TORONTO, ON--(Marketwired - February 15, 2017) - Kinross Gold Corporation (TSX: K) (NYSE: KGC) today announced its results for the fourth-quarter and year-end December 31, 2016.
(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.)
2016 fourth-quarter highlights:
- Production
1 : 746,291 gold equivalent ounces (Au eq. oz.), compared with 623,716 Au eq. oz. in Q4 2015. - Revenue: $902.8 million, compared with $706.2 million in Q4 2015.
- Production cost of sales
2 : $712 per Au eq. oz., compared with $688 in Q4 2015. - All-in sustaining cost
2 : $1,012 per Au eq. oz. sold, compared with $991 in Q4 2015. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $1,010 in Q4 2016, compared with $988 in Q4 2015. - Adjusted operating cash flow
2 : $211.6 million, compared with $203.8 million in Q4 2015. - Operating cash flow: $302.6 million, compared with $182.2 million in Q4 2015.
- Adjusted net loss
2,3 : $50.9 million, or $0.04 per share, compared with an adjusted loss of $68.8 million, or $0.06 per share, in Q4 2015. - Reported net loss
3 : $116.5 million, or $0.09 per share, compared with a reported loss of $841.9 million, or $0.73 per share, for Q4 2015.
2016 full-year highlights:
- Production
1 : record 2,789,150 Au eq. oz., compared with 2,594,652 Au eq. oz. for full-year 2015. - Revenue: $3,472.0 million, compared with $3,052.2 million for full-year 2015.
- Production cost of sales
2 : $712 per Au eq. oz., compared with $696 for full-year 2015. - All-in sustaining cost
2 : $984 per Au eq. oz. sold, compared with $975 for full-year 2015. All-in sustaining cost per Au oz. sold on a by-product basis was $975 for full-year 2016, compared with $971 per Au oz. sold for full-year 2015. - Adjusted operating cash flow
2 : $926.7 million, compared with $786.6 million for full-year 2015. - Operating cash flow: $1,099.2 million, compared with $831.6 million for full-year 2015.
- Adjusted net earnings (loss)
2,3 : earnings of $93.0 million, or $0.08 per share, compared with an adjusted net loss of $91.0 million, or $0.08 per share, for full-year 2015. - Reported net loss
3 : $104.0 million, or $0.08 per share, compared with a reported loss of $984.5 million, or $0.86 per share, for full-year 2015. - Capital expenditures: $633.8 million, compared with $610.0 million for full-year 2015.
- Balance sheet: The Company ended the year with cash and cash equivalents of $827.0 million, total liquidity of approximately $2.3 billion, and no debt maturities until 2020.
2017 outlook:
- 2017 Outlook: Kinross expects to produce 2.5 - 2.7 million Au eq. oz. at a production cost of sales per Au eq. oz. of $660 - $720 and an all-in sustaining cost per Au eq. oz. of $925 - $1,025. Total capital expenditures are forecast to be approximately $900 million (+/- 5%), which includes sustaining capital of $420 million, in-line with previous levels, and non-sustaining capital of approximately $455 million to advance development projects, including Tasiast.
CEO Commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to 2016 fourth-quarter and year-end results:
"Kinross ended 2016 on a strong note, establishing a new record of almost 2.8 million Au eq. oz. for full-year gold production, and meeting our annual guidance on production, costs, and capital expenditures for the fifth straight year. We generated operating cash flow of $1.1 billion for the full year, a 32% increase over the previous year, and improved our adjusted net earnings by more than $180 million.
"We are forecasting another year of solid production in 2017, with costs expected to be consistent with 2016 levels. We are making excellent progress advancing our development projects at Tasiast and Bald Mountain, and continue to advance attractive organic development opportunities at other sites. With cash and cash equivalents of $827 million at year-end, and total liquidity of approximately $2.3 billion, we have the balance sheet strength and financial flexibility to fund these organic opportunities and secure strong, steady production and cash flow in the years ahead.
"With an impressive operational track record, one of the strongest balance sheets in the industry, and exciting organic development opportunities, we believe Kinross continues to offer compelling relative value for shareholders.""
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) 2016 2015 2016 2015
----------------------------------------------------------------------------
Operating Highlights
Total gold equivalent
ounces(a)
Produced(c) 752,501 629,528 2,810,345 2,620,262
Sold(c) 743,427 638,040 2,778,902 2,634,867
Attributable gold equivalent
ounces(a)
Produced(c) 746,291 623,716 2,789,150 2,594,652
Sold(c) 738,087 632,411 2,758,306 2,608,870
Financial Highlights
Metal sales $ 902.8 $ 706.2 $ 3,472.0 $ 3,052.2
Production cost of sales $ 529.4 $ 439.4 $ 1,983.8 $ 1,834.8
Depreciation, depletion and
amortization $ 237.8 $ 235.0 $ 855.0 $ 897.7
Impairment charges $ - $ 674.5 $ 139.6 $ 699.0
Operating earnings (loss) $ (35.6) $ (717.3) $ 46.3 $ (742.9)
Net loss attributable to
common shareholders $ (116.5) $ (841.9) $ (104.0) $ (984.5)
Basic loss per share
attributable to common
shareholders $ (0.09) $ (0.73) $ (0.08) $ (0.86)
Diluted loss per share
attributable to common
shareholders $ (0.09) $ (0.73) $ (0.08) $ (0.86)
Adjusted net earnings (loss)
attributable to common
shareholders(b) $ (50.9) $ (68.8) $ 93.0 $ (91.0)
Adjusted net earnings (loss)
per share(b) $ (0.04) $ (0.06) $ 0.08 $ (0.08)
Net cash flow provided from
operating activities $ 302.6 $ 182.2 $ 1,099.2 $ 831.6
Adjusted operating cash
flow(b) $ 211.6 $ 203.8 $ 926.7 $ 786.6
Average realized gold price
per ounce $ 1,217 $ 1,108 $ 1,249 $ 1,159
Consolidated production cost
of sales per equivalent
ounce(c)sold(b) $ 712 $ 689 $ 714 $ 696
Attributable(a) production
cost of sales per
equivalent ounce(c)sold(b) $ 712 $ 688 $ 712 $ 696
Attributable(a) production
cost of sales per ounce
sold on a by-product
basis(b) $ 701 $ 676 $ 696 $ 684
Attributable(a) all-in
sustaining cost per ounce
sold on a by-product
basis(b) $ 1,010 $ 988 $ 975 $ 971
Attributable(a) all-in
sustaining cost per
equivalent ounce(c)sold(b) $ 1,012 $ 991 $ 984 $ 975
Attributable(a) all-in cost
per ounce sold on a by-
product basis(b) $ 1,192 $ 1,055 $ 1,073 $ 1,047
Attributable(a) all-in cost
per equivalent
ounce(c)sold(b) $ 1,189 $ 1,055 $ 1,079 $ 1,049
----------------------------------------------------------------------------
(a) "Total" includes 100% of Chirano production. "Attributable" includes
Kinross' share of Chirano (90%) production.
(b) The definition and reconciliation of these non-GAAP financial measures
is included onpage 14 to 18 of this news release.
(c) "Gold equivalent ounces" include silver ounces produced and sold
converted to a gold equivalent based on a ratio of the average spot
market prices for the commodities for each period. The ratio for the
fourth quarter of 2016 was 70.88:1, compared with 74.78:1 for the fourth
quarter of 2015; year to date 2016 was 72.95:1 compared with 73.92:1 for
2015.
The following operating and financial results are based on fourth-quarter and year-end 2016 gold equivalent production. Production and cost measures are on an attributable basis:
Production: Kinross produced 746,291 attributable Au eq. oz. in the fourth quarter of 2016, an increase compared with the fourth quarter of 2015, mainly due to the acquisition of Bald Mountain and the remaining 50% of Round Mountain that the Company did not already own.
Kinross produced 2,789,150 attributable Au eq. oz. for full-year 2016, which was within the Company's 2016 guidance range. This compares with 2,594,652 ounces for full-year 2015. The 7% year-over-year increase was primarily due to the acquisition described above.
Production cost of sales: Production cost of sales per Au eq. oz.
Production cost of sales per Au eq. oz. was $712 for full-year 2016, which was within the Company's 2016 guidance range. This compares with production cost of sales of $696 per Au eq. oz. for full-year 2015. The full-year increase was mainly due to higher costs per ounce at Fort Knox and Chirano, and higher cost ounces from Bald Mountain. Production cost of sales per Au oz. on a by-product basis was $696 for full-year 2016, compared with $684 for full-year 2015, based on 2016 full-year attributable
All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold
All-in sustaining cost per Au eq. oz. sold was $984 for full-year 2016, compared with $975 for full-year 2015, which was within the Company's 2016 guidance range. The year-over-year increase was mainly due to higher production cost of sales and higher capital expenditures. All-in sustaining cost per Au oz. sold on a by-product basis was $975 for full-year 2016, compared with $971 for full-year 2015.
Revenue: Revenue from metal sales was $902.8 million in the fourth quarter of 2016, compared with $706.2 million during the same period in 2015, due to higher gold sales and a higher average realized gold price.
Revenue was $3,472.0 million for full-year 2016, compared with $3,052.2 million for full-year 2015, due to higher gold sales and a higher average realized gold price.
Average realized gold price: The average realized gold price in Q4 2016 increased to $1,217 per ounce, compared with $1,108 per ounce in Q4 2015. The average realized gold price per ounce increased to $1,249 for full-year 2016, compared with $1,159 per ounce for full-year 2015.
Margins: Kinross' attributable margin per Au eq. oz. sold
Operating cash flow: Adjusted operating cash flow
Net operating cash flow was $302.6 million for the fourth quarter of 2016, compared with $182.2 million for Q4 2015. Operating cash flow for full-year 2016 was $1,099.2 million, compared with $831.6 million for full-year 2015.
Earnings/loss: Adjusted net loss
Reported net loss
Capital expenditures: Capital expenditures increased to $226.5 million for Q4 2016, compared with $160.7 million for the same period last year, due mainly to increased spending at Tasiast and Bald Mountain.
Capital expenditures for full-year 2016 were $633.8 million, an increase compared with $610.0 million for 2015, primarily due to increased spending resulting from the Tasiast Phase One development and the acquisition of Bald Mountain and 50% of Round Mountain. Capital expenditures were below the Company's original guidance of $755 million, mainly due to deferred spending at Tasiast.
Balance sheet
As of December 31, 2016, Kinross had cash and cash equivalents of $827.0 million, compared with $1,043.9 million on December 31, 2015. The decrease was mainly a result of net cash used in the Nevada asset acquisition, capital expenditures, and debt repayment, partially offset by operating cash flow and net proceeds received from the equity issuance in 2016.
The Company has available credit of $1,430.4 million as of year-end 2016, for total liquidity of $2,257.4 million.
Kinross repaid $250 million in senior notes in September 2016, and has no debt maturities until 2020. With a strong balance sheet and excellent liquidity, the Company is well-positioned to fund its pipeline of organic development opportunities.
Operating results
Mine-by-mine summaries for 2016 fourth-quarter and full-year operating results may be found on pages nine and 13 of this news release. Highlights include the following:
Americas
The Americas region, which represented 60% of Kinross' production in 2016, performed well and met its production guidance range for the year. The 22% year-over-year increase in regional production was mainly a result of the acquisition of Bald Mountain and the 50% of Round Mountain the Company did not already own.
At Fort Knox, full-year production increased slightly compared with 2015 mainly as a result of record production from the heap leach, partially offset by lower mill grades. At Round Mountain, full-year production increased mainly as a result of the acquisition noted above, and higher grades and recoveries from the mill. Bald Mountain's production increased progressively over the year as a result of higher grades and an increased amount of ore placed on the leach pads. Kettle River-Buckhorn continued to perform well, despite nearing the end of its mine life, which is expected in Q1 2017. The mine increased its full-year production compared with 2015 mainly as a result of higher grades and mill recoveries, as successful drilling results allowed the operation to extend mine life. At Paracatu, full-year production was higher compared with 2015 mainly as a result of gold recovered from the Santo Antonio tailings reprocessing initiative, which produced approximately 74,200 Au eq. oz. in 2016, partially offset by lower mill recoveries. At Maricunga, production was lower year-over-year due to the suspension of mining operations in the third quarter of 2016.
In the fourth quarter, regional production was higher compared with Q3 2016 mainly as a result of increased production at Paracatu and Bald Mountain. Paracatu's increased production quarter-over-quarter is mainly due to a return to a full quarter of operations following the temporary curtailment of production in Q3 due to lack of rainfall.
The region ended the year within its production cost of sales per ounce guidance range for 2016. Fort Knox's full-year cost of sales per ounce was higher compared with the previous year mainly due to a higher percentage of operating waste mined. Kettle River-Buckhorn cost of sales per ounce for 2016 decreased compared with 2015 primarily due to lower labour and contractor costs. Paracatu cost of sales per ounce decreased versus 2015 mainly due to favourable foreign exchange movements net of currency hedges. Maricunga cost of sales per ounce decreased compared with 2015 as a result of higher than expected ounces recovered. During the quarter, cost of sales per ounce for the region was lower compared with the previous quarter, mainly as a result of decreases at Maricunga and Kettle River.
Russia
The region outperformed both its production and cost guidance ranges for the year, with production higher than the top end of its guidance and production cost of sales per ounce $19 below the low end of its guidance.
The combined full-year production at Kupol and Dvoinoye was lower compared with 2015 mainly as a result of lower grades at Dvoinoye, which were anticipated, and were partially offset by higher mill throughput. During the fourth quarter, production increased compared with Q3 2016 largely due to higher grades.
Full-year cost of sales per ounce was lower compared with the previous year mainly as a result of a decrease in labour and fuel costs due to favourable foreign exchange movements and lower maintenance costs. Cost of sales per ounce in Q4 2016 was lower compared with the previous quarter mainly due to higher grades.
The filter cake plant at Kupol is currently in commissioning, with construction now completed. The plant allows for tailings storage of the current mineral reserve estimate, and flexibility to permit additional storage for potential mine life extensions.
West Africa
The region performed well during the year, coming within its production guidance range despite temporary mining stoppages at Tasiast and the transition to the Paboase underground deposit at Chirano.
Tasiast full-year production was lower compared with 2015 mainly due to the temporary six-week suspension of mining. At Chirano, full-year production was lower compared with 2015 mainly due to lower grades as the site transitioned to mining the Paboase deposit. Both mines performed well in Q4 2016, with Tasiast substantially increasing production compared with Q3 2016 mainly due to higher grades and full quarterly production. Chirano production in Q4 2016 was up slightly compared with the previous quarter, as the site continued to mine higher grades and larger volumes at Paboase compared with the first half of 2016.
Full-year cost of sales per ounce at Tasiast was higher compared with the previous year mainly as a result of lower grades. Full-year cost of sales per ounce at Chirano was higher compared with 2015 mainly due to an increase in costs for power and lower grades. During the fourth quarter, Tasiast cost of sales was lower compared with Q3 2016 mainly as a result of higher grades. At Chirano, cost of sales per ounce in Q4 2016 decreased versus Q3 2016 mainly as a result of lower power costs and higher grades.
In late January, Tasiast was certified in full compliance under the International Cyanide Management Code, a voluntary code that focuses on the safe manufacture, transportation, storage, use and decommissioning of cyanide and associated facilities used for the production of gold. The Code was developed by the international mining industry under the guidance of the United Nations Environment Program with the goal of ensuring the responsible management of cyanide used in gold mining by protecting human health and the environment. Kinross was one of the original signatory companies, and all of the Company's operations around the world are now certified under the Code.
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.
In 2017, Kinross expects to produce 2.5 - 2.7 million Au eq. oz. from its operations, which is consistent with the Company's average production over the past five years.
The forecast decrease compared with full-year 2016 production is mainly a result of the suspension of mining activities at Maricunga, the anticipated lower grades at the Russia operations due to mine sequencing, and the expected closure of Kettle River-Buckhorn in Q1 2017, partially offset by significantly higher forecast production at Bald Mountain, and expected increases from the West Africa region. Production guidance once again takes into consideration the potential for a temporary curtailment of mill operations at Paracatu due to the possibility of seasonal rainfall shortages in south central Brazil.
Production in the second half of 2017 is expected to be higher compared with the first half of the year, mainly due to the seasonal impact of the heap leaches at Fort Knox and Round Mountain, and the significantly higher production expected at Bald Mountain in Q4 2017 due to mine sequencing and a lag from the heap leach.
Production cost of sales per Au eq. oz. is expected to be in the range of $660 - $720 for 2017, the mid-point of which is lower compared with full-year 2016 production cost of sales of $712 per Au eq. oz. Lower production in the first half of 2017 is expected to result in higher production costs compared with the second half of 2017.
The Company has forecast an all-in sustaining cost of $925 - $1,025 per ounce sold on both a gold equivalent and by-product basis for 2017. The mid-point of the all-in sustaining cost guidance range is lower compared with 2016 all-in sustaining cost of sales of $984 per Au eq. oz.
The table below summarizes the 2017 forecasts for production and average production cost of sales on a gold equivalent and a by-product accounting basis:
----------------------------------------------------------------------------
Accounting basis 2017 (forecast)
----------------------------------------------------------------------------
Gold equivalent basis
Production (Au eq. oz.) 2.5 - 2.7 million
Average production cost of sales per Au eq. oz. $660 - $720
All-in sustaining cost per Au eq. oz. $925 - $1,025
By-product basis
Gold ounces 2.4 - 2.6 million
Silver ounces 4.9 - 5.3 million
Average production cost of sales per Au oz. $650 - $710
----------------------------------------------------------------------------
The following table provides a summary of the 2017 production and production cost of sales forecast by region:
----------------------------------------------------------------------------
Forecast 2017
Forecast 2017 Percentage of production
Region production total forecast cost of sales
(Au eq. oz.) production(5) ($ per Au eq.
oz.)
----------------------------------------------------------------------------
Americas 1.52- 1.63 million 61% $680 - $750
West Africa
(attributable)* 420,000 - 470,000 17% $740 - $820
Russia 560,000 - 600,000 22% $520 - $570
---------------------- -------------- --------------
Total 2.5 - 2.7 million 100% $660 - $720
*Based on Kinross' 90% share of Chirano
----------------------------------------------------------------------------
Material assumptions used to forecast 2017 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 $60 per barrel,
- foreign exchange rates of:
- 3.25 Brazilian real to the U.S. dollar,
- 1.25 Canadian dollars to the U.S. dollar,
- 60 Russian rubles to the U.S. dollar,
- 630 Chilean pesos to the U.S. dollar,
- 4.00 Ghanaian cedi to the U.S. dollar,
- 330 Mauritanian ouguiya to the U.S. dollar, and
- 1.10 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 $15 impact on production cost of sales per ounce;
- specific to the Russian ruble, a 10% change in the exchange rate would be expected to result in an approximate $16 impact on Russian production cost of sales per ounce;
- specific to the Brazilian real, a 10% change in the exchange rate would be expected to result in an approximate $32 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 $2 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 2017 are forecast to be approximately $900 million (including capitalized interest of approximately $25 million) and are summarized in the table below:
--------------------------------------------------------------------
Forecast 2017 Forecast 2017 Total forecast
Region sustaining non-sustaining capital
capital capital (million)
(million) (million)
--------------------------------------------------------------------
Americas $295 $65 $360
West Africa $80 $375 $455
Russia $40 $15 $55
Corporate $5 $0 $5
--------------- --------------- ---------------
Total $420 $455 $875
Capitalized interest $25
---------------
TOTAL $900
--------------------------------------------------------------------
Sustaining capital includes the following forecast spending estimates:
- Mine development: $75 million (Americas); $30 million (Russia)
- Mobile equipment: $70 million (Americas); $20 million (West Africa); $10 million (Russia)
- Tailings facilities: $65 million (Americas); $15 million (West Africa)
- Leach facilities: $50 million (Americas)
- Mill facilities: $30 million (Americas); $10 million (West Africa)
Non-sustaining capital includes the following forecast spending estimates:
- Tasiast Project: $215 million
- Development projects and other: $125 million
- Tasiast West Branch stripping: $115 million
The 2017 forecast for exploration is approximately $70 million, none of which is expected to be capitalized, with 2017 overhead (general and administrative and business development expenses) forecast to be approximately $165 million, both of which are consistent with last year's guidance. Other operating costs expected to be incurred in 2017 are approximately $60 million, which includes approximately $30 million of care and maintenance costs in Chile.
Based on our assumed gold price and other inputs, net income tax expense is expected to be $90 million and taxes paid are expected to be $150 million, with both increasing at 26% of any profit resulting from higher gold prices. Depreciation, depletion and amortization is forecast to be approximately $350 per Au eq. oz.
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, February 16, 2017 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 - 1-800-319-4610
Outside of Canada & US - 1-604-638-5340
UK toll-free: 0808-101-2791
Replay (available up to 14 days after the call):
Canada & US toll-free - 1-800-319-6413; Passcode - 00179 followed by #.
Outside of Canada & US - 1-604-638-9010; Passcode - 00179 followed by #.
You may also access the conference call on a listen-only basis via webcast at our website www.kinross.com. The audio webcast will be archived on our website at www.kinross.com.
This release should be read in conjunction with Kinross' 2016 year-end Financial Statements and Management's Discussion and Analysis report at www.kinross.com. Kinross' 2016 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 (TSX: K) and the New York Stock Exchange (NYSE: KGC).
Review of operations
--------------------------------------------------------------------------
Three months ended
December 31, Gold equivalent ounces
-----------------------------------------------
Produced Sold
---------------------- ----------------------
2016 2015 2016 2015
---------------------- ----------------------
Fort Knox 114,427 87,561 115,101 87,426
Round Mountain 99,310 51,034 107,313 52,882
Bald Mountain 44,343 - 34,585 -
Kettle River - Buckhorn 30,690 19,301 30,862 19,601
Paracatu 124,975 113,547 127,576 117,796
Maricunga 32,899 54,948 33,360 56,440
---------------------- ----------------------
Americas Total 446,644 326,391 448,797 334,145
Kupol 180,023 191,308 179,912 195,465
---------------------- ----------------------
Russia Total 180,023 191,308 179,912 195,465
Tasiast 63,728 53,706 61,318 52,146
Chirano (100%) 62,106 58,123 53,400 56,284
---------------------- ----------------------
West Africa Total 125,834 111,829 114,718 108,430
---------------------- ----------------------
Operations Total 752,501 629,528 743,427 638,040
Less Chirano non-
controlling interest
(10%) (6,210) (5,812) (5,340) (5,629)
---------------------- ----------------------
Attributable Total 746,291 623,716 738,087 632,411
--------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended
December 31,
Production cost of
Production cost of sales sales/equivalent ounce
($millions) sold
------------------------ -----------------------
2016 2015 2016 2015
------------------------ -----------------------
Fort Knox $ 82.8 $ 62.6 $ 719 $ 716
Round Mountain 86.6 37.0 807 700
Bald Mountain 44.5 - 1,287 -
Kettle River - Buckhorn 15.5 14.6 502 745
Paracatu 101.5 89.2 796 757
Maricunga 17.8 52.6 534 932
------------------------ -----------------------
Americas Total 348.7 256.0 777 766
Kupol 80.8 91.3 449 467
------------------------ -----------------------
Russia Total 80.8 91.3 449 467
Tasiast 58.7 49.9 957 957
Chirano (100%) 41.2 42.2 772 750
------------------------ -----------------------
West Africa Total 99.9 92.1 871 849
------------------------ -----------------------
Operations Total 529.4 439.4 712 689
Less Chirano non-
controlling interest
(10%) (4.1) (4.2)
------------------------ -----------------------
Attributable Total $ 525.3 $ 435.2 $ 712 $ 688
----------------------------------------------------------------------------
--------------------------------------------------------------------------
Years ended December 31, Gold equivalent ounces
-----------------------------------------------
Produced Sold
-----------------------------------------------
2016 2015 2016 2015
-----------------------------------------------
Fort Knox 409,844 401,553 408,059 402,104
Round Mountain 378,264 197,818 377,910 195,781
Bald Mountain 130,144 - 111,464 -
Kettle River - Buckhorn 112,274 97,368 112,038 97,576
Paracatu 483,014 477,662 482,827 484,732
Maricunga 175,532 212,155 175,670 214,055
---------------------- ----------------------
Americas Total 1,689,072 1,386,556 1,667,968 1,394,248
Kupol 734,143 758,563 736,001 764,613
---------------------- ----------------------
Russia Total 734,143 758,563 736,001 764,613
Tasiast 175,176 219,045 168,969 216,040
Chirano (100%) 211,954 256,098 205,964 259,966
---------------------- ----------------------
West Africa Total 387,130 475,143 374,933 476,006
---------------------- ----------------------
Operations Total 2,810,345 2,620,262 2,778,902 2,634,867
Less Chirano non-
controlling interest
(10%) (21,195) (25,610) (20,596) (25,997)
---------------------- ----------------------
Attributable Total 2,789,150 2,594,652 2,758,306 2,608,870
--------------------------------------------------------------------------
--------------------------------------------------------------------------
----------------------------------------------------------------------------
Years ended December 31,
Production cost of
Production cost of sales sales/equivalent ounce
($millions) sold
--------------------------------------------------
2016 2015 2016 2015
--------------------------------------------------
Fort Knox $ 302.2 $ 252.8 $ 741 $ 629
Round Mountain 292.0 146.9 773 750
Bald Mountain 131.7 - 1,182 -
Kettle River - Buckhorn 73.0 81.6 652 836
Paracatu 346.4 374.3 717 772
Maricunga 145.2 216.1 827 1,010
------------------------ -----------------------
Americas Total 1,290.5 1,071.7 774 769
Kupol 324.3 362.8 441 474
------------------------ -----------------------
Russia Total 324.3 362.8 441 474
Tasiast 179.3 220.6 1,061 1,021
Chirano (100%) 189.7 179.7 921 691
------------------------ -----------------------
West Africa Total 369.0 400.3 984 841
------------------------ -----------------------
Operations Total 1,983.8 1,834.8 714 696
Less Chirano non-
controlling interest
(10%) (19.0) (18.0)
------------------------ -----------------------
Attributable Total $ 1,964.8 $ 1,816.8 $ 712 $ 696
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated balance sheets
(expressed in millions of United States
dollars, except share amounts)
----------------------------------------------------------------------------
As at
------------------------------
December 31, December 31,
2016 2015
-------------- --------------
Assets
Current assets
Cash and cash equivalents $ 827.0 $ 1,043.9
Restricted cash 11.6 10.5
Accounts receivable and other assets 127.3 108.2
Current income tax recoverable 111.9 123.3
Inventories 986.8 1,005.2
Unrealized fair value of derivative
assets 16.1 1.0
-------------- --------------
2,080.7 2,292.1
-------------- --------------
Non-current assets
Property, plant and equipment 4,917.6 4,593.7
Goodwill 162.7 162.7
Long-term investments 142.9 83.1
Investments in associate and joint
ventures 163.6 157.1
Unrealized fair value of derivative
assets 6.0 -
Other long-term assets 411.3 370.2
Deferred tax assets 94.5 76.5
-------------- --------------
Total assets $ 7,979.3 $ 7,735.4
-------------- --------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 464.8 $ 379.6
Current income tax payable 72.6 6.4
Current portion of long-term debt - 249.5
Current portion of provisions 93.2 50.3
Current portion of unrealized fair value
of derivative liabilities 7.1 16.0
-------------- --------------
637.7 701.8
-------------- --------------
Non-current liabilities
Long-term debt 1,733.2 1,731.9
Provisions 861.2 720.8
Other long-term liabilities 172.2 148.7
Deferred tax liabilities 390.7 499.0
-------------- --------------
Total liabilities 3,795.0 3,802.2
-------------- --------------
Equity
Common shareholders' equity
Common share capital $ 14,894.2 $ 14,603.5
Contributed surplus 238.3 239.2
Accumulated deficit (11,026.1) (10,922.1)
Accumulated other comprehensive income
(loss) 39.1 (31.3)
-------------- --------------
Total common shareholders' equity 4,145.5 3,889.3
-------------- --------------
Non-controlling interest 38.8 43.9
-------------- --------------
Total equity 4,184.3 3,933.2
-------------- --------------
Total liabilities and equity $ 7,979.3 $ 7,735.4
-------------- --------------
Common shares
Authorized Unlimited Unlimited
Issued and outstanding 1,245,049,712 1,146,540,188
----------------------------------------------------------------------------
Consolidated statements of operations
(expressed in millions of United States dollars, except per share and share
amounts)
----------------------------------------------------------------------------
Years ended
------------------------------
December 31, December 31,
2016 2015
-------------- --------------
Revenue
Metal sales $ 3,472.0 $ 3,052.2
Cost of sales
Production cost of sales 1,983.8 1,834.8
Depreciation, depletion and amortization 855.0 897.7
Impairment charges 139.6 699.0
-------------- --------------
Total cost of sales 2,978.4 3,431.5
-------------- --------------
Gross profit (loss) 493.6 (379.3)
-------------- --------------
Other operating expense 209.3 76.2
Exploration and business development 94.3 108.0
General and administrative 143.7 179.4
-------------- --------------
Operating earnings (loss) 46.3 (742.9)
-------------- --------------
Other income (expense) - net 22.5 (20.3)
Equity in earnings (losses) of associate
and joint ventures (1.2) 3.2
Finance income 7.5 8.3
Finance expense (134.6) (96.0)
-------------- --------------
Loss before tax (59.5) (847.7)
Income tax expense - net (49.6) (141.7)
-------------- --------------
Net loss $ (109.1) $ (989.4)
-------------- --------------
Net loss attributable to:
Non-controlling interest $ (5.1) $ (4.9)
-------------- --------------
Common shareholders $ (104.0) $ (984.5)
-------------- --------------
Loss per share attributable to common
shareholders
Basic $ (0.08) $ (0.86)
Diluted $ (0.08) $ (0.86)
Weighted average number of common shares
outstanding (millions)
Basic 1,227.0 1,146.0
Diluted 1,227.0 1,146.0
----------------------------------------------------------------------------
Consolidated statements of cash flows
(expressed in millions of United States
dollars)
----------------------------------------------------------------------------
Years ended
------------------------------
December 31, December 31,
2016 2015
-------------- --------------
Net inflow (outflow) of cash related to the
following activities:
Operating:
Net loss $ (109.1) $ (989.4)
Adjustments to reconcile net loss to net
cash provided from operating activities:
Depreciation, depletion and amortization 855.0 897.7
Impairment charges 139.6 699.0
Impairment of investments
Equity in losses (earnings) of associate
and joint ventures 1.2 (3.2)
Share-based compensation expense 13.5 17.1
Finance expense 134.6 96.0
Deferred tax expense (recovery) (149.7) 53.0
Foreign exchange losses and other 14.4 24.3
Reclamation expense (recovery) 27.2 (7.9)
Changes in operating assets and
liabilities:
Accounts receivable and other assets (21.2) 91.0
Inventories 79.5 63.5
Accounts payable and accrued liabilities 239.9 27.9
-------------- --------------
Cash flow provided from operating activities 1,224.9 969.0
-------------- --------------
Income taxes paid (125.7) (137.4)
-------------- --------------
Net cash flow provided from operating
activities 1,099.2 831.6
-------------- --------------
Investing:
Additions to property, plant and equipment (633.8) (610.0)
Business acquisition (588.0) -
Net additions to long-term investments and
other assets (59.8) (59.7)
Net proceeds from the sale of property,
plant and equipment 9.1 3.3
Decrease (increase) in restricted cash (1.1) 30.8
Interest received and other 3.5 4.0
-------------- --------------
Net cash flow used in investing activities (1,270.1) (631.6)
-------------- --------------
Financing:
Issuance of common shares on exercise of
options 2.8 -
Proceeds from issuance of equity 275.7 -
Proceeds from issuance of debt - 22.5
Repayment of debt (250.0) (102.5)
Interest paid (73.5) (48.8)
Other (3.3) (2.9)
-------------- --------------
Net cash flow used in financing activities (48.3) (131.7)
-------------- --------------
Effect of exchange rate changes on cash and
cash equivalents 2.3 (7.9)
-------------- --------------
Increase (decrease) in cash and cash
equivalents (216.9) 60.4
Cash and cash equivalents, beginning of
period 1,043.9 983.5
-------------- --------------
Cash and cash equivalents, end of period $ 827.0 $ 1,043.9
-------------- --------------
----------------------------------------------------------------------------
--------------------------------------------------------------------------
Operating Summary
--------------------------------------------------------------------------
Ore Ore
Processed Processed
Mine Tonnes Ore (Milled) (Heap
Period Ownership Mined (1) (1) Leach) (1)
--------------------------------------------------------------------------
('000 ('000 ('000
(%) tonnes) tonnes) tonnes)
--------------------------------------------------------------------------
Americas Fort Knox Q4 2016 100 9,864 3,235 7,226
------------------------------------------------------
Q3 2016 100 8,959 3,270 9,507
Q2 2016 100 6,141 3,467 4,914
Q1 2016 100 6,786 3,246 7,495
Q4 2015 100 4,454 3,407 6,712
-----------------------------------------------------------------
Round
Mountain Q4 2016 100 7,488 865 6,054
------------------------------------------------------
Q3 2016 100 5,392 953 5,426
Q2 2016 100 6,632 942 5,533
Q1 2016
(8) 100(8) 4,018 869 3,071
Q4 2015 50 6,392 898 3,724
-----------------------------------------------------------------
Bald
Mountain
(8), (9) Q4 2016 100 3,627 - 3,627
------------------------------------------------------
Q3 2016 100 3,081 - 3,081
Q2 2016 100 2,182 - 2,182
Q1 2016
(8) 100 1,766 - 1,766
-----------------------------------------------------------------
Kettle
River-
Buckhorn Q4 2016 100 128 122 -
------------------------------------------------------
Q3 2016 100 123 111 -
Q2 2016 100 101 101 -
Q1 2016 100 86 107 -
Q4 2015 100 84 90 -
-----------------------------------------------------------------
Paracatu Q4 2016 100 10,675 11,962 -
------------------------------------------------------
Q3 2016 100 12,597 11,084 -
Q2 2016 100 12,109 12,331 -
Q1 2016 100 11,825 11,439 -
Q4 2015 100 10,730 9,738 -
-----------------------------------------------------------------
Maricunga
(9) Q4 2016 100 - - -
------------------------------------------------------
Q3 2016 100 766 - 779
Q2 2016 100 1,346 - 1,475
Q1 2016 100 3,947 - 4,254
Q4 2015 100 3,870 - 4,099
-------- -----------------------------------------------------------------
Kupol
Russia (3)(4)(6) Q4 2016 100 503 426 -
------------------------------------------------------
Q3 2016 100 492 440 -
Q2 2016 100 513 428 -
Q1 2016 100 494 416 -
Q4 2015 100 449 429 -
--------------------------------------------------------------------------
West
Africa Tasiast Q4 2016 100 1,683 736 454
------------------------------------------------------
Q3 2016 100 2,462 457 1,585
Q2 2016 100 1,937 489 1,542
Q1 2016 100 1,891 777 1,187
Q4 2015 100 1,318 689 587
-----------------------------------------------------------------
Chirano -
100% Q4 2016 90 864 811 -
------------------------------------------------------
Q3 2016 90 858 918 -
Q2 2016 90 547 882 -
Q1 2016 90 453 847 -
Q4 2015 90 559 853 -
-----------------------------------------------------------------
Chirano -
90% Q4 2016 90 864 811 -
------------------------------------------------------
Q3 2016 90 858 918 -
Q2 2016 90 547 882 -
Q1 2016 90 453 847 -
Q4 2015 90 559 853 -
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Operating Summary
--------------------------------------------------------------------------
Grade Gold Eq
Mine Grade (Heap Recovery Production Gold Eq
(Mill) Leach) (2) (5) Sales (5)
--------------------------------------------------------------------------
(g/t) (g/t) (%) (ounces) (ounces)
--------------------------------------------------------------------------
Americas Fort Knox 0.79 0.28 83% 114,427 115,101
-------------------------------------------------------
0.68 0.26 85% 110,396 107,444
0.64 0.28 83% 97,221 97,625
0.66 0.26 81% 87,800 87,889
0.66 0.26 82% 87,561 87,426
-----------------------------------------------------------------
Round
Mountain 0.99 0.43 78% 99,310 107,313
-------------------------------------------------------
0.98 0.43 82% 93,215 88,477
0.80 0.40 80% 92,813 91,646
1.17 0.44 83% 92,926 90,474
0.86 0.42 77% 51,034 52,882
-----------------------------------------------------------------
Bald
Mountain
(8), (9) - 0.72 nm 44,343 34,585
-------------------------------------------------------
- 0.66 nm 32,675 30,174
- 0.48 nm 32,704 35,508
- 0.62 nm 20,422 11,197
-----------------------------------------------------------------
Kettle
River-
Buckhorn 8.49 - 94% 30,690 30,862
-------------------------------------------------------
8.14 - 94% 28,241 28,104
7.40 - 93% 25,031 24,808
7.23 - 92% 28,312 28,264
9.67 - 92% 19,301 19,601
-----------------------------------------------------------------
Paracatu 0.44 - 73% 124,975 127,576
-------------------------------------------------------
0.48 - 73% 111,889 111,796
0.44 - 70% 126,774 126,365
0.44 - 73% 119,376 117,090
0.51 - 76% 113,547 117,796
-----------------------------------------------------------------
Maricunga
(9) - - 32,899 33,360
-------------------------------------------------------
0.68 nm 39,253 39,458
0.61 nm 44,304 45,362
- 0.69 nm 59,076 57,490
- 0.78 nm 54,948 56,440
-------- -----------------------------------------------------------------
Kupol
Russia (3)(4)(6) 12.46 - 95% 180,023 179,912
-------------------------------------------------------
11.79 - 95% 178,032 181,508
12.75 - 95% 183,638 198,890
13.92 - 95% 192,450 175,691
13.81 - 96% 191,308 195,465
--------------------------------------------------------------------------
West
Africa Tasiast 2.39 0.46 91% 63,728 61,318
-------------------------------------------------------
1.78 0.45 91% 34,793 30,793
1.39 0.45 92% 29,577 28,467
1.51 0.41 91% 47,078 48,391
2.27 0.55 89% 53,706 52,146
-----------------------------------------------------------------
Chirano -
100% 2.55 - 92% 62,106 53,400
-------------------------------------------------------
2.35 - 92% 61,817 62,573
1.72 - 91% 43,561 42,312
1.77 - 91% 44,470 47,679
2.32 - 91% 58,123 56,284
-----------------------------------------------------------------
Chirano -
90% 2.55 - 92% 55,896 48,060
-------------------------------------------------------
2.35 - 92% 55,635 56,316
1.72 - 91% 39,205 38,081
1.77 - 91% 40,023 42,911
2.32 - 91% 52,311 50,655
--------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Summary
----------------------------------------------------------------------------
Production
Mine Production cost of
cost of sales sales/oz Cap Ex (7) DD&A
----------------------------------------------------------------------------
($ millions) ($/ounce) ($ millions) ($ millions)
----------------------------------------------------------------------------
Americas Fort Knox $ 82.8 $ 719 $ 23.2 $ 22.5
---------------------------------------------------------
79.8 743 13.8 20.4
77.4 793 15.2 22.3
62.2 708 18.0 23.5
62.6 716 35.3 31.7
-------------------------------------------------------------------
Round
Mountain $ 86.6 $ 807 $ 28.5 $ 33.6
---------------------------------------------------------
73.7 833 14.8 24.2
71.3 778 12.3 20.8
60.4 668 16.3 16.1
37.0 700 14.2 11.0
-------------------------------------------------------------------
Bald
Mountain
(8), (9) $ 44.5 $ 1,287 $ 17.7 $ 17.3
---------------------------------------------------------
30.9 1,024 16.6 10.7
43.2 1,217 4.5 8.6
13.1 1,170 1.7 2.0
-------------------------------------------------------------------
Kettle
River-
Buckhorn $ 15.5 $ 502 $ - $ -
---------------------------------------------------------
17.1 608 - -
18.2 734 - -
22.2 785 - 1.3
14.6 745 - 2.0
-------------------------------------------------------------------
Paracatu $ 101.5 $ 796 $ 47.9 $ 40.9
---------------------------------------------------------
77.5 693 34.0 31.0
87.5 692 15.9 35.4
79.9 682 10.7 35.4
89.2 757 30.1 34.9
-------------------------------------------------------------------
Maricunga
(9) $ 17.8 $ 534 $ 2.1 $ 1.2
---------------------------------------------------------
37.5 950 0.9 10.8
42.6 939 1.3 11.6
47.3 823 0.8 10.8
52.6 932 4.7 8.2
-------- -------------------------------------------------------------------
Kupol
Russia (3)(4)(6) $ 80.8 $ 449 $ 21.1 $ 63.1
---------------------------------------------------------
82.4 454 24.8 60.9
82.9 417 15.1 59.9
78.2 445 27.8 52.9
91.3 467 9.0 73.8
----------------------------------------------------------------------------
West
Africa Tasiast $ 58.7 $ 957 $ 68.7 $ 29.4
---------------------------------------------------------
38.1 1,237 36.3 22.0
35.3 1,240 36.0 22.3
47.2 975 49.9 22.7
49.9 957 49.6 26.5
-------------------------------------------------------------------
Chirano -
100% $ 41.2 $ 772 $ 14.3 $ 28.4
---------------------------------------------------------
53.0 847 9.5 30.0
48.3 1,142 11.1 25.8
47.2 990 11.7 25.7
42.2 750 11.6 44.1
-------------------------------------------------------------------
Chirano -
90% $ 37.1 $ 772 $ 12.9 $ 25.6
---------------------------------------------------------
47.7 847 8.5 27.0
43.5 1,142 10.0 23.2
42.5 990 10.5 23.1
38.0 750 10.4 39.7
----------------------------------------------------------------------------
(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: Q4 (2016) 99.05 g/t,
86.6%; Q3 (2016) 104.36 g/t, 90%; Q2 (2016) 105.89 g/t, 86.5%; Q1 (2016)
104.19 g/t, 88%; Q4 (2015) 100.58 g/t, 87%
(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: Q4 2016: 70.88:1; Q3 2016: 68.05:1; Q2 2016:
75.06:1; Q1 2016: 79.64:1; Q4 2015: 74.78:1
(6) Dvoinoye ore processed and grade were as follows: Q4 (2016) 120,000
tonnes, 21.24 g/t; Q3 (2016) 117,814 tonnes, 18.96 g/t; Q2 (2016)
118,057 tonnes, 22.42 g/t; Q1 (2016) 129,675 tonnes, 22.69 g/t; Q4
(2015) 122,987 tonnes, 22.91 g/t
(7) Capital expenditures are presented on a cash basis, consistent with the
statement of cash flows.
(8) On January 11, 2016, Kinross completed the acquisition of 100% of the
Bald Mountain gold mine and the remaining 50% interest in the Round
Mountain gold mine. The interim financial statements for the three
months ended March 31, 2016 were recasted to reflect the retrospective
impact of the finalization of the purchase price allocation.
(9) "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 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, 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 (loss) to adjusted net earnings (loss) for the periods presented:
----------------------------------------------------------------------------
Adjusted Earnings
-------------------------------------------
(in millions, except share and
per share amounts) Three months ended Years ended
December 31, December 31,
-------------------------------------------
2016 2015 2016 2015
-------------------------------------------
Net earnings (loss) attributable
to common shareholders - as
reported $ (116.5) $ (841.9) $ (104.0 ) $ (984.5)
-------------------------------------------
Adjusting items(a):
Foreign exchange losses (gains) (1.8) 17.9 6.3 30.6
Losses (gains) on sale of other
assets (2.9) 10.3 (9.7) 16.2
Foreign exchange losses (gains)
on translation of tax basis
and foreign exchange on
deferred income taxes within
income tax expense (10.4) 108.5 (65.1) 132.9
Acquisition costs - - 7.8 -
Tax benefits realized upon
acquisition - - (27.7) -
Impairment charges - 674.5 139.6 699.0
Taxes in respect of prior years 47.9 0.9 85.5 22.2
Chile weather event related
costs - - - 18.2
Impairment of investments - 1.2 - 7.6
Tasiast and Maricunga
suspension related costs - - 40.4 -
Reclamation and remediation
expense (recovery) 27.2 (7.9) 27.2 (7.9)
Insurance recoveries - (13.0) (13.0) (25.1)
Restructuring - 10.3 1.7 22.2
Other(b) 6.3 1.8 2.1 5.8
Tax effect of above adjustments (0.7) (31.4) 1.9 (28.2)
-------------------------------------------
65.6 773.1 197.0 893.5
-------------------------------------------
Adjusted net earnings (loss)
attributable to common
shareholders $ (50.9) $ (68.8) $ 93.0 $ (91.0)
===========================================
Weighted average number of
common shares outstanding -
Basic 1,245.0 1,146.5 1,227.0 1,146.0
-------------------------------------------
Adjusted net earnings (loss) per
share (0.04 ) (0.06) 0.08 (0.08)
-------------------------------------------
----------------------------------------------------------------------------
(a) In the third quarter of 2016, the Company amended its presentation of
the reconciliation of net earnings to adjusted net net earnings by
presenting the adjusting items on a pre-tax basis and including their tax
impact as a separate line item. As a result, the comparative periods have
been recast to reflect this change in presentation.
(b) In 2016, other includes non-hedge derivatives losses (gains) and
settlement resulting from renegotiation of a labour agreement. In 2015,
other includes non-hedge derivatives losses (gain) and transaction costs.
The Company makes reference to a non-GAAP measure for adjusted operating cash flow. Adjusted operating cash flow is defined as cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company's regular operating cash flow, and excluding changes in working capital. Working capital can be volatile due to numerous factors, including the timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The Company uses adjusted operating cash flow internally as a measure of the underlying operating cash flow performance and future operating cash flow-generating capability of the Company. However, the adjusted operating cash flow measure is not necessarily indicative of net cash flow from operations as determined under IFRS.
The following table provides a reconciliation of adjusted operating cash flow for the periods presented:
----------------------------------------------------------------------------
Adjusted Operating Cash Flow
-------------------------------------------
(in millions) Three months ended Years ended
December 31, December 31,
-------------------------------------------
2016 2015 2016 2015
-------------------------------------------
Net cash flow provided from
operating activities - as
reported $ 302.6 $ 182.2 $1,099.2 $ 831.6
-------------------------------------------
Adjusting items:
Working capital changes:
Accounts receivable and other
assets (30.7) (83.6) 21.2 (91.0)
Inventories (12.5) 46.9 (79.5) (63.5)
Accounts payable and other
liabilities, including taxes (47.8) 58.3 (114.2) 109.5
-------------------------------------------
(91.0) 21.6 (172.5) (45.0)
-------------------------------------------
Adjusted operating cash flow $ 211.6 $ 203.8 $ 926.7 $ 786.6
===========================================
----------------------------------------------------------------------------
Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of sales as per the consolidated financial statements divided by the total number of gold equivalent ounces sold. This measure converts the Company's non-gold production into gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company's non-gold production into gold equivalent ounces and credits it to total production.
Management uses these measures to monitor and evaluate the performance of its operating properties. The following table presents a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for the periods presented:
----------------------------------------------------------------------------
Consolidated and Attributable Production Cost of
Sales Per
Equivalent Ounce Sold
---------------------------------------------------
(in millions, except
ounces and production
cost of sales per
equivalent ounce) Three months ended Years ended
December 31, December 31,
---------------------------------------------------
2016 2015 2016 2015
---------------------------------------------------
Production cost of sales
- as reported $ 529.4 $ 439.4 $ 1,983.8 $ 1,834.8
Less: portion
attributable to Chirano
non-controlling
interest (4.1 ) (4.2) (19.0) (18.0)
---------------------------------------------------
Attributable production
cost of sales $ 525.3 $ 435.2 $ 1,964.8 $ 1,816.8
===================================================
Gold equivalent ounces
sold 743,427 638,040 2,778,902 2,634,867
Less: portion
attributable to Chirano
non-controlling
interest (5,340 ) (5,629) (20,596 ) (25,997)
---------------------------------------------------
Attributable gold
equivalent ounces sold 738,087 632,411 2,758,306 2,608,870
===================================================
Consolidated production
cost of sales per
equivalent ounce sold $ 712 $ 689 $ 714 $ 696
Attributable production
cost of sales per
equivalent ounce sold $ 712 $ 688 $ 712 $ 696
----------------------------------------------------------------------------
Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP measure which calculates the Company's non-gold production as a credit against its per ounce production costs, rather than converting its non-gold production into gold equivalent ounces and crediting it to total production, as is the case in co-product accounting. Management believes that this measure provides investors with the ability to better evaluate Kinross' production cost of sales per ounce on a comparable basis with other major gold producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-product accounting.
The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the periods presented:
----------------------------------------------------------------------------
Attributable Production Cost of Sales Per
Ounce Sold on a
By-Product Basis
---------------------------------------------
(in millions, except ounces
and production cost of sales
per ounce) Three months ended Years ended
December 31, December 31,
---------------------------------------------
2016 2015 2016 2015
---------------------------------------------
Production cost of sales - as
reported $ 529.4 $ 439.4 $ 1,983.8 $ 1,834.8
Less: portion attributable to
Chirano non-controlling
interest (4.1) (4.2) (19.0) (18.0)
Less: attributable silver
revenues (21.9) (20.1) (102.5) (82.5)
---------------------------------------------
Attributable production cost
of sales net of silver by-
product revenue $ 503.4 $ 415.1 $ 1,862.3 $ 1,734.3
=============================================
Gold ounces sold 723,670 619,449 2,697,912 2,562,219
Less: portion attributable to
Chirano non-controlling
interest (5,327) (5,614) (20,545) (25,925)
---------------------------------------------
Attributable gold ounces sold 718,343 613,835 2,677,367 2,536,294
=============================================
Attributable production cost
of sales per ounce sold on a
by-product basis $ 701 $ 676 $ 696 $ 684
=============================================
----------------------------------------------------------------------------
In June 2013, the World Gold Council ("WGC") published its guidelines for reporting all-in sustaining costs and all-in costs. The WGC is a market development organization for the gold industry and is an association whose membership comprises leading gold mining companies including Kinross. Although the WGC is not a mining industry regulatory organization, it worked closely with its member companies to develop these non-GAAP measures. Adoption of the all-in sustaining cost and all-in cost metrics is voluntary and not necessarily standard, and therefore, these measures presented by the Company may not be comparable to similar measures presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing measures reported by Kinross.
All-in sustaining cost includes both operating and capital costs required to sustain gold production on an ongoing basis. The value of silver sold is deducted from the total production cost of sales as it is considered residual production. Sustaining operating costs represent expenditures incurred at current operations that are considered necessary to maintain current production. Sustaining capital represents capital expenditures at existing operations comprising mine development costs and ongoing replacement of mine equipment and other capital facilities, and does not include capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.
All-in cost is comprised of all-in sustaining cost as well as operating expenditures incurred at locations with no current operation, or costs related to other non-sustaining activities, and capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.
Attributable all-in sustaining cost and all-in cost per ounce sold on a by-product basis are calculated by adjusting total production cost of sales, as reported on the consolidated statement of operations, as follows:
----------------------------------------------------------------------------
Attributable All-In Sustaining Cost and All-In
Cost Per Ounce
Sold on a By-Product Basis
---------------------------------------------------
(in millions, except
ounces and costs per
ounce) Three months ended Years ended
December 31, December 31,
---------------------------------------------------
2016 2015 2016 2015
---------------------------------------------------
Production cost of sales
- as reported $ 529.4 $ 439.4 $ 1,983.8 $ 1,834.8
Less: portion
attributable to Chirano
non-controlling
interest(1) (4.1) (4.2) (19.0) (18.0)
Less: attributable(2)
silver revenues(3) (21.9) (20.1) (102.5) (82.5)
---------------------------------------------------
Attributable(2)
production cost of
sales net of silver by-
product revenue $ 503.4 $ 415.1 $ 1,862.3 $ 1,734.3
===================================================
Adjusting items on an
attributable(2) basis:
General and
administrative(4) 33.1 38.9 143.7 160.6
Other operating expense
- sustaining(5) 8.6 2.5 18.6 21.5
Reclamation and
remediation -
sustaining(6) 14.2 13.5 94.9 58.0
Exploration and
business development -
sustaining(7) 12.4 14.6 50.8 59.0
Additions to property,
plant and equipment -
sustaining(8) 153.6 122.0 440.1 428.5
---------------------------------------------------
All-in Sustaining Cost
on a by-product basis -
attributable(2) $ 725.3 $ 606.6 $ 2,610.4 $ 2,461.9
===================================================
Other operating expense
- non-sustaining(5) 12.2 3.2 25.6 20.8
Exploration - non-
sustaining(7) 13.3 10.7 42.6 47.6
Additions to property,
plant and equipment -
non-sustaining(8) 70.3 34.7 160.1 132.7
Reclamation &
remediation costs not
related to current
operations(6) 34.9 (7.9) 34.9 (7.9)
---------------------------------------------------
All-in Cost on a by-
product basis -
attributable(2) $ 856.0 $ 647.3 $ 2,873.6 $ 2,655.1
===================================================
Gold ounces sold 723,670 619,449 2,697,912 2,562,219
Less: portion
attributable to Chirano
non-controlling
interest(9) (5,327) (5,614) (20,545) (25,925)
---------------------------------------------------
Attributable(2) gold
ounces sold 718,343 613,835 2,677,367 2,536,294
===================================================
Attributable(2) all-in
sustaining cost per
ounce sold on a by-
product basis $ 1,010 $ 988 $ 975 $ 971
Attributable(2) all-in
cost per ounce sold on
a by-product basis $ 1,192 $ 1,055 $ 1,073 $ 1,047
----------------------------------------------------------------------------
The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP measures, the Company's production of silver is converted into gold equivalent ounces and credited to total production.
Attributable all-in sustaining cost and all-in cost per equivalent ounce sold are calculated by adjusting total production cost of sales, as reported on the consolidated statement of operations, as follows:
----------------------------------------------------------------------------
Attributable All-In Sustaining Cost and All-In
Cost Per
Equivalent Ounce Sold
------------------------------------------------
(in millions, except ounces
and costs per equivalent
ounce) Three months ended Years ended
December 31, December 31,
------------------------------------------------
2016 2015 2016 2015
------------------------------------------------
Production cost of sales -
as reported $ 529.4 $ 439.4 $ 1,983.8 $ 1,834.8
Less: portion attributable
to Chirano non-controlling
interest(1) (4.1) (4.2) (19.0) (18.0)
------------------------------------------------
Attributable(2) production
cost of sales $ 525.3 $ 435.2 $ 1,964.8 $ 1,816.8
================================================
Adjusting items on an
attributable(2) basis:
General and
administrative(4) 33.1 38.9 143.7 160.6
Other operating expense -
sustaining(5) 8.6 2.5 18.6 21.5
Reclamation and
remediation -
sustaining(6) 14.2 13.5 94.9 58.0
Exploration and business
development -
sustaining(7) 12.4 14.6 50.8 59.0
Additions to property,
plant and equipment -
sustaining(8) 153.6 122.0 440.1 428.5
------------------------------------------------
All-in Sustaining Cost -
attributable(2) $ 747.2 $ 626.7 $ 2,712.9 $ 2,544.4
================================================
Other operating expense -
non-sustaining(5) 12.2 3.2 25.6 20.8
Exploration - non-
sustaining(7) 13.3 10.7 42.6 47.6
Additions to property,
plant and equipment -
non-sustaining(8) 70.3 34.7 160.1 132.7
Reclamation & remediation
costs not related to
current operations(6) 34.9 (7.9) 34.9 (7.9)
------------------------------------------------
All-in Cost -
attributable(2) $ 877.9 $ 667.4 $ 2,976.1 $ 2,737.6
------------------------------------------------
Gold equivalent ounces sold 743,427 638,040 2,778,902 2,634,867
Less: portion attributable
to Chirano non-controlling
interest(9) (5,340) (5,629) (20,596) (25,997)
------------------------------------------------
Attributable(2) gold
equivalent ounces sold 738,087 632,411 2,758,306 2,608,870
================================================
Attributable(2) all-in
sustaining cost per
equivalent ounce sold $ 1,012 $ 991 $ 984 $ 975
Attributable(2) all-in cost
per equivalent ounce sold $ 1,189 $ 1,055 $ 1,079 $ 1,049
----------------------------------------------------------------------------
(1) "Portion attributable to Chirano non-controlling interest" represents
the non-controlling interest (10%) in the production cost of sales for the
Chirano mine.
(2) "Attributable" includes Kinross' share of Chirano (90%) production.
(3) "Attributable silver revenues" represents the attributable portion of
metal sales realized from the production of the secondary or by-product
metal (i.e. silver). Revenue from the sale of silver, which is produced as
a by-product of the process used to produce gold, effectively reduces the
cost of gold production.
(4) "General and administrative" expenses is as reported on the
consolidated statement of operations, net of certain severance expenses.
General and administrative expenses are considered sustaining costs as
they are required to be absorbed on a continuing basis for the effective
operation and governance of the Company.
(5) "Other operating expense - sustaining" is calculated as "Other
operating expense" as reported on the consolidated statement of
operations, less other operating and reclamation and remediation expenses
related to non-sustaining activities as well as other items not reflective
of the underlying operating performance of our business. Other operating
expenses are classified as either sustaining or non-sustaining based on
the type and location of the expenditure incurred. The majority of other
operating expenses that are incurred at existing operations are considered
costs necessary to sustain operations, and are therefore classified as
sustaining. Other operating expenses incurred at locations where there is
no current operation or related to other non-sustaining activities are
classified as non-sustaining.
(6) "Reclamation and remediation - sustaining" is calculated as current
period accretion related to reclamation and remediation obligations plus
current period amortization of the corresponding reclamation and
remediation assets, and is intended to reflect the periodic cost of
reclamation and remediation for currently operating mines. Reclamation and
remediation costs for development projects or closed mines are excluded
from this amount and classified as non-sustaining.
(7) "Exploration and business development - sustaining" is calculated as
"Exploration and business development" expenses as reported on the
consolidated statement of operations, less non-sustaining exploration
expenses. Exploration expenses are classified as either sustaining or non-
sustaining based on a determination of the type and location of the
exploration expenditure. Exploration expenditures within the footprint of
operating mines are considered costs required to sustain current
operations and so are included in sustaining costs. Exploration
expenditures focused on new ore bodies near existing mines (i.e.
brownfield), new exploration projects (i.e. greenfield) or for other
generative exploration activity not linked to existing mining operations
are classified as non-sustaining. Business development expenses are
considered sustaining costs as they are required for general operations.
(8) "Additions to property, plant and equipment - sustaining" represents
the majority of capital expenditures at existing operations including
capitalized exploration costs, capitalized stripping and underground mine
development costs, ongoing replacement of mine equipment and other capital
facilities and other capital expenditures and is calculated as total
additions to property, plant and equipment (as reported on the
consolidated statements of cash flows), less capitalized interest and non-
sustaining capital. Non-sustaining capital represents capital expenditures
for major growth projects as well as enhancement capital for significant
infrastructure improvements at existing operations. Non-sustaining capital
expenditures during the three months ended December 31, 2016 primarily
relate to projects at Tasiast and Bald Mountain. Non-sustaining capital
expenditures during the twelve months ended December 31, 2016 primarily
relate to projects at Tasiast, Round Mountain, Chirano and Bald Mountain.
(9) "Portion attributable to Chirano non-controlling interest" represents
the non-controlling interest (10%) in the ounces sold from the Chirano
mine.
Cautionary statement on forward-looking information
All statements, other than statements of historical fact, contained or incorporated by reference in this news release including, but not limited to, any information as to the future financial or operating performance of Kinross, constitute "forward-looking information" or "forward-looking statements" within the meaning of certain securities laws, including the provisions of the Securities Act (Ontario) and the provisions for "safe harbor" under the United States Private Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this news release. Forward-looking statements contained in this news release, include, but are not limited to, those under the headings (or headings that include): "CEO commentary", "Outlook" and "Balance sheet", and include, without limitation, statements with respect to our guidance for production; production costs of sales, all-in sustaining cost and capital expenditures; and continuous improvement initiatives, as well as references to other possible events, the future price of gold and silver, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, success of exploration, development and mining activities, currency fluctuations, capital requirements, project studies, mine life extensions, restarting suspended or disrupted operations; continuous improvement initiatives; and resolution of pending litigation. The words "forward", "intend", "optimize", "opportunity", "phased", "projection", or variations of or similar such words and phrases or statements that certain actions, events or results may, could, should or will be achieved, received or taken, or will occur or result and similar such expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The estimates, models and assumptions of Kinross referenced, contained or incorporated by reference in this news release, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein and in our most recently filed Annual Information Form and our Management's Discussion and Analysis as well as: (1) there being no significant disruptions affecting the operations of the Company whether due to extreme weather events (including, without limitation, excessive or lack of rainfall) and other or related natural disasters, labour disruptions (including but not limited to following workforce reductions), supply disruptions, power disruptions, damage to equipment or otherwise; (2) permitting, development, operations and production from the Company's operations being consistent with Kinross' current expectations including, without limitation, land acquisitions and permitting for the construction and operation of the new tailings facility, water and power supply and launch of the new tailings reprocessing facility at Paracatu; (3) political and legal developments in any jurisdiction in which the Company operates being consistent with its current expectations including, without limitation, the impact of any escalating political tensions and uncertainty in the Russian Federation and Ukraine or any related sanctions and any other similar restrictions or penalties imposed, or actions taken, by any government, including but not limited to potential power rationing, tailings facility regulation and amendments to mining laws in Brazil, potential amendments to water laws and/or other water use restrictions and regulatory actions in Chile, potential amendments to minerals and mining laws and dam safety regulation in Ghana, potential amendments to customs and mining laws (including but not limited amendments to the VAT) in Mauritania, and potential amendments to and enforcement of tax laws in Russia (including, but not limited to, the interpretation, implementation, application and enforcement of any such laws and amendments thereto), being consistent with Kinross' current expectations; (4) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately consistent with current levels; (5) certain price assumptions for gold and silver; (6) prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; (7) production and cost of sales forecasts for the Company meeting expectations; (8) the accuracy of the current mineral reserve and mineral resource estimates of the Company (including but not limited to ore tonnage and ore grade estimates) and mine plans for the Company's mining operations (including but not limited to throughput and recoveries being affected by metallurgical characteristics at Paracatu); (9) labour and materials costs increasing on a basis consistent with Kinross' current expectations; (10) the terms and conditions of the legal and fiscal stability agreements for the Tasiast and Chirano operations being interpreted and applied in a manner consistent with their intent and Kinross' expectations; (11) goodwill and/or asset impairment potential; and (12) access to capital markets, including but not limited to maintaining credit ratings consistent with the Company's current expectations. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: sanctions (any other similar restrictions or penalties) now or subsequently imposed, other actions taken, by, against, in respect of or otherwise impacting any jurisdiction in which the Company is domiciled or operates (including but not limited to the Russian Federation, Canada, the European Union and the United States), or any government or citizens of, persons or companies domiciled in, or the Company's business, operations or other activities in, any such jurisdiction; fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as fuel and electricity); changes in the discount rates applied to calculate the present value of net future cash flows based on country-specific real weighted average cost of capital; changes in the market valuations of peer group gold producers and the Company, and the resulting impact on market price to net asset value multiples; changes in various market variables, such as interest rates, foreign exchange rates, gold or silver prices and lease rates, or global fuel prices, that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under any financial obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation (including but not limited to income tax, advance income tax, stamp tax, withholding tax, capital tax, tariffs, value-added or sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, royalty, excise tax, customs/import or export taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with any related fine, penalty, surcharge, or interest imposed in connection with such taxes), controls, policies and regulations; the security of personnel and assets; political or economic developments in Canada, the United States, Chile, Brazil, Russia, Mauritania, Ghana, or other countries in which Kinross does business or may carry on business; business opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical difficulties in connection with mining or development activities; employee relations; litigation or other claims against, or regulatory investigations and/or any enforcement actions or sanctions in respect of the Company (and/or its directors, officers, or employees) including, but not limited to, securities class action litigation in Canada and/or the United States, or any investigations, enforcement actions and/or sanctions under any applicable anti-corruption, international sanctions and/or anti-money laundering laws and regulations in Canada, the United States or any other applicable jurisdiction; the speculative nature of gold exploration and development including, but not limited to, the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves; adverse changes in our credit rating; and contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards associated with the business of gold exploration, development and mining, including environmental hazards, tailings dam failures, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance, or the inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can directly or indirectly affect, and could cause, Kinross' actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Kinross,including but not limited to resulting in an impairment charge on goodwill and/or assets. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management's expectations and plans relating to the future. All of the forward-looking statements made in this news release are qualified by these cautionary statements and those made in our other filings with the securities regulators of Canada and the United States including, but not limited to, the cautionary statements made in the "Risk Factors" section of our most recently filed Annual Information Form and the "Risk Analysis" section of our full year 2016 MD&A. These factors are not intended to represent a complete list of the factors that could affect Kinross. Kinross disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in this news release, we mean Kinross Gold Corporation and/or one or more or all of its subsidiaries, as may be applicable.
The technical information about the Company's mineral properties contained in this news release has been prepared under the supervision of Mr. John Sims, an officer of the Company who is a "qualified person" within the meaning of National Instrument 43-101.
For more information, please see Kinross' 2016 year-end Financial Statements, MD&A and Projects and Exploration news release at www.kinross.com
Media Contact
Louie Diaz
Director, Corporate Communications
phone: 416-369-6469
louie.diaz@kinross.com
Investor Relations Contact
Tom Elliott
Senior Vice-President, Investor Relations and Corporate Development
phone: 416-365-3390
tom.elliott@kinross.com
