Kinross reports 2019 second-quarter results Three largest producing mines – Paracatu, Kupol and Tasiast – achieve lowest costs in portfolio On track to meet production and cost of sales guidance First gold produced at both Round Mountain Phase W and Bald Mountain Vantage Complex projects
Kinross reports 2019 second-quarter results
Three largest producing mines – Paracatu, Kupol and Tasiast – achieve lowest costs in portfolio
On track to meet production and cost of sales guidance
First gold produced at both Round Mountain Phase W and Bald Mountain Vantage Complex projects
TORONTO, July 31, 2019 -- Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the second-quarter ended June 30, 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 19 of this release. All dollar amounts are
expressed in U.S. dollars, unless otherwise noted.)
2019 second-quarter highlights:
Q2 2019 results First half 2019 results 2019 guidance
(+/- 5%)
Gold equivalent production 1
(ounces) 648,251 1,254,282 2.5 million
Production cost of sales2
($ per Au eq. oz.) $663 $672 $730
All-in sustaining cost2
($ per Au eq. oz.) $925 $925 $995
Capital expenditures $276.7 million $541.5 million $1,050 million
• On track to meet 2019 annual guidance for production, cost of sales per ounce, all-in sustaining cost per ounce and capital expenditures.
• Operating cash flow of $333.0 million and adjusted operating cash flow 2 of $287.7 million for Q2 2019.
• Reported net earnings 3 of $71.5 million, or $0.06 per share, and adjusted net earnings 2,3 of $79.6 million, or $0.06 per share for Q2 2019.
• Cash and cash equivalents of $475.4 million and total liquidity of approximately $1.9 billion at June 30, 2019, with no debt maturities until 2021.
Operations and development projects highlights:
• Three largest producing mines – Paracatu , Kupol-Dvoinoye and Tasiast – representing 63% of total company production, achieve lowest costs in
portfolio for Q2 2019 and the first half of the year.
• Round Mountain Phase W and Bald Mountain Vantage Complex projects achieve major milestone and produce first gold.
• Paracatu continues to deliver record performance, surpassing its peak quarterly production in first quarter of 2019 and maintaining its lowest costs
since 2010.
• Sustained strong performance at Tasiast as mill throughput continues to outperform. The Company expects to announce results of the evaluation of low
-capital alternative approaches to increase throughput in mid-September.
CEO Commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to 2019 second-quarter results:
“In the second quarter we delivered excellent operating and financial results, as our portfolio of mines increased production and lowered costs compared with
the previous quarter and year. We generated robust cash flow, improved our margins, and maintained our strong liquidity position. We remain on track to meet
our annual production and cost outlook for 2019 following a strong first half of the year.
“The performance of our largest producing assets bolstered our results as Paracatu, Kupol and Tasiast, which represent more than 60% of our production,
delivered the lowest costs in our portfolio during the quarter and in the first half of the year. Paracatu continues to outperform, surpassing its first quarter
production record and maintaining its lowest costs since 2010.
“Our Nevada development projects – Round Mountain Phase W and Bald Mountain Vantage Complex – achieved a major milestone as both produced their first
gold bars. At Tasiast, our evaluation of alternative approaches to increase throughput at a significantly lower capital cost is making good progress, and we
expect to announce results in mid-September.”
Financial results
Summary of financial and operating results
Three months ended Six months ended
June 30, June 30,
(in millions, except ounces, per share amounts, and per ounce amounts) 2019 2018 2019 2018
Operating Highlights
Total gold equivalent ounces(1)
Produced(3) 653,586 607,906 1,264,849 1,267,861
Sold(3) 641,149 593,296 1,244,206 1,267,957
Attributable gold equivalent ounces(1)
Produced(3) 648,251 602,049 1,254,282 1,255,986
Sold(3) 636,035 587,556 1,233,684 1,255,773
Financial Highlights
Metal sales $ 837.8 $ 775.0 $ 1,624.0 $ 1,672.2
Production cost of sales $ 426.1 $ 454.9 $ 837.8 $ 899.5
Depreciation, depletion and amortization $ 179.9 $ 190.3 $ 344.0 $ 383.4
Operating earnings $ 144.3 $ 46.3 $ 259.7 $ 224.2
Net earnings attributable to common shareholders $ 71.5 $ 2.4 $ 136.2 $ 108.5
Basic earnings per share attributable to common shareholders $ 0.06 $ 0.00 $ 0.11 $ 0.09
Diluted earnings per share attributable to common shareholders $ 0.06 $ 0.00 $ 0.11 $ 0.09
Adjusted net earnings attributable to common shareholders(2) $ 79.6 $ 37.8 $ 162.9 $ 163.0
Adjusted net earnings per share(2) $ 0.06 $ 0.03 $ 0.13 $ 0.13
Net cash flow provided from operating activities $ 333.0 $ 184.5 $ 584.6 $ 478.0
Adjusted operating cash flow(2) $ 287.7 $ 231.5 $ 518.5 $ 595.2
Capital expenditures $ 276.7 $ 247.1 $ 541.5 $ 494.0
Average realized gold price per ounce(2) $ 1,307 $ 1,306 $ 1,305 $ 1,319
Consolidated production cost of sales per equivalent ounce(3) sold(2) $ 665 $ 767 $ 673 $ 709
Attributable(1) production cost of sales per equivalent ounce(3) sold(2) $ 663 $ 767 $ 672 $ 709
Attributable(1) production cost of sales per ounce sold on a by-product basis (2) $ 650 $ 754 $ 659 $ 696
Attributable(1) all-in sustaining cost per ounce sold on a by-product basis (2) $ 918 $ 1,011 $ 917 $ 918
Attributable(1) all-in sustaining cost per equivalent ounce(3) sold(2) $ 925 $ 1,018 $ 925 $ 926
Attributable(1) all-in cost per ounce sold on a by-product basis (2) $ 1,242 $ 1,343 $ 1,240 $ 1,226
Attributable(1) all-in cost per equivalent ounce(3) sold(2) $ 1,243 $ 1,342 $ 1,242 $ 1,228
(1) "Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
(2) The definition and reconciliation of these non-GAAP financial measures is included on pages 13 to 18 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 the second quarter of 2019 was 87.98:1 (second quarter of 2018 - 79.00:1). The ratio for the first six months of
2019 was 85.78:1 (first six months of 2018 - 79.12:1).
The following operating and financial results are based on second-quarter 2019 gold equivalent production. Production and cost measures are on an attributable
basis:
Production: Kinross produced 648,251 attributable Au eq. oz. in the second quarter of 2019, compared with 602,049 Au eq. oz. in the second quarter of 2018.
Production cost of sales : Production cost of sales per Au eq. oz. 2 was $663 for the second quarter of 2019, compared with $767 for the second quarter of
2018, mainly due to lower costs at Paracatu, Tasiast and Round Mountain. Production cost of sales per Au oz. on a by-product basis 2 was $650 in Q2 2019,
compared with $754 in Q2 2018, based on Q2 2019 attributable gold sales of 624,098 ounces and attributable silver sales of 1,050,325 ounces.
All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold 2 was $925 in Q2 2019, compared with $1,018 in Q2 2018. All-in sustaining cost per Au oz.
sold on a by-product basis 2 was $918 in Q2 2019, compared with $1,011 in Q2 2018.
Revenue : Revenue from metal sales was $837.8 million in the second quarter of 2019, compared with $775.0 million during the same period in 2018, mainly
due to an increase in gold equivalent ounces sold.
Average realized gold price 4: The average realized gold price in Q2 2019 was $1,307 per ounce, compared with $1,306 per ounce in Q2 2018.
Margins: Kinross’ attributable margin per Au eq. oz. sold5 was $644 for the second quarter of 2019, compared with the Q2 2018 margin of $539 per Au eq. oz.
sold.
Operating cash flow : Adjusted operating cash flow 2 was $287.7 million for the second quarter of 2019, compared with $231.5 million for Q2 2018, primarily
due to the increase in margins.
Net operating cash flow was $333.0 million for the second quarter of 2019, compared with $184.5 million for Q2 2018.
Earnings: Adjusted net earnings 2,3 was $79.6 million, or $0.06 per share, for Q2 2019, compared with adjusted net earnings of $37.8 million, or $0.03 per
share, for Q2 2018.
Reported net earnings 3 was $71.5 million, or $0.06 per share, for Q2 2019, compared with earnings of $2.4 million, or $0.00 per share, in Q2 2018. The
increase was primarily a result of the increase in operating earnings, partially offset by an increase in income tax expense.
Capital expenditures : Capital expenditures was $276.7 million for Q2 2019, compared with $247.1 million for the same period last year, mainly due to
increased spending at our U.S. development projects offset by lower spending at Tasiast.
Operating results
Mine-by-mine summaries for 2019 second-quarter operating results may be found on pages eight and 12 of this news release. Highlights include the following:
Americas
Paracatu continued its record performance, surpassing the peak quarterly production it achieved last quarter by approximately 40,000 Au oz. and reducing
cost of sales per ounce for the fifth consecutive quarter, which is at the lowest level since Q4 2010. Grades improved quarter-over-quarter and year-over-year as
higher grade portions of the orebody were mined during Q2 2019, while recoveries and throughput remained strong. Mining is expected to transition to lower
grade portions of the pit in the second half of the year. Cost of sales per ounce sold was lower versus last quarter mainly due to higher grades and lower
maintenance costs. Favourable foreign exchange movements and lower power, maintenance and reagent costs also contributed to the decrease in costs
compared with the previous year.
Round Mountain performed well during the quarter, as production increased versus Q1 2019 mainly due to timing of ounces recovered from the heap leach
pads, partially offset by lower mill grades. Production decreased compared with Q2 2018 mainly due to lower mill grades. Cost of sales per ounce sold was
lower quarter-over-quarter and year-over-year mainly due to timing of ounces processed through the mill.
At Bald Mountain , production was lower compared with Q1 2019 mainly due to the timing of ounces recovered from the heap leach pads and lower grades.
Production was lower compared with Q2 2018 as weather-related challenges impacted mining rates resulting in less ore placed on the heap leach pads. Cost
of sales per ounce sold was higher quarter-over-quarter and year-over-year mainly due to a decrease in gold equivalent ounces produced. An increase in
maintenance and fuel costs also contributed to higher cost of sales per ounce sold quarter-over-quarter. The Vantage Complex project is expected to ramp up
in the second half of the year, although at a lower than planned rate mainly due to weather challenges.
Exploration during the first half of the year at Bald Mountain has returned promising results at Redbird, including high grade intercepts adjacent to the current
Redbird resource pit shell. Exploration in the second half of the year plans to test the high-grade mineralization along the northeast trend and the southeast
extension.
At Fort Knox, production increased compared with the previous quarter mainly as a result of timing of ounces recovered from the heap leach pads, partially
offset by lower mill grades and weather-related conditions that affected geotechnical stability in the northwest section of the pit. Production decreased year-
over-year primarily due to lower mill throughput and less ore placed on and recovered from the heap leach pads, partially offset by higher mill grades. Cost of
sales per ounce sold decreased compared with the previous quarter primarily due to the timing of ounces recovered from the heap leach pads, and decreased
year-over-year mainly due to lower operating waste mined and favourable processing costs.
At Maricunga , minor production continued as a result of the rinsing of heap materials placed on the pads prior to the suspension of mining activities. Cost of
sales per ounce sold increased quarter-over-quarter and year-over-year mainly due to higher processing costs.
Russia
At Kupol and Dvoinoye , production decreased slightly quarter-over-quarter mainly due to anticipated lower grades at Kupol, which was partially offset by
higher mill throughput, and increased year-over-year mainly due to planned mine sequencing and better grades. Cost of sales per ounce sold decreased
compared with Q1 2019 mainly due to timing of ore processed. Compared with Q2 2018, cost of sales per ounce sold in Q2 2019 was lower mainly due to
higher mill grades.
Production at Dvoinoye Zone 1 commenced during the second quarter as planned. Exploration results during the first half of the year at Zone 37 West in
Dvoinoye have been encouraging. At Kupol, drilling focused on depth extensions of the Kupol main zone and hanging wall. Results continue to be positive. At
the Big Bend area, drilling continues to intercept significant grade, though widths are narrower than expected. Infill and extension drilling at North Extension
also returned grades higher than previously modeled. The Company will continue to test targets with the goal of adding to the site’s estimated mineral
resources in the second half of the year.
West Africa
Tasiast performed strongly during the quarter, with mill throughput rates continuing to outperform. Anticipated lower grades during Q2 2019 contributed to a
decrease in production compared with the previous quarter’s record high. Grades are expected to improve in the second half of the year. Cost of sales per
ounce sold decreased by $40 an ounce compared with the previous quarter as a result of operational efficiencies and lower operating waste mined. Production
was higher and cost of sales per ounce lower compared with the previous year reflecting the benefits of the completion and commissioning of the Phase One
expansion.
Chirano continued its consistent performance, with production largely in line compared with the previous quarter. Production was lower year-over-year as a
result of anticipated lower grades. Cost of sales per ounce sold was higher versus Q1 2019 and Q2 2018 primarily due to higher operating waste mined as the
site commenced open pit mining in late Q1 2019.
The Company continued its priority exploration program at Chirano and results during the first half of the year have been promising, including depth extensions
at Akwaaba and Paboase. At both areas, drilling has identified extensions of high-grade mineralization up to approximately 100 metres beneath the current
reserve base. At Akwaaba, the hanging wall mineralization identified in 2018 is proving to be continuous and high grade with depth. For the second half of the
year, drilling will continue at Akwaaba and Paboase, as well as Tano, where a drift from Paboase has been completed, and Mamnao North. Exploration at site
will continue to seek near near-term mine life extensions.
Organic development projects and opportunities
Tasiast phased expansion
Kinross continues to take into account Tasiast’s excellent performance since the completion of the Phase One expansion as it evaluates alternative
approaches to further increase throughput. The alternatives include preserving and potentially enhancing the value proposition of the original Phase Two 30,000
tpd concept by increasing throughput to above 20,000 tpd at a significantly lower capital cost through de-bottlenecking, continuous improvement and further
optimization of the existing processing circuit. The Company expects to complete the evaluation of alternative approaches and announce results in mid-
September.
The Company is on schedule to complete the $300 million project financing for Tasiast from the International Finance Corporation (IFC), Export Development
Canada (EDC), and two commercial banks later this year. While the financing remains subject to final approval by all lenders, final due diligence activities are
advancing well, with work now focused on completing the details of the loan documentation.
Round Mountain Phase W
The Round Mountain Phase W project continues to be on budget and on schedule. The processing circuit was commissioned ahead of schedule and is now
in production, with the first gold bar from the completed vertical carbon-in-column (VCIC) plant poured in late May. Mine infrastructure, including the truck shop,
warehouse, wash bay and fuel island, is now approximately 95% complete and expected to be fully commissioned in Q3 2019. Stripping activities are making
excellent progress and expected to continue until late 2020 as planned, with initial near-surface Phase W ore now encountered.
Bald Mountain Vantage Complex
The Bald Mountain Vantage Complex project also commenced production, and the first gold bar from the project was poured in late June. Weather-related
challenges, higher than anticipated labour rates and issues with supply for some of the fabricated components continued to challenge the project budget and
ramp up of production. Despite these challenges, commissioning for the project is well-advanced, with the VCIC plant and heap leach pads now substantially
complete and in production, and construction of support infrastructure, such as the truck shop, warehouse and wash bay, close to completion.
Fort Knox Gilmore
The Fort Knox Gilmore project is progressing on schedule and on budget, with initial ore now expected later in the year. Construction of the new heap leach
pad is underway and proceeding well, with half the impermeable liner now laid. Dewatering for the Gilmore pit expansion is proceeding according to plan and
stripping for the initial Gilmore pushback is on target to begin in late Q3 2019.
La Coipa Restart and Lobo-Marte
The La Coipa Restart project feasibility study is proceeding well and is on schedule to be completed in Q3 2019. At the Lobo-Marte project, the Company is
following up the positive scoping study completed last quarter with a pre-feasibility study that is expected to be completed in mid-2020. The studies are
evaluating the potential for a return to long-term production in Chile based on the concept of commencing Lobo-Marte production following the end of La Coipa’s
mine life. Both studies are evaluating the degree to which resources such as personnel, water, energy and capital equipment can be shared and leveraged for
synergies and efficiencies between the two potential projects.
Balance sheet and financial flexibility
As of June 30, 2019, Kinross had cash and cash equivalents of $475.4 million, compared with $349.0 million at December 31, 2018.
The Company also had available credit of $1,397.2 million, for total liquidity of approximately $1.9 billion, and no debt maturities until 2021.
On July 25, 2019, the Company extended the maturity date of its $1.5 billion revolving credit facility by one year to August 2024, restoring a five-year term.
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.
Kinross is on track to meet its production guidance of 2.5 million Au eq. oz. (+/- 5%), its production cost of sales guidance of $730 per Au eq. oz. (+/- 5%) and
its all-in sustaining cost guidance of $995 per Au eq. oz. (+/-5%) for 2019.
The Company is on track to meet its 2019 capital expenditure forecast of approximately $1,050 million (+/-5%).
Depreciation, depletion and amortization is now expected to be approximately $300 (+/-5%) per Au eq. oz., compared with the previously disclosed $330 (+/-
5%) per Au eq. oz, mainly due to increased production at Paracatu and lower production from Bald Mountain in the first half of the year.
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, August 1, 2019 at 8:00 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: 3163386
Outside of Canada & US – +1 (647) 788-4901; Conference ID: 3163386
Replay (available up to 14 days after the call):
Canada & US toll-free – (800) 585-8367; Conference ID: 3163386
Outside of Canada & US – +1 (416) 621-4642; Conference ID: 3163386
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
www.kinross.com.
This news release should be read in conjunction with Kinross’ 2019 second-quarter unaudited Financial Statements and Management’s Discussion and
Analysis report at www.kinross.com. Kinross’ 2019 second-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
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
Review of operations
Three months ended June 30, 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 55,440 71,463 55,740 72,340 $ 50.7 $ 70.1 $ 910 $ 969
Round Mountain 90,833 97,650 87,106 95,432 57.8 72.0 664 754
Bald Mountain 40,564 71,435 31,547 60,730 27.0 27.7 856 456
Kettle River - Buckhorn - - - - - - - -
Paracatu 186,167 121,226 186,520 117,043 106.8 100.4 573 858
Maricunga 6,648 19,866 9,474 17,764 8.0 11.7 844 659
Americas Total 379,652 381,640 370,387 363,309 250.3 281.9 676 776
Kupol 127,684 120,418 124,873 124,179 70.2 73.6 562 593
Russia Total 127,684 120,418 124,873 124,179 70.2 73.6 562 593
Tasiast 92,901 47,276 94,748 48,409 58.9 54.8 622 1,132
Chirano (100%) 53,349 58,572 51,141 57,399 46.7 44.6 913 777
West Africa Total 146,250 105,848 145,889 105,808 105.6 99.4 724 939
Operations Total 653,586 607,906 641,149 593,296 426.1 454.9 665 767
Less Chirano non-controlling
interest (10%) (5,335) (5,857) (5,114) (5,740) (4.7) (4.5)
Attributable Total 648,251 602,049 636,035 587,556 $ 421.4 $ 450.4 $ 663 $ 767
Six months ended June 30, 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 93,053 151,391 93,677 151,951 $ 89.5 $ 112.3 $ 955 $ 739
Round Mountain 175,968 194,733 170,720 193,213 113.8 138.6 667 717
Bald Mountain 87,819 164,875 74,777 158,872 56.2 73.8 752 465
Kettle River - Buckhorn - - - 927 - - - -
Paracatu 332,943 249,426 332,917 245,322 201.7 216.3 606 882
Maricunga 17,364 42,032 17,098 40,118 12.8 27.2 749 678
Americas Total 707,147 802,457 689,189 790,403 474.0 568.2 688 719
Kupol 257,772 240,599 255,287 246,803 148.2 138.2 581 560
Russia Total 257,772 240,599 255,287 246,803 148.2 138.2 581 560
Tasiast 194,259 106,054 194,506 108,912 124.9 101.6 642 933
Chirano (100%) 105,671 118,751 105,224 121,839 90.7 91.5 862 751
West Africa Total 299,930 224,805 299,730 230,751 215.6 193.1 719 837
Operations Total
1,264,849 1,267,861
1,244,206 1,267,957 837.8 899.5 673 709
Less Chirano non-controlling
interest (10%) (10,567) (11,875) (10,522) (12,184) (9.1) (9.2)
Attributable Total
1,254,282 1,255,986
1,233,684 1,255,773 $ 828.7 $ 890.3 $ 672 $ 709
Consolidated balance sheets
(unaudited expressed in millions of United States dollars, except share amounts)
As at
June 30, December 31,
2019 2018
Assets
Current assets
Cash and cash equivalents $ 475.4 $ 349.0
Restricted cash 13.5 12.7
Accounts receivable and other assets 129.8 101.4
Current income tax recoverable 44.8 79.0
Inventories 991.3 1,052.0
Unrealized fair value of derivative assets 6.7 3.8
1,661.5 1,597.9
Non-current assets
Property, plant and equipment 5,769.6 5,519.1
Goodwill 158.8 162.7
Long-term investments 182.4 155.9
Investments in joint ventures 18.4 18.3
Unrealized fair value of derivative assets 3.9 0.8
Other long-term assets 577.1 564.1
Deferred tax assets 35.6 45.0
Total assets $ 8,407.3 $ 8,063.8
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 441.1 $ 465.9
Current income tax payable 69.2 21.7
Current portion of provisions 49.9 72.6
Other current liabilities 16.3 52.2
576.5 612.4
Non-current liabilities
Long-term debt and credit facilities 1,891.2 1,735.0
Provisions 836.0 816.4
Long-term lease liabilities 39.2 -
Unrealized fair value of derivative liabilities 2.3 9.6
Other long-term liabilities 107.0 97.9
Deferred tax liabilities 235.3 265.2
Total liabilities 3,687.5 3,536.5
Equity
Common shareholders' equity
Common share capital $ 14,919.9 $ 14,913.4
Contributed surplus 237.6 239.8
Accumulated deficit (10,411.8) (10,548.0)
Accumulated other comprehensive income (loss) (46.0) (98.5)
Total common shareholders' equity 4,699.7 4,506.7
Non-controlling interest 20.1 20.6
Total equity 4,719.8 4,527.3
Total liabilities and equity $ 8,407.3 $ 8,063.8
Common shares
Authorized Unlimited Unlimited
Issued and outstanding 1,252,468,491 1,250,228,821
Consolidated statements of operations
(unaudited expressed in millions of United States dollars, except share and per share amounts)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2019 2018 2019 2018
Revenue
Metal sales $ 837.8 $ 775.0 $ 1,624.0 $ 1,672.2
Cost of sales
Production cost of sales 426.1 454.9 837.8 899.5
Depreciation, depletion and amortization 179.9 190.3 344.0 383.4
Total cost of sales 606.0 645.2 1,181.8 1,282.9
Gross profit 231.8 129.8 442.2 389.3
Other operating expense 29.5 29.4 62.4 54.8
Exploration and business development 28.4 23.8 47.9 44.3
General and administrative 29.6 30.3 72.2 66.0
Operating earnings 144.3 46.3 259.7 224.2
Other income (expense) - net (2.6) 1.8 0.1 7.7
Equity in earnings (losses) of joint ventures 0.1 (0.1) 0.1 (0.2)
Finance income 1.9 3.2 4.0 6.6
Finance expense (26.1) (24.7) (53.6) (51.6)
Earnings before tax 117.6 26.5 210.3 186.7
Income tax expense - net (46.5) (24.4) (74.6) (78.4)
Net earnings $ 71.1 $ 2.1 $ 135.7 $ 108.3
Net earnings (loss) attributable to:
Non-controlling interest $ (0.4) $ (0.3) $ (0.5) $ (0.2)
Common shareholders $ 71.5 $ 2.4 $ 136.2 $ 108.5
Earnings per share attributable to common shareholders
Basic $ 0.06 $ 0.00 $ 0.11 $ 0.09
Diluted $ 0.06 $ 0.00 $ 0.11 $ 0.09
Weighted average number of common shares outstanding
(millions)
Basic 1,252.3 1,250.2 1,251.5 1,248.7
Diluted 1,261.2 1,259.3 1,260.3 1,258.3
Consolidated statements of cash flows
(unaudited expressed in millions of United States dollars)
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2019 2018 2019 2018
Net inflow (outflow) of cash related to the following activities:
Operating:
Net earnings $ 71.1 $ 2.1 $ 135.7 $ 108.3
Adjustments to reconcile net earnings to net cash provided from
operating activities:
Depreciation, depletion and amortization 179.9 190.3 344.0 383.4
Equity in (earnings) losses of joint ventures (0.1) 0.1 (0.1) 0.2
Share-based compensation expense 3.0 3.5 7.6 7.5
Finance expense 26.1 24.7 53.6 51.6
Deferred tax expense (recovery) 5.8 15.9 (31.4) 27.3
Foreign exchange losses (gains) and other 1.9 (5.1) 9.1 16.9
Changes in operating assets and liabilities:
Accounts receivable and other assets (40.3) (41.7) (25.7) (44.1)
Inventories 12.6 21.2 50.0 (1.8)
Accounts payable and accrued liabilities 56.6 7.2 42.4 (16.0)
Cash flow provided from operating activities 316.6 218.2 585.2 533.3
Income taxes recovered (paid) 16.4 (33.7) (0.6) (55.3)
Net cash flow provided from operating activities 333.0 184.5 584.6 478.0
Investing:
Additions to property, plant and equipment (276.7) (247.1) (541.5) (494.0)
Acquisition of La Coipa Phase 7 mining concessions - - (30.0) (35.1)
Net additions to long-term investments and other assets (5.9) (15.9) (12.3) (30.2)
Net proceeds from the sale of property, plant and equipment 1.2 1.0 2.1 4.0
(Increase) decrease in restricted cash (0.2) 0.6 (0.8) (0.1)
Interest received and other 1.2 2.4 2.1 5.0
Net cash flow used in investing activities (280.4) (259.0) (580.4) (550.4)
Financing:
Net proceeds from issuance/drawdown of debt 100.0 - 260.0 -
Repayment of debt (80.0) - (105.0) -
Payment of lease liabilities (3.9) - (7.2) -
Interest paid (1.1) - (28.4) (30.0)
Other (0.4) - (0.2) 0.4
Net cash flow provided from (used in) financing activities 14.6 - 119.2 (29.6)
Effect of exchange rate changes on cash and cash equivalents 1.3 (4.7) 3.0 (5.1)
Increase (decrease) in cash and cash equivalents 68.5 (79.2) 126.4 (107.1)
Cash and cash equivalents, beginning of period 406.9 997.9 349.0 1,025.8
Cash and cash equivalents, end of period $ 475.4 $ 918.7 $ 475.4 $ 918.7
Operating
Summary
Mine Period Ownership
Tonnes
Ore
Mined
(1)
Ore
Processed
(Milled) (1)
Ore
Processed
(Heap
Leach) (1)
Grade
(Mill)
Grade
(Heap
Leach)
Recovery
(2)
Gold Eq
Production
(5)
Gold Eq
Sales (5)
Production
cost of
sales
Production
cost of
sales/oz
Cap Ex
(7) DD&A
(%) ('000
tonnes)
('000
tonnes)
('000
tonnes) (g/t) (g/t) (%) (ounces) (ounces) ($ millions) ($/ounce) ($
millions)
($
millions)
Americas
Fort Knox
Q2
2019 100 4,829 1,811 3,440 0.59 0.20 81% 55,440 55,740 $ 50.7 $ 910 $ 35.0 $ 22.6
Q1
2019 100 5,796 1,556 4,295 0.72 0.22 84% 37,613 37,937 38.8 $ 1,023 28.9 18.0
Q4
2018 100 5,645 2,856 2,927 0.44 0.19 83% 52,194 51,889 49.1 $ 946 30.5 21.9
Q3
2018 100 5,306 2,718 3,262 0.42 0.19 81% 51,984 52,197 53.0 $ 1,015 32.6 26.0
Q2
2018 100 4,620 3,106 4,279 0.44 0.18 80% 71,463 72,340 70.1 $ 969 16.8 38.8
Round
Mountain
Q2
2019 100 4,074 909 3,910 1.17 0.33 86% 90,833 87,106 $ 57.8 $ 664 $ 58.9 $ 10.2
Q1
2019 100 3,904 845 3,557 1.31 0.38 86% 85,135 83,614 56.0 $ 670 64.2 7.9
Q4
2018 100 4,386 987 4,172 1.38 0.43 83% 96,715 91,769 70.0 $ 763 68.0 9.6
Q3
2018 100 5,023 980 4,410 1.43 0.42 82% 94,153 96,496 69.0 $ 715 47.1 12.7
Q2
2018 100 4,721 853 4,361 1.44 0.37 86% 97,650 95,432 72.0 $ 754 43.6 13.9
Bald
Mountain
(8)
Q2
2019 100 3,725 - 4,138 - 0.36 nm 40,564 31,547 $ 27.0 $ 856 $ 57.5 $ 12.2
Q1
2019 100 2,659 - 2,836 - 0.48 nm 47,255 43,230 29.2 $ 675 64.6 16.2
Q4
2018 100 4,929 - 5,406 - 0.47 nm 47,211 68,288 46.9 $ 687 40.4 22.4
Q3
2018 100 7,106 - 5,806 - 0.38 nm 72,560 90,931 53.4 $ 587 44.2 29.3
Q2
2018 100 7,109 - 7,109 - 0.48 nm 71,435 60,730 27.7 $ 456 44.9 20.8
Paracatu
Q2
2019 100
12,307 14,439 - 0.48 - 80% 186,167
186,520 $ 106.8 $ 573 $ 34.6 $ 45.2
Q1
2019 100 12,393 14,283 - 0.38 - 80% 146,776 146,397 94.9 $ 648 16.5 35.9
Q4
2018 100 11,680 13,479 - 0.44 - 81% 145,634 152,395 116.6 $ 765 33.3 41.7
Q3
2018 100 12,565 13,547 - 0.38 - 76% 126,515 125,700 97.6 $ 776 25.1 42.2
Q2
2018 100 11,677 14,074 - 0.37 - 75% 121,226 117,043 100.4 $ 858 23.7 30.8
Maricunga
(8)
Q2
2019 100 - - - - - nm 6,648 9,474 $ 8.0 $ 844 $ - $ 0.5
Q1
2019 100 - - - - - nm 10,716 7,624 4.8 $ 630 - 0.4
Q4
2018 100 - - - - - nm 7,226 19,399 16.1 $ 830 - 0.6
Q3
2018 100 - - - - - nm 10,808 30,442 22.4 $ 736 - 1.1
Q2
2018 100 - - - - - nm 19,866 17,764 11.7 $ 659 - 0.8
Russia Kupol (3)(4)
(6)
Q2
2019 100 431 432 - 9.23 - 94% 127,684
124,873 $ 70.2 $ 562 $ 8.2 $ 30.7
Q1
2019 100 362 425 - 9.62 - 93% 130,088 130,414 78.0 $ 598 8.2 27.4
Q4
2018 100 400 425 - 8.77 - 95% 123,478 124,408 68.7 $ 552 19.4 30.1
Q3
2018 100 412 439 - 8.69 - 95% 125,870 123,624 81.3 $ 658 22.0 32.0
Q2
2018 100 412 430 - 8.42 - 95% 120,418 124,179 73.6 $ 593 11.2 33.0
West
Africa
Tasiast
Q2
2019 100 819 1,281 - 2.19 - 97% 92,901 94,748 $ 58.9 $ 622 $ 75.2 $ 32.2
Q1
2019 100 1,962 1,269 - 2.37 - 97% 101,358 99,758 66.0 $ 662 75.7 31.0
Q4
2018 100 3,267 1,301 - 2.19 - 94% 91,548 83,780 69.5 $ 830 71.1 28.5
Q3
2018 100 2,187 947 924 1.72 0.42 91% 53,363 50,549 66.2 $ 1,310 98.1 29.1
Q2
2018 100 966 750 755 1.88 0.29 91% 47,276 48,409 54.8 $ 1,132 101.4 18.9
Chirano -
100%
Q2
2019 90 619 904 - 1.95 - 92% 53,349 51,141 $ 46.7 $ 913 $ 2.7 $ 23.8
Q1
2019 90 499 908 - 1.97 - 92% 52,322 54,083 44.0 $ 814 3.3 25.4
Q4
2018 90 527 840 - 2.08 - 92% 51,273 49,173 39.5 $ 803 5.7 28.3
Q3
2018 90 505 908 - 2.10 - 92% 56,675 53,915 41.7 $ 773 6.9 30.8
Q2
2018 90 458 873 - 2.23 - 92% 58,572 57,399 44.6 $ 777 5.0 31.4
Chirano -
90%
Q2
2019 90 619 904 - 1.95 - 92% 48,014 46,027 $ 42.0 $ 913 $ 2.4 $ 21.4
Q1
2019 90 499 908 - 1.97 - 92% 47,090 48,675 39.6 $ 814 3.0 22.9
Q4
2018 90 527 840 - 2.08 - 92% 46,146 44,255 35.5 $ 802 5.1 25.5
Q3
2018 90 505 908 - 2.10 - 92% 51,007 48,524 37.6 $ 775 6.2 27.7
Q2
2018 90 458 873 - 2.23 - 92% 52,715 51,659 40.1 $ 776 4.5 28.3
(1) Tonnes of ore mined and processed represent 100% Kinross for all periods presented.
(2) Due to the nature of heap leach operations, recovery rates at Maricunga and Bald Mountain cannot be accurately measured on a quarterly basis. Recovery rates at
Fort Knox, Round Mountain and Tasiast represent mill recovery only.
(3) The Kupol segment includes the Kupol and Dvoinoye mines.
(4) Kupol silver grade and recovery were as follows: Q2 2019: 75.29 g/t, 84.9%; Q1 2019: 69.61 g/t, 82.1%; Q4 2018: 73.35 g/t, 83.5%; Q3 2018: 72.38 g/t, 85.5%; Q2
2018: 68.65 g/t, 84%
(5) Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent based on the ratio of the average spot market prices for the
commodities for each period. The ratios for the quarters presented are as follows: Q2 2019: 87.98:1; Q1 2019: 83.74:1; Q4 2018: 84.42:1; Q3 2018: 80.80:1; Q2 2018:
79.00:1.
(6) Dvoinoye ore processed and grade were as follows: Q2 2019: 113,872, 9.24 g/t; Q1 2019: 135,529, 7.46 g/t; Q4 2018: 104,495, 9.82 g/t; Q3 2018: 106,918, 10.03
g/t; Q2 2018: 121,739, 9.22 g/t
(7) Capital expenditures are presented on a cash basis, consistent with the statement of cash flows.
(8) "nm" means not meaningful.
Reconciliation of non-GAAP financial measures
The Company has included certain non-GAAP financial measures in this document. These measures are not defined under International Financial Reporting
Standards (IFRS) and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance
with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to
provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not
necessarily standard and therefore may not be comparable to other issuers.
Adjusted net earnings attributable to common shareholders and adjusted net earnings per share are non-GAAP measures which determine the performance of
the Company, excluding certain impacts which the Company believes are not reflective of the Company’s underlying performance for the reporting period, such
as the impact of foreign exchange gains and losses, reassessment of prior year taxes and/or taxes otherwise not related to the current period, impairment
charges (reversals), gains and losses and other one-time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains and
losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current
business and are not necessarily indicative of future operating results. Management believes that these measures, which are used internally to assess
performance and in planning and forecasting future operating results, provide investors with the ability to better evaluate underlying performance, particularly
since the excluded items are typically not included in public guidance. However, adjusted net earnings and adjusted net earnings per share measures are not
necessarily indicative of net earnings and earnings per share measures as determined under IFRS.
The following table provides a reconciliation of net earnings to adjusted net earnings for the periods presented:
Adjusted Net Earnings