For more information, please see Kinross’ 2015 first quarter Financial Statements and MD&A
For more information, please see Kinross’ 2015 first quarter Financial Statements and MD&A at www.kinross.com NEWS RELEASE
Kinross reports 2015 first quarter results
All-in sustaining cost and production cost of sales lower quarter-over-quarter and year-over-year On track to meet Company-wide and regional production guidance
Toronto, Ontario – May 5, 2015 – Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the first quarter ended March 31, 2015.
(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 17 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
2015 first quarter highlights:
- Production1: 629,360 gold equivalent ounces (Au eq. oz.), compared with 664,690 ounces in Q1 2014.
Revenue: $781.4 million, compared with $817.4 million in Q1 2014.
- Production cost of sales2: $709 per Au eq. oz., compared with $727 in Q1 2014.
- All-in sustaining cost2: $964 per Au eq. oz. sold, compared with $1,001 in Q1 2014. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $957 in Q1 2015, compared with $991 in Q1 2014.
- Adjusted operating cash flow2: $214.8 million, or $0.19 per share, compared with $242.2 million, or $0.21 per share, in Q1 2014.
- Adjusted net earnings2,3: $15.3 million, or $0.01 per share, compared with adjusted earnings of $34.1 million, or $0.03 per share, in Q1 2014.
- Reported net earnings/loss3: Loss of $6.7 million, or $0.01 per share, compared with earnings of $31.8 million, or $0.03 per share, in Q1 2014.
Outlook: Kinross expects to be within its 2015 forecast guidance for production (2.4 - 2.6 million Au eq. oz.), production cost of sales ($720 - $780 per Au eq. oz.), all-in sustaining cost ($1,000 - $1,100 per Au eq. oz.) and total capital expenditures ($725 million).
Organic production initiatives: A pre-feasibility study to explore potential re-start options at La Coipa remains on track to be completed during Q3 2015. A new tailings reprocessing project at Paracatu, set to launch in Q4 2015, is expected to produce an additional 34,000 Au oz. per year at a production cost of sales of $400 per ounce for a minimum of nine years. The Company is also planning to extend Chirano’s estimated mine life by one year to 2020. This will provide additional time to pursue exploration potential in this highly prospective and low-cost area.
- Maricunga update: Mining and crushing operations are expected to restart in June with the support of an additional backup power plant after operations were suspended in late March due to heavy rains in northern Chile. The loss in production is expected to be largely offset by improved production forecasts at Paracatu. As a result, Kinross expects no change to its regional guidance.
CEO Commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to 2015 first quarter results:
“Kinross followed up its strong performance in 2014 with a solid start to 2015. The Company is firmly on track to meet production guidance for the year and is tracking below guidance on both cost of sales and all-in sustaining cost. Lower power costs and favourable foreign exchange rates contributed to a continued decline in Paracatu’s cost of sales, while at the combined Kupol-Dvoinoye operations, cost of sales declined to $476 dollars per ounce – the lowest level since Q4 2012.
“In addition to another strong quarter, I am pleased that we are moving forward with two new organic production initiatives. Tailings reprocessing is an established technology and the Santo Antonio project at Paracatu is expected to quickly begin generating cash flow with the addition of low-cost ounces. Chirano’s life of mine extension allows Kinross greater scope to develop exploration targets in what is a highly prospective and low-cost area.
“As for Maricunga, it has been a challenging time for the site after heavy rains forced the temporary suspension of mining and crushing operations in late March. The team has done an outstanding job, working around the clock to establish alternate routes to the mine and deploy backup power supply. Operations are expected to restart in June, with no anticipated change to regional guidance.”
1Unless otherwise stated, production figures in this news release are based on Kinross’ 90% share of Chirano production.
2These figures are non-GAAP financial measures and are defined and reconciled on pages 12 to 16 of this news release.
3Net earnings/loss figures in this release represent “net earnings (loss) from continuing operations attributable to common shareholders”.
p. 1 Kinross reports 2015 first-quarter results www.kinross.com
Financial results Summary of financial and operating results
Three months ended March 31,
(in millions, except ounces, per share amounts, and per ounce amounts) 2015 2014
Operating Highlights from Continuing Operations
Total gold equivalent ounces(a)
Produced(c) 636,128 672,180 Sold(c) 641,752 628,637
Attributable gold equivalent ounces(a)
Produced(c) 629,360 664,690 Sold(c) 621,531
634,565
Financial Highlights from Continuing Operations
Metal sales $ 781.4 $ 817.4 Production cost of sales $ 454.6 $ 456.0 Depreciation, depletion and amortization $ 196.4
$ 206.2
Operating earnings $ 42.5 $ 81.4 Net earnings (loss) attributable to common shareholders $ (6.7) $ 31.8 Basic earnings (loss) per share attributable to common shareholders $ (0.01) $ 0.03 Diluted earnings (loss) per share attributable to common shareholders $ (0.01) $ 0.03 Adjusted net earnings attributable to common shareholders(b) $ 34.1
$ 15.3
Adjusted net earnings per share(b) $ 0.01 $ 0.03 Net cash flow provided from operating activities $ 250.1 $ 210.5 Adjusted operating cash flow (b) $ 214.8 $ 242.2 Adjusted operating cash flow per share(b) $ 0.19 $ 0.21 Average realized gold price per ounce $ 1,299
$ 1,218
Consolidated production cost of sales per equivalent ounce(c) sold(b) $ 708 $ Attributable(a) production cost of sales per equivalent ounce(c) sold(b) $ 709 $ Attributable(a) production cost of sales per ounce sold on a by-product basis(b) $ 696 $ Attributable(a) all-in sustaining cost per ounce sold on a by-product basis(b) $ 957 $ Attributable(a) all-in sustaining cost per equivalent ounce(c) sold(b) $ 1,001
$
1,050 $ 1,103 Attributable(a) all-in cost per ounce sold on a by-product basis(b) $ Attributable(a) all-in cost per equivalent ounce(c) sold(b) $ 1,054 $ 1,110
(a) "Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
(b) The definition and reconciliation of these non-GAAP financial measures is included on pages 12 to 16 of this news release.
(c) "Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market prices for the commodities for each period. The ratio for the first quarter of 2015 was 72.91:1, compared with 63.15:1 for the first quarter of 2014.
The following operating and financial results are based on first-quarter 2015 gold equivalent production from continuing operations. Production and cost measures are on an attributable basis:
Production: Kinross produced 629,360 attributable Au eq. oz. in Q1 2015, a 5% decrease compared with Q1 2014, due mainly to lower production at Tasiast and Chirano.
Production cost of sales: Production cost of sales per Au eq. oz.2 was $709 for Q1 2015, compared with $727 for the first quarter of 2014, mainly as a result of lower fuel costs, favourable foreign exchange rates and an increase in attributable Au eq. oz. sold.
p. 2 Kinross reports 2015 first-quarter results www.kinross.com Production cost of sales per Au oz. on a by-product basis2 was $696 in Q1 2015, compared with $708 in Q1 2014, based on Q1 2015 attributable gold sales of 617,851 ounces and attributable silver sales of 1,218,620 ounces.
All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold2 decreased to $964 in Q1 2015, compared with $1,001 in Q1 2014, primarily due to reductions in both sustaining capital expenditures and production cost of sales. All-in sustaining cost per Au oz. sold on a by-product basis2 was $957 in Q1 2015, compared with $991 in Q1 2014.
Revenue: Revenue from metal sales was $781.4 million in Q1 2015, compared with $817.4 million during the same period in 2014, primarily due to a lower average realized gold price, partially offset by an increase in gold equivalent ounces sold.
Average realized gold price: The average realized gold price in Q1 2015 declined to $1,218 per ounce, compared with $1,299 per ounce in Q1 2014.
Margins: Kinross’ attributable margin per Au eq. oz. sold4 was $509 per Au eq. oz. for Q1 2015, compared with a Q1 2014 margin of $572 per Au eq. oz.
Operating cash flow: Adjusted operating cash flow2 was $214.8 million, or $0.19 per share, for Q1 2015, compared with $242.2 million, or $0.21 per share, for Q1 2014.
Earnings/loss: Adjusted net earnings2,3 were $15.3 million, or $0.01 per share, for Q1 2015, compared with adjusted net earnings of $34.1 million, or $0.03 per share, for Q1 2014.
Reported net loss3 was $6.7 million, or $0.01 per share, for Q1 2015, compared with reported net earnings of $31.8 million, or $0.03 per share, for Q1 2014. Reported net loss for the quarter included foreign exchange losses of $18.7 million primarily related to deferred income taxes.
Capital expenditures: Capital expenditures decreased to $149.5 million for Q1 2015, compared with $168.9 million for the same period last year, due mainly to lower spending at Tasiast and Dvoinoye.
Operating results
Mine-by-mine summaries for 2015 first-quarter operating results may be found on pages seven and 11 of this news release. Highlights include the following:
Americas
The region performed well in the quarter despite the anticipated decline in production compared with 2014, and is on track to meet its production and cost of sales forecast for the year. At Fort Knox, production was down slightly compared with Q4 2014 due to a planned reduction in mill grades and the expected seasonal impact of the heap leach in winter. Cost of sales per ounce was in line with Q4 2014, but higher year-over-year due to fewer ounces sold. At Kettle River-Buckhorn, production was down slightly and cost of sales increased year-over-year as mill grades declined with the anticipated winding down of the operation in 2016. Production was lower at Round Mountain year-over-year after mill operations were temporarily suspended following a fire on October 1, 2014. The mill was successfully re-commissioned in March and is now operating at full capacity. The majority of the repair cost is expected to be covered by insurance.
Paracatu’s production decreased year-over-year due to reduced throughput, which was partially offset by higher grades resulting from the successful ore blending program. Power rationing in Brazil has yet to take effect, and is now expected to have less of an impact on Paracatu’s production than originally anticipated. Paracatu’s production cost of sales declined for the third consecutive quarter to $752 per ounce as a result of lower power costs and favourable foreign exchange rates. Maricunga’s production increased 8% year-over-year due to improvements to the crushing plant and enhanced management of the heap leach and ADR plant. Production declined from Q4 2014, partially due to heavy rains in late March which temporarily suspended mining and crushing operations, and
4Attributable margin per equivalent ounce sold is a non-GAAP measure defined as “average realized gold price per ounce” less “attributable production cost of sales per gold equivalent ounce sold.”
p. 3 Kinross reports 2015 first-quarter results www.kinross.com the planned replacement of the stock pile conveyor structure. Maricunga’s production cost of sales per ounce declined compared with Q1 2014 and remained in line with the previous quarter.
Russia
First quarter production at the combined Kupol and Dvoinoye operation was largely in line with the previous quarter. First quarter production decreased slightly compared with prior year results due mainly to lower grades at Dvoinoye. Approximately 80,500 Au eq. oz. were produced from processing Dvoinoye ore in Q1 2015, an increase compared with the previous quarter. Production cost of sales per ounce decreased to $476 per ounce, the lowest level since Q4 2012, due mainly to savings associated with favourable foreign exchange movements.
West Africa
At Chirano, production was lower compared with the previous quarter and year-over-year due to the declining contribution from the Akwaaba underground deposit. The impact of power rationing on production during the quarter was minimal as grid power was prioritized for processing facilities and underground development was supplemented with generator power. Production cost of sales per ounce increased 4% year-over-year due to lower grades, power generator costs and higher underground mobile equipment maintenance costs, partially offset by lower contractor costs.
At Tasiast, production decreased compared with Q4 2014 as a result of mine sequencing and lower mill grades. Production cost of sales per ounce decreased year-over-year due to lower fuel prices and continuous improvement programs, but increased 2% compared with Q4 2014 as a result of fewer ounces sold.
Maricunga update
As previously disclosed, heavy rains in Chile’s northern Atacama region in late March led to the temporary suspension of mining and crushing operations at Maricunga. Alternate routes to the mine have now been established. Mining and crushing operations are expected to re-start in June using an additional backup power plant, with main power lines expected to be back in operation in September. The ADR processing plant, which produces gold from the heap leach, has been running at 80% capacity during this period.
The Company does not anticipate any changes to the Americas regional guidance. The loss of production from the temporary suspension of operations is expected to be largely offset by a lower-than-expected impact on Paracatu’s production from power rationing in Brazil and additional anticipated production from the Santo Antonio tailings reprocessing project.
Organic production initiatives
La Coipa Phase 7 update: A pre-feasibility study (PFS), begun in Q2 2014 to explore potential re-start options at La Coipa, remains on track to be completed during the third quarter of 2015. Metallurgical test work continues to be a major component of the study. Results to date confirm similar characteristics to past ores, with more tests to follow in an effort to optimize the process. A scoping study focused on processing options for known near-surface sulfide mineralization in the district was completed; however, results indicate processing of near-surface sulfides would not be economic at current gold prices. Exploration continues at several district targets with the assessment of some attractive opportunities to extend the mine life beyond what the PFS will contemplate.
Paracatu Santo Antonio tailings reprocessing: In the fourth quarter 2015, a new continuous improvement project is expected to launch at Paracatu to reprocess tailings from the Santo Antonio tailings facility. The initiative, which has an estimated capital cost of $20 million, is expected to produce approximately 34,000 additional Au oz. per year at a production cost of sales of $400 per ounce for a minimum of nine years. The tailings will be reprocessed through Plant 1, with an expected production of approximately 11,000 Au oz. in Q4 2015.
Chirano mine life extension: The Company is moving forward with plans to profitably extend Chirano’s estimated mine life by one year to 2020 by unlocking estimated additional ounces at two known mineral deposits: Paboase,
p. 4 Kinross reports 2015 first-quarter results www.kinross.com and Akoti, where a third underground mine is expected to open. The anticipated mine life extension will also provide additional time to pursue the exploration potential at Chirano, which is one of Kinross’ most cost competitive operations and is located in a highly prospective and low-cost mining area.
Liquidity
As of March 31, 2015, Kinross had cash and cash equivalents of $1,010.5 million, an increase of $27.0 million since December 31, 2014, and available credit of $1,509.6 million.
In 2015, the Company expects to repay $60.0 million of the Kupol loan, of which $30.0 million was repaid during the first quarter.
Outlook
The following section of the news release represents forward-looking information and users are cautioned that actual results may vary. We refer to the risks and assumptions contained in the Cautionary Statement on Forward-Looking Information on page 17 of this news release.
As previously announced on February 10, 2015, Kinross expects to produce approximately 2.4 - 2.6 million Au eq. oz. for the year. Kinross expects to be within its regional production guidance ranges.
The Company expects to be within its regional production cost of sales guidance ranges, its company-wide production cost of sales guidance range of $720 - $780 per Au eq. oz., and its all-in sustaining cost guidance range of $1,000 - $1,100 per Au eq. oz. sold in 2015. The Company also expects to meet its 2015 capital expenditure forecast of approximately $725 million.
Class action lawsuits update
In April, Kinross reached an agreement to settle for CDN$12.5 million a proposed securities class action lawsuit filed against it in 2012 in the Ontario Superior Court of Justice. This settlement follows a separate $33 million agreement reached in March to settle a securities class action lawsuit pending against the Company in U.S. federal court in New York. Subject to the respective approvals of the Ontario and U.S. federal courts, these agreements will result in the dismissal of both actions in their entirety, and all members of the classes bound by the settlements will be prohibited from bringing further actions relating to the same subject matters of the respective lawsuit.
Assuming that these two proposed settlements receive final court approval and the conditions of the settlement agreements are fulfilled, Kinross will have resolved these lawsuits related to the acquisition and development of Tasiast without any admission of fault or direct payout of funds from the Company for the settlement amounts. In both cases the settlement amounts will be funded from insurance coverage. We expect the Ontario court to consider approval of the Canadian settlement in June and the U.S. federal court to consider approval of the U.S. settlement by end of Q3 2015.
These settlements, if approved, will shield Kinross shareholders from the continuing risks and costs of the ongoing litigation in these proceedings while allowing the Company to continue to focus on its strategic objectives without the distraction of this litigation.
For more information on these lawsuits please refer to the Company’s Q1 2015 Management’s Discussion and Analysis filed concurrently with this news release.
p. 5 Kinross reports 2015 first-quarter results www.kinross.com
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast on Wednesday, May 6, 2015 at 7:45 a.m. ET to discuss the results, followed by a question-and-answer session. To access the call, please dial:
Canada & US toll-free – 1-800-319-4610 Outside of Canada & US – 1-604-638-5340
Replay (available up to 14 days after the call):
Canada & US toll-free – 1-800-319-6413; Passcode – 3310 followed by #.
Outside of Canada & US – 1-604-638-9010; Passcode – 3310 followed by #.
You may also access the conference call on a listen-only basis via webcast at our website www.kinross.com. The audio webcast will be archived on our website at www.kinross.com.
Kinross’ Annual and Special Shareholders Meeting will be held on Wednesday, May 6, 2015 at 10:00 a.m. ET at the Glenn Gould Studio, 250 Front Street West, Toronto, Ontario, Canada. A live audio webcast (listen-only mode) of the Annual and Special Meeting will be available at www.kinross.com and will also be archived for later access.
This release should be read in conjunction with Kinross’ 2015 first-quarter unaudited Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2015 first-quarter unaudited Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished to the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.
About Kinross Gold Corporation
Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol:KGC).
Media Contact
Andrea Mandel-Campbell Vice-President, Corporate Communications phone: 647-788-4179 [email protected]
Investor Relations Contact
Tom Elliott Vice-President, Investor Relations phone: 416-365-3390 [email protected]
p. 6 Kinross reports 2015 first-quarter results www.kinross.com
Review of operations
Gold equivalent ounces Three months ended March 31, Production cost of Production cost of Produced Sold
sales ($millions) sales/equivalent ounce sold
| 2014 | 2014 | 2014 2014 | ||
| 2015 | 2015 | 2015 2015 | ||
| Fort Knox 82,673 | 83,588 | 82,003 | 112,711 | $55.1 $ |
64.2 $ 672 $
| Round Mountain | 40,262 | 45,054 | 40,447 | 41,390 | 36.0 | 37.3 | 890 | 901 |
| Kettle River - Buckhorn | 24,265 | 25,917 | 24,167 | 25,829 | 24.3 | 16.4 | 1,006 | 635 |
| Paracatu | 124,685 | 127,085 | 124,929 | 115,776 | 93.9 | 100.1 | 752 | 865 |
| La Coipa | - | - | - | 1,344 | - | 1.6 | - | 1,190 |
| Maricunga | 56,822 | 52,729 | 54,376 | 55,857 | 56.0 | 58.6 | 1,030 | 1,049 |
| Americas Total | 328,707 | 334,373 | 325,922 | 352,907 | 265.3 | 278.2 | 814 | 788 |
| Kupol | 185,729 | 191,238 | 192,167 | 138,286 | 91.5 | 66.5 | 476 | 481 |
| Russia Total | 185,729 | 191,238 | 192,167 | 138,286 | 91.5 | 66.5 | 476 | 481 |
| Tasiast | 54,009 | 71,671 | 51,790 | 66,386 | 51.9 | 67.5 | 1,002 | 1,017 |
| Chirano (100%) | 67,683 | 74,898 | 71,873 | 71,058 | 45.9 | 43.8 | 639 | 616 |
| West Africa Total | 121,692 | 146,569 | 123,663 | 137,444 | 97.8 | 111.3 | 791 | 810 |
| Operations Total | 636,128 | 672,180 | 641,752 | 628,637 | 454.6 | 456.0 | 708 | 725 |
Less Chirano non-controlling (6,768) (7,490) (7,187) (7,106) (4.6) (4.4)
interest (10%)
Attributable Total 629,360 664,690 634,565 621,531 $ 450.0 $ 451.6 $ 709 $
p. 7 Kinross reports 2015 first-quarter results www.kinross.com
Consolidated balance sheets
(unaudited expressed in millions of United States dollars, except share amounts)
As at March 31 December 31, 2015 2014
Assets
Current assets $ 983.5
| Cash and cash equivalents | $ 1,010.5 |
| Restricted cash Accounts receivable and other assets Current income tax recoverable Inventories | 41.1 148.7 105.8 1,238.5 |
| 2,544.6 | |
| Non-current assets Property, plant and equipment Goodw ill Long-term investments Investments in associate and joint venture Other long-term assets Deferred tax assets Total assets Liabilities Current liabilities Accounts payable and accrued liabilities Current income tax payable Current portion of long-term debt | 5,345.8 162.7 97.7 156.2 390.2 106.2 |
| $ 8,803.4 | |
| $ 337.6 27.2 43.0 | |
| Current portion of provisions | 43.3 |
| Current portion of unrealized fair value of derivative liabilities Non-current liabilities Long-term debt | 71.5 |
| 522.6 | |
| 1,986.1 | |
| Provisions | 792.8 |
| Other long-term liabilities Deferred tax liabilities Total liabilities Equity Common shareholders' equity Common share capital Contributed surplus Accumulated deficit Accumulated other comprehensive income (loss) | 197.1 435.2 |
| 3,933.8 | |
| $ 14,598.5 231.9 (9,944.3) (64.5) | |
| Total common shareholders' equity | 4,821.6 |
| Non-controlling interest Total equity | 48.0 |
| 4,869.6 | |
| $ 8,803.4 |
41.3 170.4 115.2 1,276.7
2,587.1
5,409.4 162.7 111.0 156.8 417.9 106.5 $ 8,951.4
$ 421.9 19.2 60.0 43.1 60.2 604.4
1,998.1 780.9 207.2 469.0 4,059.6
$ 14,587.7 239.0 (9,937.6)
(46.1)
4,843.0 48.8 4,891.8 $ 8,951.4
Common shares
Authorized Unlimited Unlimited Issued and outstanding 1,146,210,681 1,144,576,474
p. 8 Kinross reports 2015 first-quarter results www.kinross.com
Consolidated statements of operations
(unaudited expressed in millions of United States dollars, except per share and share amounts)
| Three months ended March 31, March 31, 2015 2014 | |||
|---|---|---|---|
| 2015 | 2014 | ||
| Revenue Metal sales $ 781.4 $ 817.4 Cost of sales Production cost of sales 454.6 456.0 Depreciation, depletion and amortization 206.2 196.4 Total cost of sales 660.8 652.4 Gross profit 120.6 165.0 Other operating expense 16.3 17.7 Exploration and business development 22.8 22.7 General and administrative 39.0 43.2 Operating earnings 42.5 81.4 Other income (expense) - net (1.9) (6.2) Equity in earnings (losses) of associate and joint venture (1.0) (1.3) Finance income 2.2 1.4 Finance expense (24.0) (12.8) Earnings before tax 17.8 62.5 Income tax expense - net (25.3) (31.1) Earnings (loss) from continuing operations after tax (7.5) 31.4 Loss from discontinued operation after tax - (2.2) Net earnings (loss) $ (7.5) $ 2 9.2 Net earnings (loss) from continuing operations attributable to: Non-controlling interest $ (0.8) $ (0.4) Common shareholders $ (6.7) $ 3 1.8 Net earnings (loss) attributable to: Non-controlling interest $ (0.8) $ (0.4) Common shareholders $ (6.7) $ 2 9.6 Earnings (loss) per share from continuing operations attributable to common shareholders Basic $ (0.01) $ 0.03 Diluted $ (0.01) $ 0 .03 Earnings (loss) per share attributable to common shareholders Basic $ (0.01) $ 0.03 Diluted $ (0.01) $ 0.03 Weighted average number of common shares outstanding (millions) Basic $ 1,145.1 1,143.8 Diluted 1,145.1 1,151.1 | |||
| Revenue | |||
| Metal sales Cost of sales Production cost of sales Depreciation, depletion and amortization | $ 781.4 454.6 206.2 | ||
| Total cost of sales Gross profit | 660.8 | ||
| 120.6 | |||
| Other operating expense Exploration and business development General and administrative Operating earnings Other income (expense) - net Equity in earnings (losses) of associate and joint venture Finance income | 16.3 22.8 39.0 | ||
| 42.5 | |||
| (1.9) (1.0) 2.2 | |||
| Finance expense Earnings before tax Income tax expense - net Earnings (loss) from continuing operations after tax Loss from discontinued operation after tax Net earnings (loss) | (24.0) | ||
| 17.8 (25.3) | |||
| (7.5) - | |||
| $ (7.5) | |||
| Net earnings (loss) from continuing operations attributable to: Non-controlling interest Common shareholders Net earnings (loss) attributable to: Non-controlling interest Common shareholders Earnings (loss) per share from continuing operations attributable to common shareholders Basic Diluted Earnings (loss) per share attributable to common shareholders Basic Diluted | $ (0.8) | ||
| $ (6.7) | |||
| $ (0.8) | |||
| $ (6.7) | |||
| $ (0.01) $ (0.01) $ (0.01) $ (0.01) | |||
| Weighted average number of common shares outstanding (millions) | |||
| Basic Diluted | $ 1,145.1 | 1,143.8 1,151.1 | |
| 1,145.1 |
p. 9 Kinross reports 2015 first-quarter results www.kinross.com
Consolidated statements of cash flows
(unaudited expressed in millions of United States dollars)
| 2015 | |
| Net inflow (outflow) of cash related to the following activities: | |
| Operating: | |
| Earnings (loss) from continuing operations Adjustments to reconcile net earnings (loss) from continuing operations to net cash provided from (used in) operating activities: Depreciation, depletion and amortization Losses (gains) on sale of other assets - net Equity in losses (earnings) of associate and joint venture Non-hedge derivative losses - net Share-based compensation expense | $ (7.5) 206.2 1.2 1.0 1.0 4.6 |
| Finance expense | 24.0 |
| Deferred tax expense (recovery) Foreign exchange (gains) losses and other Changes in operating assets and liabilities: Accounts receivable and other assets Inventories Accounts payable and accrued liabilities | (29.8) 14.1 40.8 50.7 (27.6) |
| Cash flow provided from operating activities Income taxes paid Net cash flow of continuing operations provided from operating activities Net cash flow of discontinued operations used in operating activities | 278.7 |
| (28.6) | |
| 250.1 | |
| - | |
| Investing: Additions to property, plant and equipment | (149.5) |
| Net additions to long-term investments and other assets | (21.7) |
| Net proceeds from the sale of property, plant and equipment Decrease (increase) in restricted cash Interest received and other Net cash flow of continuing operations used in investing activities Net cash flow of discontinued operations provided from investing activities Financing: Issuance of common shares on exercise of options Proceeds from issuance of debt Repayment of debt Interest paid Settlement of derivative instruments Other | 0.3 0.2 1.1 |
| (169.6) | |
| 1.0 | |
| - 19.5 (49.5) (21.0) - - | |
| Net cash flow of continuing operations used in financing activities Net cash flow of discontinued operations used in financing activities | (51.0) |
| - | |
| Effect of exchange rate changes on cash and cash equivalents of continuing operations Increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period | (3.5) |
| 27.0 983.5 | |
| $ 1,010.5 |
p. 10 Kinross reports 2015 first-quarter results www.kinross.com
| Operating Summary | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| M ine | P erio d | Ownership | T o nnes Ore M ined ( 1) | Ore P ro cessed (M illed) ( 1) | Ore P ro cessed (H eap Leach) ( 1) | Grade (M ill) | Grade (H eap Leach) | R eco very ( 2) | Go ld Eq P ro ductio n ( 5) | Go ld Eq Sales ( 5) | P ro ductio n co st o f sales | P ro ductio n co st o f sales / o z | C ap Ex ( 7) | D D &A | |
| (%) | ('000 tonnes) | ('000 tonnes) | ('000 tonnes) | (g/t) | (g/t) | (%) | (ounces) | (ounces) | ($ millions) | ($/ounce) | ($ millions) | ($ millions) | |||
| Americas | F o rt Kno x | Q1 2015 | 100 | 5,814 | 3,366 | 3,554 | 0.64 | 0.29 | 82% | 82,673 | 82,003 | $ 55.1 | $ 672 | $ 41.4 | $ 24.6 |
| Q4 2014 Q3 2014 Q2 2014 Q1 2014 | 100 100 100 100 | 5,453 | 3,261 3,491 3,479 3,307 | 8,782 7,638 6,638 2,790 | 0.86 0.62 0.50 0.66 | 0.30 0.30 0.29 0.27 | 84% 86% 84% 84% | 99,734 104,815 91,316 83,588 | 99,636 110,187 85,938 112,711 | 66.6 88.5 71.7 64.2 | 668 803 834 570 | 19.2 11.1 26.0 29.7 | 27.0 31.8 30.7 28.5 | ||
| 2,537 | |||||||||||||||
| 3,241 3,655 | |||||||||||||||
| R o und M o untain ( 8) | Q1 2015 | 50 | 7,494 | 146 | 6,726 | 0.65 | 0.40 | 67% | 40,262 | 40,447 | $ 36.0 | $ 890 | $ 11.2 | $ 9.0 | |
| Q4 2014 Q3 2014 Q2 2014 Q1 2014 | 50 50 50 50 | 6,946 6,265 6,475 6,670 | - 1,010 1,008 910 | 6,418 5,956 5,258 5,466 | nm 0.91 0.91 1.02 | 0.38 0.35 0.37 0.32 | nm 61% 63% 82% | 37,746 44,764 42,275 45,054 | 37,133 45,540 42,378 41,390 | 32.2 35.9 36.9 37.3 | 867 788 871 901 | 16.7 13.0 8.3 6.6 | 10.0 5.6 5.0 4.6 | ||
| Kettle R iver- B uckho rn | Q1 2015 | 100 | 93 | 111 | - | 6.02 | - | 91% | 24,265 | 24,167 | $ 24.3 | $ 1,006 | $ 0.6 | $ 4.1 | |
| Q4 2014 Q3 2014 Q2 2014 Q1 2014 | 100 100 100 100 | 91 | 104 | - - - - | 7.46 9.78 11.96 10.93 | - - - - | 93% 95% 94% 92% | 24,735 32,175 40,555 25,917 | 24,849 33,783 38,801 25,829 | 19.7 22.6 24.9 16.4 | 793 669 642 635 | 1.5 2.7 1.0 1.6 | 10.8 14.1 15.6 9.7 | ||
| 81 | 93 | ||||||||||||||
| 78 97 | 95 102 | ||||||||||||||
| P aracatu | Q1 2015 | 100 | 11,616 | 11,825 | - | 0.43 | - | 77% | 124,685 | 124,929 | $ 93.9 | $ 752 | $ 16.3 | $ 37.8 | |
| Q4 2014 Q3 2014 Q2 2014 Q1 2014 | 100 100 100 100 | 11,271 12,898 13,332 16,083 | 11,548 12,635 12,167 15,047 | - - - - | 0.45 0.44 0.42 0.35 | - - - - | 79% 77% 75% 68% | 133,534 136,078 124,329 127,085 | 127,991 136,233 132,327 115,776 | 97.8 105.7 114.6 100.1 | 764 776 866 865 | 49.7 31.6 14.5 16.8 | 38.8 41.1 40.5 33.9 | ||
| M aricunga ( 8) | Q1 2015 | 100 | 2,695 | - | 2,912 | - | 0.69 | nm | 56,822 | 54,376 | $ 56.0 | $ 1,030 | $ 7.5 | $ 5.4 | |
| Q4 2014 Q3 2014 Q2 2014 Q1 2014 | 100 100 100 100 | 4,227 4,328 3,854 4,491 | - - - - | 4,192 4,174 3,792 3,860 | - - - - | 0.70 0.77 0.77 0.74 | nm nm nm nm | 60,918 69,279 64,290 52,729 | 58,845 68,434 64,333 55,857 | 60.8 | 1,033 881 874 1,049 | 2.7 6.2 11.4 9.4 | 13.4 6.7 11.5 4.6 | ||
| 60.3 | |||||||||||||||
| 56.2 | |||||||||||||||
| 58.6 | |||||||||||||||
| Russia | Kupo l ( 3) ( 4) ( 6) | Q1 2015 | 100 | 464 | 418 | - | 13.20 | - | 95% | 185,729 | 192,167 | $ 91.5 | $ 476 | $ 15.5 | $ 63.9 |
| Q4 2014 Q3 2014 Q2 2014 Q1 2014 | 100 100 100 100 | 437 428 437 440 | 420 417 419 409 | - - - - | 13.19 13.28 13.77 13.81 | - - - - | 95% 95% 95% 94% | 183,750 180,838 195,275 191,238 | 179,722 216,225 216,765 138,286 | 92.6 | 515 493 530 481 | 12.7 23.4 15.7 39.5 | 64.6 75.0 58.7 56.4 | ||
| 106.6 | |||||||||||||||
| 114.8 | |||||||||||||||
| 66.5 | |||||||||||||||
| West Africa | T asiast | Q1 2015 | 100 | 1,009 | 630 | 66 | 2.00 | 0.97 | 89% | 54,009 | 51,790 | $ 51.9 | $ 1,002 | $ 36.4 | $ 16.2 |
| Q4 2014 Q3 2014 Q2 2014 Q1 2014 | 100 100 100 100 | 1,226 3,445 4,643 7,333 | 619 615 663 659 | 1,139 2,303 2,297 2,289 | 2.18 2.27 2.04 2.15 | 0.75 0.70 0.62 0.63 | 93% 93% 89% 89% | 63,277 60,438 65,099 71,671 | 58,236 62,727 65,319 66,386 | 57.2 61.0 66.5 67.5 | 982 972 1,018 1,017 | 59.4 44.5 25.8 51.3 | 19.7 15.9 15.1 15.9 | ||
| C hirano - 100% | Q1 2015 | 90 | 739 | 899 | - | 2.62 | - | 89% | 67,683 | 71,873 | $ 45.9 | $ 639 | $ 7.3 | $ 43.6 | |
| Q4 2014 Q3 2014 Q2 2014 Q1 2014 | 90 90 90 90 | 866 787 666 902 | 883 829 615 817 | - - - - | 2.96 2.95 3.42 3.06 | - - - - | 91% 93% 92% 92% | 75,952 72,701 62,991 74,898 | 72,318 73,296 63,724 71,058 | 42.3 39.5 40.2 43.8 | 585 539 631 616 | 10.5 12.0 9.0 10.7 | 42.7 41.0 35.5 40.5 | ||
| C hirano - 90% | Q1 2015 | 90 | 739 | 899 | - | 2.62 | - | 89% | 60,915 | 64,686 | $ 41.3 | $ 639 | $ 6.6 | $ 39.2 | |
| Q4 2014 Q3 2014 Q2 2014 Q1 2014 | 90 90 90 90 | 866 787 666 902 | 883 829 615 817 | - - - - | 2.96 2.95 3.42 | - - - | 91% 93% 92% 92% | 68,357 | 65,086 | 38.0 | 585 | 9.5 10.8 8.1 9.6 | 38.4 36.9 32.0 36.5 | ||
| 65,431 56,692 67,408 | 65,966 57,352 63,952 | 35.6 36.2 39.4 | 539 631 616 | ||||||||||||
| 3.06 | - |
Reconciliation of non-GAAP financial measures
The Company has included certain non-GAAP financial measures in this document. These measures are not defined under IFRS and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other issuers.
Adjusted net earnings attributable to common shareholders and adjusted net earnings per share are non-GAAP measures which determine the performance of the Company, excluding certain impacts which the Company believes are not reflective of the Company’s underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, reassessment of prior year taxes and/or taxes otherwise not related to the current period, impairment charges, gains and losses and other one-time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results. Management believes that these measures, which are used internally to assess performance and in planning and forecasting future operating results, provide investors with the ability to better evaluate underlying performance, particularly since the excluded items are typically not included in public guidance. However, adjusted net earnings and adjusted net earnings per share measures are not necessarily indicative of net earnings and earnings per share measures as determined under IFRS.
The following table provides a reconciliation of net earnings from continuing operations to adjusted net earnings from continuing operations for the periods presented:
Adjusted Earnings
(in millions, except share and per share amounts) Three months ended
March 31
2015 2014
Net earnings (loss) from continuing operations attributable to common shareholders - as reported $ (6.7) $ 31.8
Adjusting items:
Foreign exchange losses 8.3
1.0
Non-hedge derivatives losses - net of tax 2.0 3.0 Losses (gains) on sale of other assets - net of tax 0.9 (0.2)
Foreign exchange losses (gains) on translation of tax basis and foreign exchange on deferred income taxes within income tax expense 17.7 (9.5)
Taxes in respect of prior years 0.4 0.7 22.0 2.3 Adjusted net earnings from continuing operations attributable to common shareholders $ 15.3 $ 34.1 Weighted average number of common shares outstanding - Basic 1,145.1 1,143.8 Adjusted net earnings from continuing operations per share $ 0.01 $ 0.03
The Company makes reference to a non-GAAP measure for adjusted operating cash flow and adjusted operating cash flow per share. 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, adjusted operating cash flow and adjusted operating cash flow per share measures are not necessarily indicative of net cash flow from operations as determined under IFRS.
The following table provides a reconciliation of adjusted operating cash flow from continuing operations for the periods presented:
p. 12 Kinross reports 2015 first-quarter results www.kinross.com