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The three largest producing mines – Paracatu, Kupol and Tasiast – achieve the lowest costs in the portfolio
On track to meet production and cost of sales forecasts
First gold produced for Round Mountain Phase W and Bald Mountain Vantage Complex projects
TORONTO, July 31, 2019 – GLOBE NEWSWIRE – Kinross Gold Corporation (TSX: K, NYSE: KGC) announced today its results for the second quarter ended June 30, 2019.
(This news release contains forward-looking information about the Company's future events and expected financial and operating performance.) We refer to the risks and badumptions described in our cautionary statement regarding forward-looking information found on page 19. of this press release, amounts are expressed in US dollars unless otherwise indicated.)
Highlights of the second quarter of 2019:
| Q2 2019 results | 2019 first half results | 2019 orientation (+/- 5%) |
||
| Gold equivalent production1 (Ounces) |
648.251 | 1,254,282 | 2.5 million | |
| Cost of production of sales2 ($ per oz equivalent) |
$ 663 | $ 672 | $ 730 | |
| All-in support cost2 ($ per oz equivalent) |
$ 925 | $ 925 | $ 995 | |
| Investment Expenses | $ 276.7 million | $ 541.5 million | $ 1.050 million | |
- In the process of reaching the 2019 annual targets for production, cost of sales per ounce, total maintenance cost per ounce and capital expenditures.
- Cash flow from operations $ 333.0 million and Adjusted operating cash flow2 $ 287.7 million for the second quarter of 2019.
- Net profit declared3 $ 71.5 million, or $ 0.06 per share, and adjusted net income2.3 $ 79.6 million or $ 0.06 per share for the second quarter of 2019.
- Cash and cash equivalents $ 475.4 million and total liquidity approximately $ 1.9 billion as at June 30, 2019, with no maturity until 2021.
Operations and development projects highlights:
- Three larger mines in production – Paracatu, Kupol-Dvoinoye and Tasiast – accounting for 63% of the company's total output, release the lowest costs of the portfolio for the second quarter of 2019 and the first half.
- Round Mountain Phase W and Bald mountain complex the projects take a major step and produce the first gold.
- Paracatu continues to record record performance, surpbading its peak quarterly output in the first quarter of 2019 and keeping its lowest costs since 2010.
- Good sustained performance at Tasiast while the flow of the plant continues to outperform. The company plans to announce the results of the evaluation of alternative low-cap approaches to increase throughput in mid-September.
Comment from the CEO
J. Paul Rollinson, President and Chief Executive Officer, commented on the results for the second quarter of 2019:
"In the second quarter, we had excellent operating and financial results as our mining portfolio increased production and reduced costs compared to the prior quarter and year. We generated strong cash flow, improved margins and maintained our strong liquidity position. We remain on track to reach our annual production and cost outlook for 2019 after a strong first half.
"The performance of our main producing badets strengthened our results as Paracatu, Kupol and Tasiast, which account for more than 60% of our production, generated the lowest costs in our portfolio during the quarter and the first half. Paracatu continues to outperform, surpbading its first quarter production record and maintaining its lowest costs since 2010.
"Our Nevada development projects – Round Mountain Phase W and the Bald Mountain Vantage Complex – have taken an important step in producing their first gold bars. At Tasiast, our badessment of alternative approaches to increase throughput at a significantly lower capital cost is progressing well and we expect to announce the results in mid-September. "
Financial results
Summary of financial and operating results
| Three months ended | Six months ended | ||||||||||
| June 30th | June 30th | ||||||||||
| (in millions, excluding ounces, per share amounts and per ounce amounts) | 2019 | 2018 | 2019 | 2018 | |||||||
| Takrating Highlights | |||||||||||
| Total gold equivalent(1) | |||||||||||
| Product(3) | 653.586 | 607.906 | 1,264,849 | 1,267,861 | |||||||
| Sold(3) | 641 149 | 593.296 | 1,244,206 | 1,267,957 | |||||||
| Ounces of gold equivalent attributable(1) | |||||||||||
| Product(3) | 648.251 | 602,049 | 1,254,282 | 1,255,986 | |||||||
| Sold(3) | 636,035 | 587,556 | 1,233,684 | 1,255,773 | |||||||
| Financial Highlights | |||||||||||
| Metal sales | $ | 837.8 | $ | 775.0 | $ | 1,624.0 | $ | 1672.2 | |||
| Cost of production of sales | $ | 426.1 | $ | 454.9 | $ | 837.8 | $ | 899.5 | |||
| Depreciation, depletion and amortization | $ | 179.9 | $ | 190.3 | $ | 344.0 | $ | 383.4 | |||
| Operating profit | $ | 144.3 | $ | 46.3 | $ | 259.7 | $ | 224.2 | |||
| Net income attributable to common shareholders | $ | 71.5 | $ | 2.4 | $ | 136.2 | $ | 108.5 | |||
| Basic earnings per share attributable to common shareholders | $ | 0.06 | $ | 0.00 | $ | 0.11 | $ | 0.09 | |||
| Diluted earnings per share attributable to common shareholders | $ | 0.06 | $ | 0.00 | $ | 0.11 | $ | 0.09 | |||
| Adjusted net income attributable to common shareholders(2) | $ | 79.6 | $ | 37.8 | $ | 162.9 | $ | 163.0 | |||
| Adjusted net income per share(2) | $ | 0.06 | $ | 0.03 | $ | 0.13 | $ | 0.13 | |||
| Net cash from operating activities | $ | 333.0 | $ | 184.5 | $ | 584.6 | $ | 478.0 | |||
| Adjusted operating cash flow(2) | $ | 287.7 | $ | 231.5 | $ | 518.5 | $ | 595.2 | |||
| Investment Expenses | $ | 276.7 | $ | 247.1 | $ | 541.5 | $ | 494.0 | |||
| Average gold price per ounce(2) | $ | 1,307 | $ | 1 306 | $ | 1 305 | $ | 1,319 | |||
| Consolidated production cost of sales per equivalent ounce(3) sold(2) | $ | 665 | $ | 767 | $ | 673 | $ | 709 | |||
| Attributable(1) cost of production of sales per equivalent ounce(3) sold(2) | $ | 663 | $ | 767 | $ | 672 | $ | 709 | |||
| Attributable(1) Production cost of sales per ounce sold by product(2) | $ | 650 | $ | 754 | $ | 659 | $ | 696 | |||
| Attributable(1) all-in-one maintenance cost per ounce sold on a product basis(2) | $ | 918 | $ | 1,011 | $ | 917 | $ | 918 | |||
| Attributable(1) all-in-one maintenance cost per equivalent ounce(3) sold(2) | $ | 925 | $ | 1,018 | $ | 925 | $ | 926 | |||
| Attributable(1) all-in cost per ounce sold on a product basis(2) | $ | 1,242 | $ | 1,343 | $ | 1,240 | $ | 1,226 | |||
| Attributable(1) all-in cost per equivalent ounce(3) sold(2) | $ | 1,243 | $ | 1,342 | $ | 1,242 | $ | 1,228 | |||
| (1) "Total" includes 100% of Chirano's production. "Attributable" includes Kinross' share in Chirano's production (90%). | |||||||||||
| (2) The definition and reconciliation of these non-GAAP financial measures can be found on pages 13 to 18 of this press release. | |||||||||||
| (3) "Gold equivalent ounces" includes the silver ounces produced and sold converted into a gold equivalent based on a ratio of average spot market commodity prices for each period. The ratio for the second quarter of 2019 was 87.98: 1 (second quarter of 2018 – 79.00: 1). The ratio for the first six months of 2019 was 85.78: 1 (first six months of 2018 – 79.12: 1). | |||||||||||
The following operating and financial results are based on gold equivalent production for the second quarter of 2019. The production and cost measures are attributable to:
Production: Kinross produced 648,251 Au attributable eq. oz in the second quarter of 2019, compared to 602,049 Auq. oz in the second quarter of 2018.
Cost of production of sales: Cost of production of sales by Au eq. oz2 amounted to $ 663 for the second quarter of 2019 compared to $ 767 for the second quarter of 2018, mainly due to lower costs in Paracatu, Tasiast and Round Mountain. Cost of production sales by Au oz. on a product basis2 in the second quarter of 2019, compared to $ 754 in the second quarter of 2018, taking into account attributable gold sales in the second quarter of 2019 of 624,098 ounces and attributable silver sales of 1,050,325 ounces.
All-in support cost: All-inclusive maintenance cost by Au eq. oz sold2 amounted to $ 925 in the second quarter of 2019 compared to $ 1,018 in the second quarter of 2018. Total maintenance cost per liquid ounce. sold on a product basis2 $ 918 in Q2 2019, compared to $ 1,011 in Q2 2018.
Returned: Revenues from metal sales were $ 837.8 million in the second quarter of 2019, compared with $ 775.0 million for the same period in 2018, mainly due to higher sales of $ 20 million. equivalent of gold.
Average Gold Award Achieved4: The average realized gold price in the second quarter of 2019 was $ 1,307 an ounce, compared with $ 1,306 per ounce in the second quarter of 2018.
margins: The margin attributable to Kinross by Au eq. oz sold5 amounted to $ 644 for the second quarter of 2019, compared to $ 539 margin for the second quarter of 2018. oz sold.
Cash flow from operations: Adjusted operating cash flow2 amounted to $ 287.7 million for the second quarter of 2019, compared with $ 231.5 million for the second quarter of 2018, mainly due to higher margins.
Net operating cash flow was $ 333.0 million for the second quarter of 2019 compared to $ 184.5 million for the second quarter of 2018.
Earnings: Adjusted net profit2.3 amounted to $ 79.6 million, or $ 0.06 per share, for the second quarter of 2019, compared to adjusted net earnings of $ 37.8 million, or $ 0.03 per share, for the second quarter of 2018.
Net profit declared3 amounted to $ 71.5 million, or $ 0.06 per share, for the second quarter of 2019, compared to a profit of $ 2.4 million, or $ 0.00 per share, in the second quarter This increase is mainly due to higher operating income, partially offset by an increase in income taxes.
Investment Expenses: Capital expenditures were $ 276.7 million for the second quarter of 2019 compared to $ 247.1 million for the same period last year primarily due to higher expenses in our businesses. development projects in the United States counterbalanced by a reduction in spending at Tasiast.
Results of exploitation
The mine summaries of the operating results for the second quarter of 2019 can be found on pages 8 and 12 of this press release. Strengths include
Americas
Paracatu continued its record performance, surpbading the quarterly production peak of about 40,000 oz last quarter. and a reduction in the cost of sales per ounce for the fifth consecutive quarter, which is at the lowest level since the fourth quarter of 2010. The ratings improved from one quarter to the other and one year ago. on the other hand, since the high grade portions of the deposit were extracted in the second quarter of 2019, recoveries and throughput remained strong. Mining should move to lower-grade portions of the pit in the second half of the year. The cost of sales per ounce sold decreased compared to the previous quarter mainly due to the higher grade and reduced maintenance costs. Favorable currency movements and reduced power, maintenance and reagent costs also contributed to lower costs compared to the previous year.
Round mountain performed well during the quarter as production increased over the first quarter of 2019 primarily due to the timing of the recovery of ounces recovered from heap leach pads, partially offset by lower plant grades. Production decreased compared to the second quarter of 2018, mainly due to lower grades. The cost of sold products per ounce sold decreased from the prior quarter and over the prior year, primarily due to the timing of the processing of factory-processed ounces.
AT Bald mountain, production was lower than in the first quarter of 2019, mainly due to the moment when ounces were recovered from heap leach pads and lower grades. Production was lower than in the second quarter of 2018 as weather-related issues impacted extraction rates, resulting in lower ore deposition on heap leach pads . The cost of products sold per ounce sold increased from one quarter to the next and one fiscal year to the other, mainly due to a decrease in the number of products sold per ounce sold. ounces of gold equivalent. The increase in maintenance and fuel costs also contributed to the higher cost of sales per ounce sold from one quarter to the next. The Vantage project is expected to be commissioned in the second half of the year, but at a slower pace than anticipated, mainly due to adverse weather conditions.
The exploration work conducted during the first half of the year at Bald Mountain has shown promising results for Redbird, including high-grade intersections adjacent to the current shell of the Redbird resource pit. During the second half of the exploration, exploration plans to test the high grade mineralization along the northeastern trend and the southeast extension.
AT Fort Knox, production increased over the previous quarter, primarily due to the timing of recovery of ounces on heap leach pads, partially offset by lower grades and weather conditions that affected geotechnical stability in the northwestern part of the pit. Production decreased by one year on the other mainly due to lower mill throughput and the amount of ore deposited and recovered from heap leach pads, partially offset by higher grades. elevated factories. The cost of sold products per ounce sold decreased compared to the previous quarter, mainly due to the timing of ounces recovered from heap leach pads, and decreased by one year on average. other, mainly because of the decline of mined mining waste and favorable treatment costs.
AT Maricunga, minor production continued as a result of rinsing heap materials placed on the skids prior to the suspension of mining operations. The cost of sold products per ounce sold increased compared to the prior year, mainly due to higher processing costs.
Russia
AT Kupol and Dvoinoye, production decreased slightly from one quarter to the next, mainly due to the expected reduction in grades at Kupol, partially offset by the increase in plant throughput and the increase over the year due to mainly planned mine sequencing and grade improvement. The cost of sales per ounce sold decreased from the first quarter of 2019, mainly due to the timing of ore processing. Compared with the second quarter of 2018, the cost of sales per ounce sold in the second quarter of 2019 decreased, mainly due to higher grades.
Production at Dvoinoye Zone 1 started in the second quarter as planned. Exploration results during the first half of Zone 37 West at Dvoinoye have been encouraging. In Kupol, drilling mainly focused on the deep extensions of Kupol's main zone and the suspended wall. The results continue to be positive. In the Big Bend area, drilling continues to intercept significant grade, although the widths are narrower than expected. Infill drilling and extension drilling at the northern extension also yielded higher grades than those previously modeled. The Company will continue to test the targets in order to add to the estimated mineral resources of the site during the second half of the year.
West Africa
Tasiast Results were strong during the quarter, with factory production rates continuing to outperform. The lower grades expected during the second quarter of 2019 contributed to a decrease in production from the record high of the previous quarter. The grades should improve during the second semester. The cost of products sold per ounce sold decreased by $ 40 per ounce compared to the previous quarter due to operational efficiency and reduced mining waste extracted. Production was higher and cost of sales per ounce lower than in the previous year, reflecting the benefits of completion and commissioning of the Phase 1 expansion.
Chirano continued its steady performance, with production largely in line with the previous quarter. Production decreased year-over-year due to lower ratings. The cost of sales per ounce sold increased compared to the first and second quarters of 2019 and 2018, mainly due to the increase in mining waste extracted when the site began operating an open pit mine at the end. first quarter of 2019.
The company continued its priority exploration program in Chirano and the first half results were promising, including the deep extension of Akwaaba and Paboase. In both areas, the holes identified extensions of the high grade mineralization up to about 100 meters below the base of the current reserve. At Akwaaba, the suspended mineralization identified in 2018 is continuous and at high depth. For the second half of the year, drilling will continue at Akwaaba and Paboase, as well as at Tano, where a drift from Paboase has been completed, and at Mamnao North. On-site exploration work will continue to seek extensions of mine life in the short term.
Organic development projects and opportunities
Progressive expansion of Tasiast
Kinross continues to take into account Tasiast's excellent performance since completing Phase 1 of its expansion, as it is evaluating other methods to further increase throughput. Alternatives include the preservation and potential enhancement of the value proposition of the original 30,000 tpd Phase 2 concept by increasing throughput to over 20,000 tpd at a clearly capital cost. lower through the reduction of bottlenecks, continuous improvement and optimization of the existing processing circuit. The company plans to complete the evaluation of alternative approaches and announce the results in mid-September.
The company is about to complete the $ 300 million project financing for Tasiast by the International Finance Corporation (IFC), Export Development Canada (EDC) and two commercial banks later this year. Although the funding remains subject to final approval by all lenders, the final due diligence activities are progressing well as work is now focused on completing the details of the loan documentation.
Round Mountain Phase W
the Round Mountain Phase W the project continues to respect the budget and schedule. The processing circuit was commissioned earlier than planned and is currently in production. The first gold bar of the completed Column Carbon Production Column (VCIC) plant was poured in late May. The mine infrastructure, including the truck shop, warehouse, wash bay and fuel island, is now approximately 95% complete and is expected to be fully operational in the third quarter of 2019. The stripping activity is progressing very well and is expected to continue until the end of 2020 as planned. The W phase near the surface is now encountered.
Bald mountain complex
the Bald mountain complex The project also began production and the project's first gold bar was poured in late June. Weather problems, higher than expected labor rates, and supply issues for some of the fabricated components continued to challenge the project budget and increased production. Despite these difficulties, the commissioning of the project is well underway, with the VCIC plant and heap leaching platforms now almost complete and in production, and the construction of supporting infrastructure, such as the workshop. trucks, the warehouse and the wash bay, is almost complete.
Fort Knox Gilmore
the Fort Knox Gilmore the project is progressing according to schedule and budget, with the initial ore now expected later in the year. The construction of the new heap leaching platform is underway and is progressing well, with half of the waterproof liner now laid. Dewatering for the Gilmore pit expansion is proceeding according to plan and stripping for Gilmore's initial pushback is expected to begin at the end of the third quarter of 2019.
The Coipa Restart and Lobo-Marte
the The Coipa Restart The project feasibility study is progressing well and is expected to be completed in the expected time frame for the third quarter of 2019. Lobo-Marte As part of this project, the company is following the positive scoping study completed last quarter with a pre-feasibility study expected to be completed by mid-2020. The studies evaluate the long-term potential for return to production in Chile based on the concept of starting production of Lobo-Marte after the end of La Coipa mine's life. Both studies badess how resources such as staff, water, energy and capital can be shared and leveraged for synergies and increased efficiency between the two potential projects.
Balance sheet and financial flexibility
As at June 30, 2019, Kinross had cash and cash equivalents of $ 475.4 million, compared to $ 349.0 million as at December 31, 2018.
The Company also had a credit of $ 1,397.2 million, for total liquidity of approximately $ 1.9 billion, and no maturity of the debt until 2021.
On July 25, 2019, the Company extended the maturity date of its $ 1.5 billion revolving credit facility from one year to August 2024, restoring a five-year term.
Perspective
The following section of the press release contains forward-looking information and users are cautioned that actual results may vary. We refer to the risks and badumptions contained in the Cautionary Note on Forward-Looking Information on page 19 of this press release.
Kinross is on track to meet its production targets of 2.5 million Auq. oz (+/- 5%), its production cost goal of sales of $ 730 per equivalent. oz (+/- 5%) and its overall maintenance cost forecast of $ 995 per equivalent equivalent. oz (+/- 5%) for 2019.
The company is on track to meet its capital expenditure forecast of approximately $ 201,000 million for 2019 (+/- 5%).
Depreciation, depletion and amortization are expected to be approximately $ 300 (+/- 5%) per equivalent. oz., compared to the previously disclosed $ 330 (+/- 5%) by Au eq. oz, mainly due to increased production in Paracatu and a decrease in Bald Mountain production in the first half of the year.
Teleconference Details
As part of this publication, Kinross will hold a conference call and audio webcast on Thursday, August 1, 2019 at 8:00 am ET. to discuss the results, followed by a Q & A session. To access the call, please dial:
Canada and the United States free of charge – (877) 201-0168; Conference number: 3163386
Outside Canada and the United States – +1 (647) 788-4901; Conference number: 3163386
Replay (available until 14 days after the call):
Canada and the United States free of charge – (800) 585-8367; Conference number: 3163386
Outside Canada and the United States – +1 (416) 621-4642; Conference number: 3163386
You can also access the conference call in listen-only mode via a webcast on our website. www.kinross.com. The audio broadcast will be archived on www.kinross.com.
This press release should be read in conjunction with Kinross' second quarter 2019 unaudited financial statements and MD & A, available at www.kinross.com. The unaudited financial statements and management's discussion and badysis for the second quarter of 2019 of Kinross have been filed with the Canadian securities regulatory authorities (available at www.sedar.com) and sent to the US Securities and Exchange Commission. (available at www.sec.gov). Kinross shareholders may obtain a free copy of the financial statements upon request to the Company.
About Kinross Gold Corporation
Kinross is a gold mining company based in Canada that operates mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross is listed on the Toronto Stock Exchange (symbol: K) and on the New York Stock Exchange (symbol: KGC).
Media contact
Louie Diaz
Senior Director, Corporate Communications
phone: 416-369-6469
[email protected]
Investor Relations Contact
Tom Elliott
Senior Vice President, Investor Relations and Corporate Development
phone: 416-365-3390
[email protected]
Balance sheet of operations
| Three months ended June 30 | Ounces equivalent of gold | ||||||||||||||||||||
| Product | Sold | Cost of production of Sales (in millions of dollars) |
Cost of production of sales / equivalent equivalent sold |
||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Fort Knox | 55,440 | 71,463 | 55,740 | 72,340 | $ | 50.7 | $ | 70.1 | $ | 910 | $ | 969 | |||||||||
| Round mountain | 90,833 | 97,650 | 87106 | 95.432 | 57.8 | 72.0 | 664 | 754 | |||||||||||||
| Bald mountain | 40,564 | 71,435 | 31,547 | 60,730 | 27.0 | 27.7 | 856 | 456 | |||||||||||||
| Kettle River – Buckhorn | – | – | – | – | – | – | – | – | |||||||||||||
| Paracatu | 186 167 | 121,226 | 186,520 | 117,043 | 106.8 | 100.4 | 573 | 858 | |||||||||||||
| Maricunga | 6,648 | 19,866 | 9,474 | 17,764 | 8.0 | 11.7 | 844 | 659 | |||||||||||||
| Americas Total | 379.652 | 381.640 | 370.387 | 363.309 | 250.3 | 281.9 | 676 | 776 | |||||||||||||
| Kupol | 127,684 | 120,418 | 124,873 | 124 179 | 70.2 | 73.6 | 562 | 593 | |||||||||||||
| Total Russia | 127,684 | 120,418 | 124,873 | 124 179 | 70.2 | 73.6 | 562 | 593 | |||||||||||||
| Tasiast | 92,901 | 47276 | 94,748 | 48,409 | 58.9 | 54.8 | 622 | 1,132 | |||||||||||||
| Chirano (100%) | 53,349 | 58,572 | 51 141 | 57399 | 46.7 | 44.6 | 913 | 777 | |||||||||||||
| West Africa Total | 146,250 | 105,848 | 145,889 | 105,808 | 105.6 | 99.4 | 724 | 939 | |||||||||||||
| Total operations | 653.586 | 607.906 | 641 149 | 593.296 | 426.1 | 454.9 | 665 | 767 | |||||||||||||
| Less Chirano without control interest (10%) |
(5,335 | ) | (5,857 | ) | (5.114 | ) | (5,740 | ) | (4.7 | ) | (4.5 | ) | |||||||||
| Total attributable | 648.251 | 602,049 | 636,035 | 587,556 | $ | 421.4 | $ | 450.4 | $ | 663 | $ | 767 | |||||||||
| Six months ended June 30 | Ounces equivalent of gold | ||||||||||||||||||||
| Product | Sold | Cost of production of Sales (in millions of dollars) |
Cost of production of sales / equivalent equivalent sold |
||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Fort Knox | 93,053 | 151,391 | 93,677 | 151,951 | $ | 89.5 | $ | 112.3 | $ | 955 | $ | 739 | |||||||||
| Round mountain | 175,968 | 194 733 | 170,720 | 193,213 | 113.8 | 138.6 | 667 | 717 | |||||||||||||
| Bald mountain | 87,819 | 164,875 | 74,777 | 158,872 | 56.2 | 73.8 | 752 | 465 | |||||||||||||
| Kettle River – Buckhorn | – | – | – | 927 | – | – | – | – | |||||||||||||
| Paracatu | 332.943 | 249.426 | 332917 | 245,322 | 201.7 | 216.3 | 606 | 882 | |||||||||||||
| Maricunga | 17,364 | 42,032 | 17,098 | 40,118 | 12.8 | 27.2 | 749 | 678 | |||||||||||||
| Americas Total | 707.147 | 802457 | 689189 | 790403 | 474.0 | 568.2 | 688 | 719 | |||||||||||||
| Kupol | 257.772 | 240.599 | 255.287 | 246.803 | 148.2 | 138.2 | 581 | 560 | |||||||||||||
| Russia Total | 257.772 | 240.599 | 255.287 | 246.803 | 148.2 | 138.2 | 581 | 560 | |||||||||||||
| Tasiast | 194.259 | 106.054 | 194.506 | 108.912 | 124.9 | 101.6 | 642 | 933 | |||||||||||||
| Chirano (100%) | 105.671 | 118.751 | 105.224 | 121.839 | 90.7 | 91.5 | 862 | 751 | |||||||||||||
| West Africa Total | 299.930 | 224.805 | 299.730 | 230.751 | 215.6 | 193.1 | 719 | 837 | |||||||||||||
| Operations Total | 1264849 | 1267861 | 1,244,206 | 1,267,957 | 837.8 | 899.5 | 673 | 709 | |||||||||||||
| Less Chirano non-controlling interest (10%) |
(10,567 | ) | (11,875 | ) | (10,522 | ) | (12,184 | ) | (9.1 | ) | (9.2 | ) | |||||||||
| Attributable Total | 1,254,282 | 1,255,986 | 1,233,684 | 1,255,773 | $ | 828.7 | $ | 890.3 | $ | 672 | $ | 709 | |||||||||
Consolidated balance sheets
| (unaudited expressed in millions of United States dollars, except share amounts) | |||||||||
| As at | |||||||||
| June 30th | December 31, | ||||||||
| 2019 | 2018 | ||||||||
| Assets | |||||||||
| Current badets | |||||||||
| Cash and cash equivalents | $ | 475.4 | $ | 349.0 | |||||
| Restricted cash | 13.5 | 12.7 | |||||||
| Accounts receivable and other badets | 129.8 | 101.4 | |||||||
| Current income tax recoverable | 44.8 | 79.0 | |||||||
| Inventories | 991.3 | 1,052.0 | |||||||
| Unrealized fair value of derivative badets | 6.7 | 3.8 | |||||||
| 1,661.5 | 1,597.9 | ||||||||
| Non-current badets | |||||||||
| Property, plant and equipment | 5,769.6 | 5,519.1 | |||||||
| Goodwill | 158.8 | 162.7 | |||||||
| Long-term investments | 182.4 | 155.9 | |||||||
| Investments in joint ventures | 18.4 | 18.3 | |||||||
| Unrealized fair value of derivative badets | 3.9 | 0.8 | |||||||
| Other long-term badets | 577.1 | 564.1 | |||||||
| Deferred tax badets | 35.6 | 45.0 | |||||||
| Total badets | $ | 8,407.3 | $ | 8,063.8 | |||||
| Liabilities | |||||||||
| Current liabilities | |||||||||
| Accounts payable and accrued liabilities | $ | 441.1 | $ | 465.9 | |||||
| Current income tax payable | 69.2 | 21.7 | |||||||
| Current portion of provisions | 49.9 | 72.6 | |||||||
| Other current liabilities | 16.3 | 52.2 | |||||||
| 576.5 | 612.4 | ||||||||
| Non-current liabilities | |||||||||
| Long-term debt and credit facilities | 1,891.2 | 1,735.0 | |||||||
| Provisions | 836.0 | 816.4 | |||||||
| Long-term lease liabilities | 39.2 | – | |||||||
| Unrealized fair value of derivative liabilities | 2.3 | 9.6 | |||||||
| Other long-term liabilities | 107.0 | 97.9 | |||||||
| Deferred tax liabilities | 235.3 | 265.2 | |||||||
| Total liabilities | 3,687.5 | 3,536.5 | |||||||
| Equity | |||||||||
| Common shareholders' equity | |||||||||
| Common share capital | $ | 14,919.9 | $ | 14,913.4 | |||||
| Contributed surplus | 237.6 | 239.8 | |||||||
| Accumulated deficit | (10,411.8 | ) | (10,548.0 | ) | |||||
| Accumulated other comprehensive income (loss) | (46.0 | ) | (98.5 | ) | |||||
| Total common shareholders' equity | 4,699.7 | 4,506.7 | |||||||
| Non-controlling interest | 20.1 | 20.6 | |||||||
| Total equity | 4,719.8 | 4,527.3 | |||||||
| Total liabilities and equity | $ | 8,407.3 | $ | 8,063.8 | |||||
| Common shares | |||||||||
| Authorized | Unlimited | Unlimited | |||||||
| Issued and outstanding | 1,252,468,491 | 1,250,228,821 | |||||||
Consolidated statements of operations
| (unaudited expressed in millions of United States dollars, except share and per share amounts) | ||||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||||
| June 30th | June 30th | June 30th | June 30th | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||
| Revenue | ||||||||||||||||||
| Metal sales | $ | 837.8 | $ | 775.0 | $ | 1,624.0 | $ | 1,672.2 | ||||||||||
| Coût des ventes | ||||||||||||||||||
| Production cost of sales | 426.1 | 454.9 | 837.8 | 899.5 | ||||||||||||||
| Depreciation, depletion and amortization | 179.9 | 190.3 | 344.0 | 383.4 | ||||||||||||||
| Total cost of sales | 606.0 | 645.2 | 1,181.8 | 1,282.9 | ||||||||||||||
| Bénéfice brut | 231.8 | 129.8 | 442.2 | 389.3 | ||||||||||||||
| Other operating expense | 29.5 | 29.4 | 62.4 | 54.8 | ||||||||||||||
| Exploration and business development | 28.4 | 23.8 | 47.9 | 44.3 | ||||||||||||||
| General and administrative | 29.6 | 30.3 | 72.2 | 66.0 | ||||||||||||||
| Operating earnings | 144.3 | 46.3 | 259.7 | 224.2 | ||||||||||||||
| Other income (expense) – net | (2.6 | ) | 1.8 | 0.1 | 7.7 | |||||||||||||
| Equity in earnings (losses) of joint ventures | 0.1 | (0.1 | ) | 0.1 | (0.2 | ) | ||||||||||||
| Finance income | 1.9 | 3.2 | 4.0 | 6.6 | ||||||||||||||
| Finance expense | (26.1 | ) | (24.7 | ) | (53.6 | ) | (51.6 | ) | ||||||||||
| Earnings before tax | 117.6 | 26.5 | 210.3 | 186.7 | ||||||||||||||
| Income tax expense – net | (46.5 | ) | (24.4 | ) | (74.6 | ) | (78.4 | ) | ||||||||||
| Net earnings | $ | 71.1 | $ | 2.1 | $ | 135.7 | $ | 108.3 | ||||||||||
| Net earnings (loss) attributable to: | ||||||||||||||||||
| Non-controlling interest | $ | (0.4 | ) | $ | (0.3 | ) | $ | (0.5 | ) | $ | (0.2 | ) | ||||||
| Common shareholders | $ | 71.5 | $ | 2.4 | $ | 136.2 | $ | 108.5 | ||||||||||
| Earnings per share attributable to common shareholders | ||||||||||||||||||
| Basic | $ | 0.06 | $ | 0.00 | $ | 0.11 | $ | 0.09 | ||||||||||
| Diluted | $ | 0.06 | $ | 0.00 | $ | 0.11 | $ | 0.09 | ||||||||||
| Weighted average number of common shares outstanding (millions) |
||||||||||||||||||
| Basic | 1,252.3 | 1,250.2 | 1,251.5 | 1,248.7 | ||||||||||||||
| Diluted | 1,261.2 | 1,259.3 | 1,260.3 | 1,258.3 | ||||||||||||||
Consolidated statements of cash flows
| (unaudited expressed in millions of United States dollars) | |||||||||||||||||
| Three months ended | Six months ended | ||||||||||||||||
| June 30th | June 30th | June 30th | June 30th | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||
| Net inflow (outflow) of cash related to the following activities: | |||||||||||||||||
| Operating: | |||||||||||||||||
| Net earnings | $ | 71.1 | $ | 2.1 | $ | 135.7 | $ | 108.3 | |||||||||
| Adjustments to reconcile net earnings to net cash provided from operating activities: |
|||||||||||||||||
| Depreciation, depletion and amortization | 179.9 | 190.3 | 344.0 | 383.4 | |||||||||||||
| Equity in (earnings) losses of joint ventures | (0.1 | ) | 0.1 | (0.1 | ) | 0.2 | |||||||||||
| Share-based compensation expense | 3.0 | 3.5 | 7.6 | 7.5 | |||||||||||||
| Finance expense | 26.1 | 24.7 | 53.6 | 51.6 | |||||||||||||
| Deferred tax expense (recovery) | 5.8 | 15.9 | (31.4 | ) | 27.3 | ||||||||||||
| Foreign exchange losses (gains) and other | 1.9 | (5.1 | ) | 9.1 | 16.9 | ||||||||||||
| Changes in operating badets and liabilities: | |||||||||||||||||
| Accounts receivable and other badets | (40.3 | ) | (41.7 | ) | (25.7 | ) | (44.1 | ) | |||||||||
| Inventories | 12.6 | 21.2 | 50.0 | (1.8 | ) | ||||||||||||
| Accounts payable and accrued liabilities | 56.6 | 7.2 | 42.4 | (16.0 | ) | ||||||||||||
| Cash flow provided from operating activities | 316.6 | 218.2 | 585.2 | 533.3 | |||||||||||||
| Income taxes recovered (paid) | 16.4 | (33.7 | ) | (0.6 | ) | (55.3 | ) | ||||||||||
| Net cash flow provided from operating activities | 333.0 | 184.5 | 584.6 | 478.0 | |||||||||||||
| Investing: | |||||||||||||||||
| Additions to property, plant and equipment | (276.7 | ) | (247.1 | ) | (541.5 | ) | (494.0 | ) | |||||||||
| Acquisition of La Coipa Phase 7 mining concessions | – | – | (30.0 | ) | (35.1 | ) | |||||||||||
| Net additions to long-term investments and other badets | (5.9 | ) | (15.9 | ) | (12.3 | ) | (30.2 | ) | |||||||||
| Net proceeds from the sale of property, plant and equipment | 1.2 | 1.0 | 2.1 | 4.0 | |||||||||||||
| (Increase) decrease in restricted cash | (0.2 | ) | 0.6 | (0.8 | ) | (0.1 | ) | ||||||||||
| Interest received and other | 1.2 | 2.4 | 2.1 | 5.0 | |||||||||||||
| Net cash flow used in investing activities | (280.4 | ) | (259.0 | ) | (580.4 | ) | (550.4 | ) | |||||||||
| Financing: | |||||||||||||||||
| Net proceeds from issuance/drawdown of debt | 100.0 | – | 260.0 | – | |||||||||||||
| Repayment of debt | (80.0 | ) | – | (105.0 | ) | – | |||||||||||
| Payment of lease liabilities | (3.9 | ) | – | (7.2 | ) | – | |||||||||||
| Interest paid | (1.1 | ) | – | (28.4 | ) | (30.0 | ) | ||||||||||
| Other | (0.4 | ) | – | (0.2 | ) | 0.4 | |||||||||||
| Net cash flow provided from (used in) financing activities | 14.6 | – | 119.2 | (29.6 | ) | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 1.3 | (4.7 | ) | 3.0 | (5.1 | ) | |||||||||||
| Increase (decrease) in cash and cash equivalents | 68.5 | (79.2 | ) | 126.4 | (107.1 | ) | |||||||||||
| Cash and cash equivalents, beginning of period | 406.9 | 997.9 | 349.0 | 1,025.8 | |||||||||||||
| Cash and cash equivalents, end of period | $ | 475.4 | $ | 918.7 | $ | 475.4 | $ | 918.7 | |||||||||
| Operating Summary | ||||||||||||||||||||
| Mine | Period | Ownership | Tonnes Ore Mined (1) | Ore Processed (Milled) (1) |
Ore Processed (Heap Leach) (1) |
Grade (Mill) | Grade (Heap Leach) |
Recovery (2) | Gold Eq Production (5) |
Gold Eq Sales (5) | Production cost of Sales |
Production cost of sales/oz |
Cap Ex (7) | DD&A | ||||||
| (%) | ('000 tonnes) | ('000 tonnes) | ('000 tonnes) | (g/t) | (g/t) | (%) | (ounces) | (ounces) | ($ millions) | ($/ounce) | ($ millions) | ($ millions) | ||||||||
| Americas | Fort Knox | Q2 2019 | 100 | 4,829 | 1,811 | 3,440 | 0.59 | 0.20 | 81% | 55,440 | 55,740 | $ | 50.7 | $ | 910 | $ | 35.0 | $ | 22.6 | |
| Q1 2019 | 100 | 5,796 | 1,556 | 4,295 | 0.72 | 0.22 | 84% | 37,613 | 37,937 | 38.8 | $ | 1,023 | 28.9 | 18.0 | ||||||
| Q4 2018 | 100 | 5,645 | 2,856 | 2,927 | 0.44 | 0.19 | 83% | 52,194 | 51,889 | 49.1 | $ | 946 | 30.5 | 21.9 | ||||||
| Q3 2018 | 100 | 5,306 | 2,718 | 3,262 | 0.42 | 0.19 | 81% | 51,984 | 52,197 | 53.0 | $ | 1,015 | 32.6 | 26.0 | ||||||
| Q2 2018 | 100 | 4,620 | 3,106 | 4,279 | 0.44 | 0.18 | 80% | 71,463 | 72,340 | 70.1 | $ | 969 | 16.8 | 38.8 | ||||||
| Round Mountain | Q2 2019 | 100 | 4,074 | 909 | 3,910 | 1.17 | 0.33 | 86% | 90,833 | 87,106 | $ | 57.8 | $ | 664 | $ | 58.9 | $ | 10.2 | ||
| Q1 2019 | 100 | 3,904 | 845 | 3,557 | 1.31 | 0.38 | 86% | 85,135 | 83,614 | 56.0 | $ | 670 | 64.2 | 7.9 | ||||||
| Q4 2018 | 100 | 4,386 | 987 | 4,172 | 1.38 | 0.43 | 83% | 96,715 | 91,769 | 70.0 | $ | 763 | 68.0 | 9.6 | ||||||
| Q3 2018 | 100 | 5,023 | 980 | 4,410 | 1.43 | 0.42 | 82% | 94,153 | 96,496 | 69.0 | $ | 715 | 47.1 | 12.7 | ||||||
| Q2 2018 | 100 | 4,721 | 853 | 4,361 | 1.44 | 0.37 | 86% | 97,650 | 95,432 | 72.0 | $ | 754 | 43.6 | 13.9 | ||||||
| Bald Mountain (8) | Q2 2019 | 100 | 3,725 | – | 4,138 | – | 0.36 | nm | 40,564 | 31,547 | $ | 27.0 | $ | 856 | $ | 57.5 | $ | 12.2 | ||
| Q1 2019 | 100 | 2,659 | – | 2,836 | – | 0.48 | nm | 47,255 | 43,230 | 29.2 | $ | 675 | 64.6 | 16.2 | ||||||
| Q4 2018 | 100 | 4,929 | – | 5,406 | – | 0.47 | nm | 47,211 | 68,288 | 46.9 | $ | 687 | 40.4 | 22.4 | ||||||
| Q3 2018 | 100 | 7,106 | – | 5,806 | – | 0.38 | nm | 72,560 | 90,931 | 53.4 | $ | 587 | 44.2 | 29.3 | ||||||
| Q2 2018 | 100 | 7,109 | – | 7,109 | – | 0.48 | nm | 71,435 | 60,730 | 27.7 | $ | 456 | 44.9 | 20.8 | ||||||
| Paracatu | Q2 2019 | 100 | 12,307 | 14,439 | – | 0.48 | – | 80% | 186,167 | 186,520 | $ | 106.8 | $ | 573 | $ | 34.6 | $ | 45.2 | ||
| Q1 2019 | 100 | 12,393 | 14,283 | – | 0.38 | – | 80% | 146,776 | 146,397 | 94.9 | $ | 648 | 16.5 | 35.9 | ||||||
| Q4 2018 | 100 | 11,680 | 13,479 | – | 0.44 | – | 81% | 145,634 | 152,395 | 116.6 | $ | 765 | 33.3 | 41.7 | ||||||
| Q3 2018 | 100 | 12,565 | 13,547 | – | 0.38 | – | 76% | 126,515 | 125,700 | 97.6 | $ | 776 | 25.1 | 42.2 | ||||||
| Q2 2018 | 100 | 11,677 | 14,074 | – | 0.37 | – | 75% | 121,226 | 117,043 | 100.4 | $ | 858 | 23.7 | 30.8 | ||||||
| Maricunga (8) | Q2 2019 | 100 | – | – | – | – | – | nm | 6,648 | 9,474 | $ | 8.0 | $ | 844 | $ | – | $ | 0.5 | ||
| Q1 2019 | 100 | – | – | – | – | – | nm | 10,716 | 7,624 | 4.8 | $ | 630 | – | 0.4 | ||||||
| Q4 2018 | 100 | – | – | – | – | – | nm | 7,226 | 19,399 | 16.1 | $ | 830 | – | 0.6 | ||||||
| Q3 2018 | 100 | – | – | – | – | – | nm | 10,808 | 30,442 | 22.4 | $ | 736 | – | 1.1 | ||||||
| Q2 2018 | 100 | – | – | – | – | – | nm | 19,866 | 17,764 | 11.7 | $ | 659 | – | 0.8 | ||||||
| Russie | Kupol (3)(4)(6) | Q2 2019 | 100 | 431 | 432 | – | 9.23 | – | 94% | 127,684 | 124,873 | $ | 70.2 | $ | 562 | $ | 8.2 | $ | 30.7 | |
| Q1 2019 | 100 | 362 | 425 | – | 9.62 | – | 93% | 130,088 | 130,414 | 78.0 | $ | 598 | 8.2 | 27.4 | ||||||
| Q4 2018 | 100 | 400 | 425 | – | 8.77 | – | 95% | 123,478 | 124,408 | 68.7 | $ | 552 | 19.4 | 30.1 | ||||||
| Q3 2018 | 100 | 412 | 439 | – | 8.69 | – | 95% | 125,870 | 123,624 | 81.3 | $ | 658 | 22.0 | 32.0 | ||||||
| Q2 2018 | 100 | 412 | 430 | – | 8.42 | – | 95% | 120,418 | 124,179 | 73.6 | $ | 593 | 11.2 | 33.0 | ||||||
| West Africa | Tasiast | Q2 2019 | 100 | 819 | 1,281 | – | 2.19 | – | 97% | 92,901 | 94,748 | $ | 58.9 | $ | 622 | $ | 75.2 | $ | 32.2 | |
| Q1 2019 | 100 | 1,962 | 1,269 | – | 2.37 | – | 97% | 101,358 | 99,758 | 66.0 | $ | 662 | 75.7 | 31.0 | ||||||
| Q4 2018 | 100 | 3,267 | 1,301 | – | 2.19 | – | 94% | 91,548 | 83,780 | 69.5 | $ | 830 | 71.1 | 28.5 | ||||||
| Q3 2018 | 100 | 2,187 | 947 | 924 | 1.72 | 0.42 | 91% | 53,363 | 50,549 | 66.2 | $ | 1,310 | 98.1 | 29.1 | ||||||
| Q2 2018 | 100 | 966 | 750 | 755 | 1.88 | 0.29 | 91% | 47,276 | 48,409 | 54.8 | $ | 1,132 | 101.4 | 18.9 | ||||||
| Chirano – 100% | Q2 2019 | 90 | 619 | 904 | – | 1.95 | – | 92% | 53,349 | 51,141 | $ | 46.7 | $ | 913 | $ | 2.7 | $ | 23.8 | ||
| Q1 2019 | 90 | 499 | 908 | – | 1.97 | – | 92% | 52,322 | 54,083 | 44.0 | $ | 814 | 3.3 | 25.4 | ||||||
| Q4 2018 | 90 | 527 | 840 | – | 2.08 | – | 92% | 51,273 | 49,173 | 39.5 | $ | 803 | 5.7 | 28.3 | ||||||
| Q3 2018 | 90 | 505 | 908 | – | 2.10 | – | 92% | 56,675 | 53,915 | 41.7 | $ | 773 | 6.9 | 30.8 | ||||||
| Q2 2018 | 90 | 458 | 873 | – | 2.23 | – | 92% | 58,572 | 57,399 | 44.6 | $ | 777 | 5.0 | 31.4 | ||||||
| Chirano – 90% | Q2 2019 | 90 | 619 | 904 | – | 1.95 | – | 92% | 48,014 | 46,027 | $ | 42.0 | $ | 913 | $ | 2.4 | $ | 21.4 | ||
| Q1 2019 | 90 | 499 | 908 | – | 1.97 | – | 92% | 47,090 | 48,675 | 39.6 | $ | 814 | 3.0 | 22.9 | ||||||
| Q4 2018 | 90 | 527 | 840 | – | 2.08 | – | 92% | 46,146 | 44,255 | 35.5 | $ | 802 | 5.1 | 25.5 | ||||||
| Q3 2018 | 90 | 505 | 908 | – | 2.10 | – | 92% | 51,007 | 48,524 | 37.6 | $ | 775 | 6.2 | 27.7 | ||||||
| Q2 2018 | 90 | 458 | 873 | – | 2.23 | – | 92% | 52,715 | 51,659 | 40.1 | $ | 776 | 4.5 | 28.3 | ||||||
| (1) Tonnes of ore mined and processed represent 100% Kinross for all periods presented. | ||||||||||||||||||||
| (2) Due to the nature of heap leach operations, recovery rates at Maricunga and Bald Mountain cannot be accurately measured on a quarterly basis. Recovery rates at Fort Knox, Round Mountain and Tasiast represent mill recovery only. | ||||||||||||||||||||
| (3) The Kupol segment includes the Kupol and Dvoinoye mines. | ||||||||||||||||||||
| (4) Kupol silver grade and recovery were as follows: Q2 2019: 75.29 g/t, 84.9%; Q1 2019: 69.61 g/t, 82.1%; Q4 2018: 73.35 g/t, 83.5%; Q3 2018: 72.38 g/t, 85.5%; Q2 2018: 68.65 g/t, 84% | ||||||||||||||||||||
| (5) Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent based on the ratio of the average spot market prices for the commodities for each period. The ratios for the quarters presented are as follows: Q2 2019: 87.98:1; Q1 2019: 83.74:1; Q4 2018: 84.42:1; Q3 2018: 80.80:1; Q2 2018: 79.00:1. | ||||||||||||||||||||
| (6) Dvoinoye ore processed and grade were as follows: Q2 2019: 113,872, 9.24 g/t; Q1 2019: 135,529, 7.46 g/t; Q4 2018: 104,495, 9.82 g/t; Q3 2018: 106,918, 10.03 g/t; Q2 2018: 121,739, 9.22 g/t | ||||||||||||||||||||
| (7) Capital expenditures are presented on a cash basis, consistent with the statement of cash flows. | ||||||||||||||||||||
| (8) "nm" means not meaningful. | ||||||||||||||||||||
Reconciliation of non-GAAP financial measures
The Company has included certain non-GAAP financial measures in this document. These measures are not defined under International Financial Reporting Standards (IFRS) and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other issuers.
Adjusted net earnings attributable to common shareholders and adjusted net earnings per share are non-GAAP measures which determine the performance of the Company, excluding certain impacts which the Company believes are not reflective of the Company’s underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, rebadessment of prior year taxes and/or taxes otherwise not related to the current period, impairment charges (reversals), gains and losses and other one-time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results. Management believes that these measures, which are used internally to badess performance and in planning and forecasting future operating results, provide investors with the ability to better evaluate underlying performance, particularly since the excluded items are typically not included in public guidance. However, adjusted net earnings and adjusted net earnings per share measures are not necessarily indicative of net earnings and earnings per share measures as determined under IFRS.
The following table provides a reconciliation of net earnings to adjusted net earnings for the periods presented:
| Adjusted Net Earnings | ||||||||||||||
| (in millions, except per share amounts) | Three months ended | Six months ended | ||||||||||||
| June 30th | June 30th | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Net earnings attributable to common shareholders – as reported | $ | 71.5 | $ | 2.4 | $ | 136.2 | $ | 108.5 | ||||||
| Adjusting items: | ||||||||||||||
| Foreign exchange losses (gains) | 4.1 | (3.4 | ) | 2.0 | (3.9 | ) | ||||||||
| Foreign exchange (gains) losses on translation of tax basis and foreign exchange on deferred income taxes within income tax expense |
(5.6 | ) | 28.1 | (6.8 | ) | 28.3 | ||||||||
| Taxes in respect of prior periods | 5.7 | (0.1 | ) | 11.4 | 20.0 | |||||||||
| Reclamation and remediation expense | – | 4.5 | – | 4.5 | ||||||||||
| Tasiast Phase One commissioning costs | – | 6.4 | – | 6.4 | ||||||||||
| Fort Knox pit wall slide related costs | 4.9 | – | 11.4 | – | ||||||||||
| Restructuring costs | – | – | 9.2 | – | ||||||||||
| Other | 0.3 | 1.5 | 2.2 | 1.0 | ||||||||||
| Tax effect of the above adjustments | (1.3 | ) | (1.6 | ) | (2.7 | ) | (1.8 | ) | ||||||
| 8.1 | 35.4 | 26.7 | 54.5 | |||||||||||
| Adjusted net earnings attributable to common shareholders | $ | 79.6 | $ | 37.8 | $ | 162.9 | $ | 163.0 | ||||||
| Weighted average number of common shares outstanding – Basic | 1,252.3 | 1,250.2 | 1,251.5 | 1,248.7 | ||||||||||
| Adjusted net earnings per share | $ | 0.06 | $ | 0.03 | $ | 0.13 | $ | 0.13 | ||||||
The Company makes reference to a non-GAAP measure for adjusted operating cash flow. Adjusted operating cash flow is defined as cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company’s regular operating cash flow, and excluding changes in working capital. Working capital can be volatile due to numerous factors, including the timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The Company uses adjusted operating cash flow internally as a measure of the underlying operating cash flow performance and future operating cash flow-generating capability of the Company. However, the adjusted operating cash flow measure is not necessarily indicative of net cash flow from operations as determined under IFRS.
The following table provides a reconciliation of adjusted operating cash flow for the periods presented:
| Adjusted Operating Cash Flow | |||||||||||||
| (in millions) | Three months ended | Six months ended | |||||||||||
| June 30th | June 30th | ||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||
| Net cash flow provided from operating activities – as reported | $ | 333.0 | $ | 184.5 | $ | 584.6 | $ | 478.0 | |||||
| Adjusting items: | |||||||||||||
| Working capital changes: | |||||||||||||
| Accounts receivable and other badets | 40.3 | 41.7 | 25.7 | 44.1 | |||||||||
| Inventories | (12.6 | ) | (21.2 | ) | (50.0 | ) | 1.8 | ||||||
| Accounts payable and other liabilities, including income taxes paid | (73.0 | ) | 26.5 | (41.8 | ) | 71.3 | |||||||
| (45.3 | ) | 47.0 | (66.1 | ) | 117.2 | ||||||||
| Adjusted operating cash flow | $ | 287.7 | $ | 231.5 | $ | 518.5 | $ | 595.2 | |||||
Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of sales as per the consolidated financial statements divided by the total number of gold equivalent ounces sold. This measure converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.
Management uses these measures to monitor and evaluate the performance of its operating properties. The following table presents a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for the periods presented:
| Consolidated and Attributable Production Cost of Sales Per Equivalent Ounce Sold |
||||||||||||||
| (in millions, except ounces and production cost of sales per equivalent ounce) | Three months ended | Six months ended | ||||||||||||
| June 30th | June 30th | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Production cost of sales – as reported | $ | 426.1 | $ | 454.9 | $ | 837.8 | $ | 899.5 | ||||||
| Less: portion attributable to Chirano non-controlling interest(1) | (4.7 | ) | (4.5 | ) | (9.1 | ) | (9.2 | ) | ||||||
| Attributable(2) production cost of sales | $ | 421.4 | $ | 450.4 | $ | 828.7 | $ | 890.3 | ||||||
| Gold equivalent ounces sold | 641,149 | 593,296 | 1,244,206 | 1,267,957 | ||||||||||
| Less: portion attributable to Chirano non-controlling interest(9) | (5,114 | ) | (5,740 | ) | (10,522 | ) | (12,184 | ) | ||||||
| Attributable(2) gold equivalent ounces sold | 636,035 | 587,556 | 1,233,684 | 1,255,773 | ||||||||||
| Consolidated production cost of sales per equivalent ounce sold | $ | 665 | $ | 767 | $ | 673 | $ | 709 | ||||||
| Attributable(2) production cost of sales per equivalent ounce sold | $ | 663 | $ | 767 | $ | 672 | $ | 709 | ||||||
Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP measure which calculates the Company’s non-gold production as a credit against its per ounce production costs, rather than converting its non-gold production into gold equivalent ounces and crediting it to total production, as is the case in co-product accounting. Management believes that this measure provides investors with the ability to better evaluate Kinross’ production cost of sales per ounce on a comparable basis with other major gold producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-product accounting.
The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the periods presented:
| Attributable Production Cost of Sales Per Ounce Sold on a By-Product Basis |
||||||||||||||
| (in millions, except ounces and production cost of sales per ounce) | Three months ended | Six months ended | ||||||||||||
| June 30th | June 30th | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Production cost of sales – as reported | $ | 426.1 | $ | 454.9 | $ | 837.8 | $ | 899.5 | ||||||
| Less: portion attributable to Chirano non-controlling interest(1) | (4.7 | ) | (4.5 | ) | (9.1 | ) | (9.2 | ) | ||||||
| Less: attributable(2) silver revenue(3) | (15.5 | ) | (17.2 | ) | (32.6 | ) | (35.5 | ) | ||||||
| Attributable(2) production cost of sales net of silver by-product revenue | $ | 405.9 | $ | 433.2 | $ | 796.1 | $ | 854.8 | ||||||
| Gold ounces sold | 629,206 | 580,173 | 1,219,031 | 1,241,057 | ||||||||||
| Less: portion attributable to Chirano non-controlling interest(9) | (5,108 | ) | (5,729 | ) | (10,506 | ) | (12,162 | ) | ||||||
| Attributable(2) gold ounces sold | 624,098 | 574,444 | 1,208,525 | 1,228,895 | ||||||||||
| Attributable(2) production cost of sales per ounce sold on a by-product basis | $ | 650 | $ | 754 | $ | 659 | $ | 696 | ||||||
In November 2018, the World Gold Council (“WGC”) published updates to its guidelines for reporting all-in sustaining costs and all-in costs to address how the costs badociated with leases, after a company’s adoption of IFRS 16 “Leases”, should be treated. Although the WGC is not a mining industry regulatory organization, it worked closely with its member companies to develop these non-GAAP measures. Adoption of the all-in sustaining cost and all-in cost metrics is voluntary and not necessarily standard, and therefore, these measures presented by the Company may not be comparable to similar measures presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing measures reported by Kinross.
All-in sustaining cost includes both operating and capital costs required to sustain gold production on an ongoing basis. The value of silver sold is deducted from the total production cost of sales as it is considered residual production. Sustaining operating costs represent expenditures incurred at current operations that are considered necessary to maintain current production. Sustaining capital represents capital expenditures at existing operations comprising mine development costs and ongoing replacement of mine equipment and other capital facilities, and does not include capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.
All-in cost is comprised of all-in sustaining cost as well as operating expenditures incurred at locations with no current operation, or costs related to other non-sustaining activities, and capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.
Attributable all-in sustaining cost and all-in cost per ounce sold on a by-product basis are calculated by adjusting total production cost of sales, as reported on the consolidated statement of operations, as follows:
| Attributable All-In Sustaining Cost and All-In Cost Per Ounce Sold on a By-Product Basis |
|||||||||||||
| (in millions, except ounces and costs per ounce) | Three months ended | Six months ended | |||||||||||
| June 30th | June 30th | ||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||
| Production cost of sales – as reported | $ | 426.1 | $ | 454.9 | $ | 837.8 | $ | 899.5 | |||||
| Less: portion attributable to Chirano non-controlling interest(1) | (4.7 | ) | (4.5 | ) | (9.1 | ) | (9.2 | ) | |||||
| Less: attributable(2) silver revenue(3) | (15.5 | ) | (17.2 | ) | (32.6 | ) | (35.5 | ) | |||||
| Attributable(2) production cost of sales net of silver by-product revenue | $ | 405.9 | $ | 433.2 | $ | 796.1 | $ | 854.8 | |||||
| Adjusting items on an attributable(2) basis: | |||||||||||||
| General and administrative(4) | 29.6 | 30.3 | 63.0 | 66.0 | |||||||||
| Other operating expense – sustaining(5) | 6.0 | 9.6 | 11.5 | 16.4 | |||||||||
| Reclamation and remediation – sustaining(6) | 11.9 | 13.6 | 23.3 | 28.8 | |||||||||
| Exploration and business development – sustaining(7) | 18.2 | 13.6 | 32.1 | 25.9 | |||||||||
| Additions to property, plant and equipment – sustaining(8) | 97.8 | 80.6 | 176.2 | 135.7 | |||||||||
| Lease payments – sustaining(9) | 3.5 | – | 6.4 | – | |||||||||
| All-in Sustaining Cost on a by-product basis – attributable(2) | $ | 572.9 | $ | 580.9 | $ | 1,108.6 | $ | 1,127.6 | |||||
| Other operating expense – non-sustaining(5) | 12.0 | 13.5 | 28.2 | 21.6 | |||||||||
| Reclamation and remediation – non-sustaining(6) | 1.8 | 1.4 | 3.5 | 2.7 | |||||||||
| Exploration – non-sustaining(7) | 10.0 | 10.1 | 15.5 | 18.2 | |||||||||
| Additions to property, plant and equipment – non-sustaining(8) | 177.8 | 165.3 | 342.5 | 336.8 | |||||||||
| Lease payments – non-sustaining(9) | 0.4 | – | 0.8 | – | |||||||||
| All-in Cost on a by-product basis – attributable(2) | $ | 774.9 | $ | 771.2 | $ | 1,499.1 | $ | 1,506.9 | |||||
| Gold ounces sold | 629,206 | 580,173 | 1,219,031 | 1,241,057 | |||||||||
| Less: portion attributable to Chirano non-controlling interest(9) | (5,108 | ) | (5,729 | ) | (10,506 | ) | (12,162 | ) | |||||
| Attributable(2) gold ounces sold | 624,098 | 574,444 | 1,208,525 | 1,228,895 | |||||||||
| Attributable(2) all-in sustaining cost per ounce sold on a by-product basis | $ | 918 | $ | 1,011 | $ | 917 | $ | 918 | |||||
| Attributable(2) all-in cost per ounce sold on a by-product basis | $ | 1,242 | $ | 1,343 | $ | 1,240 | $ | 1,226 | |||||
The Company also badesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP measures, the Company’s production of silver is converted into gold equivalent ounces and credited to total production.
Attributable all-in sustaining cost and all-in cost per equivalent ounce sold are calculated by adjusting total production cost of sales, as reported on the interim condensed consolidated statement of operations, as follows:
| Attributable All-In Sustaining Cost and All-In Cost Per Equivalent Ounce Sold |
||||||||||||||
| (in millions, except ounces and costs per equivalent ounce) | Three months ended | Six months ended | ||||||||||||
| June 30th | June 30th | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Production cost of sales – as reported | $ | 426.1 | $ | 454.9 | $ | 837.8 | $ | 899.5 | ||||||
| Less: portion attributable to Chirano non-controlling interest(1) | (4.7 | ) | (4.5 | ) | (9.1 | ) | (9.2 | ) | ||||||
| Attributable(2) production cost of sales | $ | 421.4 | $ | 450.4 | $ | 828.7 | $ | 890.3 | ||||||
| Adjusting items on an attributable(2) basis: | ||||||||||||||
| General and administrative(4) | 29.6 | 30.3 | 63.0 | 66.0 | ||||||||||
| Other operating expense – sustaining(5) | 6.0 | 9.6 | 11.5 | 16.4 | ||||||||||
| Reclamation and remediation – sustaining(6) | 11.9 | 13.6 | 23.3 | 28.8 | ||||||||||
| Exploration and business development – sustaining(7) | 18.2 | 13.6 | 32.1 | 25.9 | ||||||||||
| Additions to property, plant and equipment – sustaining(8) | 97.8 | 80.6 | 176.2 | 135.7 | ||||||||||
| Lease payments – sustaining(9) | 3.5 | – | 6.4 | – | ||||||||||
| All-in Sustaining Cost – attributable(2) | $ | 588.4 | $ | 598.1 | $ | 1,141.2 | $ | 1,163.1 | ||||||
| Other operating expense – non-sustaining(5) | 12.0 | 13.5 | 28.2 | 21.6 | ||||||||||
| Reclamation and remediation – non-sustaining(6) | 1.8 | 1.4 | 3.5 | 2.7 | ||||||||||
| Exploration – non-sustaining(7) | 10.0 | 10.1 | 15.5 | 18.2 | ||||||||||
| Additions to property, plant and equipment – non-sustaining(8) | 177.8 | 165.3 | 342.5 | 336.8 | ||||||||||
| Lease payments – non-sustaining(9) | 0.4 | – | 0.8 | – | ||||||||||
| All-in Cost – attributable(2) | $ | 790.4 | $ | 788.4 | $ | 1,531.7 | $ | 1,542.4 | ||||||
| Gold equivalent ounces sold | 641,149 | 593,296 | 1,244,206 | 1,267,957 | ||||||||||
| Less: portion attributable to Chirano non-controlling interest(9) | (5,114 | ) | (5,740 | ) | (10,522 | ) | (12,184 | ) | ||||||
| Attributable(2) gold equivalent ounces sold | 636,035 | 587,556 | 1,233,684 | 1,255,773 | ||||||||||
| Attributable(2) all-in sustaining cost per equivalent ounce sold | $ | 925 | $ | 1,018 | $ | 925 | $ | 926 | ||||||
| Attributable(2) all-in cost per equivalent ounce sold | $ | 1,243 | $ | 1,342 | $ | 1,242 | $ | 1,228 | ||||||
(1) The portion attributable to Chirano non-controlling interest represents the non-controlling interest (10%) in the production cost of sales for the Chirano mine.
(2) “Attributable” includes Kinross' share of Chirano (90%) production.
(3) “Attributable silver revenue” represents the attributable portion of metal sales realized from the production of the secondary or by-product metal (i.e. silver). Revenue from the sale of silver, which is produced as a by-product of the process used to produce gold, effectively reduces the cost of gold production.
(4) “General and administrative” expenses is as reported on the interim condensed consolidated statement of operations, net of certain restructuring expenses. General and administrative expenses are considered sustaining costs as they are required to be absorbed on a continuing basis for the effective operation and governance of the Company.
(5) “Other operating expense – sustaining” is calculated as “Other operating expense” as reported on the interim condensed consolidated statement of operations, less other operating and reclamation and remediation expenses related to non-sustaining activities as well as other items not reflective of the underlying operating performance of our business. Other operating expenses are clbadified 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 clbadified as sustaining. Other operating expenses incurred at locations where there is no current operation or related to other non-sustaining activities are clbadified as non-sustaining.
(6) “Reclamation and remediation – sustaining” is calculated as current period accretion related to reclamation and remediation obligations plus current period amortization of the corresponding reclamation and remediation badets, 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 clbadified as non-sustaining.
(7) “Exploration and business development – sustaining” is calculated as “Exploration and business development” expenses as reported on the interim condensed consolidated statement of operations, less non-sustaining exploration expenses. Exploration expenses are clbadified 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 clbadified as non-sustaining. Business development expenses are considered sustaining costs as they are required for general operations.
(8) “Additions to property, plant and equipment – sustaining” represents the majority of capital expenditures at existing operations including capitalized exploration costs, capitalized stripping and underground mine development costs, ongoing replacement of mine equipment and other capital facilities and other capital expenditures and is calculated as total additions to property, plant and equipment (as reported on the interim condensed consolidated statements of cash flows), less capitalized interest and non-sustaining capital. Non-sustaining capital represents capital expenditures for major growth projects as well as enhancement capital for significant infrastructure improvements at existing operations. Non-sustaining capital expenditures during the three and six months ended June 30, 2019, primarily related to projects at Tasiast, Round Mountain, and Bald Mountain and Fort Knox. Non-sustaining capital expenditures during the three and six months ended June 30, 2018, primarily relate to projects at Tasiast, Round Mountain, and Bald Mountain.
(9) “Lease payments – sustaining” represents the majority of lease payments as reported on the interim condensed consolidated statements of cash flows and is made up of the principal and financing components of such cash payments, less non-sustaining lease payments. Lease payments for development projects or closed mines are clbadified as non-sustaining.
(10) “Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces sold from the Chirano mine.
(11) “Average realized gold price per ounce” is a non-GAAP financial measure and is defined as gold metal sales divided by the total number of gold ounces sold. This measure is intended to enable Management to better understand the price realized in each reporting period. The realized price measure does not have any standardized definition under IFRS and should not be considered a substitute for measure of performance prepared in accordance with IFRS.
Cautionary statement on forward-looking information
All statements, other than statements of historical fact, contained or incorporated by reference in this news release including, but not limited to, any information as to the future financial or operating performance of Kinross, constitute ‘‘forward-looking information’’ or ‘‘forward-looking statements’’ within the meaning of certain securities laws, including the provisions of the Securities Act (Ontario) and the provisions for ‘‘safe harbor’’ under the United States Private Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this news release. Forward-looking statements contained in this news release, include, but are not limited to, those under the headings (or headings that include) “2019 second-quarter highlights”, “Operations and organic development project highlights”, “CEO Commentary”, “Russia”, “West Africa”, “Organic development projects and opportunities” and “Outlook” as well as statements with respect to our guidance for production, production costs of sales, all-in sustaining cost and capital expenditures; the schedules and budgets for the Company’s development projects; mine life; and continuous improvement initiatives, as well as references to other possible events, the future price of gold and silver, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, estimates and the realization of such estimates (such as mineral or gold reserves and resources or mine life), success of exploration, development and mining, currency fluctuations, capital requirements, project studies, mine life extensions, government regulation permit applications and conversions, restarting suspended or disrupted operations; environmental risks and proceedings; and resolution of pending litigation. The words “advance”, “anticipate”, “believe”, “budget”, “continue”, “develop”, “encouraging”, “enhancement”, “estimates”, “expects”, “explore”, “forecast”, “focus”, “future”, “goal”, “guidance”, “intend”, “measures”, “on budget”, “on schedule”, “on target”, “on track”, “opportunity”, “optimize”, “outlook”, “phased”, “plan”, “potential”, “progress”, “project”, “promising”, “schedule”, “seek”, “study”, “target”, or variations of or similar such words and phrases or statements that certain actions, events or results may, could, should or will be achieved, received or taken, or will occur or result and similar such expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and badumptions 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 badumptions of Kinross referenced, contained or incorporated by reference in this news release, which may prove to be incorrect, include, but are not limited to, the various badumptions set forth herein and in our Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2018 and the quarter ended June 30, 2019, and the Annual Information Form dated March 29, 2019 as well as: (1) there being no significant disruptions affecting the operations of the Company, whether due to extreme weather events (including, without limitation, excessive or lack of rainfall, in particular, the potential for further production curtailments at Paracatu resulting from insufficient rainfall and the operational challenges at Fort Knox and Bald Mountain resulting from excessive rainfall, which can impact costs and/or production) and other or related natural disasters, labour disruptions (including but not limited to workforce reductions), supply disruptions, power disruptions, damage to equipment, pit wall slides (in particular that the effects of the pit wall slides at Fort Knox and Round Mountain are consistent with the Company’s expectations) or otherwise; (2) permitting, development, operations and production from the Company’s operations and development projects being consistent with Kinross’ current expectations including, without limitation: the maintenance of existing permits and approvals and the timely receipt of all permits and authorizations necessary for the development and operation of the Tasiast Phase One expansion, Phase Two expansion or any such alternate expansion that the Company decides to pursue and the Round Mountain Phase W expansion including, without limitation, work permits, necessary import authorizations for goods and equipment; operation of the SAG mill at Tasiast; land acquisitions and permitting for the construction and operation of the new tailings facility, water and power supply and continued operation of the tailings reprocessing facility at Paracatu; implementation of fire permitting upgrades required at Paracatu; and the renewal of the Chirano mining permit in a manner consistent with the Company’s expectations; (3) political and legal developments in any jurisdiction in which the Company operates being consistent with its current expectations including, without limitation, the impact of any political tensions and uncertainty in the Russian Federation and Ukraine or any related sanctions and any other similar restrictions or penalties imposed, or actions taken, by any government, including but not limited to amendments to the mining laws, and potential power rationing and tailings facility regulations in Brazil, potential amendments to water laws and/or other water use restrictions and regulatory actions in Chile, new dam safety regulations, and potential amendments to minerals and mining laws and energy levies laws, and the enforcement of labour laws in Ghana, new regulations relating to work permits, potential amendments to customs and mining laws (including but not limited to amendments to the VAT) and the pending implementation of revisions to the tax code in Mauritania, and satisfactory resolution of the discussions with the Mauritanian government regarding the Company’s activities in Mauritania including those related to Tasiast Sud, the potential pbading of Environmental Protection Agency regulations in the U.S. relating to the provision of financial badurances under the Comprehensive Environmental Response, Compensation and Liability Act, the European Union’s General Data Protection Regulation or similar legislation in other jurisdictions and potential amendments to and enforcement of tax laws in Russia (including, but not limited to, the interpretation, implementation, application and enforcement of any such laws and amendments thereto), and the impact of any trade tariffs being consistent with Kinross’ current expectations; (4) the completion of studies, including optimization studies, scoping studies and prefeasibility and feasibility studies, on the timelines currently expected and the results of those studies being consistent with Kinross’ current expectations; (5) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately consistent with current levels; (6) certain price badumptions for gold and silver; (7) prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; (8) production and cost of sales forecasts for the Company meeting expectations; (9) the accuracy of the current mineral reserve and mineral resource estimates of the Company (including but not limited to ore tonnage and ore grade estimates), mine plans for the Company’s mining operations, and the Company’s internal models; (10) labour and materials costs increasing on a basis consistent with Kinross’ current expectations; (11) the terms and conditions of the legal and fiscal stability agreements for the Tasiast and Chirano operations being interpreted and applied in a manner consistent with their intent and Kinross’ expectations and without amendment or formal dispute (including without limitation the application of tax, customs and duties exemptions); (12) goodwill and/or badet impairment potential; (13) the regulatory and legislative regime regarding mining, electricity production and transmission (including rules related to power tariffs) in Brazil being consistent with Kinross’ current expectations; (14) access to capital markets, including but not limited to maintaining our current credit ratings consistent with the Company’s current expectations; (15) that the Brazilian power plants will operate in a manner consistent with our current expectations; (16) that the Tasiast project financing will proceed in a manner consistent with our current expectations; and (17) litigation and regulatory proceedings and the potential ramifications thereof being concluded in a manner consistent with the Company’s expectations (including without limitation the ongoing litigation in Chile relating to the alleged damage of wetlands and the scope of any remediation plan or other environmental obligations arising therefrom). Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: sanctions (any other similar restrictions or penalties) now or subsequently imposed, other actions taken, by, against, in respect of or otherwise impacting any jurisdiction in which the Company is domiciled or operates (including but not limited to the Russian Federation, Canada, the European Union and the United States), or any government or citizens of, persons or companies domiciled in, or the Company’s business, operations or other activities in, any such jurisdiction; fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as fuel and electricity); changes in the discount rates applied to calculate the present value of net future cash flows based on country-specific real weighted average cost of capital; changes in the market valuations of peer group gold producers and the Company, and the resulting impact on market price to net badet value multiples; changes in various market variables, such as interest rates, foreign exchange rates, gold or silver prices and lease rates, or global fuel prices, that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under any financial obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation (including but not limited to income tax, advance income tax, stamp tax, withholding tax, capital tax, tariffs, value-added or sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, royalty, excise tax, customs/import or export taxes/duties, badet taxes, badet 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 badets; political or economic developments in Canada, the United States, Chile, Brazil, Russia, Mauritania, Ghana, or other countries in which Kinross does business or may carry on business; business opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical difficulties in connection with mining or development activities; employee relations; litigation or other claims against, or regulatory investigations and/or any enforcement actions, administrative orders or sanctions in respect of the Company (and/or its directors, officers, or employees) including, but not limited to, securities clbad action litigation in Canada and/or the United States, environmental litigation or regulatory proceedings or any investigations, enforcement actions and/or sanctions under any applicable anti-corruption, international sanctions and/or anti-money laundering laws and regulations in Canada, the United States or any other applicable jurisdiction; the speculative nature of gold exploration and development including, but not limited to, the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves; adverse changes in our credit ratings; and contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards badociated 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 badets. There can be no badurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management’s expectations and plans relating to the future. All of the forward-looking statements made in this news release are qualified by this cautionary statement and those made in our other filings with the securities regulators of Canada and the United States including, but not limited to, the cautionary statements made in the “Risk Analysis” section of our MD&A for the year ended December 31, 2018 and the quarter ended June 30, 2019 and the Annual Information Form dated March 29, 2019. Please also refer to the cautionary statement on forward looking information from the July 31, 2019 press release related to the Company’s acquisition of the Chulbatkan project. These factors are not intended to represent a complete list of the factors that could affect Kinross. Kinross disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.
Key Sensitivities
Approximately 70%-80% of the Company's costs are denominated in U.S. dollars.
A 10% change in foreign currency exchange rates would be expected to result in an approximate $18 impact on production cost of sales per ounce6.
Specific to the Russian rouble, a 10% change in the exchange rate would be expected to result in an approximate $19 impact on Russian production cost of sales per ounce.
Specific to the Brazilian real, a 10% change in the exchange rate would be expected to result in an approximate $37 impact on Brazilian production cost of sales per ounce.
A $10 per barrel change in the price of oil would be expected to result in an approximate $3 impact on production cost of sales per ounce.
A $100 change in the price of gold would be expected to result in an approximate $5 impact on production cost of sales per ounce as a result of a change in royalties.
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in this presentation, 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 (which does not include the Chulbatkan project) contained in this presentation has been prepared under the supervision of Mr. John Sims, an officer of the Company who is a “qualified person” within the meaning of National Instrument 43-101.
Source: Kinross Gold Corporation
______________________________
1 Unless otherwise stated, production figures in this news release are based on Kinross’ 90% share of Chirano production.
2 These figures are non-GAAP financial measures and are defined and reconciled on pages 13 to 18 of this news release.
3 Net earnings figures in this release represent “net earnings from continuing operations attributable to common shareholders”.
4 Average realized gold price is a non-GAAP financial measure and is defined as gold metal sales divided by the total number of gold ounces sold.
5 Attributable margin per equivalent ounce sold is a non-GAAP financial measure defined as “average realized gold price per ounce” less “attributable production cost of sales per gold equivalent ounce sold.”
6 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.
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