ii) | |
SOFR plus 1.45% | |
| 100.0 | | |
| - | | |
| 100.0 | | |
| 100.0 | | |
| 200.0 | | |
| 200.0 | |
Term loan | |
(ii) | |
SOFR plus 1.25% | |
| 1,000.0 | | |
| (1.3 | ) | |
| 998.7 | | |
| 1,000.0 | | |
| 998.2 | | |
| 1,000.0 | |
Tasiast loan | |
(iii) | |
LIBOR plus 4.38% | |
| 140.0 | | |
| (7.3 | ) | |
| 132.7 | | |
| 140.0 | | |
| 151.3 | | |
| 160.0 | |
Total long-term and current debt | |
| |
| |
$ | 2,488.6 | | |
$ | (13.2 | ) | |
$ | 2,475.4 | | |
$ | 2,473.5 | | |
$ | 2,592.9 | | |
$ | 2,575.7 | |
Less: current portion | |
| |
| |
| (531.8 | ) | |
| 0.3 | | |
| (531.5 | ) | |
| (499.2 | ) | |
| (36.0 | ) | |
| - | |
Long-term debt and credit facility | |
| |
| |
$ | 1,956.8 | | |
$ | (12.9 | ) | |
$ | 1,943.9 | | |
$ | 1,974.3 | | |
$ | 2,556.9 | | |
$ | 2,575.7 | |
| (a) | Includes transaction costs on senior notes, term loan and
Tasiast loan financings. |
| (b) | The fair value of senior notes is primarily determined using
quoted market determined variables. See Note 7(ii). |
The Company’s $1,250.0 million
of senior notes consist of $500.0 million principal amount of 5.950% notes due in March 2024, $500.0 million principal amount of
4.50% notes due in 2027 and $250.0 million principal amount of 6.875% notes due in 2041.
On July 5, 2023, the Company completed
a $500.0 million offering of debt securities consisting of 6.250% senior notes due in 2033. On July 11, 2023, the Company announced that
it will redeem all outstanding 5.950% senior notes due March 15, 2024 on August 10, 2023 which have an aggregate principal amount of
$500.0 million outstanding. These notes will be redeemed at a redemption price determined in accordance with the terms of the notes and
will include accrued and unpaid interest to, but not including, the redemption date.
(ii) | Revolving credit facility and term loan |
As at June 30, 2023, the Company
had utilized $106.7 million (December 31, 2022 - $206.7 million) of its $1,500.0 million revolving credit facility, of which $6.7
million was used for letters of credit. The revolving credit facility matures on August 4, 2027. During the second quarter of 2023,
the Company repaid $200.0 million of the outstanding balance on the revolving credit facility.
Loan interest on the revolving credit
facility and term loan is variable and is dependent on the Company’s credit rating. Based on the Company’s credit rating at
June 30, 2023, interest charges and fees are as follows:
Type of credit | |
|
Revolving credit facility | |
SOFR plus 1.45% |
Term loan | |
SOFR plus 1.25% |
Letters of credit | |
0.967-1.45% |
Standby fee applicable to unused availability | |
0.29% |
The revolving credit facility agreement
and the term loan agreement contain various covenants including limits on indebtedness, asset sales and liens. The Company was in compliance
with its financial covenant in the credit agreements at June 30, 2023.
The asset recourse loan matures in
December 2027, has a floating interest rate of LIBOR plus a weighted average margin of 4.38%, with semi-annual interest and principal
payments to be made in each of June and December for the term of the loan. The Company made $20.0 million of scheduled principal
payments during the second quarter of 2023, resulting in a balance of $140.0 million as at June 30, 2023.
As at June 30, 2023, the Company
held $25.0 million (December 31, 2022 - $27.8 million) in a separate bank account as required under the Tasiast loan agreement. This
cash, which is subject to fluctuations over time depending on the next scheduled principal and interest payments, is required to remain
in the bank account for the duration of the loan and is therefore recorded as restricted cash in other long-term assets. See Notes 6ii
and 6vii.
Kinross
Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
The Company has a $300.0 million Letter
of Credit guarantee facility with Export Development Canada (“EDC”) with a maturity date of June 30, 2024. Total fees
related to letters of credit under this facility were 0.75% of the utilized amount. As at June 30, 2023, $230.7 million (December 31,
2022 - $230.4 million) was utilized under this facility.
In addition, at June 30, 2023,
the Company had $307.8 million (December 31, 2022 - $267.5 million) in letters of credit and surety bonds outstanding in respect
of its operations in Brazil, Mauritania, United States and Chile, as well as its discontinued operations in Ghana, which have been issued
pursuant to arrangements with certain international banks and incur average fees of 0.80%.
As at June 30, 2023, $362.6 million
(December 31, 2022 - $318.0 million) of surety bonds were outstanding with respect to Kinross’ properties in the United States.
These surety bonds were issued pursuant to arrangements with international insurance companies and incur average fees of 0.55%.
(v) | Changes in liabilities arising from financing activities |
| |
Total current | | |
Lease | | |
Accrued interest | | |
| |
| |
and long-term debt | | |
liabilities | | |
payable(a) | | |
Total | |
Balance as at January 1, 2023 | |
$ | 2,592.9 | | |
$ | 47.6 | | |
$ | 41.9 | | |
$ | 2,682.4 | |
Changes from financing cash flows | |
| | | |
| | | |
| | | |
| | |
Debt issued | |
| 100.0 | | |
| - | | |
| - | | |
| 100.0 | |
Debt repayments | |
| (220.0 | ) | |
| - | | |
| - | | |
| (220.0 | ) |
Interest paid | |
| - | | |
| - | | |
| (26.5 | ) | |
| (26.5 | ) |
Payment of lease liabilities | |
| - | | |
| (21.1 | ) | |
| - | | |
| (21.1 | ) |
| |
| 2,472.9 | | |
| 26.5 | | |
| 15.4 | | |
| 2,514.8 | |
Other changes | |
| | | |
| | | |
| | | |
| | |
Interest expense and accretion | |
$ | - | | |
$ | 1.2 | | |
$ | 31.6 | | |
$ | 32.8 | |
Capitalized interest | |
| - | | |
| - | | |
| 50.9 | | |
| 50.9 | |
Capitalized interest paid | |
| - | | |
| - | | |
| (46.8 | ) | |
| (46.8 | ) |
Additions of lease liabilities | |
| - | | |
| 7.7 | | |
| - | | |
| 7.7 | |
Other | |
| 2.5 | | |
| 1.6 | | |
| (2.2 | ) | |
| 1.9 | |
| |
| 2.5 | | |
| 10.5 | | |
| 33.5 | | |
| 46.5 | |
Balance as at June 30, 2023 | |
$ | 2,475.4 | | |
$ | 37.0 | | |
$ | 48.9 | | |
$ | 2,561.3 | |
| |
Total current | | |
Lease | | |
Accrued interest | | |
| |
| |
and long-term debt | | |
liabilities | | |
payable(a) | | |
Total | |
Balance as at January 1, 2022 | |
$ | 1,629.9 | | |
$ | 54.8 | | |
$ | 25.3 | | |
$ | 1,710.0 | |
Changes from financing cash flows | |
| | | |
| | | |
| | | |
| | |
Debt issued | |
| 1,297.6 | | |
| - | | |
| - | | |
| 1,297.6 | |
Debt repayments | |
| (340.0 | ) | |
| - | | |
| - | | |
| (340.0 | ) |
Interest paid | |
| - | | |
| - | | |
| (52.4 | ) | |
| (52.4 | ) |
Payment of lease liabilities | |
| - | | |
| (23.2 | ) | |
| - | | |
| (23.2 | ) |
| |
| 2,587.5 | | |
| 31.6 | | |
| (27.1 | ) | |
| 2,592.0 | |
Other changes | |
| | | |
| | | |
| | | |
| | |
Interest expense and accretion | |
$ | - | | |
$ | 2.6 | | |
$ | 65.6 | | |
$ | 68.2 | |
Capitalized interest | |
| - | | |
| - | | |
| 66.5 | | |
| 66.5 | |
Capitalized interest paid | |
| - | | |
| - | | |
| (43.7 | ) | |
| (43.7 | ) |
Additions of lease liabilities | |
| - | | |
| 14.8 | | |
| - | | |
| 14.8 | |
Other | |
| 5.4 | | |
| (1.4 | ) | |
| (19.4 | ) | |
| (15.4 | ) |
| |
| 5.4 | | |
| 16.0 | | |
| 69.0 | | |
| 90.4 | |
Balance as at December 31, 2022 | |
$ | 2,592.9 | | |
$ | 47.6 | | |
$ | 41.9 | | |
$ | 2,682.4 | |
(a) | Included in Accounts payable and accrued liabilities. See Note 6viii. |
Kinross Gold Corporation
Notes to the INTERIM condensed
Consolidated Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited, tabular amounts in millions of United States dollars,
unless otherwise noted)
| |
Reclamation and
remediation
obligations (i) | | |
Other | | |
Total | |
Balance at January 1, 2023 | |
$ | 779.0 | | |
$ | 27.7 | | |
$ | 806.7 | |
Additions | |
| 32.9 | | |
| 6.3 | | |
| 39.2 | |
Reductions | |
| - | | |
| (2.8 | ) | |
| (2.8 | ) |
Reclamation spending | |
| (8.3 | ) | |
| - | | |
| (8.3 | ) |
Accretion | |
| 20.7 | | |
| - | | |
| 20.7 | |
Reclamation expense | |
| 4.0 | | |
| - | | |
| 4.0 | |
Balance at June 30, 2023 | |
$ | 828.3 | | |
$ | 31.2 | | |
$ | 859.5 | |
| |
| | | |
| | | |
| | |
Current portion | |
| 53.2 | | |
| 0.2 | | |
| 53.4 | |
Non-current portion | |
| 775.1 | | |
| 31.0 | | |
| 806.1 | |
| |
$ | 828.3 | | |
$ | 31.2 | | |
$ | 859.5 | |
(i) | Reclamation and remediation obligations |
The Company conducts its operations
so as to protect the public health and the environment, and to comply with all applicable laws and regulations governing protection of
the environment. Reclamation and remediation obligations arise throughout the life of each mine. The Company estimates future reclamation
costs based on the level of current mining activity and estimates of costs required to fulfill the Company’s future obligations.
The above table details the items that affect the reclamation and remediation obligations.
Included in other operating expense
for the six months ended June 30, 2023 is $4.0 million of reclamation expense (six months ended June 30,
2022 - $23.9 million) reflecting revised estimated fair values of costs that support the reclamation and remediation obligations
of certain properties. The majority of the estimated expenditures are expected to occur between 2023 and 2045. The discount rates used
in estimating the site restoration cost obligation were between 3.4% and 8.3% as at June 30, 2023 (December 31, 2022 –
3.9% and 8.8%), and the inflation rates used were between 2.0% and 9.5% as at June 30, 2023 (December 31, 2022 – 2.0%
and 8.7%).
Regulatory authorities in certain jurisdictions
require that security be provided to cover the estimated reclamation and remediation obligations. As at June 30, 2023, letters of
credit totaling $502.9 million (December 31, 2022 - $463.2 million) had been issued to various regulatory agencies to satisfy financial
assurance requirements for this purpose. The letters of credit were issued against the Company's Letter of Credit guarantee facility with
EDC, the revolving credit facility, and pursuant to arrangements with certain international banks. The Company is in compliance with all
applicable requirements under these facilities. As at June 30, 2023, $361.6 million (December 31, 2022 - $317.0 million) of
surety bonds were outstanding as security over reclamation and remediation obligations with respect to Kinross’ properties in the
United States. The surety bonds were issued pursuant to arrangements with international insurance companies.
Kinross
Gold Corporation
Notes
to the INTERIM condensed Consolidated Financial Statements
For the three and six months ended June 30,
2023 and 2022
(Unaudited, tabular amounts in millions
of United States dollars, unless otherwise noted)
The
authorized share capital of the Company is comprised of an unlimited number of common shares without par value. A summary of common share
transactions for the six months ended June 30, 2023 and year ended December 31, 2022 is as follows:
| |
Six months ended
June 30, 2023 | | |
Year ended
December 31, 2022 | |
| |
Number of shares | | |
Amount | | |
Number of shares | | |
Amount | |
| |
(000's) | | |
| | |
(000's) | | |
| |
Common shares | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, | |
| 1,221,891 | | |
$ | 4,449.5 | | |
| 1,244,333 | | |
$ | 4,427.7 | |
Issued: | |
| | | |
| | | |
| | | |
| | |
Issued on acquisition of Great Bear(a) | |
| - | | |
| - | | |
| 49,268 | | |
| 271.6 | |
Issued under share option and restricted share plans | |
| 5,688 | | |
| 30.7 | | |
| 7,147 | | |
| 37.3 | |
Repurchase and cancellation of shares (i) | |
| - | | |
| - | | |
| (78,857 | ) | |
| (287.1 | ) |
Total common share capital | |
| 1,227,579 | | |
$ | 4,480.2 | | |
| 1,221,891 | | |
$ | 4,449.5 | |
(a) | See
Note 5i for details of the shares issued on acquisition of Great Bear. |
i. | Repurchase
and cancellation of common shares |
On July 28,
2022, the Company received approval from the TSX to renew its normal course issuer bid (“NCIB”) program, which was subsequently
amended on September 29, 2022. Under the program, the Company is authorized to purchase up to 114,047,070 of its common shares during
the period starting on August 3, 2022 and ending on August 2, 2023. The book value of any cancelled shares is treated as a
reduction to common share capital.
During
the year ended December 31, 2022, the Company repurchased 78,857,250 common shares for $300.8 million. The book value of the cancelled
shares was $287.1 million and was treated as a reduction to common share capital.
No common
shares were repurchased or cancelled during the three and six months ended June 30, 2023.
ii. | Dividends
on common shares |
The
following summarizes dividends declared and paid during the six months ended June 30, 2023 and 2022:
| |
Per share | | |
Total paid | |
Dividends declared and paid during the period: | |
| | | |
| | |
Three months ended March 31, 2023 | |
$ | 0.03 | | |
$ | 36.8 | |
Three months ended June 30, 2023 | |
| 0.03 | | |
| 36.9 | |
Total | |
| | | |
$ | 73.7 | |
Dividends declared and paid during the period: | |
| | | |
| | |
Three months ended March 31, 2022 | |
$ | 0.03 | | |
$ | 38.9 | |
Three months ended June 30, 2022 | |
| 0.03 | | |
| 39.0 | |
Total | |
| | | |
$ | 77.9 | |
There
were no dividends declared but unpaid at June 30, 2023 or June 30, 2022.
On August 2,
2023, the Board of Directors declared a dividend of $0.03 per common share payable on September 8, 2023 to shareholders of record
on August 24, 2023.
Kinross
Gold Corporation
Notes
to the INTERIM condensed Consolidated Financial Statements
For the three and six months ended June 30,
2023 and 2022
(Unaudited, tabular amounts in millions
of United States dollars, unless otherwise noted)
The
following table summarizes the changes in stock options outstanding and exercisable for the six months ended June 30, 2023:
| |
Six months ended June 30, 2023 | |
| |
Number of options
(000's) | | |
Weighted average
exercise price (C$) | |
Outstanding at January 1, 2023 | |
| 7,186 | | |
$ | 2.84 | |
Exercised | |
| (5,181 | ) | |
| 2.07 | |
Outstanding at end of period | |
| 2,005 | | |
$ | 4.83 | |
Exercisable at end of period | |
| 2,005 | | |
$ | 4.83 | |
For
the six months ended June 30, 2023, the weighted average market share price at the date of exercise was C$5.56.
ii. | Restricted
share unit plans |
(a) | Restricted share units (“RSUs”) |
The
following table summarizes the changes in RSUs for the six months ended June 30, 2023:
| |
Six months ended June 30, 2023 | |
| |
Number of units
(000's) | | |
Weighted average fair
value (C$/unit) | |
Outstanding at January 1, 2023 | |
| 4,905 | | |
$ | 7.44 | |
Granted | |
| 4,542 | | |
| 5.08 | |
Reinvested | |
| 102 | | |
| 5.91 | |
Redeemed | |
| (1,885 | ) | |
| 7.64 | |
Forfeited | |
| (471 | ) | |
| 6.67 | |
Outstanding at end of period | |
| 7,193 | | |
$ | 5.93 | |
As at
June 30, 2023, the Company had recognized a liability of $7.3 million (December 31, 2022 - $6.1 million) within employee related
accrued liabilities (See Note 6viii) in respect of its cash-settled RSUs.
(b) | Restricted performance share
units (“RPSUs”) |
The
following table summarizes the changes in RPSUs for the six months ended June 30, 2023:
| |
Six months ended June 30, 2023 | |
| |
Number of units
(000's) | | |
Weighted average fair
value (C$/unit) | |
Outstanding at January 1, 2023 | |
| 3,394 | | |
$ | 8.06 | |
Granted | |
| 2,127 | | |
| 4.69 | |
Reinvested | |
| 58 | | |
| 6.06 | |
Redeemed | |
| (448 | ) | |
| 8.12 | |
Forfeited | |
| (809 | ) | |
| 7.87 | |
Outstanding at end of period | |
| 4,322 | | |
$ | 6.40 | |
Kinross
Gold Corporation
Notes
to the INTERIM condensed Consolidated Financial Statements
For the three and six months ended June 30,
2023 and 2022
(Unaudited, tabular amounts in millions
of United States dollars, unless otherwise noted)
iii. | Deferred
share unit (“DSU”) plan |
The
number of DSUs granted by the Company was 168,463 and the weighted average fair value per unit at the date of issue was C$6.31 for the
six months ended June 30, 2023.
There
were 1,794,248 DSUs outstanding, for which the Company had recognized a liability of $8.6 million as at June 30, 2023 (December 31,
2022 - $6.6 million), within employee related accrued liabilities (see Note 6viii).
iv. | Employee
share purchase plan (“SPP”) |
The
compensation expense related to the employee SPP for the three and six months ended June 30, 2023 was $0.6 million and $1.2 million,
respectively (three and six months ended June 30, 2022 - $0.6 million and $1.3 million, respectively).
12. | EARNINGS
(LOSS) PER SHARE |
Basic
and diluted net earnings (loss) from continuing operations attributable to common shareholders of Kinross for the three and six months
ended June 30, 2023 was $151.0 million and $241.2 million, respectively (three and six months ended June 30, 2022 - $(9.3)
million and $72.0 million, respectively).
The
following table details the weighted average number of common shares outstanding for the purpose of computing basic and diluted earnings
(loss) per share from continuing operations attributable to common shareholders for the following periods:
| |
Three months ended June 30, | | |
Six months ended June 30, | |
(Number of common shares in thousands) | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
Basic weighted average shares outstanding: | |
| 1,227,569 | | |
| 1,299,224 | | |
| 1,226,273 | | |
| 1,281,954 | |
Weighted average shares dilution adjustments: | |
| | | |
| | | |
| | | |
| | |
Stock options(a) | |
| 558 | | |
| - | | |
| 1,158 | | |
| 4,310 | |
Restricted share units | |
| 4,178 | | |
| - | | |
| 4,078 | | |
| 4,098 | |
Restricted performance share units | |
| 6,046 | | |
| - | | |
| 5,835 | | |
| 5,834 | |
Diluted weighted average shares outstanding | |
| 1,238,351 | | |
| 1,299,224 | | |
| 1,237,344 | | |
| 1,296,196 | |
| |
| | | |
| | | |
| | | |
| | |
Weighted average shares dilution adjustments - exclusions:(b) | |
| | | |
| | | |
| | | |
| | |
Stock options(a) | |
| - | | |
| 4,268 | | |
| - | | |
| - | |
Restricted share units | |
| - | | |
| 2,402 | | |
| - | | |
| - | |
Restricted performance share units | |
| - | | |
| 3,856 | | |
| - | | |
| - | |
(a) | Dilutive
stock options were determined using the Company’s average share price for the period.
For the three and six months ended June 30, 2023, the average share price used was $4.97
and $4.59, respectively (three and six months ended June 30, 2022 - $4.81 and $5.18,
respectively). |
(b) | These
adjustments were excluded as they are anti-dilutive. |
Basic
and diluted net earnings (loss) from discontinued operations attributable to common shareholders of Kinross for the three and six months
ended June 30, 2023 was $nil (three and six months ended June 30, 2022 – $(31.0) million and $(636.1) million, respectively).
Basic
and diluted net earnings (loss) attributable to common shareholders of Kinross for the three and six months ended June 30, 2023
was $151.0 million and $241.2 million, respectively (three and six months ended June 30, 2022 – $(40.3) million and $(564.1)
million, respectively).
Kinross
Gold Corporation
Notes
to the INTERIM condensed Consolidated Financial Statements
For the three and six months ended June 30,
2023 and 2022
(Unaudited, tabular amounts in millions
of United States dollars, unless otherwise noted)
Operating segments
On June 15,
2022, the Company announced that it had completed the sale of its Russian operations, and on August 10, 2022, the Company announced
it had completed the sale of its Chirano operations. Accordingly, the Kupol segment, which included the Kupol and Dvoinoye mines, and
the Chirano segment are no longer reportable segments. The Company’s Russian operations, which also included the Udinsk project,
previously included in the Corporate and other segment, and Chirano operations were considered discontinued operations for 2022. See
Note 5ii and 5iii.
The
following tables set forth operating results by reportable segment for the following periods:
| |
Operating
segments | | |
Non-operating segments(a) | |
Three months ended
June 30, 2023: | |
Tasiast | | |
Paracatu | | |
La
Coipa(d) | | |
Fort
Knox | | |
Round
Mountain | | |
Bald
Mountain | | |
Great
Bear | | |
Corporate
and
other(b),(c) | | |
Total | |
Revenue | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Metal sales | |
$ | 301.6 | | |
| 322.9 | | |
| 132.0 | | |
| 136.9 | | |
| 114.4 | | |
| 83.7 | | |
| - | | |
| 0.8 | | |
$ | 1,092.3 | |
Cost of sales | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Production cost of sales | |
| 99.5 | | |
| 135.2 | | |
| 43.6 | | |
| 79.3 | | |
| 85.5 | | |
| 54.5 | | |
| - | | |
| 0.3 | | |
| 497.9 | |
Depreciation,
depletion and amortization | |
| 58.6 | | |
| 49.8 | | |
| 48.3 | | |
| 22.1 | | |
| 33.5 | | |
| 25.6 | | |
| 0.1 | | |
| 1.3 | | |
| 239.3 | |
Total cost
of sales | |
| 158.1 | | |
| 185.0 | | |
| 91.9 | | |
| 101.4 | | |
| 119.0 | | |
| 80.1 | | |
| 0.1 | | |
| 1.6 | | |
| 737.2 | |
Gross profit
(loss) | |
$ | 143.5 | | |
| 137.9 | | |
| 40.1 | | |
| 35.5 | | |
| (4.6 | ) | |
| 3.6 | | |
| (0.1 | ) | |
| (0.8 | ) | |
$ | 355.1 | |
Other operating expense | |
| 16.1 | | |
| 8.9 | | |
| 0.2 | | |
| 0.2 | | |
| - | | |
| 0.3 | | |
| 0.2 | | |
| 10.1 | | |
| 36.0 | |
Exploration and business development | |
| 1.0 | | |
| 1.1 | | |
| 3.4 | | |
| 3.9 | | |
| 11.1 | | |
| 0.4 | | |
| 13.9 | | |
| 14.5 | | |
| 49.3 | |
General and
administrative | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 32.0 | | |
| 32.0 | |
Operating
earnings (loss) | |
$ | 126.4 | | |
| 127.9 | | |
| 36.5 | | |
| 31.4 | | |
| (15.7 | ) | |
| 2.9 | | |
| (14.2 | ) | |
| (57.4 | ) | |
$ | 237.8 | |
Other income - net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (10.4 | ) |
Finance income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 11.5 | |
Finance expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (26.0 | ) |
Earnings
from continuing operations before tax | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 212.9 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Capital
expenditures for three months ended June 30, 2023(e) | |
$ | 94.0 | | |
| 37.9 | | |
| 26.9 | | |
| 64.3 | | |
| 10.6 | | |
| 36.2 | | |
| 21.2 | | |
| 35.4 | | |
$ | 326.5 | |
| |
Operating
segments | | |
Non-operating segments(a) | |
Three months ended
June 30, 2022: | |
Tasiast | | |
Paracatu | | |
La
Coipa(d) | | |
Fort
Knox | | |
Round
Mountain | | |
Bald
Mountain | | |
Great
Bear | | |
Corporate
and
other(b),(c) | | |
Total | |
Revenue | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Metal sales | |
$ | 213.2 | | |
| 250.0 | | |
| 13.1 | | |
| 145.4 | | |
| 96.0 | | |
| 102.3 | | |
| - | | |
| 1.5 | | |
$ | 821.5 | |
Cost of sales | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Production cost of sales | |
| 93.3 | | |
| 129.6 | | |
| 5.6 | | |
| 92.6 | | |
| 74.8 | | |
| 54.5 | | |
| - | | |
| 0.4 | | |
| 450.8 | |
Depreciation,
depletion and amortization | |
| 56.4 | | |
| 46.0 | | |
| - | | |
| 26.1 | | |
| 11.7 | | |
| 38.4 | | |
| - | | |
| 1.9 | | |
| 180.5 | |
Total cost
of sales | |
| 149.7 | | |
| 175.6 | | |
| 5.6 | | |
| 118.7 | | |
| 86.5 | | |
| 92.9 | | |
| - | | |
| 2.3 | | |
| 631.3 | |
Gross profit
(loss) | |
$ | 63.5 | | |
| 74.4 | | |
| 7.5 | | |
| 26.7 | | |
| 9.5 | | |
| 9.4 | | |
| - | | |
| (0.8 | ) | |
$ | 190.2 | |
Other operating expense | |
| 10.6 | | |
| 0.8 | | |
| (3.2 | ) | |
| - | | |
| 1.3 | | |
| 0.3 | | |
| - | | |
| 46.5 | | |
| 56.3 | |
Exploration and business development | |
| 1.5 | | |
| 0.2 | | |
| 0.6 | | |
| 1.8 | | |
| 1.8 | | |
| 1.3 | | |
| 16.1 | | |
| 16.6 | | |
| 39.9 | |
General and
administrative | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 30.0 | | |
| 30.0 | |
Operating
earnings (loss) | |
$ | 51.4 | | |
| 73.4 | | |
| 10.1 | | |
| 24.9 | | |
| 6.4 | | |
| 7.8 | | |
| (16.1 | ) | |
| (93.9 | ) | |
$ | 64.0 | |
Other income - net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 0.7 | |
Finance income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 2.0 | |
Finance expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (23.5 | ) |
Earnings
from continuing operations before tax | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 43.2 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Capital
expenditures from continuing operations for three months ended
June 30, 2022(e) | |
$ | 14.9 | | |
| 36.6 | | |
| 41.9 | | |
| 13.2 | | |
| 21.4 | | |
| 19.2 | | |
| 6.2 | | |
| 5.6 | | |
$ | 159.0 | |
| |
Operating
segments | | |
Non-operating segments(a) | |
Six months ended
June 30, 2023: | |
Tasiast | | |
Paracatu | | |
La
Coipa(d) | | |
Fort
Knox | | |
Round
Mountain | | |
Bald
Mountain | | |
Great
Bear | | |
Corporate
and
other(b),(c) | | |
Total | |
Revenue | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Metal sales | |
$ | 547.4 | | |
| 565.5 | | |
| 249.8 | | |
| 260.0 | | |
| 223.5 | | |
| 173.1 | | |
| - | | |
| 2.3 | | |
$ | 2,021.6 | |
Cost of sales | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Production cost of sales | |
| 187.9 | | |
| 253.2 | | |
| 88.5 | | |
| 156.9 | | |
| 182.0 | | |
| 112.5 | | |
| - | | |
| 0.8 | | |
| 981.8 | |
Depreciation,
depletion and amortization | |
| 104.8 | | |
| 90.2 | | |
| 84.7 | | |
| 40.7 | | |
| 68.1 | | |
| 59.5 | | |
| 0.3 | | |
| 2.9 | | |
| 451.2 | |
Total cost
of sales | |
| 292.7 | | |
| 343.4 | | |
| 173.2 | | |
| 197.6 | | |
| 250.1 | | |
| 172.0 | | |
| 0.3 | | |
| 3.7 | | |
| 1,433.0 | |
Gross profit
(loss) | |
$ | 254.7 | | |
| 222.1 | | |
| 76.6 | | |
| 62.4 | | |
| (26.6 | ) | |
| 1.1 | | |
| (0.3 | ) | |
| (1.4 | ) | |
$ | 588.6 | |
Other operating expense | |
| 31.4 | | |
| 9.8 | | |
| 0.4 | | |
| 0.6 | | |
| 1.7 | | |
| 0.9 | | |
| 0.2 | | |
| 22.2 | | |
| 67.2 | |
Exploration and business development | |
| 1.7 | | |
| 2.0 | | |
| 5.4 | | |
| 5.1 | | |
| 16.1 | | |
| 0.7 | | |
| 24.9 | | |
| 27.4 | | |
| 83.3 | |
General and
administrative | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 56.4 | | |
| 56.4 | |
Operating
earnings (loss) | |
$ | 221.6 | | |
| 210.3 | | |
| 70.8 | | |
| 56.7 | | |
| (44.4 | ) | |
| (0.5 | ) | |
| (25.4 | ) | |
| (107.4 | ) | |
$ | 381.7 | |
Other income - net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (6.0 | ) |
Finance income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 20.9 | |
Finance expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (53.5 | ) |
Earnings
from continuing operations before tax | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 343.1 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Capital
expenditures for six months ended June 30, 2023(e) | |
$ | 172.4 | | |
| 63.4 | | |
| 52.9 | | |
| 110.1 | | |
| 18.2 | | |
| 68.8 | | |
| 36.6 | | |
| 67.0 | | |
$ | 589.4 | |
| |
Operating
segments | | |
Non-operating segments(a) | |
Six months ended
June 30, 2022: | |
Tasiast | | |
Paracatu | | |
La
Coipa(d) | | |
Fort
Knox | | |
Round
Mountain | | |
Bald
Mountain | | |
Great
Bear | | |
Corporate
and
other(b),(c) | | |
Total | |
Revenue | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Metal sales | |
$ | 460.6 | | |
| 439.7 | | |
| 13.1 | | |
| 243.5 | | |
| 183.6 | | |
| 178.8 | | |
| - | | |
| 3.1 | | |
$ | 1,522.4 | |
Cost of sales | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Production cost of sales | |
| 189.1 | | |
| 236.2 | | |
| 5.6 | | |
| 160.0 | | |
| 127.1 | | |
| 94.8 | | |
| - | | |
| 1.1 | | |
| 813.9 | |
Depreciation,
depletion and amortization | |
| 113.5 | | |
| 85.6 | | |
| - | | |
| 47.0 | | |
| 23.8 | | |
| 73.5 | | |
| - | | |
| 3.6 | | |
| 347.0 | |
Total cost
of sales | |
| 302.6 | | |
| 321.8 | | |
| 5.6 | | |
| 207.0 | | |
| 150.9 | | |
| 168.3 | | |
| - | | |
| 4.7 | | |
| 1,160.9 | |
Gross profit
(loss) | |
$ | 158.0 | | |
| 117.9 | | |
| 7.5 | | |
| 36.5 | | |
| 32.7 | | |
| 10.5 | | |
| - | | |
| (1.6 | ) | |
$ | 361.5 | |
Other operating expense | |
| 24.8 | | |
| 1.9 | | |
| (7.5 | ) | |
| 0.2 | | |
| 1.7 | | |
| 0.8 | | |
| - | | |
| 49.6 | | |
| 71.5 | |
Exploration and business development | |
| 2.4 | | |
| 0.5 | | |
| 0.7 | | |
| 2.9 | | |
| 2.1 | | |
| 2.6 | | |
| 20.1 | | |
| 32.0 | | |
| 63.3 | |
General and
administrative | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 60.2 | | |
| 60.2 | |
Operating
earnings (loss) | |
$ | 130.8 | | |
| 115.5 | | |
| 14.3 | | |
| 33.4 | | |
| 28.9 | | |
| 7.1 | | |
| (20.1 | ) | |
| (143.4 | ) | |
$ | 166.5 | |
Other income - net | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (6.0 | ) |
Finance income | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 4.2 | |
Finance expense | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| (44.7 | ) |
Earnings
from continuing operations before tax | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
$ | 120.0 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Capital
expenditures from continuing operations for six months ended
June 30, 2022(e) | |
$ | 32.4 | | |
| 53.8 | | |
| 80.3 | | |
| 16.1 | | |
| 38.6 | | |
| 25.4 | | |
| 8.8 | | |
| 11.3 | | |
$ | 266.7 | |
Kinross
Gold Corporation
Notes
to the INTERIM condensed Consolidated Financial Statements
For the three and six months ended June 30,
2023 and 2022
(Unaudited, tabular amounts in millions
of United States dollars, unless otherwise noted)
| |
Operating
segments | | |
Non-operating segments(a) | |
| |
Tasiast | | |
Paracatu | | |
La
Coipa(d) | | |
Fort
Knox | | |
Round
Mountain | | |
Bald
Mountain | | |
Great
Bear | | |
Corporate
and
other(b),(c) | | |
Total | |
Property, plant and equipment
at: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
June 30, 2023 | |
$ | 2,289.0 | | |
| 1,595.7 | | |
| 462.3 | | |
| 484.5 | | |
| 505.9 | | |
| 334.8 | | |
| 1,433.9 | | |
| 709.3 | | |
$ | 7,815.4 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total assets at: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
June 30, 2023 | |
$ | 3,061.6 | | |
| 1,957.7 | | |
| 585.4 | | |
| 900.8 | | |
| 814.3 | | |
| 485.4 | | |
| 1,435.8 | | |
| 1,305.7 | | |
$ | 10,546.7 | |
| |
Operating
segments | | |
Non-operating segments(a) | |
| |
Tasiast | | |
Paracatu | | |
La
Coipa(d) | | |
Fort
Knox | | |
Round
Mountain | | |
Bald
Mountain | | |
Great
Bear | | |
Corporate
and
other(b),(c) | | |
Total | |
Property, plant and equipment
at: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
December 31,
2022 | |
$ | 2,269.2 | | |
| 1,623.1 | | |
| 487.5 | | |
| 424.1 | | |
| 588.7 | | |
| 305.8 | | |
| 1,397.1 | | |
| 645.9 | | |
$ | 7,741.4 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total assets at: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
December 31, 2022 | |
$ | 2,972.7 | | |
| 1,973.8 | | |
| 636.7 | | |
| 826.1 | | |
| 827.1 | | |
| 500.0 | | |
| 1,401.4 | | |
| 1,258.6 | | |
$ | 10,396.4 | |
(a) | Non-operating
segments include development and pre-development properties. |
(b) | Corporate
and other includes corporate, shutdown and other non-operating assets (including Kettle River-Buckhorn,
Lobo-Marte, the Manh Choh project, and Maricunga). |
(c) | Corporate
and other includes metal sales and operating loss of Maricunga of $0.7 million and $2.2 million,
and $3.1 million and 6.9 million, respectively, for the three and six months ended June 30,
2023 ($1.5 million and $(41.6) million, and $3.1 million and $(41.8) million, respectively
for the three and six months ended June 30, 2022). Maricunga continues to sell its remaining
finished metals inventories after transitioning all processing activities to care and maintenance
in 2019. Maricunga’s operating loss includes net reclamation expense of $nil and $2.1
million, respectively, for the three and six months ended June 30, 2023 ($38.9 million
and $36.7 million, respectively, for the three and six months ended June 30, 2022). |
(d) | La
Coipa was determined to be a reportable segment as its operating earnings exceeded 10% of
the total consolidated earnings for the year ended December 31, 2022. |
(e) | Segment
capital expenditures are presented on an accrual basis and include capitalized interest.
Additions to property, plant and equipment in the interim condensed consolidated statements
of cash flows are presented on a cash basis. |
14. | COMMITMENTS
AND CONTINGENCIES |
Leases
The Company has
a number of lease agreements involving office space, buildings, vehicles and equipment. Many of the leases for equipment provide that
the Company may, after the initial lease term, renew the lease for successive yearly periods or may purchase the equipment at its fair
market value. Leases for certain office facilities contain escalation clauses for increases in operating costs and property taxes. A
majority of these leases are cancelable and are renewable on a yearly basis. Total lease liabilities of $37.0 million were recorded as
at June 30, 2023.
Purchase
commitments
At June 30,
2023, the Company had future commitments from continuing operations of approximately $618.8 million for capital expenditures, which have
not been accrued.
General
Estimated
losses from contingencies are accrued by a charge to earnings when information available prior to the issuance of the financial statements
indicates that it is likely that a future event will confirm that an asset has been impaired or a liability incurred at the date of the
financial statements and the amount of the loss can be reasonably estimated.
Other
legal matters
The
Company is from time to time involved in legal proceedings, arising in the ordinary course of its business. Typically, the amount of
ultimate liability with respect to these actions will not, in the opinion of management, materially affect Kinross’ financial position,
results of operations or cash flows.
Maricunga
regulatory proceedings
In May 2015,
Chilean environmental enforcement authority (“SMA”) commenced an administrative proceeding against Compania Minera Maricunga
(“CMM”) alleging that pumping of groundwater to support the Maricunga operation had impacted area wetlands and, on March 18,
2016, issued a resolution alleging that CMM’s pumping was impacting the “Valle Ancho” wetland. Beginning in May 2016,
the SMA issued a series of resolutions ordering CMM to temporarily curtail pumping from its wells.
Kinross
Gold Corporation
Notes
to the INTERIM condensed Consolidated Financial Statements
For the three and six months ended June 30,
2023 and 2022
(Unaudited, tabular amounts in millions
of United States dollars, unless otherwise noted)
In response,
CMM suspended mining and crushing activities and reduced water consumption to minimal levels. CMM contested these resolutions, but its
efforts were unsuccessful and, except for a short period of time in July 2016, CMM’s operations have remained suspended. On
June 24, 2016, the SMA amended its initial sanction (the “Amended Sanction”) and effectively required CMM to cease operations
and close the mine, with water use from its wells curtailed to minimal levels. On July 9, 2016, CMM appealed the sanctions and,
on August 30, 2016, submitted a request to the Environmental Tribunal that it issue an injunction suspending the effectiveness of
the Amended Sanction pending a final decision on the merits of CMM’s appeal. On September 16, 2016, the Environmental Tribunal
rejected CMM’s injunction request and on August 7, 2017, upheld the SMA’s Amended Sanction and curtailment orders on
procedural grounds. On October 9, 2018, the Supreme Court affirmed the Environmental Tribunal’s ruling on procedural grounds
and dismissed CMM’s appeal.
On June 2,
2016, CMM was served with two separate lawsuits filed by the Chilean State Defense Counsel (“CDE”). Both lawsuits, filed
with the Environmental Tribunal, alleged that pumping from the Maricunga groundwater wells caused environmental damage to area wetlands.
One action relates to the “Pantanillo” wetland and the other action relates to the Valle Ancho wetland (described above).
On November 23, 2018, the Tribunal ruled in favor of CMM in the Pantanillo case and against CMM in the Valle Ancho case. In the
Valle Ancho case, the Tribunal required CMM to, among other things, submit a restoration plan to the SMA for approval. CMM appealed the
Valle Ancho ruling to the Supreme Court. The CDE appealed to the Supreme Court in both cases and asserted in the Valle Ancho matter that
the Environmental Tribunal erred by not ordering a complete shutdown of Maricunga’s groundwater wells. On January 7, 2022,
the Supreme Court annulled the Tribunal’s rulings in both cases on procedural grounds and remanded the matters to the Tribunal
for further proceedings. The cases before the Tribunal are currently stayed pending ongoing settlement discussions.
Kinross
Brasil Mineração S.A. (“KBM”)
On February 27,
2023, the State Public Attorney (“SPA”) in Brazil filed a civil action against KBM seeking, among other things, to compel
KBM to cease depositing mine tailings into its two onsite tailings facilities (“TSFs”), decommission the TSFs and to obtain
100 million Brazilian Reals (approximately $20.0 million) from KBM to ensure money is available to address the requested relief. The
SPA sought an immediate injunction to obtain this relief, which was denied by the Lower Court. In its ruling, the Lower Court found that
the TSFs are properly permitted, regularly monitored and inspected, and that the SPA produced no evidence, technical or otherwise, that
the TSFs are unsafe. The Lower Court further noted that a generalized concern about the size of the TSFs does not provide a legal basis
for the relief sought. On March 17, 2023, the SPA filed an interlocutory appeal before the Appellate Court of the State of Minas
Gerais challenging the Lower Court’s Decision. The interlocutory appeal was denied by the Appellate Court on March 27, 2023.
The case remains pending before the Lower Court, but all proceedings have been stayed at the request of the parties to allow them to
discuss potential resolution of the matter. If the case is not resolved amicably, KBM intends to continue its vigorous defense against
the SPA’s claims.
Income
and Other Taxes
The
Company operates in numerous countries around the world and accordingly is subject to, and pays taxes under the various regimes in countries
in which it operates. These tax regimes are determined under general corporate tax laws of the country. The Company has historically
filed, and continues to file, all required tax returns and to pay the taxes reasonably determined to be due. The tax rules and regulations
in many countries are complex and subject to interpretation. Changes in tax law or changes in the way that tax law is interpreted may
also impact the Company’s effective tax rate as well as its business and operations.
Kinross’
tax records, transactions and filing positions may be subject to examination by the tax authorities in the countries in which the Company
has operations. The tax authorities may review the Company’s transactions in respect of the year, or multiple years, which they
have chosen for examination. The tax authorities may interpret the tax implications of a transaction, in form or in fact, differently
from the interpretation reached by the Company. In circumstances where the Company and the tax authority cannot reach a consensus on
the tax impact, there are processes and procedures which both parties may undertake in order to reach a resolution, which may span many
years in the future. Uncertainty in the interpretation and application of applicable tax laws, regulations or the relevant sections of
Mining Conventions by the tax authorities, or the failure of relevant Governments or tax authorities to honour tax laws, regulations
or the relevant sections of Mining Conventions could adversely affect Kinross.
Exhibit 99.2
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, J. Paul Rollinson, President and Chief Executive Officer of Kinross
Gold Corporation, certify the following:
| 1. | Review: I have reviewed the interim financial
statements and interim MD&A (together, the "interim filings") of Kinross Gold Corporation (the "issuer") for
the interim period ended June 30, 2023. |
| 2. | No misrepresentations: Based on my knowledge,
having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which
it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having
exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim
filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the
date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer's other certifying
officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control
over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described
in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| a. | designed DC&P, or caused it to be designed under our supervision,
to provide reasonable assurance that |
| i. | material information relating to the issuer is made known to
us by others, particularly during the period in which the interim filings are being prepared; and |
| ii. | information required to be disclosed by the issuer in its annual
filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation; and |
| b. | designed ICFR, or caused it to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with the issuer's GAAP. |
| 5.1. | Control framework: The control framework the issuer's
other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. |
| 5.2. | ICFR -- material weakness relating to design:
N/A |
| 5.3. | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed
in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on April 1, 2023 and ended on June
30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR. |
Date: August 2, 2023
J. Paul Rollinson
President and Chief Executive Officer
Exhibit 99.3
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Andrea S. Freeborough, Chief Financial Officer of Kinross Gold Corporation,
certify the following:
| 1. | Review: I have reviewed the interim financial
statements and interim MD&A (together, the "interim filings") of Kinross Gold Corporation (the "issuer") for
the interim period ended June 30, 2023. |
| 2. | No misrepresentations: Based on my knowledge,
having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which
it was made, with respect to the period covered by the interim filings. |
| 3. | Fair presentation: Based on my knowledge, having
exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim
filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the
date of and for the periods presented in the interim filings. |
| 4. | Responsibility: The issuer's other certifying
officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control
over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers'
Annual and Interim Filings, for the issuer. |
| 5. | Design: Subject to the limitations, if any, described
in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| a. | designed DC&P, or caused it to be designed under our supervision,
to provide reasonable assurance that |
| i. | material information relating to the issuer is made known to
us by others, particularly during the period in which the interim filings are being prepared; and |
| ii. | information required to be disclosed by the issuer in its annual
filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities legislation; and |
| b. | designed ICFR, or caused it to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with the issuer's GAAP. |
| 5.1. | Control framework: The control framework the issuer's
other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission. |
| 5.2. | ICFR -- material weakness relating to design:
N/A |
| 5.3. | Limitation on scope of design: N/A |
| 6. | Reporting changes in ICFR: The issuer has disclosed
in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on April 1, 2023 and ended on June
30, 2023 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR. |
Date: August 2, 2023
/s/ Andrea S. Freeborough |
|
Andrea S. Freeborough
Executive Vice-President and Chief Financial Officer
Kinross Gold (NYSE:KGC)
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