Kinross reports 2019 fourth-quarter and full-year results Meets production and cost guidance for eighth consecutive year Tasiast delivers record annual production and costs; Paracatu achieves record annual production Solid production with lower all-in sustaining cost per ounce and capital expenditur
Kinross reports 2019 fourth-quarter and full-year results
Meets production and cost guidance for eighth consecutive year
Tasiast delivers record annual production and costs; Paracatu achieves record annual production
Solid production with lower all-in sustaining cost per ounce and capital expenditures forecast in 2020
TORONTO, Feb. 12, 2020 -- Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the fourth-quarter and year-end December 31,
2019.
(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 21 of this release. All dollar amounts are
expressed in U.S. dollars, unless otherwise noted.)
2019 full-year results and 2020 guidance:
2019 guidance
(+/- 5%) 2019 full-year results 2020 guidance
(+/- 5%)
Gold equivalent production 1
(ounces) 2.5 million 2.5 million 2.4 million
Production cost of sales1, 2
($ per Au eq. oz.) $730 $706 $720
All-in sustaining cost1, 2
($ per Au eq. oz.) $995 $983 $970
Capital expenditures $1,050 million $1,105 million3 $900 million3
CEO Commentary:
J. Paul Rollinson, President and CEO, made the following comments in relation to 2019 fourth-quarter and year-end results:
“In 2019, our portfolio of mines performed strongly, as we increased production and lowered costs year-over-year and generated robust free cash flow. Our
strong performance ensured we met our production, cost and capital guidance for the eighth consecutive year.
“Our three largest producers in 2019 – Paracatu, Kupol and Tasiast – accounted for 61% of our total production and delivered the lowest costs in the portfolio.
Paracatu and Tasiast each had an outstanding year, posting record annual production, with Tasiast also delivering record low costs.
“In terms of 2019 financial performance, Kinross increased operating cash flow by 55% to $1.2 billion, more than tripled adjusted net earnings to $423 million,
grew our margins by 28%, and improved liquidity to $2 billion while continuing to invest in our development projects.
“We also took steps to strengthen our future production profile. We approved and launched the capital efficient Tasiast 24k expansion project and completed
the IFC-led project financing. We improved our development pipeline by acquiring the high-quality and highly prospective Chulbatkan project in Russia and are
now proceeding with the La Coipa Restart project in Chile. In addition, we made excellent progress at our U.S. projects, commencing production at our Round
Mountain Phase W and Bald Mountain Vantage Complex projects in Nevada, and advancing Fort Knox Gilmore in Alaska.
“In 2020, we expect to continue our strong performance, producing approximately 2.4 million gold equivalent ounces, with all-in sustaining costs and capital
expenditures guidance lower than last year. In 2021, generating strong free cash flow will continue to be a priority, with production expected to be at or above
2019 levels and capital expenditures and all-in sustaining costs expected to decrease compared with 2020. We currently expect a further reduction in capital
expenditures and all-in sustaining costs for 2022, with production expected to remain at the 2.5 million ounce level.”
2019 Q4 and full-year highlights:
• Production1: 645,344 gold equivalent ounces (Au eq. oz.) in Q4 2019 and 2,507,659 Au eq. oz. in 2019.
• Revenue: $996.2 million in Q4 2019 and $3,497.3 million in 2019.
• Production cost of sales2: $744 per Au eq. oz. in Q4 2019 and $706 per Au eq. oz. in 2019.
• All-in sustaining cost2: $1,050 per Au eq. oz. sold in Q4 2019 and $983 per Au eq. oz. sold in 2019. All-in sustaining cost per Au oz. sold on a by-
product basis was $1,041 in Q4 2019 and $974 per Au oz. sold in 2019.
• Operating cash flow: $408.6 million in Q4 2019 and $1,224.9 million in 2019.
• Adjusted operating cash flow 2: $387.6 million in Q4 2019 and $1,201.5 million for 2019.
• Reported net earnings 4: $521.5 million, or $0.41 per share in Q4 2019, and $718.6 million, or $0.57 per share, in 2019.
• Adjusted net earnings 2,3: adjusted net earnings of $156.0 million, or $0.13 per share in Q4 2019, and adjusted net earnings of $422.9 million, or $0.34
per share, in 2019.
• Margins5: attributable margins of $741 per Au eq. oz. sold in Q4 2019 and $686 per Au eq. oz. sold for 2019.
Operations highlights:
• Paracatu delivered record annual production of approximately 620,000 Au eq. oz., mainly due to benefits from an asset optimization program that
improved mill efficiencies and enhanced the understanding of the orebody.
• Tasiast achieved record production and costs in 2019, as the mine continued to benefit from the Phase One expansion and the mill’s strong
performance. Year-over-year production increased by 140,000 Au eq. oz., or 56%, with cost of sales per ounce decreasing by $374 per ounce sold, or
38%.
• Kupol-Dvoinoye production was 8% higher year-over-year primarily due to higher-grade ore processed from Kupol’s Northeast Extension and
Moroshka deposits.
• Round Mountain performed well in full-year 2019 with the completion of the Phase W project and increases in ounces recovered from the heap leach
pads and lower full-year cost of sales.
Balance sheet and liquidity:
• Cash and cash equivalents of $575.1 million, and total liquidity of $2,028.2 million at December 31, 2019. No debt maturities until September 2021.
• Completed the $300 million project financing for Tasiast with the IFC (a member of the World Bank Group), Export Development Canada and two
commercial banks.
• Sold remaining shares in Lundin Gold Inc. for gross proceeds of approximately $113 million.
• Sold royalty portfolio to Maverix Metals Inc. (“Maverix”) for total consideration of approximately $74 million, which includes $25 million in cash and
approximately 11.2 million Maverix common shares.
Environment, Social, Governance (ESG):
• Maintained industry-leading health and safety performance.
• Delivered strong environmental management and sustainability performance; achieved lowest energy-use and greenhouse gas emission intensities
among gold industry peers.
• Published best practice approach to safe and responsible tailings management, based on an overriding commitment to safety and environmental
stewardship.
• Governance standards continued to be robust: achieved 33% Board gender diversity target and welcomed two new independent Board members.
Financial results
Summary of financial and operating results
Three months ended Years ended
December 31, December 31,
(in millions, except ounces, per share amounts, and per ounce amounts) 2019 2018 2019 2018
Operating Highlights
Total gold equivalent ounces(1)
Produced(3) 650,242 615,279 2,527,788 2,475,068
Sold(3) 670,917 641,101 2,512,758 2,532,912
Attributable gold equivalent ounces(1)
Produced(3) 645,344 610,152 2,507,659 2,452,398
Sold(3) 666,199 636,183 2,492,572 2,510,419
Financial Highlights
Metal sales $ 996.2 $ 786.5 $ 3,497.3 $ 3,212.6
Production cost of sales $ 500.5 $ 476.4 $ 1,778.9 $ 1,860.5
Depreciation, depletion and amortization $ 210.4 $ 184.3 $ 731.3 $ 772.4
Reversals of impairment charges $ (361.8) $ - $ (361.8) $ -
Operating earnings $ 568.8 $ 25.1 $ 991.1 $ 200.5
Net earnings (loss) attributable to common shareholders $ 521.5 $ (27.7) $ 718.6 $ (23.6)
Basic earnings (loss) per share attributable to common shareholders $ 0.41 $ (0.02) $ 0.57 $ (0.02)
Diluted earnings (loss) per share attributable to common shareholders $ 0.41 $ (0.02) $ 0.57 $ (0.02)
Adjusted net earnings attributable to common shareholders(2) $ 156.0 $ 13.5 $ 422.9 $ 128.1
Adjusted net earnings per share(2) $ 0.13 $ 0.01 $ 0.34 $ 0.10
Net cash flow provided from operating activities $ 408.6 $ 183.5 $ 1,224.9 $ 788.7
Adjusted operating cash flow(2) $ 387.6 $ 135.8 $ 1,201.5 $ 874.2
Capital expenditures $ 298.2 $ 273.0 $ 1,105.2 $ 1,043.4
Average realized gold price per ounce(2) $ 1,485 $ 1,226 $ 1,392 $ 1,268
Consolidated production cost of sales per equivalent ounce(3) sold(2) $ 746 $ 743 $ 708 $ 735
Attributable(1) production cost of sales per equivalent ounce(3) sold(2) $ 744 $ 743 $ 706 $ 734
Attributable(1) production cost of sales per ounce sold on a by-product basis (2) $ 728 $ 733 $ 691 $ 723
Attributable(1) all-in sustaining cost per ounce sold on a by-product basis (2) $ 1,041 $ 955 $ 974 $ 959
Attributable(1) all-in sustaining cost per equivalent ounce(3) sold(2) $ 1,050 $ 961 $ 983 $ 965
Attributable(1) all-in cost per ounce sold on a by-product basis (2) $ 1,337 $ 1,287 $ 1,282 $ 1,275
Attributable(1) all-in cost per equivalent ounce(3) sold(2) $ 1,340 $ 1,286 $ 1,284 $ 1,274
(1) "Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
(2) The definition and reconciliation of these non-GAAP financial measures is included on pages 16 to 20 of this news release.
(3) “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 2019 was 85.99:1 (2018 - 80.74:1). The ratio for Q4 2019 was 85.59:1 (Q4 2018 - 84.42:1).
The following operating and financial results are based on fourth-quarter and year-end 2019 gold equivalent production. Production and cost measures are on
an attributable basis:
Production: Kinross produced 645,344 attributable Au eq. oz. in the fourth quarter of 2019, compared with 610,152 in the fourth quarter of 2018, mainly due to
record quarterly production at Tasiast and higher production at Round Mountain and Bald Mountain.
Kinross produced 2,507,659 attributable Au eq. oz. for full-year 2019, which was in line with the Company’s 2019 annual guidance, and an increase compared
with full-year 2018 production of 2,452,398 Au eq. oz.
Production cost of sales: Production cost of sales per Au eq. oz. 2 was $744 for Q4 2019, compared with $743 for the fourth quarter of 2018. Production cost
of sales per Au oz. on a by-product basis 2 was $728 in Q4 2019, compared with $733 in Q4 2018, based on Q4 2019 attributable gold sales of 652,462 ounces
and attributable silver sales of 1,175,772 ounces.
Production cost of sales per Au eq. oz. was $706 for full-year 2019, which was at the low end of the Company’s 2019 guidance. This compares with production
cost of sales of $734 per Au eq. oz. for full-year 2018. The full-year decrease was mainly due lower costs at Paracatu, Tasiast and Round Mountain.
Production cost of sales per Au oz. on a by-product basis 2 was $691 for full-year 2019, compared with $723 for full-year 2018, based on 2019 attributable gold
sales of 2,438,678 ounces and attributable silver sales of 4,633,932 ounces.
All-in sustaining cost2: All-in sustaining cost per Au eq. oz. sold was $1,050 in Q4 2019, compared with $961 in Q4 2018. All-in sustaining cost per Au oz.
sold on a by-product basis increased to $1,041 in Q4 2019, compared with $955 in Q4 2018.
All-in sustaining cost per Au eq. oz. sold was $983 for full-year 2019, which was within the Company’s 2019 guidance range, compared with $965 for full-year
2018. All-in sustaining cost per Au oz. sold on a by-product basis was $974 for full-year 2019, compared with $959 for full-year 2018.
Revenue : Revenue from metal sales was $996.2 million in the fourth quarter of 2019, compared with $786.5 million during the same period in 2018.
Revenue for full-year 2019 increased to $3,497.3 million, compared with $3,212.6 million for full-year 2018.
Average realized gold price 6: The average realized gold price in Q4 2019 increased 21% to $1,485 per ounce, compared with $1,226 per ounce in Q4 2018.
The average realized gold price per ounce increased 10% to $1,392 for full-year 2019, compared with $1,268 per ounce for full-year 2018.
Margins5: Kinross’ attributable margin per Au eq. oz. sold increased 53% to $741 per Au eq. oz. for the fourth quarter of 2019, compared with the Q4 2018
margin of $483 per Au eq. oz. sold.
Full-year 2019 margin per Au eq. oz. sold increased 28% to $686, compared with $534 for full-year 2018.
Operating cash flow : Adjusted operating cash flow 2 increased significantly to $387.6 million for the fourth quarter of 2019, compared with $135.8 million for
Q4 2018. Adjusted operating cash flow for full-year 2019 increased 37% to $1,201.5 million, compared with $874.2 million for full-year 2018.
Net operating cash flow was $408.6 million for the fourth quarter of 2019, compared with $183.5 million for Q4 2018. Net operating cash flow for full-year 2019
increased 55% to $1,224.9 million, compared with $788.7 million for full-year 2018.
Impairment reversal : At December 31, 2019, Kinross recorded non-cash after-tax impairment reversals totalling $293.6 million, including $161.1 million at
Tasiast and $132.5 million at Paracatu. The reversals were entirely related to property, plant and equipment, and were mainly due to an increase in the
Company’s long-term gold price estimates.
Earnings/loss: Adjusted net earnings 2,3 increased to $156.0 million, or $0.13 per share, for Q4 2019, compared with adjusted net earnings of $13.5 million, or
$0.01 per share, for Q4 2018. Full-year 2019 adjusted net earnings more than tripled to $422.9 million, or $0.34 per share, compared with adjusted net
earnings of $128.1 million, or $0.10 per share, for full-year 2018, mainly due to higher margins.
Reported net earnings increased to $521.5 million, or $0.41 per share, for Q4 2019, compared with net loss of $27.7 million, or $0.02 per share, in Q4 2018.
Full-year 2019 reported net earnings increased to $718.6 million, or $0.57 per share, compared with net loss of $23.6 million, or $0.02 per share, for full-year
2018. The increase was mainly due to higher margins, non-cash impairment reversals, a gain of $72.7 million on the sale of the royalty portfolio, and a
decrease in depreciation, depletion and amortization.
Capital expenditures 3: Capital expenditures were $298.2 million for Q4 2019, compared with $273.0 million for the same period last year.
Capital expenditures for full-year 2019 were $1,105.2 million, compared with $1,043.4 million for 2018, primarily due to increased spending on projects at Bald
Mountain, Fort Knox and Round Mountain, partially offset by lower spending at Tasiast. Capital expenditures were within the Company’s guidance.
Balance sheet
As of December 31, 2019, Kinross had cash and cash equivalents of $575.1 million, compared with $349.0 million at December 31, 2018. The increase was
primarily due to net operating cash flow inflows, partially offset by capital expenditures at the Company’s development projects.
The Company has available credit of $1,453.1 million as of year-end 2019, for total liquidity of $2,028.2 million.
Operating results
Mine-by-mine summaries for 2019 fourth-quarter and full-year operating results may be found on pages 11 and 15 of this news release. Highlights include the
following:
Americas
Paracatu had an outstanding year in 2019, achieving record annual production of 619,563 Au eq. oz. while lowering costs. The strong performance was mainly
due to an asset optimization program started in 2018, which resulted in improved mill efficiencies and an enhanced understanding of the orebody. Full-year
production increased approximately 98,000 Au eq. oz., or 19%, compared with 2018, as both throughput and recoveries improved. Full-year cost of sales per
ounce sold decreased by approximately 19% compared with 2018 mainly due to operational efficiencies, lower power costs, and favourable foreign exchange
movements. During Q4 2019 cost of sales per ounce sold increased versus Q3 2019 mainly due to higher maintenance costs, as the crusher was repaired
during the quarter. Quarterly production was slightly lower compared with Q3 2019 mainly due to lower throughput.
Round Mountain performed well for full-year 2019. While there was a slight year-over-year reduction in annual production, Q4 2019 production increased 26%
compared with Q3 2019 mainly due to strong performance from the heap leach pads as a result of the Phase W project. Full-year cost of sales per ounce sold
was lower versus 2018 primarily due to lower operating waste. Cost of sales per ounce sold in Q4 2019 was largely in line quarter-over-quarter.
At Bald Mountain , full-year production was lower compared with 2018 mainly due to a slower-than-anticipated ramp up at the Vantage Complex project and
unfavourable weather conditions at the site early in the year. As expected, production was significantly higher in Q4 2019, increasing by 95% compared with
Q3 2019, as more ounces were recovered from the Vantage Complex. Cost of sales per ounce sold for 2019 was higher compared with 2018 mostly due to
lower production. Cost of sales per ounce sold decreased during Q4 2019 compared with Q3 2019 primarily due an increase in production.
At Fort Knox , production for 2019 was lower compared with 2018 mainly due to a decrease in mill throughput, while 2019 cost of sales per ounce sold
increased compared with the previous year mainly due to lower production and higher maintenance costs. Production and cost of sales per ounce sold for Q4
2019 were largely in line with the previous quarter.
Maricunga delivered higher-than-expected annual production from the rinsing of materials placed on the heap leach pads prior to the suspension of mining
activities. Full-year cost of sales per ounce sold were largely in line with 2018. The mine has now transitioned into care and maintenance, with final production
occurring in Q4 2019. For tax planning purposes, the sale of residual gold ounces are expected to continue during 2020.
Russia
The Russia region continued its strong and consistent performance in 2019. Combined full-year production at Kupol and Dvoinoye was 8% higher compared
with 2018 primarily due to higher grade ore processed from Kupol’s Northeast Extension and Moroshka deposits. Production quarter-over-quarter was lower
primarily due to planned lower mill grades at Kupol. Full-year cost of sales per ounce sold was higher compared with 2018 primarily due to an increase in
operating waste mined, and was largely in line quarter-over-quarter.
West Africa
Tasiast outperformed in 2019, achieving record production and a record low cost of sales per ounce sold, as the mine continued to benefit from the Phase One
expansion and the mill’s strong performance. During 2019, production increased by approximately 140,000 Au eq. oz., or 56%, while cost of sales decreased
by $374 per ounce sold, or 38%, compared with 2018. Tasiast finished the year strongly, achieving a record quarterly production of 102,973 Au eq. oz. at a
cost of sales of $494 per ounce sold, the lowest in its history. The mine also achieved a record average throughput of 15,000 tonnes per day during the quarter.
Higher grades, operational efficiencies and lower operating waste during Q4 2019 also contributed to a decrease in costs compared with the same period in
2018.
At Chirano, full-year production decreased slightly compared with 2018 mainly due to lower grades. Production for Q4 2019 was higher compared with the
previous quarter primarily as a result of improved mill throughput. Cost of sales per ounce sold was higher for full-year 2019 mainly due to an increase in
operating waste mined associated with the return to open pit mining, and was largely in line quarter-over-quarter.
2020 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 21 of this news release.
In 2020, Kinross expects to produce 2.4 million Au eq. oz. (+/- 5%) from its operations. In 2021, annual production is expected to be at or above 2019 levels,
and is expected to remain at the 2.5 million Au eq. oz. level for 2022.
The slight forecast decrease compared to full-year 2019 production is primarily due to Maricunga transitioning to care and maintenance, and expected lower
production at Paracatu following its record year, partially offset by an expected production increase at Tasiast and Fort Knox.
Production is expected to be relatively flat quarter-over-quarter throughout 2020, with a slight increase in the fourth quarter. Tasiast is expected to have higher
production in the first half of the year mainly as a result of higher grade ore. Paracatu and Round Mountain are expected to have higher production in the
second half of the year mainly due to anticipated higher grades at Paracatu and more ounces recovered at Round Mountain as the benefits of Phase W
continue to be realized.
Production cost of sales is expected to be $720 per Au eq. oz. (+/- 5%) for 2020. The Company expects all-in sustaining cost to be $970 (+/- 5%) per ounce
sold on both a gold equivalent and by-product basis for 2020, which is lower than full-year 2019 all-in sustaining cost per ounce, mainly due to the expected
lower cost of sales per ounce sold and capital expenditures for 2020. All-in sustaining cost per ounce is expected to decrease in 2021 and 2022, compared
with 2020 levels.
The table below summarizes the 2020 forecast for production and production cost of sales on a gold equivalent and by-product accounting basis:
Accounting basis 2020 Guidance
(+/- 5%)
Gold equivalent basis
Production (Au eq. oz.)1,2 2.4 million
Average production cost of sales per Au eq. oz. 1,2 $720
All-in sustaining cost per Au eq. oz. 1,2 $970
By-product basis
Gold ounces1 2.3 million
Silver ounces 4.0 million
Average production cost of sales per Au oz. 1,2 $710
The following table provides a summary of the 2020 production and production cost of sales forecast by region:
Region
Forecast 2020
production
(Au eq. oz.)
Percentage of total
forecast production7
Forecast 2020 production
cost of sales
(per Au eq. oz.)2
Americas 1.3 million (+/- 5%) 54% $770 (+/- 5%)
West Africa (attributable)* 600,000 (+/- 10%) 25% $670 (+/- 10%)
Russia 500,000 (+/- 3%) 21% $650 (+/- 3%)
Total 2.4 million (+/- 5%) 100% $720 (+/- 5%)
*Based on Kinross’ 90% share of Chirano
Material assumptions used to forecast 2020 production cost of sales are as follows:
• a gold price of $1,200 per ounce,
• a silver price of $16 per ounce,
• an oil price of $65 per barrel,
• foreign exchange rates of:
◦ 3.50 Brazilian reais is to the U.S. dollar,
◦ 1.30 Canadian dollars to the U.S. dollar,
◦ 60 Russian roubles to the U.S. dollar,
◦ 650 Chilean pesos to the U.S. dollar,
◦ 5.0 Ghanaian cedis to the U.S. dollar,
◦ 35 Mauritanian ouguiyas to the U.S. dollar, and
◦ 1.11 U.S. dollars to the Euro.
Taking into account existing currency and oil hedges:
• a 10% change in foreign currency exchange rates would be expected to result in an approximate $14 impact on production cost of sales per ounce 8;
• specific to the Russian rouble, a 10% change in this exchange rate would be expected to result in an approximate $15 impact on Russian production
cost of sales per ounce;
• specific to the Brazilian real, a 10% change in this exchange rate would be expected to result in an approximate $25 impact on Brazilian production
cost of sales per ounce;
• a $10 per barrel change in the price of oil would be expected to result in an approximate $4 impact on production cost of sales per ounce;
• a $100 change in the price of gold would be expected to result in an approximate $4 impact on production cost of sales per ounce as a result of a
change in royalties.
Total capital expenditures for 2020 are forecast to be approximately $900 million3 (+/- 5%) and are summarized in the table below.
Capital expenditures for 2021 are expected to be lower by approximately $100 million compared with 2020 capital guidance. Capital expenditures are expected
to be further reduced in 2022 compared with 2021 levels.
Region
Forecast 2020
sustaining capital
(million)
Forecast 2020
non-sustaining capital
(million)
Total forecast capital
(+/- 5%) (million)
Americas $265 $270 $535
West Africa $35 $280 $315
Russia $25 $20 $45
Corporate $5 $0 $5
TOTAL $330 $570 $900*
*Starting in 2020, the Company will exclude capitalized interest from its capital expenditures guidance and intends to report interest as a separate item going
forward in order to provide greater transparency.
Sustaining capital includes the following forecast spending estimates:
• Mine development: $110 million (Americas); $15 million (Russia); $10 million (West Africa)
• Mobile equipment: $70 million (Americas); $10 million (Russia); $5 million (West Africa)
• Tailings facilities: $50 million (Americas); $5 million (West Africa)
• Mill facilities: $20 million (Americas); $5 million (West Africa)
• Leach facilities: $15 million (Americas)
Non-sustaining capital includes the following forecast spending estimates:
• Tasiast West Branch stripping: $225 million
• Round Mountain Phase W
(primarily stripping): $125 million
• Fort Knox Gilmore: $95 million
• Tasiast 24k project: $55 million
• La Coipa Restart $45 million
• Development projects and other:$25 million
The 2020 forecast for exploration is approximately $90 million, all of which is expected to be expensed. The increase compared to full-year 2019 is primarily
due to the addition of Chulbatkan to the Company’s project pipeline.
The 2020 forecast for overhead (general and administrative and business development expenses) is approximately $150 million, approximately $20 million less
than 2019 results primarily as a result of Kinross’ comprehensive cost and efficiency review across the organization. 2020 annual overhead guidance is down
$55 million compared with 2015 overhead guidance.
Other operating costs expected to be incurred in 2020 are approximately $100 million, which includes approximately $50 million of care and maintenance
costs in Chile and at Kettle River-Buckhorn.
Based on assumed gold price of $1,200 and other budget assumptions, tax expense is expected to be a recovery of $25 million and taxes paid is expected to
be $110 million. Adjusting the Brazilian real to the exchange rate of 4.03 at the end of 2019, tax expense is expected to be $30 million. Tax expense is
expected to increase at 23% of any profit resulting from higher gold prices. For every $100 increase in the realized gold price, taxes paid is expected to
increase by $20 million.
Depreciation, depletion and amortization is forecast to be approximately $340 (+/-5%) per Au eq. oz.
Interest paid is forecast to be approximately $110 million, which includes $55 million of capitalized interest.
Tasiast project financing
On December 16, 2019, Kinross signed a $300 million project financing for Tasiast with the IFC (a member of the World Bank Group), Export Development
Canada, and with the participation of ING Bank and Société Générale. The loan is non-recourse to Kinross, underscores the attractive foreign investment
climate in Mauritania, and was signed following a comprehensive due diligence process with the lenders, including site visits, meetings with the Government of
Mauritania, and significant technical and environmental reviews and evaluations. The first funding draw from the loan is expected later in Q1 2020.
Sale of Lundin Gold shares
As part of its portfolio management strategy and to further strengthen its balance sheet, on December 9, 2019 Kinross sold its remaining share position in
Lundin Gold Inc. to a syndicate of buyers for gross proceeds of approximately $113 million.
Sale of royalty portfolio to Maverix Metals
On December 19, 2019, Kinross completed the sale of its royalty portfolio to Maverix for total consideration of $73.9 million, which includes $25 million in cash
and approximately 11.2 million Maverix common shares, representing a 9.4% ownership interest in Maverix. The transaction enables Kinross to realize the
value of its royalty portfolio and retain upside exposure through its meaningful equity position in Maverix.
Environment, Social, Governance highlights (ESG)
Kinross’ performance in its First Priorities – safety, environment and social responsibility – remains among the best in the industry, with a 2019 safety record
on par with rates in low-risk non-industrial sectors. In 2019, we made major advancements in the implementation of critical risk management systems that are
designed to prevent serious injuries and fatalities. Kinross’ robust approach to environmental management includes addressing climate change impacts and
risks. Overall, the Company’s energy-use and greenhouse gas emission intensities are the lowest amongst gold industry peers. In 2019, Kinross published its
best practice approach to safe and responsible tailings management , which is based on an overriding commitment to safety and the environment . For its
strong sustainability performance, Kinross was recently ranked in the top 10 among metals and mining companies in The Sustainability Yearbook 2020,
published by S&P Global in collaboration with RobecoSAM.
Kinross engages directly with local communities around its operations to understand their economic, social and development goals, working together to
ensure that meaningful, long-term benefits are realized through job creation, training programs, procurement, tax payments, and targeted community
programs. In 2019, Kinross interacted with more than 90,000 stakeholders and registered more than 650,000 beneficiaries from its community projects.
Employing a diverse workforce comprised of 98% of people from host countries also enabled Kinross to contribute greater economic value in the areas where it
operates.
Studies measuring quality of life metrics have found significant improvements in communities around the Company’s mines at Paracatu and Tasiast. In Chile,
60% of local Colla indigenous people around the La Coipa project now have access to electricity after solar panels were installed in their communities. In
Chirano, more than 90% of people in communities around the mine now have access to safer piped water, compared to less than 40% in 2000, as a result of
significant improvements in essential infrastructure over the past 15 years.
Kinross’ robust corporate governance standards for its Board of Directors continue to be driven by a focus on delivering value through a mix of skills and
experience, diversity, director independence and succession planning. In 2019, Kinross appointed a new Chair of the Board and welcomed two new Board
members. Kinross maintained its top tier governance performance by, among other things, achieving its 33% Board gender diversity target and reducing
average Board tenure. Kinross was the top ranked gold mining company in The Globe and Mail’s 2019 annual corporate governance survey for the second
consecutive year.
In September 2019, the World Gold Council (WGC) launched its Responsible Gold Mining Principles (RGMPs), which are an overarching framework that
defines responsible gold mining. Kinross was a participant in the WGC committee that developed the RGMPs, which are largely consistent with the
Company’s current approach. Kinross is well-positioned to be in substantial conformance, including obtaining external assurance within the next three years.
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, February 13, 2020 at 8 a.m. ET to discuss the results,
followed by a question-and-answer session. To access the call, please dial:
Canada & US toll-free – (877) 201-0168; Conference ID: 1756358
Outside of Canada & US – +1 (647) 788-4901; Conference ID: 1756358
Replay (available up to 14 days after the call):
Canada & US toll-free – (800) 585-8367; Conference ID: 1756358
Outside of Canada & US – +1 (416) 621-4642; Conference ID: 1756358
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’ 2019 year-end Financial Statements and Management’s Discussion and Analysis report at
www.kinross.com. Kinross’ 2019 year-end Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities
regulators (available at www.sedar.com) and furnished with 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
Louie Diaz
Senior Director, Corporate Communications
phone: 416-369-6469
Investor Relations Contact
Tom Elliott
Senior Vice-President, Investor Relations and Corporate Development
phone: 416-365-3390
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 16 to 20 of this news release.
3 2020 capital expenditures guidance excludes capitalized interest of $55 million. The 2019 capital expenditures guidance and capital expenditures results
includes capitalized interest of $65 million and $45 million, respectively.
4 Net earnings/loss figures in this release represent “net (loss) earnings from continuing operations attributable to common shareholders.”
5 Attributable margin per equivalent ounce sold is a non-GAAP financial measure defined as “average realized gold price per ounce” less “attributable
production cost of sales per gold equivalent ounce sold.”
6 Average realized gold price is a non-GAAP financial measure and is defined as gold metal sales divided by the total number of gold ounces sold.
7 The percentages are calculated based on the mid-point of regional 2020 forecast production.
8 Refers to all of the currencies in the countries where the Company has mining operations, fluctuating simultaneously by 10% in the same direction, either
appreciating or depreciating, taking into consideration the impact of hedging and the weighting of each currency within our consolidated cost structure.
Review of operations
Three months ended December 31, Gold equivalent ounces
Produced Sold Production cost of
sales ($millions) Production cost of
sales/equivalent ounce sold
2019 2018 2019 2018 2019 2018 2019 2018
Fort Knox 53,183 52,194 55,040 51,889 $ 65.9 $ 49.1 $ 1,197 $ 946
Round Mountain 103,501 96,715 108,402 91,769 79.3 70.0 732 763
Bald Mountain 66,147 47,211 65,381 68,288 49.8 46.9 762 687
Kettle River - Buckhorn - - - - - - - -
Paracatu 140,224 145,634 140,430 152,395 111.1 116.6 791 765
Maricunga 3,221 7,226 17,455 19,399 11.7 16.1 670 830
Americas Total 366,276 348,980 386,708 383,740 317.8 298.7 822 778
Kupol 132,009 123,478 135,083 124,408 83.3 68.7 617 552
Russia Total 132,009 123,478 135,083 124,408 83.3 68.7 617 552
Tasiast 102,973 91,548 101,940 83,780 50.4 69.5 494 830
Chirano (100%) 48,984 51,273 47,186 49,173 49.0 39.5 1,038 803
West Africa Total 151,957 142,821 149,126 132,953 99.4 109.0 667 820
Operations Total 650,242 615,279 670,917 641,101 500.5 476.4 746 743
Less Chirano non-controlling interest (10%) (4,898) (5,127) (4,718) (4,918) (4.9) (4.0)
Attributable Total 645,344 610,152 666,199 636,183 $ 495.6 $ 472.4 $ 744 $ 743
Years ended December 31, Gold equivalent ounces
Produced Sold Production cost of
sales ($millions) Production cost of
sales/equivalent ounce sold
2019 2018 2019 2018 2019 2018 2019 2018
Fort Knox 200,263 255,569 200,323 256,037 $ 213.7 $ 214.4 $ 1,067 $ 837
Round Mountain 361,664 385,601 360,739 381,478 250.6 277.6 695 728
Bald Mountain 187,961 284,646 177,802 318,091 136.6 174.1 768 547
Kettle River - Buckhorn - - - 927 - - - -
Paracatu 619,563 521,575 619,009 523,417 412.3 430.5 666 822
Maricunga 38,601 60,066 43,756 89,959 31.5 65.7 720 730
Americas Total 1,408,052 1,507,457 1,401,629 1,569,909 1,044.7 1,162.3 745 740
Kupol 527,343 489,947 526,458 494,835 314.1 288.2 597 582
Russia Total 527,343 489,947 526,458 494,835 314.1 288.2 597 582
Tasiast 391,097 250,965 382,803 243,241 230.4 237.3 602 976
Chirano (100%) 201,296 226,699 201,868 224,927 189.7 172.7 940 768
West Africa Total 592,393 477,664 584,671 468,168 420.1 410.0 719 876
Operations Total 2,527,788 2,475,068 2,512,758 2,532,912 1,778.9 1,860.5 708 735
Less Chirano non-controlling interest (10%) (20,129) (22,670) (20,186) (22,493) (19.0) (17.3)
Attributable Total 2,507,659 2,452,398 2,492,572 2,510,419 $ 1,759.9 $ 1,843.2 $ 706 $ 734
Consolidated balance sheets
(expressed in millions of United States dollars, except share amounts)
As at
December 31, December 31,
2019 2018
Assets
Current assets
Cash and cash equivalents $ 575.1 $ 349.0
Restricted cash 15.2 12.7
Accounts receivable and other assets 130.2 101.4
Current income tax recoverable 43.2 79.0
Inventories 1,053.8 1,052.0
Unrealized fair value of derivative assets 7.2 3.8
1,824.7 1,597.9
Non-current assets
Property, plant and equipment 6,340.0 5,519.1
Goodwill 158.8 162.7
Long-term investments 126.2 155.9
Investment in joint venture 18.4 18.3
Unrealized fair value of derivative assets 4.5 0.8
Other long-term assets 568.2 564.1
Deferred tax assets 35.2 45.0
Total assets $ 9,076.0 $ 8,063.8
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 469.3 $ 465.9
Current income tax payable 68.0 21.7
Current portion of provisions 57.9 72.6
Other current liabilities 20.3 52.2
615.5 612.4
Non-current liabilities
Long-term debt and credit facilities 1,837.4 1,735.0
Provisions 838.6 816.4
Long-term lease liabilities 38.9 -
Unrealized fair value of derivative liabilities 0.8 9.6
Other long-term liabilities 107.7 97.9
Deferred tax liabilities 304.5 265.2
Total liabilities 3,743.4 3,536.5
Equity
Common shareholders' equity
Common share capital $ 14,926.2 $ 14,913.4
Contributed surplus 242.1 239.8
Accumulated deficit (9,829.4) (10,548.0)
Accumulated other comprehensive income (loss) (20.4) (98.5)
Total common shareholders' equity 5,318.5 4,506.7
Non-controlling interest 14.1 20.6
Total equity 5,332.6 4,527.3
Total liabilities and equity $ 9,076.0 $ 8,063.8
Common shares
Authorized Unlimited Unlimited
Issued and outstanding 1,253,765,724 1,250,228,821
Consolidated statements of operations
(expressed in millions of United States dollars, except share and per share amounts)
Years ended
December 31, December 31,
2019 2018
Revenue
Metal sales $ 3,497.3 $ 3,212.6
Cost of sales
Production cost of sales 1,778.9 1,860.5
Depreciation, depletion and amortization 731.3 772.4
Reversals of impairment charges (361.8) -
Total cost of sales 2,148.4 2,632.9
Gross profit 1,348.9 579.7
Other operating expense 108.5 137.0
Exploration and business development 113.5 109.2
General and administrative 135.8 133.0
Operating earnings 991.1 200.5
Other income - net 72.6 3.2
Equity in earnings (losses) of joint ventures - net 0.1 (0.3)
Finance income 7.9 11.0
Finance expense (107.9) (101.2)
Earnings before tax 963.8 113.2
Income tax expense - net (246.7) (138.8)
Net earnings (loss) $ 717.1 $ (25.6)
Net earnings (loss) attributable to:
Non-controlling interest $ (1.5) $ (2.0)
Common shareholders $ 718.6 $ (23.6)
Earnings (loss) per share attributable to common shareholders
Basic $ 0.57 $ (0.02)
Diluted $ 0.57 $ (0.02)
Weighted average number of common shares outstanding (millions)
Basic 1,252.3 1,249.5
Diluted 1,262.3 1,249.5
Consolidated statements of cash flows
(expressed in millions of United States dollars)
Years ended
December 31, December 31,
2019 2018