Kinross reports 2020 fourth-quarter and full-year results Met guidance for ninth year in a row and delivered record free cash flow of more than $1 billion Production expected to grow by 20% in 2023
Kinross reports 2020 fourth-quarter and full-year results
Met guidance for ninth year in a row and delivered record free cash flow of more than $1 billion
Production expected to grow by 20% in 2023
TORONTO, Feb. 10, 2021 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) (“Kinross” or the “Company”) today announced its
results for the fourth quarter and year ended December 31, 2020.
(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to
the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 25 of this release. All dollar amounts are
expressed in U.S. dollars, unless otherwise noted.)
2020 full-year results and guidance:
2020 guidance
(+/- 5%) 2020 full-year results 2021 guidance
(+/- 5%)
Gold equivalent production 1
(ounces) 2.4 million 2.4 million 2.4 million
Production cost of sales1, 2
($ per Au eq. oz.) $720 $723 $790
All-in sustaining cost1, 2
($ per Au eq. oz.) $970 $987 $1,025
Capital expenditures $900 million $916 million $900 million
• Expect to increase production 1 20% to 2.9 million Au eq. oz. in 2023 and produce 1 an average of 2.5 million Au eq. oz. per year to 2029.
2020 Q4 and full-year highlights:
• Production1,2 of 624,032 Au eq. oz. produced in Q4 2020 and 2,366,648 Au eq. oz. in 2020.
• Production cost of sales1,2 of $682 per Au eq. oz. in Q4 2020 and $723 per Au eq. oz. in 2020.
• All-in sustaining cost1,2 of $1,013 per Au eq. oz. sold in Q4 2020 and $987 per Au eq. oz. sold in 2020.
• Attributable margins 3 increased 61% to $1,193 per Au eq. oz. sold in Q4 2020, and 53% to $1,051 per Au eq. oz. sold for 2020, compared with Q4
2019 and 2019, respectively, with both increases outpacing the rise in average realized gold price2.
• Adjusted operating cash flow 2 increased to $527.6 million in Q4 2020 compared with Q4 2019, and increased 59% for 2020 to $1,912.7 million
compared with 2019. Operating cash flow of $681.1 million in Q4 2020 and $1,957.6 million in 2020.
• Free cash flow 2 quarterly and full-year records of $382.8 million and $1,041.5 million, respectively.
• Reported net earnings 4 of $783.3 million, or $0.62 per share in Q4 2020, and $1,342.4 million, or $1.07 per share, in 2020.
• Adjusted net earnings 2 of $335.1 million, or $0.27 per share in Q4 2020, and $966.8 million, or $0.77 per share, in 2020. Adjusted net earnings more
than doubled quarter-over-quarter and year-over-year.
• Cash and cash equivalents of $1,210.9 million, and total liquidity of $2.8 billion at December 31, 2020.
• Kinross’ Board of Directors declared a quarterly dividend of $0.03 per common share payable on March 18, 2021 to shareholders of record at the
close of business on March 3, 2021.
Operations highlights:
• Maintained operations throughout 2020 and delivered on original annual production, cost and capital expenditures guidance despite the impact of
COVID-19 across the global portfolio.
• Three largest producing mines – Paracatu , Kupol and Tasiast – represented 62% of production and were the lowest cost mines in the portfolio in
2020 for the second year in a row.
• Tasiast delivered record production and costs in 2020 for the second consecutive year, and is expected to increase throughput to 21,000 tonnes per
day by year-end with the Tasiast 24k project.
• Fort Knox Gilmore project completed on time and under budget, with newly-acquired “bolt-on” Peak project advancing well.
Environment, Social, Governance (ESG):
• Successfully managing the risks associated with the COVID-19 pandemic by implementing rigorous safety measures across global portfolio and
provided approximately $6 million towards host community efforts to combat COVID-19.
• ESG performance ranked in the top quartile of peer group, as measured by Sustainalytics, MSCI, ISS, Vigeo, Refinitiv and S&P’s Dow Jones
Sustainability Index. Kinross was also recognized as the top mining company in The Globe and Mail’s annual corporate governance ranking.
• Improved climate change disclosures and benchmarked against the recommendations made by the Task Force on Climate-related Financial
Disclosures (TCFD), and included Sustainability Accounting Standards Board (SASB) metrics in most recent Sustainability Report.
• Kinross continued to generate significant economic benefits to host countries through taxes, support of local suppliers and employment, with
approximately 98% of Kinross employees from its host countries.
• Safety performance was in line with three-year averages, with safety rates among the lowest in the industry. This was overshadowed by the first mine-
site fatality at Kinross since 2017.
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1 Unless otherwise stated, production, production cost of sales per Au eq. oz., and all-in-sustaining costs per Au eq. oz., in this news release are based on
Kinross’ 90% share of Chirano production and costs, and 70% share of Peak costs.
2 These figures are non-GAAP financial measures and are defined and reconciled on pages 18 to 24 of this news release.
3 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.”
4 Net earnings figures in this release represent “net earnings from continuing operations attributable to common shareholders”.
CEO Commentary:
J. Paul Rollinson, President and CEO, made the following comments in relation to 2020 fourth-quarter and year-end results:
“Kinross delivered an excellent year in 2020, generating record free cash flow of more than $1 billion from our diversified portfolio of mines. We met our original
guidance for the ninth consecutive year despite the impacts of the global pandemic. Kinross managed COVID-19 risks by implementing rigorous measures to
keep our employees safe, maintain business continuity and support local communities. I would like to thank our workforce around the world for meeting the
challenges of the pandemic. Our ability to quickly adapt and safely execute our plans in a difficult environment speaks to the strong culture of operational
excellence we have built at Kinross.
“Operationally, our three largest mines – Paracatu, Kupol and Tasiast – produced 62% of our total ounces and were the lowest cost mines in our portfolio in
2020. Tasiast was a standout performer and achieved record annual production and low costs for the second consecutive year. We also added 5.7 million
ounces to our mineral reserve estimates after depletion as a result of successful exploration and mine optimization programs. Kinross made good progress at
our projects, including Tasiast 24k and La Coipa, and added to our portfolio with the acquisition of the Chulbatkan and Peak projects. Construction at the Fort
Knox Gilmore project was completed on time and under budget and we continued to advance Udinsk and Lobo-Marte.
“During the year, we continued to strengthen our investment grade balance sheet, more than doubled our adjusted net earnings to approximately $970 million,
and increased our margins by 53% to $1,051 per ounce, which outpaced the increase in the average realized gold price. We also instituted a sustainable
quarterly dividend to return capital to shareholders, which underscores the strength of our financial position.
“Kinross delivered on our ESG commitments in 2020, with our ESG performance ranked in the top quartile of our peer group, as measured by independent
third-party organizations. We continued to generate significant economic benefits to our host countries through taxes, support of local suppliers and
employment.
“Looking forward, we expect to continue our consistent performance in 2021 and have provided solid guidance for the year. We expect production to grow by
20% to 2.9 million ounces in 2023, and to produce an average of 2.5 million ounces annually to 2029, putting us in excellent position to continue generating
value.”
Financial results
Summary of financial and operating results
Three months ended Years ended
December 31, December 31,
(in millions of U.S. dollars, except ounces, per share amounts, and per
ounce amounts) 2020 2019 2020 2019
Operating Highlights
Total gold equivalent ounces(a)
Produced(c) 627,944 650,242 2,383,307 2,527,788
Sold(c) 637,169 670,917 2,375,548 2,512,758
Attributable gold equivalent ounces(a)
Produced(c) 624,032 645,344 2,366,648 2,507,659
Sold(c) 633,149 666,199 2,358,927 2,492,572
Financial Highlights
Metal sales $ 1,195.1 $ 996.2 $ 4,213.4 $ 3,497.3
Production cost of sales $ 436.5 $ 500.5 $ 1,725.7 $ 1,778.9
Depreciation, depletion and amortization $ 234.0 $ 210.4 $ 842.3 $ 731.3
Reversals of impairment charges - net $ (602.6) $ (361.8) $ (650.9) $ (361.8)
Operating earnings $ 992.3 $ 568.8 $ 1,899.4 $ 991.1
Net earnings attributable to common shareholders $ 783.3 $ 521.5 $ 1,342.4 $ 718.6
Basic earnings per share attributable to common shareholders $ 0.62 $ 0.41 $ 1.07 $ 0.57
Diluted earnings per share attributable to common shareholders $ 0.62 $ 0.41 $ 1.06 $ 0.57
Adjusted net earnings attributable to common shareholders(b) $ 335.1 $ 156.0 $ 966.8 $ 422.9
Adjusted net earnings per share(b) $ 0.27 $ 0.13 $ 0.77 $ 0.34
Net cash flow provided from operating activities $ 681.1 $ 408.6 $ 1,957.6 $ 1,224.9
Adjusted operating cash flow(b) $ 527.6 $ 387.6 $ 1,912.7 $ 1,201.5
Capital expenditures(d) $ 298.3 $ 297.9 $ 916.1 $ 1,060.2
Free cash flow(b) $ 382.8 $ 110.7 $ 1,041.5 $ 164.7
Average realized gold price per ounce(b) $ 1,875 $ 1,485 $ 1,774 $ 1,392
Consolidated production cost of sales per equivalent ounce(c) sold(b) $ 685 $ 746 $ 726 $ 708
Attributable(1) production cost of sales per equivalent ounce(c) sold(b) $ 682 $ 744 $ 723 $ 706
Attributable(a) production cost of sales per ounce sold on a by-product basis
(b) $ 653 $ 728 $ 700 $ 691
Attributable(a) all-in sustaining cost per ounce sold on a by-product basis (b) $ 991 $ 1,041 $ 970 $ 974
Attributable(a) all-in sustaining cost per equivalent ounce(c) sold(b) $ 1,013 $ 1,050 $ 987 $ 983
Attributable(a) all-in cost per ounce sold on a by-product basis (b) $ 1,309 $ 1,337 $ 1,248 $ 1,282
Attributable(a) all-in cost per equivalent ounce(c) sold(b) $ 1,322 $ 1,340 $ 1,260 $ 1,284
(a) Total includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) and Peak (70%) production and costs.
(b) The definition and reconciliation of these non-GAAP financial measures is included on pages 18 to 24 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 2020 was 86.32:1 (2019 - 85.99:1). The ratio for Q4 2020 was 77.02:1 (Q4 2019 – 85.59:1).
(d) “Capital expenditures” is as reported as “Additions to property, plant and equipment” on the consolidated statements of cash flows and excludes
“Interest paid capitalized to property, plant and equipment”.
The following operating and financial results are based on fourth-quarter and year-end 2020 gold equivalent production. Production and cost measures are on
an attributable basis:
Production1,2: Kinross produced 624,032 attributable Au eq. oz. in Q4 2020, compared with 645,344 Au eq. oz. in Q4 2019. The slight decrease was largely
due to lower production at Bald Mountain, Round Mountain and Chirano, largely offset by increases at Tasiast and Paracatu.
Over the full year, Kinross produced 2,366,648 Au eq. oz., in line with the Company’s annual guidance, compared with full-year 2019 production of 2,507,659
Au eq. oz. The decrease was consistent with plan and was a result of lower production at Paracatu, Round Mountain and Chirano, partially offset by higher
production at Fort Knox and Tasiast.
Average realized gold price 2: The average realized gold price in Q4 2020 increased 26% to $1,875 per ounce, compared with $1,485 per ounce in Q4
2019.
The average realized gold price per ounce increased 27% to $1,774 for full-year 2020, compared with $1,392 per ounce for full-year 2019.
Revenue : During the fourth quarter, revenue increased 20% to $1,195.1 million, compared with $996.2 million during the same period in 2019.
Revenue for full-year 2020 increased 20% to $4,213.4 million, compared with $3,497.3 million for full-year 2019.
Production cost of sales 1, 2: Production cost of sales per Au eq. oz. decreased to $682 for Q4 2020 compared with $744 for the same period in 2019,
mainly as a result of lower costs at Paracatu, Fort Knox and Round Mountain, partially offset by higher costs at Tasiast and Chirano.
Production cost of sales per Au eq. oz. was $723 for full-year 2020, which was in line with guidance, compared with $706 per Au eq. oz. for full-year 2019.
The increase was mainly due to higher costs at Chirano.
Production cost of sales per Au oz. on a by-product basis was $653 in Q4 2020 compared with $728 in Q4 2019, based on attributable gold sales of 618,221
ounces and attributable silver sales of 1,149,687 ounces.
Production cost of sales per Au eq. oz. on a by-product was $700 for full-year 2020, compared with $691 for full-year 2019, based on 2020 attributable gold
sales of 2,307,735 ounces and attributable silver sales of 4,425,708 ounces.
Margins3: Kinross’ attributable margin per Au eq. oz. sold increased by 61% to $1,193 for Q4 2020, compared with the Q4 2019 margin of $741, which is
significantly higher than the 26% quarterly year-over-year increase in average realized gold price.
Full-year 2020 margin per Au eq. oz. sold increased 53% to $1,051, compared with $686 for full-year 2019, outpacing the 27% year-over-year increase in
average realized gold price.
All-in sustaining cost1, 2 : All-in sustaining cost per Au eq. oz. sold decreased to $1,013 in Q4 2020, compared with $1,050 in Q4 2019. All-in sustaining
cost per Au eq. oz. sold was $987 for full-year 2020, which is within the 2020 guidance range, compared with $983 for full-year 2019.
All-in sustaining cost per Au oz. sold on a by-product basis decreased to $991 in Q4 2020, compared with $1,041 in Q4 2019. All-in sustaining cost per Au
oz. sold on a by-product basis was $970 for full-year 2020, in line with $974 in the previous year.
Operating cash flow : Adjusted operating cash flow2 for Q4 2020 increased by 36% to $527.6 million, compared with $387.6 million for Q4 2019.
Adjusted operating cash flow 2 for the full year increased 59% to $1,912.7 million compared with $1,201.5 million the previous year, primarily due to an
increase in margins.
Net operating cash flow increased 67% to $681.1 million for Q4 2020, compared with $408.6 million for Q4 2019. Net operating cash flow for full-year 2020
was $1,957.6 million, a 60% increase compared with $1,224.9 million for full-year 2019.
Free cash flow 2: Free cash flow more than tripled to $382.8 million in Q4 2020, a quarterly record, compared with $110.7 million for Q4 2019.
Kinross delivered record free cash flow of $1,041.5 million for full-year 2020, which was significantly higher compared with $164.7 million the previous year.
Earnings: Adjusted net earnings 2 more than doubled to $335.1 million, or $0.27 per share, for Q4 2020, compared with $156.0 million, or $0.13 per share, for
Q4 2019.
Full-year 2020 adjusted net earnings 2 more than doubled to $966.8 million, or $0.77 per share, compared with adjusted net earnings of $422.9 million, or
$0.34 per share, for full-year 2019, mainly due to higher margins partially offset by an increase in depreciation, depletion and amortization and income tax
expense.
Reported net earnings4 increased 50% to $783.3 million, or $0.62 per share, for Q4 2020, compared with $521.5 million, or $0.41 per share, for Q4 2020.
Reported net earnings4 in full-year 2020 increased 87% to $1,342.4 million, or $1.07 per share, compared with $718.6 million, or $0.57 per share, in 2019. The
increase was primarily as a result of the increase in operating earnings, including impairment reversals, partially offset by the increase in income tax
expense.
Included in reported net earnings in 2020 is a non-cash, after-tax impairment reversal of $612.8 million at Tasiast, Lobo-Marte and Chirano of $299.5 million,
$180.4 million, and $132.9 million, respectively. The impairment reversals were related to property, plant and equipment mainly due to higher long-term gold
price assumptions.
Capital expenditures : Capital expenditures were $298.3 million for Q4 2020, compared with $297.9 million for Q4 2019.
Capital expenditures for full-year 2020 were $916.1 million, within the Company’s annual guidance, and a $144.1 million decrease compared with $1,060.2 in
2019. The decrease was primarily as a result of reduced spending at Tasiast and the completion of the Bald Mountain Vantage Complex project and the
construction of the Round Mountain Phase W project in 2019. These decreases were partially offset by additional mining equipment purchased at Paracatu.
Balance sheet
As of December 31, 2020, Kinross had cash and cash equivalents of $1,210.9 million, compared with $575.1 million at December 31, 2019. The increase was
primarily due to strong cash flow and the $200 million drawdown on the Tasiast project financing. The increase in Kinross’ cash position was partially offset
by the first 50% payment for the Chulbatkan acquisition 5, payment for the 70% interest in the Peak development project, along with the $100 million in debt
repayments on the revolving credit facility, and total interest and dividend payments.
The Company had additional available credit of $1,563.6 million as of December 31, 2020 and total liquidity of approximately $2.8 billion. Kinross had total
debt of approximately $1.9 billion at year-end 2020, of which $500 million in senior notes are due in September 2021, which the Company intends to repay.
Kinross has further improved its debt metrics, including its net debt to EBITDA ratio, and continues to prioritize maintaining and strengthening its investment
grade balance sheet.
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5 The second 50% payment was made in January 2021, which the Company also paid in cash.
Operating results
Mine-by-mine summaries for 2020 fourth-quarter and full-year operating results may be found on pages 13 and 17 of this news release. Highlights include the
following:
Americas
Paracatu production for the full year decreased compared with the record production in the previous year mainly due to anticipated lower recoveries and
throughput as result of the mine plan, partially offset by higher grades. Full-year cost of sales per ounce sold was largely in line with 2019. Paracatu finished
the year with a strong fourth quarter, increasing production and lowering cost of sales per ounce sold compared with Q3 2020. The production increase in Q4
2020 was mostly due to higher mill grades, while cost of sales per ounce sold was lower mainly due to higher production and lower maintenance costs. Mine
plan optimization work at Paracatu added 911 Au koz. to its mineral reserve estimates before depletion, extending mine life by one year to 2032.
At Round Mountain , full-year production was lower compared with 2019 mainly due to anticipated lower mill grades related to mine sequencing, while full-
year cost of sales per ounce sold decreased primarily due to lower operating waste mined. In Q4 2020, production increased compared with the previous
quarter mainly as a result of higher grades, mill recoveries and ounces recovered from the heap leach pads. Cost of sales per ounce sold increased quarter-
over-quarter, which was mostly due to higher operating waste mined, which was anticipated as part of the mine sequencing and is expected to continue in
2021.
At Bald Mountain , full-year production increased slightly compared with 2019 mainly due to higher grades. Cost of sales per ounce sold increased year-over-
year primarily as a result of higher operating waste mined. Bald Mountain finished the year well, with production largely in line quarter-over-quarter, while cost
of sales per ounce sold decreased, mainly due to lower maintenance costs.
Fort Knox performed well in 2020, as full-year production increased year-over-year, mainly as a result of higher mill grades and mill throughput. Cost of sales
per ounce sold for full-year 2020 was largely in line with the previous year. In Q4 2020, production and cost of sales per ounce sold were lower quarter-over-
quarter mainly due to an anticipated decrease in mill grades and a re-sequencing in mining which prioritized capital stripping. Construction at the Gilmore
project was completed on time and under budget, and first production from the new heap leach pad was achieved in January 2021.
Russia
The Russia region continued to perform well in 2020 while managing pandemic-related challenges as remote, camp-based operations. The combined full-year
production at Kupol and Dvoinoye decreased slightly compared with full-year 2019, mainly as a result of anticipated lower grades. Full-year cost of sales
per ounce sold was in line with the previous year. Production during Q4 2020 increased compared with the previous quarter, mainly due to higher grades.
Cost of sales per ounce sold was higher versus Q3 2020 mainly as a result of an increase in mine cost per tonne at Dvoinoye, as the last tonnes were mined
in November 2020. Although mining activities were completed at Dvoinoye as planned, stockpiles are expected to be processed at the Kupol mill over the
next three years. Kupol’s brownfields exploration program once again added to the mine’s mineral reserve estimates and extended mine life by one year to
2025, with opportunities for further mine life extensions.
West Africa
In 2020, Tasiast delivered record high annual production and record low cost of sales per ounce sold for the second consecutive year. The mine performed
well in 2020 despite the impacts of COVID-19 and the strike in Q2 2020, and finished the year with a strong fourth quarter. Full-year production increased
compared with the previous year mainly due to higher mill throughput and grades, while full-year cost of sales per ounce sold decreased mainly as a result of
higher production. Tasiast achieved record quarterly production in Q4 2020 primarily as a result of higher mill throughput. Tasiast also reduced cost of sales
per ounce quarter-over-quarter mainly due to lower processing costs.
At Chirano, full-year production decreased compared with 2019 mainly due to lower grades, throughput and recoveries. Full-year cost of sales per ounce sold
was higher mainly due to higher milling and maintenance costs. In Q4 2020, production was lower quarter-over-quarter mainly due to lower grades from the
underground operations. Cost of sales per ounce sold decreased quarter-over-quarter primarily as a result of lower power and milling costs. The exploration
program at Chirano continued to yield excellent results and added to the operation’s mineral reserve estimates, helping extend mine life by three years to
2025, with opportunities for further mine life extensions.
Company Guidance
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 25 of this news release.
Production guidance 1
In 2021, Kinross expects to produce 2.4 million Au eq. oz. (+/- 5%) from its operations, which is consistent with 2020 production. In 2022 and 2023, annual
production is expected to increase to approximately 2.7 million Au eq. oz. and 2.9 million Au eq. oz., respectively.
Annual gold equivalent production guidance
(+/- 5%)
2021 2.4 million oz.
2022 2.7 million oz.
2023 2.9 million oz.
Kinross’ 2021 production forecast was impacted by the expected deferred production of approximately 100k Au eq. oz. at Tasiast from 2021 to 2022 due to
lower mining rates as a result of COVID-19 impacts in 2020 and the strike in Q2 2020.
In 2021, production is expected to progressively increase quarter-over-quarter, largely driven by higher expected production in the second half of the year at
Tasiast. The Company’s three largest mines – Paracatu, Kupol and Tasiast – are expected to account for approximately 60% of the total production in 2021
and are expected to be the lowest cost mines in the portfolio.
The expected production growth in 2022 and 2023 represents additional ounces enabled by planned life of mine extensions and projects resulting from the
Company’s previous three-year major capital reinvestment phase, which established a low-risk and timely platform for growth in the current gold price
environment. Kinross’ comprehensive continuous improvement programs, which have enhanced productivity and operational efficiencies, and its exploration
strategy focused on promising prospects around existing operations, also contributed to the anticipated production increase.
Cost of sales guidance1
Production cost of sales is expected to be $790 per Au eq. oz. (+/- 5%) for 2021. The year-over-year increase is mainly due to higher operating waste mined
as a result of planned mine sequencing, particularly at the U.S. mines and at Tasiast in the second half of the year. The delayed access to higher grade ore
at Tasiast as a result of COVID-19 impacts and a decrease in low-cost ounces from Dvoinoye, which completed mining in November 2020 as planned, also
affected 2021 cost of sales guidance. Cost of sales per ounce is expected to increase quarter-over-quarter during the year, largely driven by anticipated
increases in operating waste mined.
Cost of sales per ounce sold is expected to decrease in 2022 and return to levels that are largely in line with 2020. The decrease is expected to be driven by
lower-cost ounces from Tasiast and La Coipa in 2022 and higher total production.
The Company expects all-in sustaining cost to be $1,025 per ounce sold (+/- 5%) on both a gold equivalent and by-product basis for 2021. The increase is
mainly driven by the expected higher cost of sales per ounce.
2021 by-product production and cost guidance
Accounting basis 2021 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 $790
All-in sustaining cost per Au eq. oz. 1,2 $1,025
By-product basis
Gold ounces1 2.4 million
Silver ounces 4.0 million
Average production cost of sales per Au oz. 1,2 $770
2021 regional production and cost guidance 1
Region
Forecast 2021
production
(Au eq. oz.)
Percentage of total
forecast production6
Forecast 2021 production
cost of sales
(per Au eq. oz.)2
Americas 1.4 million (+/- 5%) 58% $800 (+/- 5%)
West Africa (attributable) 520,000 (+/- 10%) 22% $870 (+/- 10%)
Russia 480,000 (+/- 5%) 20% $650 (+/- 5%)
Total 2.4 million (+/- 5%) 100% $790 (+/- 5%)
Material assumptions used to forecast 2021 production cost of sales are as follows:
• a gold price of $1,500 per ounce;
• a silver price of $20 per ounce;
• an oil price of $55 per barrel;
• foreign exchange rates of:
◦ 5.0 Brazilian reais to the U.S. dollar;
◦ 1.30 Canadian dollars to the U.S. dollar;
◦ 70 Russian roubles to the U.S. dollar;
◦ 725 Chilean pesos to the U.S. dollar;
◦ 5.50 Ghanaian cedis to the U.S. dollar;
◦ 35 Mauritanian ouguiyas to the U.S. dollar; and
◦ 0.90 U.S. dollar 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 7;
• 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 $3 impact on production cost of sales per ounce; and
• a $100 change in the price of gold would be expected to result in an approximate $5 impact on production cost of sales per ounce as a result of a
change in royalties.
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6 The percentages are calculated based on the mid-point of regional 2020 forecast production.
7 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.
Capital expenditures guidance
Total capital expenditures for 2021 are forecast to be approximately $900 million (+/- 5%) and are summarized in the table below.
Kinross’ capital expenditures outlook for 2022 and 2023 is $800 million and $700 million, respectively, and is based on Kinross’ current baseline production
guidance. However, as previously indicated, capital expenditures for 2022 and 2023 exclude additional opportunities in the Company’s pipeline and are
therefore expected to increase to approximate 2021 levels if additional projects are approved, including Round Mountain Phase S, Peak, Lobo-Marte and
other projects.8
Region
Forecast 2021
sustaining capital
(million)
Forecast 2021
non-sustaining capital
(million)
Total forecast capital
(+/- 5%) (million)
Americas $270 $295 $565
West Africa $40 $225 $265
Russia $25 $40 $65
Corporate $5 $0 $5
TOTAL $340 $560 $900
2021 sustaining capital includes the following forecast spending estimates:
• Mine development:
$70 million (Americas); $10 million (Russia); $10 million (West Africa)
• Mobile equipment:
$75 million (Americas); $10 million (Russia); $5 million (West Africa)
• Tailings facilities:
$40 million
• Mill facilities:
$25 million (Americas); $10 million (West Africa)
• Leach facilities:
$30 million (Americas)
2021 non-sustaining capital includes the following forecast spending estimates:
• La Coipa Restart:
$180 million
• Development and growth projects and studies:
$130 million
• Tasiast West Branch stripping:
$125 million
• Tasiast 24k project:
$75 million
• Round Mountain Phase W stripping:
$30 million
• Fort Knox Gilmore stripping:
$20 million
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8 Kinross’ capital expenditures estimates for 2021 – 2023 includes preliminary capital estimates of approximately $330 million for the Udinsk project.
Other 2021 guidance
The 2021 forecast for exploration is approximately $120 million, all of which is expected to be expensed. The increase compared with full-year 2020 will
facilitate an enhanced program to follow-up on 2020’s exploration success and exploration projects acquired in 2020, such as the Kayenmyvaam and
Kavralyanskaya projects near Kupol, Chulbatkan, and the Peak development project in Alaska.
The 2021 forecast for overhead (general and administrative and business development expenses) is approximately $155 million, which is largely in
line with last year’s guidance. The Company has made cost improvements over recent years, with 2021 annual overhead guidance down $50 million over the
past five years.
Other operating costs expected to be incurred in 2021 are approximately $150 million, which are principally due to $70 million in pandemic-related
mitigation measures.
Based on an assumed gold price of $1,500 per ounce and other budget assumptions, tax expense is expected to be $140 million and taxes paid is
expected to be $200 million. Adjusting the Brazilian real and Russian rouble to the respective exchange rates of 5.20 and 74 to the U.S. dollar in effect at
December 31, 2020, tax expense would be expected to be $160 million. Tax expense is expected to increase by 26% of any profit resulting from higher gold
prices. Taxes paid is expected to increase by a range of $20 million to $26 million for every $100 increase in the realized gold price.
Depreciation, depletion and amortization is forecast to be approximately $390 (+/-5%) per Au eq. oz.
Interest paid is forecast to be approximately $110 million, which includes $55 million of capitalized interest.
Environment, Social, Governance highlights (ESG)
Kinross continued to deliver on its ESG commitments in 2020, with the Company’s performance attributable to its values, strong policies and governance
systems. ESG is embedded in Kinross’ culture, strategy and operations, and directly contributes to its license to operate.
The Company’s ESG performance consistently ranks in the top quartile of its peer group, as measured by Sustainalytics, MSCI, ISS, Vigeo, Refinitiv and
S&P’s Dow Jones Sustainability Index. Kinross was recognized through inclusion in the S&P Global Sustainability Yearbook 2021, marking the Company’s
eighth consecutive year in the industry’s top 10 for ESG performance, and its “A” level rating by MSCI. As a World Gold Council member, Kinross played an
active role in the development of the Responsible Gold Mining Principles and is making good progress on the process of conformance.
Managing the risks associated with the COVID-19 pandemic was a key area of focus in 2020, as the Company implemented rigorous safety measures
across its global portfolio to safeguard its workforce. Kinross provided approximately $6 million in the communities where the Company operates towards
efforts to combat COVID-19 impacts, including support for health services, food security and bolstering local economies. By ensuring operational continuity,
Kinross also maintained the economic benefits that its operations provide to host countries and communities during a challenging time.
Despite the impact of COVID-19, Kinross’ overall 2020 safety performance was in line with its three-year averages, with injury frequency rates among the
lowest in the industry. This was overshadowed by a mine site fatality at Round Mountain, the first for the Company since 2017. Immediately following the
incident Kinross held a global Safety Stand-down to reflect, reiterate the importance of safety, identify tangible actions to continually improve processes, and
share insights and best practices across its global portfolio.
Kinross’ strong record of environmental performance was illustrated in World Wildlife Fund (WWF) Russia’s environmental transparency rating of mining
and metals companies, ranking first in three of the past four years, including the top ranking in 2020. In Alaska, Kinross’ successful reclamation of the True
North mine, the first large metal mine to be returned to the State and opened for public access, was publicly endorsed by the Alaska Department of Natural
Resources and continues a long and successful track record of responsible reclamation by the Company.
Kinross continued to improve its disclosure on climate , including benchmarking against the recommendations made by the Task Force on Climate-related
Financial Disclosures (TCFD). In 2020, the Company conducted a climate risk and opportunity assessment across all sites, including scenario analysis of
projected climate change.
Social engagement was strong despite the limitations imposed by COVID-19 restrictions, with approximately 105,000 stakeholder interactions conducted
during 2020. Kinross continued to provide significant economic benefits through taxes, support of local suppliers and employment, with more than 98% of
Kinross employees from its host countries. The Company’s community investments supported over 938,000 beneficiaries during the year. Kinross also
advanced its inclusion and diversity goals in 2020, with 33% female representation on the Board, and a commitment to Canada’s BlackNorth Initiative and
its anti-racism pledge.
In the area of corporate governance , Kinross maintained its strong performance. The Company’s Board of Directors succession program has brought in
seven new directors since 2015 and enabled effective succession planning. The Company was also recognized as the top mining company in The Globe and
Mail’s annual corporate governance ranking.
For more information on Kinross’ sustainability performance, see the Company’s 2019 Sustainability Report , published in August 2020. The Report follows
the Global Reporting Initiative (GRI) framework, fulfills Kinross’ commitment as a participant in the UN Global Compact and, for the first time, included
indicators and metrics from the SASB (Sustainability Accounting Standards Board) Metals and Mining Standard.
Board update
Mr. John A. Brough, who had been a Kinross Board member since 1994 and was the Chair of the Board’s Audit and Risk Committee for many years, retired
effective December 31, 2020. Kinross’ management and Board would like to thank Mr. Brough for his long and distinguished directorship on the Board and his
many significant contributions to the Company.
As previously disclosed, Mr. Glenn A. Ives has assumed the role of Chair of the Audit and Risk Committee.
Conference call details
In connection with this news release, Kinross will hold a conference call and audio webcast on Thursday, February 11, 2021 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 – +1 (833) 968-2237; Passcode: 9694745
Outside of Canada & US – +1 (825) 312-2059; Passcode: 9694745
Replay (available up to 14 days after the call):
Canada & US toll-free – +1 (800) 585-8367; Passcode: 9694745
Outside of Canada & US – +1 (416) 621-4642; Passcode: 9694745
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’ 2020 year-end Financial Statements and Management’s Discussion and Analysis report at
www.kinross.com. Kinross’ 2020 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. Our
focus is on delivering value based on the core principles of operational excellence, balance sheet strength, disciplined growth and responsible mining. Kinross
maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol:KGC).
Media Contact
Louie Diaz
Vice-President, Corporate Communications
phone: 416-369-6469
Investor Relations Contact
Tom Elliott
Senior Vice-President, Investor Relations
phone: 416-365-3390
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
2020 2019 2020 2019 2020 2019 2020 2019
Fort Knox 57,523 53,183 57,849 55,040 $ 51.1 $ 65.9 $ 883 $ 1,197
Round Mountain 89,422 103,501 89,709 108,402 62.2 79.3 693 732
Bald Mountain 51,487 66,147 57,087 65,381 45.4 49.8 795 762
Paracatu 148,218 140,224 150,881 140,430 91.2 111.1 604 791
Maricunga 414 3,221 2,035 17,455 1.1 11.7 541 670
Americas Total 347,064 366,276 357,561 386,708 251.0 317.8 702 822
Kupol 130,731 132,009 131,541 135,083 79.1 83.3 601 617
Russia Total 130,731 132,009 131,541 135,083 79.1 83.3 601 617
Tasiast 111,028 102,973 107,865 101,940 60.8 50.4 564 494
Chirano (100%) 39,121 48,984 40,202 47,186 45.6 49.0 1,134 1,038
West Africa Total 150,149 151,957 148,067 149,126 106.4 99.4 719 667
Operations Total 627,944 650,242 637,169 670,917 436.5 500.5 685 746
Less Chirano non-controlling interest
(10%) (3,912) (4,898) (4,020) (4,718) (4.6) (4.9)
Attributable Total 624,032 645,344 633,149 666,199 $ 431.9 $ 495.6 $ 682 $ 744
Years ended December 31, Gold equivalent ounces
Produced Sold Production cost of
sales ($millions)
Production cost of
sales/equivalent
ounce sold
2020 2019 2020 2019 2020 2019 2020 2019
Fort Knox 237,925 200,263 238,349 200,323 $ 251.3 $ 213.7 $ 1,054 $ 1,067
Round Mountain 324,277 361,664 319,228 360,739 219.6 250.6 688 695
Bald Mountain 191,282 187,961 186,549 177,802 155.9 136.6 836 768
Paracatu 542,435 619,563 541,506 619,009 358.9 412.3 663 666
Maricunga 3,546 38,601 8,947 43,756 3.7 31.5 414 720
Americas Total 1,299,465 1,408,052 1,294,579 1,401,629 989.4 1,044.7 764 745
Kupol 510,743 527,343 510,973 526,458 304.5 314.1 596 597
Russia Total 510,743 527,343 510,973 526,458 304.5 314.1 596 597
Tasiast 406,509 391,097 403,789 382,803 235.7 230.4 584 602
Chirano (100%) 166,590 201,296 166,207 201,868 196.1 189.7 1,180 940
West Africa Total 573,099 592,393 569,996 584,671 431.8 420.1 758 719
Operations Total 2,383,307 2,527,788 2,375,548 2,512,758 1,725.7 1,778.9 726 708
Less Chirano non-controlling interest
(10%) (16,659) (20,129) (16,621) (20,186) (19.6) (19.0)
Attributable Total 2,366,648 2,507,659 2,358,927 2,492,572 $ 1,706.1 $ 1,759.9 $ 723 $ 706
Consolidated balance sheets
(expressed in millions of U.S. dollars, except share amounts)
As at
December 31, December 31,
2020 2019
Assets
Current assets
Cash and cash equivalents $ 1,210.9 $ 575.1
Restricted cash 13.7 15.2
Accounts receivable and other assets 122.3 137.4
Current income tax recoverable 29.9 43.2
Inventories 1,072.9 1,053.8
2,449.7 1,824.7
Non-current assets
Property, plant and equipment 7,653.5 6,340.0
Goodwill 158.8 158.8
Long-term investments 113.0 126.2
Investment in joint venture 18.3 18.4
Other long-term assets 537.2 572.7
Deferred tax assets 2.7 35.2
Total assets $ 10,933.2 $ 9,076.0
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 479.2 $ 469.3