For more information, please see Kinross’ 2015 third-quarter Financial Statements and MD&A
For more information, please see Kinross’ 2015 third-quarter Financial Statements and MD&A at www.kinross.com NEWS RELEASE
Kinross reports 2015 third-quarter results
Cost of sales per ounce declines to lowest level since Q1 2012 Company explores two-phased Tasiast expansion, provides La Coipa pre-feasibility study results
Toronto, Ontario – November 10, 2015 – Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the third quarter ended September 30, 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 19 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
2015 third quarter highlights:
- Production1: 680,679 gold equivalent ounces (Au eq. oz.), compared with 693,818 ounces in Q3 2014.
Revenue: $809.4 million, compared with $945.7 million in Q3 2014.
- Production cost of sales2: $668 per Au eq. oz., compared with $698 in Q3 2014.
- All-in sustaining cost2: $941 per Au eq. oz. sold, compared with $919 in Q3 2014. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $936 in Q3 2015, compared with $911 in Q3 2014.
Adjusted operating cash flow2: $206.6 million, or $0.18 per share, compared with $324.1 million, or $0.28 per share, in Q3 2014.
- Adjusted net earnings/loss2,3: Loss of $23.9 million, or $0.02 per share, compared with adjusted earnings of $70.1 million, or $0.06 per share, in Q3 2014.
Reported net earnings/loss3: Loss of $52.7 million, or $0.05 per share, compared with a loss of $4.3 million, or $0.00 per share, in Q3 2014.
- Balance sheet strength: Reduced net debt4 to $949.2 million, repaid the remaining balance on the Kupol loan and ended the quarter with cash and cash equivalents of $1,024.8 million.
Outlook: Kinross expects to be within its updated 2015 guidance range for production (2.5-2.6 million Au eq. oz.), all-in sustaining cost ($975-$1,025 per Au eq. oz.) and cost of sales ($690-$730 per Au eq. oz.). The Company expects to be below its updated capital expenditure guidance ($650 million) and below its overhead guidance ($205 million), which excludes one-time restructuring charges.
Tasiast expansion update: Kinross is completing early-stage engineering work on a potential two-phased expansion that would add incremental grinding capacity to Tasiast’s existing comminution circuit. A feasibility study of the initial Phase One expansion, which would increase mill throughput capacity from the current 8,000 t/d to 12,000 t/d, is expected to be completed in Q1 2016. Phase Two could further increase throughput capacity up to as much as 38,000 t/d.
La Coipa pre-feasibility study (PFS) update: Results of the La Coipa PFS study estimate production of approximately 1.03 million Au eq. oz., average cost of sales per Au eq. oz. of $674 and average all-in cost per Au eq. oz.5 of $767. The project is expected to generate a 20% IRR at a gold price of $1,200/oz.
- Comprehensive spending review: As part of the Company’s cost reduction efforts, Kinross has reduced corporate headcount costs by 23% and is closing its Denver office. This headcount reduction is in addition to the departure of 222 Tasiast employees in September. The combined annual savings from the corporate and Tasiast reductions are expected to be approximately $30 million.
1 Unless otherwise stated, production figures in this news release are based on Kinross’ 90% share of Chirano production.
2 These figures are non-GAAP financial measures and are defined and reconciled on pages 14 to 18 of this news release.
3 Net earnings/loss figures in this release represent “net earnings (loss) from continuing operations attributable to common shareholders”.
4 “Net Debt” is defined as short- and long-term debt less cash and cash equivalents and restricted cash.
5 All-in cost includes operating costs, sustaining capital, and post-start-up capitalized stripping and does not include an estimated initial capital expenditures of $94 million and estimated pre- stripping of $105 million, and any exploration, income taxes, non-cash items related to reclamation or allocation of regional or corporate overhead costs. This differs from the World Gold Council definition of all-in cost.
p. 1 Kinross reports 2015 third-quarter results www.kinross.com
CEO Commentary
J. Paul Rollinson, CEO, made the following comments in relation to 2015 third quarter results:
“Cost reduction continued to be a key focus in Q3 as Kinross achieved its lowest cost of sales per ounce on a companywide basis in 3.5 years. Strong operational performance from Fort Knox, Paracatu and Kupol, together with benefits from foreign exchange rates and lower oil prices, contributed to the cost reduction.
“Kinross is keenly aware of the need to remain proactive in the current gold price environment and in recent months we have taken decisive action to reduce headcount at the corporate level, and at our Tasiast mine. The reductions are expected to result in a combined annualized savings of approximately $30 million. Driving down costs, preserving balance sheet strength and advancing growth opportunities will continue to be priorities going forward.
“It is with these three priorities in mind that we continue to explore financially prudent alternatives to realizing Tasiast’s significant growth potential. We are encouraged by the early-stage engineering work completed to date on a potential two-phased expansion which would optimize the current operation in the near term while reducing the overall capital cost of a larger expansion. During the quarter, Kinross also completed a pre-feasibility study for La Coipa, and based on the promising results, plans to move forward with additional study work.”
Financial results Summary of financial and operating results
Three months ended Nine months ended September 30, September 30,
(in millions, except ounces, per share amounts, and per ounce amounts) 2015 2014 2015 2014
Operating Highlights from Continuing Operations
Total gold equivalent ounces(a)
Produced(c) 687,077 701,088 1,990,734 2,059,398 Sold(c) 721,927 746,425 1,996,827 2,084,668
Attributable gold equivalent ounces(a)
Produced(c) 680,679 693,818 1,970,937 2,038,339 Sold(c) 715,648 739,095 1,976,459 2,063,860
Financial Highlights from Continuing Operations
Metal sales $ 809.4 $ 945.7 $ 2,346.0 $ 2,675.0 Production cost of sales $ 482.3 $ 520.1 $ 1,395.4 $ 1,502.0 Depreciation, depletion and amortization $ 239.8 $ 233.8 $ 662.7 $ 645.5 Impairment charges $ - $ - $ 24.5 $ - Operating earnings (loss) $ (0.3) $ 112.6 $ (25.6) $ 274.2 Net earnings (loss) attributable to common shareholders $ (52.7) $ (4.3) $ (142.6) $ 73.5 Basic earnings (loss) per share attributable to common shareholders $ (0.05) $ - $ (0.12) $ 0.06 Diluted earnings (loss) per share attributable to common shareholders $ (0.05) $ - $ (0.12) $ 0.06 Adjusted net earnings (loss) attributable to common shareholders (b) $ (23.9) $ 70.1 $ (22.2) $ 137.1 Adjusted net earnings (loss) per share(b) $ (0.02) $ 0.06 $ (0.02) $ 0.12 Net cash flow provided from operating activities $ 232.1 $ 304.5 $ 649.4 $ 678.9 Adjusted operating cash flow (b) $ 206.6 $ 324.1 $ 582.8 $ 806.6 Adjusted operating cash flow per share(b) $ 0.18 $ 0.28 $ 0.51 $ 0.70 Average realized gold price per ounce $ 1,122 $ 1,268 $ 1,175 $ 1,283 Consolidated production cost of sales per equivalent ounce(c) sold(b) $ 668 $ 697 $ 699 $ Attributable(a) production cost of sales per equivalent ounce(c) sold(b) $ 668 $ 698 $ 699 $ Attributable(a) production cost of sales per ounce sold on a by-product basis (b) $ 655 $ 685 $ 686 $ Attributable(a) all-in sustaining cost per ounce sold on a by-product basis (b) $ 936 $ 911 $ 965 $ Attributable(a) all-in sustaining cost per equivalent ounce(c) sold(b) $ 941 $ 919 $ 970 $ Attributable(a) all-in cost per ounce sold on a by-product basis(b) $ 998 $ 982 $ 1,044 $ 1,043 Attributable(a) all-in cost per equivalent ounce(c) sold(b) $ 1,000 $ 989 $ 1,047 $ 1,050
(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 14 to 18 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 third quarter of 2015 was 75.40:1, compared with 64.89:1 for the third quarter of 2014 and for the first nine months of 2015 was 73.66:1, compared with 64.54:1 for the first nine months of 2014.
p. 2 Kinross reports 2015 third-quarter results www.kinross.com The following operating and financial results are based on third-quarter 2015 gold equivalent production from continuing operations. Production and cost measures are on an attributable basis:
Production: Kinross produced 680,679 attributable Au eq. oz. in Q3 2015, a slight decrease compared with Q3 2014, due mainly to lower production at Maricunga as a result of heavy rains in March, which impacted the tonnes of ore placed on the heap leach pads, and at Chirano and Kettle River-Buckhorn, due to an expected decline in grades. The decrease was partially offset by increased production at Fort Knox and the combined Kupol-Dvoinoye operation, due to higher mill grades, and at Round Mountain, due to improved heap leach performance and higher mill recoveries.
Production cost of sales: Production cost of sales per Au eq. oz.2 decreased to $668 for Q3 2015, compared with $698 for Q3 2014, mainly as a result of lower energy costs, favourable foreign exchange rates and strong operational performance from a number of mine sites. This represents the lowest cost of sales per ounce since Q1 2012.
Production cost of sales per Au oz. on a by-product basis 2 was $655 in Q3 2015, compared with $685 in Q3 2014, based on Q3 2015 attributable gold sales of 695,715 ounces and attributable silver sales of 1,502,854 ounces.
All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold2 was $941 in Q3 2015, compared with $919 in Q3 2014, primarily due to higher capital expenditures and fewer attributable gold ounces sold, partially offset by lower energy costs and favourable foreign exchange rates. All-in sustaining cost per Au oz. sold on a by-product basis2 was $936 in Q3 2015, compared with $911 in Q3 2014.
Revenue: Revenue from metal sales was $809.4 million in Q3 2015, compared with $945.7 million during the same period in 2014, due to a lower average realized gold price and lower gold equivalent ounces sold.
Average realized gold price: The average realized gold price in Q3 2015 declined to $1,122 per ounce, compared with $1,268 per ounce in Q3 2014.
Margins: Kinross’ attributable margin per Au eq. oz. sold6 was $454 per Au eq. oz. for Q3 2015, compared with a Q3 2014 margin of $570 per Au eq. oz.
Operating cash flow: Adjusted operating cash flow2 was $206.6 million for Q3 2015, or $0.18 per share, compared with $324.1 million, or $0.28 per share, for Q3 2014.
Earnings/loss: Adjusted net loss2,3 was $23.9 million, or $0.02 per share, for Q3 2015, compared with adjusted net earnings of $70.1 million, or $0.06 per share, for Q3 2014.
Reported net loss3 was $52.7 million, or $0.05 per share, compared with reported net loss of $4.3 million, or $0.00 per share, for Q3 2014. Reported net loss was due mainly to lower margins as a result of a lower average gold price.
Capital expenditures: Capital expenditures increased to $171.3 million for Q3 2015, compared with $153.5 million for the same period last year, primarily due to planned increased stripping at Fort Knox.
Balance sheet strength
As of September 30, 2015, Kinross had cash and cash equivalents of $1,024.8 million, excluding restricted cash, an increase of $41.3 million since December 31, 2014. The Company has available credit of $1,506.0 million.
In Q3, Kinross repaid the remaining $50 million balance on the Kupol loan and as of September 30, 2015, Kinross’ net debt4 was $949.2 million, a reduction of $11.0 million during the quarter and $84.1 million since December 31,
6 Attributable 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 third-quarter results www.kinross.com 2014.
Other than $250 million in senior notes, which are scheduled to be repaid by September 2016, Kinross has no debt maturities until 2019.
Operating results
Mine-by-mine summaries for 2015 third-quarter operating results may be found on pages nine and 13 of this news release. Highlights include the following:
Americas
Round Mountain performed well during the quarter, achieving its best quarter of production in six years and its lowest cost of sales per ounce since Q3 2012. The mine has continued to benefit from a continuous improvement initiative to improve heap leach performance, with production increasing year-over-year and quarter-over-quarter. Cost of sales per ounce decreased compared with Q3 2014 due mainly to higher mill recoveries and ounces recovered from the heap leach pads, largely as a result of improved solutions management, a new pH enhancement system and improvements made to optimize the ADR (Adsorption, Desorption, and Recovery) facility. Cost of sales per ounce decreased compared with Q2 2015 due mainly to higher production and grades.
At Fort Knox, production increased compared with the same period last year primarily due to higher mill grades, and was fairly consistent with the previous quarter. Cost of sales per ounce decreased by $247 per Au eq. oz., or 31%, compared with Q3 2014, and reached its lowest level in two years, mainly as a result of lower power costs and higher production.
At Kettle River-Buckhorn, production decreased compared with Q3 2014 and Q2 2015 mainly as a result of anticipated lower grades. Cost of sales per ounce was consistent with Q2 2015, but was higher compared with Q3 2014 due to lower production and higher milling costs associated with the processing of lower grades.
At Maricunga, performance was better than expected following the nine-week suspension of mining and crushing due to heavy rains in late March, which was anticipated to impact heap leach performance in Q3 2015. Production increased compared to the previous quarter as there was less impact on the site from the heavy rains in March. Production cost of sales per ounce decreased compared with Q2 2015 mainly as a result of higher production.
At Paracatu, production increased compared with the previous quarter due mainly to higher mill grades and increased recovery as mining transitioned to other areas of the pit with more favourable metallurgical characteristics. Production was slightly lower compared with the previous year due mainly to lower mill throughput, grades and recoveries. Paracatu achieved its lowest production cost of sales per ounce since Q4 2011. Cost of sales per ounce decreased compared with Q2 2015 as a result of higher production and grades, and also decreased compared with the previous year as a result of lower power and input costs, and a favourable foreign exchange rate.
Due to the continuing lack of rainfall in southcentral Brazil, Paracatu temporarily suspended operation of its Plant 1 facility and one ball mill in Plant 2 on November 5, 2015. Plant 1 will remain suspended until the water balance rises sufficiently to allow for production to restart. Plant 2 will be operating at a reduced tonnage rate, with operation of the SAG mill and three remaining ball mills contingent on adequate water levels. Planned maintenance work on the mills has been brought forward while the mills are not in operation. Mining operations will continue as normal and ore will be stockpiled in the pit.
The temporary curtailment is expected to reduce production by a minimum of 22,000 Au oz. in 2015. The maximum impact, should the site receive no rainfall for the remainder of the year, is forecast to be 83,000 Au oz. The length and extent of the temporary curtailment is dependent on rainfall, however, the reduction is not expected to impact the Company’s updated annual production, cost of sales and all-in sustaining cost guidance.
As a result of the current water scarcity, Paracatu’s new Santo Antonio tailings reprocessing project has been temporarily suspended until water levels recover. The project, which is now at its commissioning stage, remains on budget, with an estimated capital cost of $20 million.
p. 4 Kinross reports 2015 third-quarter results www.kinross.com
Russia
Third quarter production at the combined Kupol and Dvoinoye operation was fairly consistent with the previous quarter, and higher year-over-year due mainly to the increased proportion of higher grade Dvoinoye ore processed through the Kupol mill. Approximately 87,200 Au eq. oz. were produced from processing Dvoinoye ore in Q3 2015. Production cost of sales per ounce at the combined operation was at its lowest level since Dvoinoye started production in October 2013. Cost of sales per ounce decreased compared with Q2 2015 mainly as a result of higher gold equivalent ounces sold due to timing of shipments, and was lower compared with Q3 2014 mainly due to higher grades and favourable foreign exchange rates.
West Africa
At Tasiast, production decreased compared with Q2 2015 and Q3 2014 due mainly to the wind-down of the dump leach. Production cost of sales per ounce was in line with the previous quarter, but increased year-over-year as a result of the lower production from the dump leach.
As part of the Company’s ongoing efforts to reduce costs at Tasiast, in September, headcount was reduced by 222 employees for an expected annualized savings of approximately $10 million.
At Chirano, production decreased quarter-over-quarter and year-over-year as a result of anticipated lower grades due mainly to a declining contribution from the higher grade Akwaaba underground deposit. Production cost of sales per ounce increased as a result of lower production and increased power costs compared with Q2 2015 and Q3 2014.
Work continued to extend Chirano’s estimated mine life by one year to 2020, as development of the decline at the Akoti deposit advanced in the third quarter, with 250 metres of the main decline developed by quarter end. Kinross expects to mine additional underground ounces at two known mineral deposits, Paboase and Akoti, with Akoti expected to start producing ore in the second half of 2016.
Tasiast expansion update
Following the deferral of a previously studied 38,000 t/d mill expansion in Q1 2015, Kinross has continued to explore financially prudent alternatives to realizing Tasiast’s significant growth potential in the current gold price environment. The Company is completing early-stage engineering on an alternative two-phased expansion concept. Phase One would add incremental grinding capacity to the operation’s existing comminution circuit. Based on work to date, this phased approach would have the benefit of both leveraging existing mill infrastructure to optimize the current operation in the near term, and significantly lowering overall capital costs compared to the 2014 feasibility study estimate of $1.6 billion.
Phase One of a potential expansion contemplates the installation of an oversized semi-autogenous grinding (SAG) mill and gyratory crusher, and is expected to increase mill throughput capacity from the current 8,000 t/d to 12,000 t/d. Once commissioned, the additional crushing and grinding capacity is expected to enhance processing of the harder, higher grade West Branch ore and, by extension, improve Tasiast’s production and operating costs. Phase Two of the potential expansion could further increase throughput capacity up to as much as 38,000 t/d with the installation of additional milling, leaching, thickening and refinery capacity.
Highlights of the early-stage engineering work completed to date on the 12,000 t/d Phase One concept include the following estimates:
p. 5 Kinross reports 2015 third-quarter results www.kinross.com
| Operational Metric | Estimates |
|---|---|
| Average annual production – first two years | 368,000 Au eq. oz. |
| Cash cost per ounce – first two years | $575 per Au eq. oz. |
| All-in cost per ounce* – first two years | $725 per Au eq. oz. |
| Initial capital | $290 million |
| Construction period | Two years |
Assumes an oil price of $65/barrel *All-in cost includes operating costs, royalties, sustaining capital, and does not include estimated initial capital expenditures of $290 million and pre-stripping of $483 million during the two-year construction period and first two years of operation, and any exploration, income taxes and non- cash items related to reclamation or allocation of regional or corporate overhead costs. This differs from the World Gold Council definition of all- in cost.
The initial capital expenditure estimate of $290 million for Phase One of the potential expansion is comprised of the installation of an oversized SAG mill, gyratory crusher and three leach tanks, as well as improvements to other components of the processing circuit.
| Forecast Phase One expansion cost | Estimates | |
|---|---|---|
| ($ millions) | ||
| Direct cost (including freight) | $180 | |
| Indirect and owner’s cost | $80 | |
| Contingency | $30 |
A feasibility study of the initial Phase One 12,000 t/d concept with the new SAG mill is expected to be completed in Q1 2016, at which time further details regarding project economics and Phase Two of a potential expansion would be released. Any potential go-forward decision will depend on a range of factors, including the gold price environment and projections, expected economic returns and various technical and other considerations.
La Coipa update7
The La Coipa pre-feasibility study (PFS) was completed during Q3 2015 as scheduled. The PFS was based on plans to leverage existing infrastructure at La Coipa and to blend and process higher grade material from the recently delineated Phase 7 deposit mineralization with oxide/transition material from the existing Puren deposit. The PFS assumed a $1,200 per ounce gold price and $17.00 per ounce silver price for overall project economics.
The study estimates total life of mine production of approximately 1.03 million Au eq. oz., with estimated cost of sales per Au eq. oz. of $674 and an estimated all-in cost of sales per Au eq. oz. of $767 during the expected 5.5 year mine life, following receipt of permits and commencement of stripping. Ore processing is expected to commence 1.5 years after pre-stripping has been initiated and continue for four years.
The initial capital cost is expected to be approximately $94 million, which includes plant refurbishment, and roads and tailings upgrades. Pre-stripping is expected to be $105 million. In addition, life of mine sustaining capital is expected to be $96 million.
The PFS indicated an estimated total project IRR of approximately 20% and an estimated NPV of approximately $120 million.
| Summary of La Coipa PFS estimates7 | |
|---|---|
| Operational Metric | Life of Mine Estimates (100% basis) |
| Life of mine | 5.5 years |
| Total ounces recovered | 1.03 million Au eq. oz. |
7 Summary results are shown on a 100% basis, however, Kinross has a 75% interest in Phase 7 and a 65% interest in Puren.
p. 6 Kinross reports 2015 third-quarter results www.kinross.com
| Average annual production | 207,000 Au eq. oz. per year |
|---|---|
| Average cost of sales | $674 per Au eq. oz. |
| Average all-in cost** | $767 per Au eq. oz. |
| Average mill throughput | 13,000 tonnes per day |
| Average mining rate | 80,000 tonnes per day |
| Average gold recovery | 76% |
| Average silver recovery | 59% |
| Average gold grade | 1.69 g/t |
| Average silver grade | 61.5 g/t |
| Strip ratio (waste:ore) | 5.0 |
| Initial Capital | $94 million |
| Pre-Stripping | $105 million |
| Sustaining Capital | $96 million |
| IRR (after tax) | 20% |
| NPV | $120 million |
| Key Assumptions: Gold price Silver price Oil price Chilean Peso Discount rate | $1,200/oz. $17.00/oz. $65/barrel 600 to the US dollar 5% |
**All-in cost includes operating costs, sustaining capital, and post start-up capitalized stripping and does not include estimated initial capital expenditures of $94 million and estimated pre-stripping of $105 million, and any exploration, income taxes and non-cash items related to reclamation or allocation of regional or corporate overhead costs. This differs from the World Gold Council definition of all-in cost.
| Gold Price Sensitivity Estimates | |||
|---|---|---|---|
| $1,100 | $1,200 | $1,300 | |
| IRR | 15% | 20% | 26% |
The Company continues to proceed with permitting, which includes preparing a response to the relevant agencies’ review and request for further information after submission of a DIA (Declaration of Impact to Environment) permit earlier this year. In the meantime, the Company intends to complete further studies to assess potential blending and throughput optimization.
Exploration continues at several district targets, including Catalina, which is located less than one kilometre southeast of the Phase 7 deposit. Results continue to be encouraging and several significant new drill intersections have been identified during infill and step-out drilling this year. Further exploration work is planned to assess opportunities to extend the estimated mine life beyond what the PFS contemplates.
Outlook
The following section of the news release represents forward-looking information and users are cautioned that actual results may vary. We refer to the risks and assumptions contained in the Cautionary Statement on Forward-Looking Information on page 19 of this news release.
On September 17, 2015, Kinross updated its 2015 full-year guidance for production, cost of sales, all-in sustaining cost, capital expenditures and overhead (general and administrative, and business development expenses). The Company does not expect the temporary production curtailment at Paracatu to affect its updated guidance forecast for the year.
The Company expects to be within its production guidance range of 2.5-2.6 million Au eq. oz., which was narrowed upward from the previous guidance range of 2.4-2.6 million Au eq. oz.
Kinross expects to be within its updated all-in sustaining cost range of $975-$1,025 per Au eq. oz., which was lowered from the previous range of $1,000-$1,100, and its updated cost of sales range of $690-$730 per Au eq. oz., which was lowered from the previous range of $720-$780.
p. 7 Kinross reports 2015 third-quarter results www.kinross.com The Company expects to end the year below its updated capital expenditure guidance of $650 million, which was lowered from $725 million, and below its overhead guidance of $205 million, which excludes one-time restructuring charges.
Kinross expects to be within its original income tax guidance of $55 million based on the Company’s assumed gold price plus approximately 24% of additional profits as it relates to its income taxes on an adjusted basis. The Company’s deferred income taxes move significantly with changes in foreign exchange rates, however, these foreign exchange impacts are normalized in its adjusted net earnings.
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast today, Tuesday, November 10, 2015 at 5:30 p.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.
This release should be read in conjunction with Kinross’ 2015 third-quarter unaudited Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2015 third-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. 8 Kinross reports 2015 third-quarter results www.kinross.com
Review of operations
| Three months ended September 30, Gold equivalent ounces Production cost of Production cost of Produced Sold sales ($millions) sales/equivalent ounce sold 2015 2014 2015 2014 2015 2014 2015 2014 Fort Knox 115,258 104,815 118,978 110,187 $ 6 6.2 $ 88.5 $ 556 $ 803 Round Mountain 58,074 44,764 54,559 45,540 37.5 35.9 687 788 Kettle River - Buckhorn 24,222 32,175 24,284 33,783 19.3 22.6 795 669 Paracatu 129,064 136,078 134,838 136,233 100.7 105.7 747 776 Maricunga 52,672 69,279 52,282 68,434 52.5 60.3 1,004 881 Americas Total 379,290 387,111 384,941 394,177 276.2 313.0 718 794 Kupol 190,366 180,838 217,031 216,225 101.7 106.6 469 493 Russia Total 190,366 180,838 217,031 216,225 101.7 106.6 469 493 Tasiast 53,440 60,438 57,163 62,727 60.4 61.0 1,057 972 Chirano (100%) 63,981 72,701 62,792 73,296 44.0 39.5 701 539 West Africa Total 117,421 133,139 119,955 136,023 104.4 100.5 870 739 Operations Total 687,077 701,088 721,927 746,425 482.3 520.1 668 697 Less Chirano non-controlling (6,398) (7,270) (6,279) (7,330) (4.4) (3.9) interest (10%) Attributable Total 680,679 693,818 715,648 739,095 $ 477.9 $ 516.2 $ 668 $ 698 | |
|---|---|
| $ 803 788 669 776 881 | |
| 794 493 | |
| 493 972 539 | |
| 739 | |
| 697 | |
| $ 698 | |
| Nine months ended September 30, Gold equivalent ounces Production cost of Production cost of Produced Sold sales ($millions) sales/equivalent ounce sold 2015 2014 2015 2014 2015 2014 2015 2014 Fort Knox 313,992 279,719 314,678 308,836 $ 190.2 $ 224.4 $ 604 $ 727 Round Mountain 146,784 132,093 142,899 129,308 109.9 110.1 769 851 Kettle River - Buckhorn 78,067 98,647 77,975 98,413 67.0 63.9 859 649 Paracatu 364,115 387,492 366,936 384,336 285.1 320.4 777 834 La Coipa - - - 1,365 - 1.7 - 1,245 Maricunga 157,207 186,298 157,615 188,624 163.5 175.1 1,037 928 Americas Total 1,060,165 1,084,249 1,060,103 1,110,882 815.7 895.6 769 806 Kupol 567,255 567,351 569,148 571,276 271.5 287.9 477 504 Russia Total 567,255 567,351 569,148 571,276 271.5 287.9 477 504 Tasiast 165,339 197,208 163,894 194,432 170.7 195.0 1,042 1,003 Chirano (100%) 197,975 210,590 203,682 208,078 137.5 123.5 675 594 West Africa Total 363,314 407,798 367,576 402,510 308.2 318.5 838 791 Operations Total 1,990,734 2,059,398 1,996,827 2,084,668 1,395.4 1,502.0 699 720 Less Chirano non-controlling (19,797) (21,059) (20,368) (20,808) (13.8) (12.3) interest (10%) Attributable Total 1,970,937 2,038,339 1,976,459 2,063,860 $ 1,381.6 $ 1,489.7 $ 699 $ 722 |
p. 9 Kinross reports 2015 third-quarter results www.kinross.com
Consolidated balance sheets
(unaudited expressed in millions of United States dollars, except share amounts)
As at September 30, December 31, 2015 2014
Assets
Current assets
| Cash and cash equivalents | $ 1 ,024.8 |
|---|---|
| Restricted cash Accounts receivable and other assets Current income tax recoverable Inventories | 6.6 208.0 88.1 1,172.8 |
| 2,500.3 | |
| 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 | 5,187.7 162.7 85.4 157.5 407.2 61.6 |
| $ 8 ,562.4 | |
| $ 3 58.6 40.6 249.3 | |
| Current portion of provisions | 47.6 |
| Current portion of unrealized fair value of derivative liabilities Non-current liabilities Long-term debt | 41.0 |
| 737.1 | |
| 1,731.3 | |
| Provisions | 800.1 |
| Other long-term liabilities Deferred tax liabilities Total liabilities Equity Common shareholders' equity Common share capital Contributed surplus Accumulated deficit Accumulated other comprehensive loss | 153.7 384.1 |
| 3,806.3 | |
| $ 1 4,600.5 239.1 (10,080.2) (49.6) | |
| Total common shareholders' equity | 4,709.8 |
| Non-controlling interest Total equity | 46.3 |
| 4,756.1 | |
| $ 8 ,562.4 |
$ 983.5 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 1,146,416,421 1,144,576,474
p. 10 Kinross reports 2015 third-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 Nine months ended September 30, September 30, September 30, September 30, 2015 2014 2015 2014 Revenue Metal sales $ 8 09.4 $ 9 45.7 $ 2 ,346.0 $ 2 ,675.0 Cost of sales Production cost of sales 482.3 520.1 1,395.4 1,502.0 Depreciation, depletion and amortization 239.8 233.8 662.7 645.5 Impairment charges - - 24.5 - Total cost of sales 722.1 753.9 2,082.6 2,147.5 Gross profit 87.3 191.8 263.4 527.5 Other operating expense 13.5 13.2 78.8 46.2 Exploration and business development 29.9 27.8 82.4 79.5 General and administrative 44.2 38.2 127.8 127.6 Operating earnings (loss) (0.3) 112.6 (25.6) 274.2 Other income (expense) - net 2.8 (4.9) (5.4) (12.2) Equity in earnings (losses) of associate and joint venture (1.1) (2.3) 3.8 (4.3) Finance income 2.1 2.5 6.3 8.3 Finance expense (21.9) (19.9) (69.6) (52.6) Earnings (loss) before tax (18.4) 88.0 (90.5) 213.4 Income tax expense - net (34.7) (92.3) (54.6) (140.6) Earnings (loss) from continuing operations after tax (53.1) (4.3) (145.1) 72.8 Loss from discontinued operation after tax - (0.8) - (4.9) Net earnings (loss) $ (53.1) $ (5.1) $ (145.1) $ 6 7.9 Net earnings (loss) from continuing operations attributable to: Non-controlling interest $ (0.4) $ - $ (2.5) $ (0.7) Common shareholders $ (52.7) $ (4.3) $ (142.6) $ 7 3.5 Net earnings (loss) attributable to: Non-controlling interest $ (0.4) $ - $ (2.5) $ (0.7) Common shareholders $ (52.7) $ (5.1) $ (142.6) $ 6 8.6 Earnings (loss) per share from continuing operations attributable to common shareholders Basic $ (0.05) $ - $ (0.12) $ 0 .06 Diluted $ (0.05) $ - $ (0.12) $ 0 .06 Earnings (loss) per share attributable to common shareholders Basic $ (0.05) $ - $ (0.12) $ 0 .06 Diluted $ (0.05) $ - $ (0.12) $ 0 .06 Weighted average number of common shares outstanding (millions) Basic 1,146.3 1,144.5 1,145.9 1,144.2 Diluted 1,146.3 1,144.5 1,145.9 1,152.9 | |||
|---|---|---|---|
| Revenue | |||
| Metal sales Cost of sales Production cost of sales Depreciation, depletion and amortization Impairment charges | $ 8 09.4 482.3 239.8 - | ||
| Total cost of sales Gross profit | 722.1 | ||
| 87.3 | |||
| Other operating expense Exploration and business development General and administrative Operating earnings (loss) Other income (expense) - net Equity in earnings (losses) of associate and joint venture Finance income | 13.5 29.9 44.2 | ||
| (0.3) | |||
| 2.8 (1.1) 2.1 | |||
| Finance expense Earnings (loss) before tax Income tax expense - net Earnings (loss) from continuing operations after tax Loss from discontinued operation after tax Net earnings (loss) | (21.9) | ||
| (18.4) (34.7) | |||
| (53.1) - | |||
| $ (53.1) | |||
| 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 | $ (0.4) | ||
| $ (52.7) | |||
| $ (0.4) | |||
| $ (52.7) | |||
| $ (0.05) $ (0.05) $ (0.05) $ (0.05) | |||
| Weighted average number of common shares outstanding (millions) | |||
| Basic | 1,146.3 | 1,144.5 | |
| Diluted | 1,146.3 | 1,144.5 |
| $ 2 ,346.0 1,395.4 662.7 24.5 | ||
|---|---|---|
| 2,082.6 | ||
| 263.4 | ||
| 78.8 82.4 127.8 | ||
| (25.6) | ||
| (5.4) 3.8 6.3 | ||
| (69.6) | ||
| (90.5) (54.6) | ||
| (145.1) - | ||
| $ (145.1) | ||
| $ (2.5) | ||
| $ (142.6) | ||
| $ (2.5) | ||
| $ (142.6) | ||
| $ (0.12) $ (0.12) $ (0.12) $ (0.12) | ||
| 1,145.9 | 1,144.2 | |
| 1,145.9 | 1,152.9 |
p. 11 Kinross reports 2015 third-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: | |||
| Net 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 Impairment of inventory | $ (53.1) 239.8 - | $ (4.3) 233.8 - 2.3 1.1 6.0 19.9 62.0 3.3 (9.7) 10.6 30.5 355.5 (51.0) 304.5 (1.5) (153.5) 3.1 0.4 0.1 0.8 (149.1) - - 132.3 (162.3) (15.8) 0.1 (2.3) (48.0) - (8.7) 97.2 738.7 $ 835.9 | $ (145.1) 662.7 24.5 |
| Equity in losses (earnings) of associate and joint venture | 1.1 | (3.8) | |
| Non-hedge derivative losses - net Share-based compensation expense Finance expense Deferred tax expense (recovery) Foreign exchange losses (gains) and other Changes in operating assets and liabilities: Accounts receivable and other assets Inventories Accounts payable and accrued liabilities | 2.0 5.0 21.9 (24.9) 14.8 (3.6) 23.2 27.7 | 1.2 13.9 69.6 (42.0) 1.8 7.4 110.4 28.1 | |
| 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 Investing: Additions to property, plant and equipment Net proceeds from (additions to) long-term investments and other assets Net proceeds from the sale of property, plant and equipment Decrease 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 Net cash flow of continuing operations used in financing activities Net cash flow of discontinued operations used in financing activities 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 | 253.9 | 728.7 | |
| (21.8) | (79.3) | ||
| 232.1 | 649.4 | ||
| - | - | ||
| (171.3) | (449.3) | ||
| (18.7) | (60.4) | ||
| 0.1 | 2.0 | ||
| 31.9 | 34.7 | ||
| 1.0 | 3.1 | ||
| (157.0) | (469.9) | ||
| - | 1.0 | ||
| - - (50.0) (24.1) - (1.9) | - 22.5 (102.5) (47.6) - (2.9) | ||
| (76.0) | (130.5) | ||
| - | - | ||
| (5.7) | (8.7) | ||
| (6.6) 1,031.4 | 41.3 983.5 | ||
| $ 1,024.8 | $ 1,024.8 |
p. 12 Kinross reports 2015 third-quarter results www.kinross.com