For more information, please see Kinross’ 2017 first-quarter Financial Statements and MD&A
For more information, please see Kinross’ 2017 first-quarter Financial Statements and MD&A at www.kinross.com NEWS RELEASE
Kinross reports 2017 first-quarter results
Company on track to meet annual production and cost guidance Tasiast Phase One expansion on budget and on schedule to reach full production in Q2 2018
Toronto, Ontario – May 2, 2017 – Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the first-quarter ended March 31, 2017.
(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 18 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
2017 first quarter highlights:
Production1: 671,956 gold equivalent ounces (Au eq. oz.), compared with 687,463 Au eq. oz. in Q1 2016.
- Revenue: $796.1 million, compared with $782.6 million in Q1 2016.
- Production cost of sales2: $701 per Au eq. oz., compared with $687 in Q1 2016.
- All-in sustaining cost2: $953 per Au eq. oz. sold, compared with $956 in Q1 2016. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $945 in Q1 2017, compared with $950 in Q1 2016. Adjusted operating cash flow2: $250.9 million, compared with $207.6 million in Q1 2016.
- Operating cash flow: $207.8 million, compared with $214.5 million in Q1 2016.
- Adjusted net earnings2,3: $23.4 million, or $0.02 per share, compared with adjusted net earnings of $21.2 million, or $0.02 per share, in Q1 2016.
Reported net earnings3: $134.6 million, or $0.11 per share, compared with earnings of $35.0 million, or $0.03 per share, in Q1 2016.
- Organic development projects:
- The Tasiast Phase One expansion is progressing on time and on budget and is expected to reach full production in Q2 2018, with the Phase Two feasibility study on schedule to be completed in Q3 2017.
- At Bald Mountain, engineering work is 60% complete at the Vantage Complex project in the South area.
- At Round Mountain, the Phase W feasibility study is on schedule to be completed in Q3 2017.
- In Russia, development of the September Northeast project near Dvoinoye is now complete, while at Moroshka, located near Kupol, portal construction is now complete and construction of surface infrastructure is 50% complete.
- Outlook: Kinross expects to be within its 2017 guidance for production (2.5 - 2.7 million Au eq. oz.), production cost of sales ($660 - $720 per Au eq. oz.) and all-in sustaining cost ($925 - $1,025 per Au eq. oz.). The Company expects to be within its capital expenditures guidance of $900 million (+/- 5%).
- Cerro Casale divestment: On March 28, 2017, the Company agreed to sell its 25% interest in Cerro Casale and its 100% interest in Quebrada Seca in Chile for $260 million in cash (which includes $20 million for Quebrada Seca), a contingent payment of $40 million following a construction decision for Cerro Casale, a 1.25% royalty on 25% of gross revenues from all metals sold at the properties (with the Company foregoing the first $10 million), a contingent water supply agreement with the Cerro Casale joint venture, and the purchaser assuming a $20 million contingent payment obligation.
- Balance sheet: As of March 31, 2017, Kinross had cash and cash equivalents of $819.0 million, and available credit of $1,433.1 million, for total liquidity of approximately $2.3 billion. After considering the closing of the Cerro Casale and Quebrada Seca divestment, the Company’s pro forma cash and cash equivalent position is approximately $1.1 billion, with a total liquidity position of approximately $2.5 billion.
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 13 to 17 of this news release.
3Net earnings/loss figures in this release represent “net earnings (loss) attributable to common shareholders”.
p. 1 Kinross reports 2017 first-quarter results www.kinross.com
CEO Commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to 2017 first-quarter results:
“Kinross started the year with a strong quarter, as our portfolio of mines generated solid cash flow. With our sharp focus on delivering consistent results, we are again on track to meet our annual guidance for production and costs.
During the quarter, we further strengthened our balance sheet with the divestment of Cerro Casale, a non-core asset in our portfolio. With the sale, our pro forma cash position is approximately $1.1 billion, with total liquidity of approximately $2.5 billion. Our strong balance sheet gives us the financial flexibility to fund our organic development projects in each of our operating regions, which are all progressing well.”
“We are making excellent progress with the Tasiast Phase One expansion, which is on schedule, on budget and expected to reach full production in approximately one year. We are continuing to develop Bald Mountain’s significant long-term potential, while the mine is on track to double production in 2017 compared with 2016. The feasibility studies for Tasiast Phase Two and Round Mountain Phase W are on schedule to be finalized in Q3 2017, when we expect to make a development decision for both projects. Russia’s development projects remain on track to support mine life extension at Kupol-Dvoinoye. We are excited about our pipeline of projects that we expect to deliver strong production with a lower cost profile in the years ahead.”
Financial results Summary of financial and operating results
| Three months ended March 31, (in millions, except ounces, per share amounts, and per ounce amounts) 2017 2016(d) | |
| Operating Highlights Total gold equivalent ounces(a) Produced(c) Sold(c) Attributable gold equivalent ounces(a) Produced(c) Sold(c) Financial Highlights Metal sales Production cost of sales Depreciation, depletion and amortization Operating earnings Net earnings attributable to common shareholders Basic earnings per share attributable to common shareholders Diluted earnings per share attributable to common shareholders Adjusted net earnings attributable to common shareholders(b) Adjusted net earnings per share(b) Net cash flow provided from operating activities Adjusted operating cash flow(b) Average realized gold price per ounce Consolidated production cost of sales per equivalent ounce(c) sold(b) Attributable(a) production cost of sales per equivalent ounce(c) sold(b) Attributable(a) production cost of sales per ounce sold on a by-product basis(b) Attributable(a) all-in sustaining cost per ounce sold on a by-product basis(b) Attributable(a) all-in sustaining cost per equivalent ounce(c) sold(b) 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) | 677,781 691,910 652,516 664,165 671,956 687,463 645,946 659,397 $ 796.1 $ 782.6 $ 458.8 $ 457.7 $ 217.5 $ 193.2 $ 48.6 $ 42.8 $ 134.6 $ 35.0 $ 0.11 $ 0.03 $ 0.11 $ 0.03 $ 23.4 $ 21.2 $ 0.02 $ 0.02 $ 207.8 $ 214.5 $ 250.9 $ 207.6 $ 1,220 $ 1,179 $ 703 $ 689 $ 701 $ 687 $ 686 $ 674 $ 945 $ 950 $ 953 $ 956 $ 1,101 $ 1,015 $ 1,104 $ 1,019 |
(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 page 13 to 17 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 2017 was 69.99:1, compared with 79.64:1 for the first quarter of 2016.
(d) The interim financial statements for the three months ended March 31, 2016 were recast to reflect the retrospective impact of the finalization of the purchase price allocation for the acquisition of Bald Mountain and 50% of Round Mountain.
p. 2 Kinross reports 2017 first-quarter results www.kinross.com The following operating and financial results are based on first-quarter 2017 gold equivalent production. Production and cost measures are on an attributable basis:
Production: Kinross produced 671,956 attributable Au eq. oz. in Q1 2017, compared with production of 687,463 attributable Au eq. oz. in Q1 2016.
Production cost of sales: Production cost of sales per Au eq. oz.2 increased to $701 for Q1 2017, compared with $687 for the first quarter of 2016, mainly as a result of higher cost of sales per ounce at Paracatu, Round Mountain and Kupol.
Production cost of sales per Au oz. on a by-product basis2 increased to $686 in Q1 2017, compared with $674 in Q1 2016, based on Q1 2017 attributable gold sales of 627,249 ounces and attributable silver sales of 1,308,861 ounces.
All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold2 decreased to $953 in Q1 2017, compared with $956 in Q1 2016. All-in sustaining cost per Au oz. sold on a by-product basis2 decreased to $945 in Q1 2017, compared with $950 in Q1 2016.
Average realized gold price: The average realized gold price in Q1 2017 increased to $1,220 per ounce, compared with $1,179 per ounce in Q1 2016.
Revenue: Revenue from metal sales increased to $796.1 million in Q1 2017, compared with $782.6 million during the same period in 2016, due to a higher average realized gold price.
Margins: Kinross’ attributable margin per Au eq. oz. sold4 was $519 for Q1 2017, compared with a Q1 2016 margin of $492 per Au eq. oz.
Operating cash flow: Adjusted operating cash flow2 increased by 21% to $250.9 million for Q1 2017, compared with $207.6 million for Q1 2016.
Net operating cash flow was $207.8 million for the first quarter of 2017, compared with $214.5 million for Q1 2016.
Earnings: Adjusted net earnings2,3 were $23.4 million, or $0.02 per share, for Q1 2017, compared with $21.2 million, or $0.02 per share, for Q1 2016.
Reported net earnings3 were $134.6 million, or $0.11 per share, for Q1 2017, compared with $35.0 million, or $0.03 per share, for Q1 2016. Reported earnings increased mainly as result of the increase in operating earnings and a reversal of previously recorded impairment charges of $97.0 million related to the agreement entered into in Q1 2017 to sell Cerro Casale at a price higher than the carrying value.
Capital expenditures: Capital expenditures increased to $178.9 million for Q1 2017, compared with $139.5 million for the same period last year, primarily due to Tasiast Phase One expansion project costs, and increased spending at Paracatu and Bald Mountain.
Operating results
Mine-by-mine summaries for 2017 first-quarter operating results may be found on pages eight and 12 of this news release. Highlights include the following:
Americas
At Fort Knox, production increased compared with Q1 2016 mainly as a result of higher mill grades and timing of ounces processed through the mill, but decreased compared with Q4 2016 largely as a result of lower mill throughput and the seasonal reduction in production from the heap. Cost of sales per ounce decreased compared
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 2017 first-quarter results www.kinross.com with Q1 2016 primarily due to lower labour and contractor costs, and more ore mined relative to operating waste, which also contributed to lower cost of sales per ounce compared with Q4 2016.
At Round Mountain, performance was strong during the quarter as production increased year-over-year mainly due to more ounces recovered from the heap leach pads as a result of higher tonnes places on the pads. The strong performance from the heap leach, along with higher mill and heap leach grades, contributed to increased production quarter-over-quarter. Cost of sales per ounce increased compared with Q1 2016 largely due to an increase in operating waste mined, and decreased compared with Q4 2016 primarily due to increased grades and lower contractor costs.
At Bald Mountain, production increased year-over-year and quarter-over-quarter mainly as a result of higher grade material placed on the pads in the fourth quarter of 2016. Cost of sales per ounce decreased year-over-year and quarter-over-quarter as a result of more ore being mined relative to operating waste. Production at the mine is expected to be higher in the second half of the year, particularly in the fourth quarter, due to mine sequencing and timing from the heap leach, and the mine is on track to double production in 2017 compared with 2016.
Kettle River-Buckhorn continued to perform well, as higher grades and lower labour costs helped to decrease cost of sales per ounce compared with Q1 2016. Kettle River-Buckhorn is now expected to reach the end of its mine life by the end of Q2 2017.
At Paracatu, production decreased compared with Q1 2016 and Q4 2016 mainly due to lower mill grades. Cost of sales per ounce increased compared with Q1 2016 and Q4 2016 due to higher operating waste mined and maintenance costs. Unfavourable foreign exchange movements also contributed to higher costs during the quarter compared with Q1 2016. During the quarter, the region received lower than average rainfall and, as a result, Paracatu is expected to temporarily curtail operations early in the third quarter. The potential for curtailment was factored into the Company’s annual production guidance and the site has continued to take further mitigation measures, including drilling more ground water wells and acquiring more water rights. The Company expects to provide an update with its second quarter results.
At Maricunga, gold production from the rinsing of heap materials placed on the pads prior to the suspension of mining activities continued during the quarter. Cost of sales per ounce continued to decrease as a result of higher than expected ounces recovered. Gold equivalent ounces sold were lower than production during the quarter due to timing of sales.
Russia
Kupol and Dvoinoye performed as planned in the first quarter. Production was lower than Q1 2016 and Q4 2016 due to anticipated lower grades. Cost of sales per ounce increased compared with Q1 2016 and Q4 2016 mainly as a result of the lower grades.
West Africa
Tasiast had strong performance during the quarter with production 37% higher compared with Q1 2016, mainly as a result of higher mill grades. Production increased compared with Q4 2016 mainly as a result of higher throughput and stronger grades. Cost of sales per ounce was significantly lower year-over-year and quarter-over-quarter mainly as a result of higher grades.
At Chirano, production was stronger compared with Q1 2016 primarily due to higher grades from the Paboase and Akoti underground deposits, but was lower compared with Q4 2016 due to lower grades from Paboase and the Tano open pit. Cost of sales per ounce decreased compared with Q1 2016 mainly as a result of the higher grades and lower power costs, and increased compared with Q4 2016 mainly due to higher labour costs and increased operating waste mined from the Tano pit.
p. 4 Kinross reports 2017 first-quarter results www.kinross.com
Organic development projects
Tasiast Phase One development is making excellent progress, with full commercial production on schedule for Q2 2018. Engineering and procurement are substantially complete and plant construction is now 35% complete. All major installation contracts have now been awarded, and 80% of all equipment and materials are on site. Installation and mechanical work for the SAG mill has begun, concrete work remains a major focus at the primary crusher, and planned upgrades to the leach tanks, cyclone towers and oxygen plant in the existing processing facilities have commenced. Phase One is expected to increase plant throughput to 12,000 t/d, and increase production to approximately 400,000 Au eq. oz. per year at an all-in sustaining cost of $760 per Au oz.
The Tasiast Phase Two expansion feasibility study is also progressing well and is on schedule to be completed in Q3 2017. The Company is expecting to make a development decision once the feasibility study is finalized.
At Bald Mountain, the Company continues to develop the mine’s potential after doubling the site’s proven and probable mineral reserve estimates at year-end 2016. In the South area, engineering work at the Vantage Complex project is now 60% complete. Major construction work is expected to commence in the first half of 2018, with the proposed heap leach pad and associated processing facilities and infrastructure expected to accommodate a total capacity of 68 million tonnes of ore.
The Round Mountain Phase W feasibility study continues to progress well and is expected to be completed in Q3 2017. The Company is expecting to make a development decision at that time. The scope of the Phase W expansion project involves changes to site infrastructure and processing facilities, and a substantial pre-stripping campaign to access a deeper extension of the mineralized zone. Phase W has the potential to extend life of mine at Round Mountain, one of the most consistent performing mines in the Company's portfolio.
Kinross’ Russian development projects continue to progress. At the Moroshka project, located approximately four kilometres from Kupol, portal construction is now complete, decline development is on schedule, and construction of surface infrastructure is now 50% complete. At September Northeast, located approximately 15 kilometres northwest of Dvoinoye, stripping has commenced, with development of the project completed on time and on budget. Processing of September Northeast ore at the Kupol mill is expected to commence in June. The new filter cake plant at Kupol is now in operation, which allows for tailings storage for the current mineral reserve estimates, and flexibility to permit additional storage capacity for potential mine life extensions.
Cerro Casale divestment
On March 28, 2017, the Company agreed to sell to Goldcorp Inc. its 25% interest in Cerro Casale and its 100% interest in Quebrada Seca in Chile for $260 million in cash (which includes $20 million for Quebrada Seca).
The agreement also includes: $40 million in cash, payable following a construction decision for Cerro Casale; the assumption by Goldcorp of a $20 million payment obligation due to Barrick Gold Corporation under the existing Cerro Casale shareholders agreement, which is payable when commercial production at Cerro Casale commences; and a 1.25% royalty from Goldcorp based on 25% of gross revenues from all metals sold at Cerro Casale and Quebrada Seca, with Kinross foregoing the first $10 million.
Additionally, Kinross will enter into a contingent water supply agreement with the Cerro Casale joint venture. Kinross expects to use any water supplied under such agreement for its Chilean assets to enhance future optionality.
Balance sheet
As of March 31, 2017, Kinross had cash and cash equivalents of $819.0 million, compared with $827.0 million as of December 31, 2016. The Company also had available credit of $1,433.1 million as of March 31, 2017 for total liquidity of approximately $2.3 billion.
The Company’s pro forma cash and cash equivalent position is approximately $1.1 billion after considering the Cerro Casale and Quebrada Seca divestment, with a total liquidity position of approximately $2.5 billion.
p. 5 Kinross reports 2017 first-quarter results www.kinross.com With no other debt maturities until 2020, Kinross is well-positioned to fund its pipeline of organic development projects with its strong balance sheet and liquidity.
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 18 of this news release.
As previously announced on February 15, 2017, Kinross expects to produce approximately 2.5 - 2.7 million Au eq. oz. for the year and 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 $660 - $720 per Au eq. oz., and its all-in sustaining cost guidance range of $925 - $1,025 per Au eq. oz. sold in 2017.
The Company also expects to meet its 2017 capital expenditure forecast of approximately $900 million (+/- 5%).
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast on Wednesday, May 3, 2017 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 – 1297 followed by #.
Outside of Canada & US – 1-604-638-9010; Passcode – 1297 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 Shareholders Meeting will be held on Wednesday, May 3, 2017 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 Meeting will be available at www.kinross.com and will also be archived for later access.
This news release should be read in conjunction with Kinross’ 2017 first-quarter unaudited Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2017 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.
p. 6 Kinross reports 2017 first-quarter results www.kinross.com
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. Our focus is on delivering value based on the core principles of operational excellence, balance sheet strength, disciplined growth and responsible mining. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol:KGC).
Media Contact
Louie Diaz 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]
p. 7 Kinross reports 2017 first-quarter results www.kinross.com
Review of operations
| Three months ended March 31, Gold equivalent ounces Produced Sold Production cost of sales Production cost of ($millions) sales/equivalent ounce sold | |||||
|---|---|---|---|---|---|
| 2017 2016 2017 2016 2017 | 2016(a) | 2017 | 2016(a) | ||
| Fort Knox 93,038 87,800 Round Mountain 102,749 92,926 Bald Mountain 47,077 20,422 Kettle River - Buckhorn 24,566 28,312 Paracatu 108,096 119,376 Maricunga 36,001 59,076 Americas Total 411,527 407,912 Kupol 143,378 192,450 Russia Total 143,378 192,450 Tasiast 64,623 47,078 Chirano (100%) 58,253 44,470 West Africa Total 122,876 91,548 Operations Total 677,781 691,910 Less Chirano non-controlling (5,825) (4,447) interest (10%) Attributable Total 671,956 687,463 | 94,741 87,889 104,098 90,474 41,647 11,197 24,895 28,264 103,276 117,090 8,571 57,490 | $ 5 8.5 $ 62.2 $ 617 $ 708 75.5 60.4 725 668 33.8 13.1 812 1,170 13.7 22.2 550 785 97.9 79.9 948 682 3.0 47.3 350 823 282.4 285.1 749 727 71.8 78.2 500 445 71.8 78.2 500 445 47.0 47.2 711 975 57.6 47.2 877 990 104.6 94.4 794 983 458.8 457.7 703 689 (5.8) (4.7) $ 453.0 $ 4 53.0 $ 701 $ 687 | |||
| 377,228 392,404 143,481 175,691 | |||||
| 143,481 175,691 66,112 48,391 65,695 47,679 | |||||
| 131,807 96,070 | |||||
| 652,516 664,165 (6,570) (4,768) | |||||
| 645,946 659,397 |
(a) The interim financial statements for the three months ended March 31, 2016 were recast to reflect the retrospective impact of the finalization of the purchase price allocation for the acquisition of Bald Mountain and 50% of Round Mountain.
p. 8 Kinross reports 2017 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, 2017 2016
Assets
Current assets
| Cash and cash equivalents | $ 819.0 |
| Restricted cash Accounts receivable and other assets Current income tax recoverable Inventories Unrealized fair value of derivative assets Assets classified as held for sale | 12.4 98.7 86.8 964.8 17.5 246.5 |
| 2,245.7 | |
| Non-current assets Property, plant and equipment Goodwill Long-term investments Investments in associate and joint ventures Unrealized fair value of derivative assets Other long-term assets Deferred tax assets Total assets Liabilities Current liabilities Accounts payable and accrued liabilities Current income tax payable | 4,866.2 162.7 171.1 24.0 3.7 436.0 94.4 |
| $ 8,003.8 | |
| $ 385.3 41.2 | |
| Current portion of provisions | 85.9 |
| Current portion of unrealized fair value of derivative liabilities Non-current liabilities Long-term debt | 0.4 |
| 512.8 | |
| 1,733.8 | |
| Provisions | 869.5 |
| 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) | 172.3 378.7 |
| 3,667.1 | |
| $ 14,901.4 230.8 (10,891.5) 58.0 | |
| Total common shareholders' equity | 4,298.7 |
| Non-controlling interest Total equity | 38.0 |
| 4,336.7 | |
| $ 8,003.8 |
$ 827.0 11.6 127.3 111.9 986.8 16.1 -
2,080.7
4,917.6 162.7 142.9 163.6 6.0 411.3 94.5 $ 7,979.3
$ 464.8 72.6 93.2 7.1 637.7
1,733.2 861.2 172.2 390.7 3,795.0
$ 14,894.2 238.3 (11,026.1)
39.1 4,145.5 38.8 4,184.3 $ 7,979.3
Common shares
Authorized Unlimited Unlimited Issued and outstanding 1,246,749,579 1,245,049,712
p. 9 Kinross reports 2017 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, (a) 2017 2016 | |||
|---|---|---|---|
| 2017 | 2016 | ||
| Revenue Metal sales $ 796.1 $ 7 82.6 Cost of sales Production cost of sales 458.8 457.7 Depreciation, depletion and amortization 217.5 193.2 Total cost of sales 676.3 650.9 Gross profit 119.8 131.7 Other operating expense 15.0 33.9 Exploration and business development 21.0 16.7 General and administrative 35.2 38.3 Operating earnings 48.6 42.8 Other income (expense) - net 114.0 9.5 Equity in earnings (losses) of associate and joint ventures (0.4) 0.2 Finance income 3.5 1.6 Finance expense (29.0) (33.2) Earnings before tax 136.7 20.9 Income tax recovery (expense) - net (2.9) 12.7 Net earnings $ 133.8 $ 33.6 Net earnings (loss) attributable to: Non-controlling interest $ (0.8) $ (1.4) Common shareholders $ 134.6 $ 35.0 Earnings per share attributable to common shareholders Basic $ 0.11 $ 0.03 Diluted $ 0.11 $ 0.03 Weighted average number of common shares outstanding (millions) Basic 1,245.6 1,173.6 Diluted 1,255.1 1,182.8 | |||
| Revenue | |||
| Metal sales Cost of sales Production cost of sales Depreciation, depletion and amortization | $ 796.1 458.8 217.5 | ||
| Total cost of sales Gross profit | 676.3 | ||
| 119.8 | |||
| Other operating expense Exploration and business development General and administrative Operating earnings Other income (expense) - net Equity in earnings (losses) of associate and joint ventures Finance income | 15.0 21.0 35.2 | ||
| 48.6 | |||
| 114.0 (0.4) 3.5 | |||
| Finance expense Earnings before tax Income tax recovery (expense) - net Net earnings Net earnings (loss) attributable to: Non-controlling interest Common shareholders Earnings per share attributable to common shareholders Basic Diluted | (29.0) | ||
| 136.7 (2.9) | |||
| $ 133.8 | |||
| $ (0.8) | |||
| $ 134.6 | |||
| $ 0.11 $ 0.11 | |||
| Weighted average number of common shares outstanding (millions) | |||
| Basic | 1,245.6 | 1,173.6 | |
| Diluted | 1,255.1 | 1,182.8 |
(a) The interim financial statements for the three months ended March 31, 2016 were recast to reflect the retrospective impact of the finalization of the purchase price allocation for the acquisition of Bald Mountain and 50% of Round Mountain.
p. 10 Kinross reports 2017 first-quarter results www.kinross.com
Consolidated statements of cash flows
(unaudited expressed in millions of United States dollars)
| 2017 | |
| Operating: | |
| Net earnings Adjustments to reconcile net earnings to net cash provided from operating activities: Depreciation, depletion and amortization Reversal of impairment charges Equity in losses (earnings) of associate and joint ventures Share-based compensation expense Finance expense Deferred tax recovery Foreign exchange losses (gains) and other Changes in operating assets and liabilities: Accounts receivable and other assets Inventories Accounts payable and accrued liabilities | $ 1 33.8 217.5 (97.0) 0.4 3.3 29.0 (13.1) (23.0) 50.2 5.7 (74.8) |
| Cash flow provided from operating activities Income taxes paid Net cash flow provided from operating activities | 232.0 |
| (24.2) | |
| 207.8 | |
| Investing: Additions to property, plant and equipment Business acquisition | (178.9) - |
| Net additions to long-term investments and other assets | (9.6) |
| Net proceeds from the sale of property, plant and equipment Increase in restricted cash Interest received and other Net cash flow used in investing activities Financing: Issuance of common shares on exercise of options Proceeds from issuance of equity Interest paid | 1.1 (0.8) 2.1 |
| (186.1) | |
| 0.1 - (31.7) | |
| Net cash flow provided from (used in) financing activities | (31.6) |
| Effect of exchange rate changes on cash and cash equivalents Decrease in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period | 1.9 |
| (8.0) 827.0 | |
| $ 819.0 |
(a) The interim financial statements for the three months ended March 31, 2016 were recast to reflect the retrospective impact of the finalization of the purchase price allocation for the acquisition of Bald Mountain and 50% of Round Mountain.
p. 11 Kinross reports 2017 first-quarter results www.kinross.com
| Operating Summary | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| M ine | P eriod | Ownership | T onnes Ore M ined ( 1) | Ore P rocessed (M illed) ( 1) | Ore P rocessed (Heap Leach) ( 1) | Grade (M ill) | Grade (Heap Leach) | Recovery ( 2 ) | Gold E q P roduction ( 5 ) | Gold E q S ales ( 5 ) | P roduction cost of sales | P roduction cost of sales /oz | Cap E x ( 7 ) | DD&A | |
| (%) | ('000 tonnes) | ('000 tonnes) | ('000 tonnes) | (g/t) | (g/t) | (%) | (ounces) | (ounces) | ($ millions) | ($/ounce) | ($ millions) | ($ millions) | |||
| A m e ric a s | Fort Knox | Q1 2017 | 100 | 5,242 | 2,933 | 3,885 | 0.75 | 0.23 | 83% | 93,038 | 94,741 | $ 58.5 | $ 617 | $ 28.0 | $ 22.5 |
| Q4 2016 Q3 2016 Q2 2016 Q1 2016 | 100 100 100 100 | 9,864 | 3,235 | 7,226 | 0.79 | 0.28 | 83% | 114,427 | 115,101 | 82.8 | 719 | 23.2 | 22.5 | ||
| 8,959 | 3,270 | 9,507 | 0.68 | 0.26 | 85% | 110,396 | 107,444 | 79.8 | 743 | 13.8 | 20.4 | ||||
| 6,141 | 3,467 | 4,914 | 0.64 | 0.28 | 83% | 97,221 | 97,625 | 77.4 | 793 | 15.2 | 22.3 | ||||
| 6,786 | 3,246 | 7,495 | 0.66 | 0.26 | 81% | 87,800 | 87,889 | 62.2 | 708 | 18.0 | 23.5 | ||||
| Round M ountain | Q1 2017 | 100 | 5,947 | 951 | 4,548 | 1.14 | 0.51 | 82% | 102,749 | 104,098 | $ 75.5 | $ 725 | $ 6.3 | $ 28.9 | |
| Q4 2016 Q3 2016 Q2 2016 | 100 100 100 100 (8) | 7,488 | 865 | 6,054 | 0.99 | 0.43 | 78% | 99,310 | 107,313 | 86.6 | 807 | 28.5 | 33.6 | ||
| 5,392 | 953 | 5,426 | 0.98 | 0.43 | 82% | 93,215 | 88,477 | 73.7 | 833 | 14.8 | 24.2 | ||||
| 6,632 | 942 | 5,533 | 0.80 | 0.40 | 80% | 92,813 | 91,646 | 71.3 | 778 | 12.3 | 20.8 | ||||
| Q1 2016 (8) | 4,018 | 869 | 3,071 | 1.17 | 0.44 | 83% | 92,926 | 90,474 | 60.4 | 668 | 16.3 | 16.1 | |||
| Bald M ountain ( 8 ) , ( 9 ) | Q1 2017 | 100 | 3,660 | - | 3,660 | - | 0.69 | nm | 47,077 | 41,647 | $ 33.8 | $ 812 | $ 15.7 | $ 14.1 | |
| Q4 2016 | 100 | 3,627 | - | 3,627 | - | 0.72 | nm | 44,343 | 34,585 | $ 44.5 | $ 1,287 | $ 17.7 | $ 17.3 | ||
| Q3 2016 | 100 | 3,081 | - | 3,081 | - | 0.66 | nm | 32,675 | 30,174 | 30.9 | 1,024 | 16.6 | 10.7 | ||
| Q2 2016 | 100 | 2,182 | - | 2,182 | - | 0.48 | nm | 32,704 | 35,508 | 43.2 | 1,217 | 4.5 | 8.6 | ||
| Q1 2016 (8) | 100 | 1,766 | - | 1,766 | - | 0.62 | nm | 20,422 | 11,197 | 13.1 | 1,170 | 1.7 | 2.0 | ||
| Kettle River- Buckhorn | Q1 2017 | 100 | 98 | 96 | - | 9.95 | - | 93% | 24,566 | 24,895 | $ 13.7 | $ 550 | $ - | $ 0.4 | |
| Q4 2016 Q3 2016 Q2 2016 Q1 2016 | 100 100 100 100 | 128 | 122 | - | 8.49 | - | 94% | 30,690 | 30,862 | 15.5 | 502 | - | - | ||
| 123 | 111 | - | 8.14 | - | 94% | 28,241 | 28,104 | 17.1 | 608 | - | - | ||||
| 101 | 101 | - | 7.40 | - | 93% | 25,031 | 24,808 | 18.2 | 734 | - | - | ||||
| 86 | 107 | - | 7.23 | - | 92% | 28,312 | 28,264 | 22.2 | 785 | - | 1.3 | ||||
| P aracatu | Q1 2017 | 100 | 10,226 | 11,892 | - | 0.38 | - | 73% | 108,096 | 103,276 | $ 97.9 | $ 948 | $ 25.9 | $ 33.5 | |
| Q4 2016 Q3 2016 Q2 2016 Q1 2016 | 100 100 100 100 | 10,675 12,597 12,109 11,825 | 11,962 11,084 12,331 11,439 | - - - - | 0.44 0.48 0.44 0.44 | - - - - | 73% 73% 70% 73% | 124,975 111,889 126,774 119,376 | 127,576 111,796 126,365 117,090 | 101.5 77.5 87.5 79.9 | 796 693 692 682 | 47.9 34.0 15.9 10.7 | 40.9 31.0 35.4 35.4 | ||
| M aricunga ( 8 ) | Q1 2017 | 100 | - | - | - | - | - | - | 36,001 | 8,571 | $ 3.0 | $ 350 | $ 0.1 | $ 1.2 | |
| Q4 2016 Q3 2016 Q2 2016 Q1 2016 | 100 100 100 100 | - 766 1,346 3,947 | - - - - | - 779 1,475 4,254 | - | - 0.68 0.61 0.69 | - nm nm nm | 32,899 39,253 44,304 59,076 | 33,360 39,458 45,362 57,490 | 17.8 37.5 42.6 47.3 | 534 950 939 823 | 2.1 0.9 1.3 0.8 | 1.2 10.8 11.6 10.8 | ||
| R u s s ia | Kupol ( 3 ) ( 4 ) ( 6 ) | Q1 2017 | 100 | 448 | 417 | - | 10.23 | - | 95% | 143,378 | 143,481 | $ 71.8 | $ 500 | $ 5.4 | $ 55.0 |
| Q4 2016 Q3 2016 Q2 2016 Q1 2016 | 100 100 100 100 | 503 492 513 494 | 426 440 428 416 | - - - - | 12.46 11.79 12.75 13.92 | - - - - | 95% 95% 95% 95% | 180,023 178,032 183,638 192,450 | 179,912 181,508 198,890 175,691 | 80.8 82.4 82.9 78.2 | 449 454 417 445 | 21.1 24.8 15.1 27.8 | 63.1 60.9 59.9 52.9 | ||
| W e s t A fric a | T asiast | Q1 2017 | 100 | 1,037 | 746 | 75 | 2.41 | 0.50 | 92% | 64,623 | 66,112 | $ 47.0 | $ 711 | $ 71.1 | $ 25.3 |
| Q4 2016 Q3 2016 Q2 2016 Q1 2016 | 100 100 100 100 | 1,683 2,462 1,937 1,891 | 736 457 489 777 | 454 1,585 1,542 1,187 | 2.39 1.78 1.39 1.51 | 0.46 0.45 0.45 0.41 | 91% 91% 92% 91% | 63,728 34,793 29,577 47,078 | 61,318 30,793 28,467 48,391 | 58.7 38.1 35.3 47.2 | 957 1,237 1,240 975 | 68.7 36.3 36.0 49.9 | 29.4 22.0 22.3 22.7 | ||
| Chirano - 100% | Q1 2017 | 90 | 845 | 852 | - | 2.25 | - | 92% | 58,253 | 65,695 | $ 57.6 | $ 877 | $ 17.9 | $ 34.5 | |
| Q4 2016 Q3 2016 Q2 2016 Q1 2016 | 90 90 90 90 | 864 858 547 453 | 811 918 882 847 | - - - - | 2.55 2.35 1.72 1.77 | - - - - | 92% 92% 91% 91% | 62,106 61,817 43,561 44,470 | 53,400 62,573 42,312 47,679 | 41.2 53.0 48.3 47.2 | 772 847 1,142 990 | 14.3 9.5 11.1 11.7 | 28.4 30.0 25.8 25.7 | ||
| Chirano - 90% | Q1 2017 | 90 | 845 | 852 | - | 2.25 | - | 92% | 52,428 | 59,125 | $ 51.8 | $ 877 | $ 16.1 | $ 31.1 | |
| Q4 2016 Q3 2016 Q2 2016 Q1 2016 | 90 90 90 90 | 864 858 547 453 | 811 918 882 847 | - - - - | 2.55 2.35 1.72 1.77 | - - - - | 92% 92% 91% 91% | 55,896 55,635 39,205 40,023 | 48,060 56,316 38,081 42,911 | 37.1 47.7 43.5 42.5 | 772 847 1,142 990 | 12.9 8.5 10.0 10.5 | 25.6 27.0 23.2 23.1 |
(1) Tonnes of ore mined and processed represent 100% Kinross for all periods presented.
(2) Due to the nature of heap leach operations, recovery rates at Maricunga and Bald Mountain cannot be accurately measured on a quarterly basis. Recovery rates at Fort Knox, Round Mountain and Tasiast represent mill recovery only.
(3) The Kupol segment includes the Kupol and Dvoinoye mines.
(4) Kupol silver grade and recovery were as follows: Q1 (2017) 83.03 g/t, 85.4%; Q4 (2016) 99.05 g/t, 86.6%; Q3 (2016) 104.36 g/t, 90.0%; Q2 (2016) 105.89 g/t, 86.5%; Q1 (2016) 104.19 g/t, 88.0%
(5) Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent based on the ratio of the average spot market prices for the commodities for each period. The ratios for the quarters presented are as follows: Q1 2017: 69.99:1; Q4 2016: 70.88:1; Q3 2016: 68.05:1; Q2 2016: 75.06:1; Q1 2016: 79.64:1
(6) Dvoinoye ore processed and grade were as follows: Q1 (2017) 120,255 tonnes, 14.67 g/t ; Q4 (2016) 120,000 tonnes, 21.24 g/t ; Q3 (2016) 117,814 tonnes, 18.96 g/t ; Q2 (2016) 118,057 tonnes, 22.42 g/t; Q1 (2016) 129,675 tonnes, 22.69 g/t
(7) Capital expenditures are presented on a cash basis, consistent with the statement of cash flows.
(8) The interim financial statements for the three months ended March 31, 2016 were recast to reflect the retrospective impact of the finalization of the purchase price allocation for the acquisition of Bald Mountain and 50% of Round Mountain.
(9) "nm" means not meaningful.
p. 12 Kinross reports 2017 first-quarter results www.kinross.com