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Kinross reports 2018 fourth-quarter and full-year results

Achieves seventh consecutive year of meeting production and cost guidance

Paracatu and Bald Mountain deliver record annual production; Tasiast achieves record quarterly production

Strong 2019 outlook forecasting production of 2.5 million Au eq. oz. and costs in line with 2018

TORONTO, Feb. 13, 2019 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the fourth-quarter and year-end December 31, 2018.

(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 37 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)

2018 full-year results and 2019 outlook:         

  2018 outlook
(+/- 5%)
2018 full-year results 2019 outlook
(+/- 5%)
Gold equivalent production1
(ounces)
2.5 million 2.45 million  

2.5 million
Production cost of sales2
($ per Au eq. oz.)
$730 $734

$ 730
All-in sustaining cost2
($ per Au eq. oz.) 
$975 $965

$ 995
Capital expenditures $1,075 million $1,043 million $1,050 million

CEO Commentary:

J. Paul Rollinson, President and CEO, made the following comments in relation to 2018 fourth-quarter and year-end results:

“Kinross once again delivered on its commitments in 2018, as we met our production, cost and capital guidance for the seventh consecutive year. Our portfolio of mines produced solid results, with standout performances from Paracatu and Bald Mountain, both of which delivered record annual production. Following successful completion of the Tasiast Phase One expansion, the mine achieved record production in the fourth quarter, with throughput and recoveries exceeding expectations. Kinross also generated approximately $790 million in operating cash flow and maintained its strong balance sheet, with $1.9 billion in liquidity and no debt maturities until 2021.

“We expect to deliver another strong year in 2019, producing approximately 2.5 million gold equivalent ounces at costs similar to 2018. Our development projects are proceeding well, and we look forward to a number of milestones this year, including: the start of commissioning of the Bald Mountain Vantage Complex processing circuit and completion of the Lobo-Marte scoping study in the first quarter; the start of commissioning of the Round Mountain Phase W processing circuit in the second quarter; and, the completion of the La Coipa Restart feasibility study and the start of stripping at Fort Knox Gilmore in the third quarter.

“At Tasiast, we continue to evaluate alternative approaches to further increase throughput and reduce capital while preserving the overall value of the project. The project financing is progressing well and we are targeting completion mid-year.”

2018 Q4 and full-year highlights:

  • Production1: 610,152 gold equivalent ounces (Au eq. oz.) in Q4 2018 and 2,452,398 Au eq. oz. in 2018.  
  • Revenue: $786.5 million in Q4 2018 and $3,212.6 million in 2018.
  • Production cost of sales2: $743 per Au eq. oz. in Q4 2018 and $734 per Au eq. oz. in 2018.
  • All-in sustaining cost2: $961 per Au eq. oz. sold in Q4 2018 and $965 per Au eq. oz. sold in 2018. All-in sustaining cost per Au oz. sold on a by-product basis was $955 in Q4 2018 and $959 per Au oz. sold in 2018.
  • Operating cash flow: $183.5 million in Q4 2018 and $788.7 million in 2018.
  • Adjusted operating cash flow2: $135.8 million in Q4 2018 and $874.2 million for 2018.
  • Reported net loss3: $27.7 million, or $0.02 per share in Q4 2018, and $23.6 million, or $0.02 per share, in 2018.
  • Adjusted net earnings2,3: adjusted net earnings of $13.5 million, or $0.01 per share in Q4 2018, and adjusted net earnings of $128.1 million, or $0.10 per share, in 2018.
  • Balance sheet: Cash and cash equivalents of $349.0 million, and total liquidity of $1,901.9 million at December 31, 2018. No debt maturities until 2021.  


Operations and organic development projects:

  • Paracatu delivers record annual production mainly due to higher recoveries and throughput, increasing production 45% year-over-year while reducing costs.
  • Bald Mountain achieves record annual production, and Tasiast delivers record quarterly production in the fourth quarter as throughput and recoveries exceed expectations.  
  • The Round Mountain Phase W project continues to progress on budget and on schedule, with pre-stripping advancing well and commissioning of the processing circuit expected to begin in Q2 2019.
  • The Bald Mountain Vantage Complex project is proceeding well, with commissioning of the processing circuit expected to begin in Q1 2019.
  • The Fort Knox Gilmore project in Alaska remains on schedule, with stripping expected to commence in Q3 2019.   
  • In Chile, the La Coipa Restart project feasibility study is scheduled to be completed in Q3 2019 and the Lobo-Marte scoping study is expected to be completed in Q1 2019.
  • The Tasiast Phase Two expansion continues to be a viable option as the Company completes its evaluation of alternative approaches to further increase throughput at the site.   

Exploration and mineral reserves and resources update4:

  • Kinross added approximately 2.3 million ounces to reserve estimates in 2018, including approximately 1.9 million ounces at Fort Knox, to largely offset depletion. 
  • Mineral reserve estimates at year-end 2018 were 25.5 million ounces, compared with 25.9 million ounces at year-end 2017.
  • The Company extended mine life at Kupol and Chirano by one year, with strong exploration results at both sites.
  • Exploration activities added a total of approximately 343 Au koz. to the Company’s estimated mineral reserves and 414 Au koz. to estimated measured and indicated mineral resources.


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) 2018 2017 2018 2017
Operating Highlights          
Total gold equivalent ounces(a)          
Produced(c)  615,279  659,339  2,475,068  2,698,136
Sold(c)  641,101  634,762  2,532,912  2,621,875
           
Attributable gold equivalent ounces(a)        
Produced(c)  610,152  652,710  2,452,398  2,673,533
Sold(c)  636,183  628,565  2,510,419  2,596,754
           
Financial Highlights          
Metal sales   $  786.5 $  810.3 $  3,212.6 $  3,303.0
Production cost of sales   $  476.4 $  414.5 $  1,860.5 $  1,757.4
Depreciation, depletion and amortization   $  184.3 $  190.3 $  772.4 $  819.4
Impairment, net of reversals     $ - $  21.5  $ - $  21.5
Operating earnings   $  25.1 $  102.9 $  200.5 $  336.5
Net (loss) earnings attributable to common shareholders   $  (27.7) $  217.6 $  (23.6) $  445.4
Basic (loss) earnings per share attributable to common shareholders   $  (0.02) $  0.17 $  (0.02) $  0.36
Diluted (loss) earnings per share attributable to common shareholders   $  (0.02) $  0.17 $  (0.02) $  0.35
Adjusted net earnings attributable to common shareholders(b)   $  13.5 $  16.3 $  128.1 $  178.7
Adjusted net earnings per share(b)   $  0.01 $  0.01 $  0.10 $  0.14
Net cash flow provided from operating activities   $  183.5 $  366.4 $  788.7 $  951.6
Adjusted operating cash flow(b)   $  135.8 $  364.2 $  874.2 $  1,166.7
Capital expenditures   $  273.0 $  313.3 $  1,043.4 $  897.6
Average realized gold price per ounce(d)   $  1,226 $  1,276 $  1,268 $  1,260
Consolidated production cost of sales per equivalent ounce(c) sold(b)   $  743 $  653 $  735 $  670
Attributable(a) production cost of sales per equivalent ounce(c) sold(b)   $  743 $  653 $  734 $  669
Attributable(a) production cost of sales per ounce sold on a by-product basis(b)   $  733 $  637 $  723 $  653
Attributable(a) all-in sustaining cost per ounce sold on a by-product basis(b)   $  955 $  1,013 $  959 $  946
Attributable(a) all-in sustaining cost per equivalent ounce(c) sold(b)   $  961 $  1,019 $  965 $  954
Attributable(a) all-in cost per ounce sold on a by-product basis(b)   $  1,287 $  1,308 $  1,275 $  1,164
Attributable(a) all-in cost per equivalent ounce(c) sold(b)   $  1,286 $  1,308 $  1,274 $  1,166
           
  1. "Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
  2. The definition and reconciliation of these non-GAAP financial measures is included on pages 27 to 31 of this news release.
  3. "Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market prices for the commodities for each period. The ratio for 2018 was 80.74:1 (2017 - 73.72:1). The ratio for Q4 2018 was 84.42:1 (Q4 2017 – 76.22:1)
  4. The definition of this non-GAAP financial measure is included on page 31 of this news release.

The following operating and financial results are based on fourth-quarter and year-end 2018 gold equivalent production. Production and cost measures are on an attributable basis:

Production: Kinross produced 610,152 attributable Au eq. oz. in the fourth quarter of 2018, compared with 652,710 in the fourth quarter of 2017, mainly due to lower production at Fort Knox and Bald Mountain, partially offset by record production at Tasiast and Paracatu. 

Kinross produced 2,452,398 attributable Au eq. oz. for full-year 2018, which was in line with the Company’s 2018 guidance range. This compares with production of 2,673,533 Au eq. oz. for full-year 2017.

Production cost of sales: Production cost of sales per Au eq. oz.2 was $743 for the fourth quarter of 2018, compared with $653 for the fourth quarter of 2017, largely due to higher cost of sales per ounce sold at Fort Knox. Production cost of sales per Au oz. on a by-product basis2 was $733 in Q4 2018, compared with $637 in Q4 2017, based on Q4 2018 attributable gold sales of 623,930 ounces and attributable silver sales of 1,034,273 ounces.

Production cost of sales per Au eq. oz. was $734 for full-year 2018, which was in line with the Company’s 2018 guidance. This compares with production cost of sales of $669 per Au eq. oz. for full-year 2017. The full-year increase was mainly due to increases in cost of sales per ounce sold at Fort Knox and Tasiast. Production cost of sales per Au oz. on a by-product basis2 was $723 for full-year 2018, compared with $653 for full-year 2017, based on 2018 attributable gold sales of 2,458,069 ounces and attributable silver sales of 4,229,257 ounces.

All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold2 decreased to $961 in Q4 2018, compared with $1,019 in Q4 2017. All-in sustaining cost per Au oz. sold on a by-product basis2 decreased to $955 in Q4 2018, compared with $1,013 in Q4 2017.

All-in sustaining cost per Au eq. oz. sold was $965 for full-year 2018, which was at the lower end of the Company’s 2018 guidance range, compared with $954 for full-year 2017. All-in sustaining cost per Au oz. sold on a by-product basis was $959 for full-year 2018, compared with $946 for full-year 2017.

Revenue: Revenue from metal sales was $786.5 million in the fourth quarter of 2018, compared with $810.3 million during the same period in 2017.

Revenue was $3,212.6 million for full-year 2018, which was largely in line with revenue of $3,303.0 million for full-year 2017.

Average realized gold price5: The average realized gold price in Q4 2018 decreased to $1,226 per ounce, compared with $1,276 per ounce in Q4 2017.

The average realized gold price per ounce was $1,268 for full-year 2018, mainly in line with $1,260 per ounce for full-year 2017.

Margins: Kinross’ attributable margin per Au eq. oz. sold6 was $483 per Au eq. oz. for the fourth quarter of 2018, compared with the Q4 2017 margin of $623 per Au eq. oz. sold. Full-year 2018 margin per Au eq. oz. sold was $534, compared with $591 for full-year 2017.

Operating cash flow: Adjusted operating cash flow2 was $135.8 million for the fourth quarter of 2018, compared with $364.2 million for Q4 2017. Adjusted operating cash flow for full-year 2018 was $874.2 million, compared with $1,166.7 million for full-year 2017.

Net operating cash flow was $183.5 million for the fourth quarter of 2018, compared with $366.4 million for Q4 2017. Net operating cash flow for full-year 2018 was $788.7 million, compared with $951.6 million for full-year 2017.

Earnings/loss: Adjusted net earnings2,3  was $13.5 million, or $0.01 per share, for Q4 2018, compared with adjusted net earnings of $16.3 million, or $0.01 per share, for Q4 2017. Full-year 2018 adjusted net earnings was $128.1 million, or $0.10 per share, compared with adjusted net earnings of $178.7 million, or $0.14 per share, for full-year 2017.

Reported net loss3 was $27.7 million, or $0.02 per share, for Q4 2018, compared with net earnings of $217.6 million, or $0.17 per share, in Q4 2017. Full-year 2018 reported net loss was $23.6 million, or $0.02 per share, compared with net earnings of $445.4 million, or $0.36 per share, for full-year 2017. This change was primarily a result of decreased operating earnings, a reversal of impairment charges related to the Cerro Casale sale in 2017, and an increase in 2018 income tax expense.

Capital expenditures: Capital expenditures decreased to $273.0 million for Q4 2018, compared with $313.3 million for the same period last year.

Capital expenditures for full-year 2018 were $1,043.4 million, compared with $897.6 million for 2017, primarily due to increased spending at Round Mountain, Bald Mountain and Tasiast, partially offset by lower spending at Paracatu and Chirano. Capital expenditures were at the low end of the Company’s guidance.

Balance sheet

As of December 31, 2018, Kinross had cash and cash equivalents of $349.0 million, compared with $1,025.8 million at December 31, 2017. The decrease was primarily due to capital expenditures at the Company’s development projects and the acquisition of two hydroelectric power plants in Brazil, partially offset by net operating cash inflows.

The Company has available credit of $1,552.9 million as of year-end 2018, for total liquidity of $1,901.9 million, and no scheduled debt repayments until 2021.

Operating results
Mine-by-mine summaries for 2018 fourth-quarter and full-year operating results may be found on pages 22 and 26 of this news release. Highlights include the following:

Americas

The Americas region, which represented 61% of Kinross’ 2018 production, delivered strong results during the year. Paracatu and Bald Mountain achieved record annual production, while Round Mountain continued to perform well.

Paracatu performed strongly in 2018, with production increasing 45% compared with full-year 2017. The record annual production was mainly as a result of record recoveries in Plant 2, and significant increases in tonnes of ore mined and processed. Production in Q4 2018 was higher compared with the previous quarter mainly due to an increase in grades and higher recoveries. Cost of sales per ounce in 2018 was lower compared with 2017 primarily as a result of lower power costs due to the acquisition of the power plants in the third quarter and favourable foreign exchange movements. Higher grades also contributed to the lower cost of sales per ounce in Q4 2018 versus the previous quarter.

At Round Mountain, 2018 production met expectations but was lower compared with 2017 primarily due to fewer ounces recovered from the heap leach pads, partially offset by the timing of ounces processed through the mill. Production in Q4 2018 was largely consistent compared with the previous quarter. Full-year cost of sales per ounce was higher year-over-year mainly due to lower heap leach grades and higher fuel and power costs. Cost of sales per ounce increased in Q4 2018 compared with the previous quarter mainly due to higher processing costs. 

Bald Mountain continued to perform well, achieving record full-year production in 2018. Production in Q4 2018 was lower compared with Q3 2018 mainly as a result of timing of recoveries from the heap leach pads. Cost of sales per ounce for 2018 was lower than full-year 2017 mainly as a result of less operating waste mined and the timing of gold equivalent ounces sold. Cost of sales per ounce in Q4 2018 increased compared with the previous quarter mainly due to fewer ounces recovered from the heap leach pads. 

Fort Knox full-year production decreased year-over-year largely due to a decrease in grades and tonnes of ore processed in the mill and placed on the heap leach pads. The pit wall failure in Q1 2018 also limited access to higher-grade ore and higher than average rainfall in the second half of 2018 affected geotechnical stability. Production in the fourth quarter was largely consistent with the third quarter of 2018. Full-year cost of sales per ounce was higher compared with 2017 mainly due to a decline in grades and an increase in operating waste mined. Cost of sales per ounce in Q4 2018 was lower versus Q3 2018 mainly due to lower processing costs. 

Maricunga delivered strong results during the year, as production from the rinsing of heap materials placed on the pads prior to the suspension of mining activities was better than expected. Cost of sales per ounce for full-year 2018 was higher than 2017 mainly due to timing of sales.

Russia

The region continued its strong and consistent performance, as Kupol and Dvoinoye’s combined full-year production met expectations, while cost of sales per ounce outperformed. Full-year production was lower than the previous year mainly due to the expected decrease in grades and the completion of mining of the September Northeast deposit at the end of 2017. Production quarter-over-quarter was largely consistent.

Full-year cost of sales per ounce was slightly higher versus 2017 mainly due to lower grades at Dvoinoye and increased maintenance costs. Q4 2018 cost of sales per ounce was lower quarter-over-quarter mainly due to less operating waste mined and lower labour costs at Dvoinoye.

At the Dvoinoye Zone 1 deposit, development is continuing as scheduled and production is expected to commence in mid-2019.

West Africa

Full-year production at Tasiast was slightly higher compared with 2017 mainly due to the completion of the Phase One expansion in the third quarter. The site achieved record quarterly production in Q4 2018 mainly due to higher than expected throughput at the new mill and better mill grades and recoveries. Cost of sales per ounce for the full year was higher compared with 2017 mainly due to higher fuel and maintenance costs and an increase in operating waste mined. Cost of sales per ounce was lower in Q4 2018 compared with Q3 2018 mainly due to higher mill grades and lower operating waste mined.

Production at Chirano was slightly lower for the full-year compared with 2017 mainly due to anticipated lower grades, and was lower quarter-over-quarter primarily as a result of lower mill throughput. Cost of sales per ounce for full-year 2018 decreased compared with 2017 mainly due to lower overhead, maintenance and power costs, as open pit mining was suspended in Q3 2017. Cost of sales per ounce was higher in Q4 2018 versus Q3 2018 mainly due to lower mill throughput, partially offset by lower power costs and favourable foreign exchange movements.

Organic development projects

Tasiast expansion update

Tasiast continues to perform strongly, achieving record quarterly production in Q4 2018. The site is currently exceeding throughput and recovery expectations. The Phase One expansion has been completed successfully and the new SAG mill is performing very well. In addition, continuous improvement initiatives have been undertaken which are expected to result in meaningful cost and operational improvements. The Company expects Tasiast to continue to deliver strong operational performance in 2019.

The Phase Two expansion continues to be a viable option as the Company completes its evaluation of alternative approaches to further increase throughput at Tasiast. The evaluation is seeking ways to reduce capital expenditures, while preserving the overall value proposition, and incorporates strong Phase One performance results, including throughput averaging above nameplate capacity. Phase Two expansion considerations include, among other matters: results from the Company’s evaluation of alternative throughput approaches; acceptable project financing terms; capital priorities across the Company’s portfolio; and, the ongoing discussions with the Government of Mauritania. 

These discussions with the Government have focused on matters that arise occasionally and are generally common to the mining sector. These matters include tax issues, expatriate work permits, and increasing opportunities for local suppliers, in accordance with Kinross policy and applicable laws. In addition, the parties have engaged in an ongoing dialogue regarding the Company’s exemption from importation duties on fuel under the Tasiast Mining Convention. Further, the Company continues to seek from the Government an exploitation license for Tasiast Sud.

The Government has not expressed an intention to re-open the Tasiast Mining Convention, and in any event, Kinross remains protected by its rights under the Mining Convention, which includes international arbitration provisions. The existing Tasiast operation is also covered under the Company’s political risk insurance policy with the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group.

Kinross continues to advance discussions to obtain the approximately $300 million in project financing for Tasiast. In addition to the previously signed mandate letters with Export Development Canada (EDC) and the International Finance Corporation (IFC), which indicated their interest in the financing, subject to completing due diligence, two commercial banks have also expressed interest in the financing and are now engaged in the due diligence process.  The financing is progressing and completion is targeted for mid-2019.

Round Mountain Phase W

The Round Mountain Phase W project continues to progress on schedule and on budget, with pre-stripping advancing well. Initial low grade Phase W ore has been encountered and is being placed on the existing heap leach pads. Construction of the new heap leach pad is now approximately 80% complete, while construction of the vertical carbon-in-column (VCIC) plant is approximately 50% complete, with commissioning for both expected to start in Q2 2019. Construction of mine infrastructure such as the truck shop, warehouse, wash bay and fuel island are all proceeding as planned and are approximately 35% complete.

Fort Knox Gilmore project

The Fort Knox Gilmore project is progressing well, on schedule and on budget, with initial ore expected in early 2020. Construction of the heap leach has begun and will continue during the 2019 and 2020 construction seasons. Expansion of the dewatering system will continue throughout the year in anticipation of stripping that is expected to commence in Q3 2019.

Bald Mountain Vantage Complex

The Bald Mountain Vantage Complex project is proceeding well, with construction of the heap leach approximately 85% complete, and the VCIC approximately 30% complete. Some challenges due to weather and a tight labour market have been encountered, but commissioning of the heap leach and processing facilities remain on track to begin in late Q1 2019. Support infrastructure including the truck shop, warehouse, and wash bay is approximately 25% complete. Stacking of economic but previously leached ore on the new heap leach pad is underway with approximately 50% of the material moved onto a segregated portion. Mining activities at the Vantage Complex have commenced and initial ore is now being mined and stockpiled in preparation for placement on the new heap.

Chile projects

The feasibility study for the La Coipa Restart project and the scoping study for the Lobo-Marte project are both proceeding well, and are expected to conclude in the third quarter of 2019 and first quarter of 2019, respectively. Permitting is in place for the La Coipa Restart project and permitting strategy planning has begun at Lobo-Marte.  

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 37 of this news release.

In 2019, Kinross expects to produce 2.5 million Au eq. oz. (+/- 5%) from its operations, in line with 2018 production.
Production is expected to be lower in the first quarter of 2019 compared with the rest of the year, mainly as a result of the expected Bald Mountain Vantage Complex project ramp up and lower production from Fort Knox as per the operation’s mining and milling strategy.

Production cost of sales is expected to be $730 per Au eq. oz. (+/- 5%) for 2019, which is in line with full-year 2018 cost of sales. The Company expects all-in sustaining cost to be $995 (+/- 5%) per ounce sold on both a gold equivalent and by-product basis for 2019, which is largely in line with full-year 2018 all-in sustaining cost per ounce.  

The table below summarizes the 2019 forecast for production and production cost of sales on a gold equivalent and by-product accounting basis:

 
  Accounting basis
 

2019 Outlook
(+/- 5%)

 
Gold equivalent basis  
Production (Au eq. oz.) 2.5 million
Average production cost of sales per Au eq. oz. $730
All-in sustaining cost per Au eq. oz. $995
By-product basis  
Gold ounces  2.4 million
Silver ounces  3.7 million
Average production cost of sales per Au oz. $720

The following table provides a summary of the 2019 production and production cost of sales forecast by region:

Region Forecast 2019 production
(Au eq. oz.)
Percentage of total forecast production7 Forecast 2019 production cost of sales
(per Au eq. oz.)
Americas 1.44 million (+/- 5%) 58 % $750 (+/- 5%)
West Africa (attributable)* 560,000 (+/- 10%) 22 % $800 (+/- 10%)
Russia 500,000 (+/- 3%) 20 % $600 (+/- 3%)
Total 2.5 million (+/- 5%) 100 % $730 (+/- 5%)
 

*Based on Kinross’ 90% share of Chirano

Material assumptions used to forecast 2019 production cost of sales are as follows:

  • a gold price of $1,200 per ounce,
  • a silver price of $16 per ounce,
  • an oil price of $65 per barrel,
  • foreign exchange rates of:
    • 3.50 Brazilian reais to the U.S. dollar,
    • 1.30 Canadian dollars to the U.S. dollar,
    • 60 Russian roubles to the U.S. dollar,
    • 650 Chilean pesos to the U.S. dollar,
    • 4.50 Ghanaian cedi to the U.S. dollar, 
    • 35 Mauritanian ouguiya to the U.S. dollar, and
    • 1.11 U.S. dollars to the Euro.

             
Taking into account existing currency and oil hedges:

  • a 10% change in foreign currency exchange rates would be expected to result in an approximate $15 impact on production cost of sales per ounce8
  • specific to the Russian rouble, a 10% change in this exchange rate would be expected to result in an approximate $19 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 $27 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;
  • 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 owing.

Total capital expenditures for 2019 are forecast to be approximately $1,050 million (+/- 5%), which includes capitalized interest of approximately $65 million, and are summarized in the table below:


Region
Forecast 2019
sustaining capital
 (million)
Forecast 2019
non-sustaining capital
(million)
Total forecast capital
 (+/- 5%) (million)
Americas $375 $295 $670
West Africa $35 $240 $275
Russia $30 $5 $35
Corporate $5 $0 $5
Total $445 $540 $985
Capitalized interest     $65
TOTAL     $1,050

Sustaining capital includes the following forecast spending estimates:

  • Mine development:
$180 million (Americas); $15 million (Russia)
  • Mobile equipment:
$70 million (Americas); $10 million (Russia); $5 million (West Africa)
  • Tailings facilities:
$50 million (Americas);
  • Leach facilities:
$20 million (Americas)
  • Mill facilities: 
$20 million (Americas); $10 million (West Africa)


Non-sustaining capital includes the following forecast spending estimates:

  • Tasiast West Branch Stripping: 
$180 million
  • Round Mountain Phase W:   
$175 million
  • Tasiast Project:         
$60 million
  • Fort Knox Gilmore: 
$45 million
  • Bald Mountain Vantage Complex: 
$20 million
  • Development projects and other: 
$60 million


The 2019 forecast for exploration is approximately $75 million, none of which is expected to be capitalized, with 2019 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 2019 are approximately $100 million, which includes approximately $40 million of care and maintenance costs in Chile and at Kettle River-Buckhorn.

Based on our assumed gold price of $1,200 and other inputs, tax expense is expected to be negligible and taxes paid are expected to be $95 million, with tax expense increasing at 16% of any profit resulting from higher gold prices and taxes paid increasing at a lower rate of 5%. With a $100 increase in the realized gold price, tax expense and taxes paid are expected to be $40 million and $105 million, respectively.  

Depreciation, depletion and amortization is forecast to be approximately $330 (+/-5%) per Au eq. oz.

2018 Mineral Reserves and Mineral Resources update

(See also the Company’s detailed Annual Mineral Reserve and Mineral Resource Statement estimated as at December 31, 2018 and explanatory notes starting at page 32.)

In preparing the Company’s 2018 year-end mineral reserves and mineral resource estimates as of December 31, 2018, Kinross has maintained gold price assumptions used since 2011 of $1,200 per ounce for mineral reserves and $1,400 per ounce for mineral resources. Kinross continues to focus on estimated higher margin, lower cost ounces, and has maintained its fully-loaded costing methodology.

Proven and Probable Mineral Reserves4

Kinross’ total proven and probable gold reserve estimates were 25.5 million Au oz. at year-end 2018, largely in line with reserve estimates of 25.9 million Au oz. at year-end 2017. The addition of approximately 1.9 million ounces of estimated mineral reserves from Fort Knox Gilmore and approximately 343 Au koz. from exploration mostly offset depletion and engineering changes during the year.

Measured and Indicated Mineral Resources4

Kinross’ total estimated measured and indicated mineral resources at year-end 2018 were 27.8 million Au oz. compared with mineral resource estimates of 29.6 million Au oz. at year-end 2017. The slight reduction was mostly due to the conversion of 1.9 million ounces of estimated resources from Fort Knox Gilmore to estimated mineral reserves.  

Inferred Mineral Resources4

Kinross’ total estimated inferred gold resources at year-end 2018 increased to approximately 6.5 million Au oz., compared with 6.4 million Au oz. at year-end 2017. Exploration gains at Kupol, Bald Mountain and Chirano, and engineering changes at Paracatu, offset the loss of ounces at Tasiast Sud after the Company was not granted an exploitation license at the project.


Kinross Gold Mineral Reserve and Mineral Resource Estimates4
  2017
(Au koz)
Ownership
(Au koz)
Depletion
(Au koz)
Exploration
(Au koz)
Engineering
(Au koz)
2018*
(Au koz)
Proven and
Probable Reserves
25,934 (144 ) (2,554 ) 343 1,945   25,521
Measured and
Indicated Resources
29,594 (192 ) (72 ) 414 (1,962 ) 27,781
Inferred
Resources
6,382 (817 ) (15 ) 505 486   6,540

*Totals may not fully add up due to rounding.

Exploration update

The Company’s 2018 exploration efforts continued to focus within the footprint of existing mines. A total of more than 300,000 metres of drilling was completed, of which approximately 47% was drilled in Russia. A total of 343 koz. was added to Kinross’ estimated mineral reserves from exploration activities during the year. Exploration also added 414 Au koz. to estimated measured and indicated resources and 505 Au koz. to estimated inferred mineral resources. Most of the additions were from Kupol, Bald Mountain and Chirano. 2018 exploration highlights include:

  • Kupol-Dvoinoye: A total of 258 Au koz. was added to estimated mineral reserves and 40 Au koz. to estimated measured and indicated resources from exploration activities, mainly from Kupol and Zone 1 and Zone 37 at Dvoinoye. At Kupol, the primary objective of 2018 drilling was to test the depth and north extensions of the Kupol main vein system. Drill intercepts continue to confirm high-grade narrow-vein mineralization extending northwards and at depths below the Kupol mine workings. As a result of continued exploration success at Kupol and engineering optimization work at Dvoinoye, scheduled mill production at Kupol has again been extended by one year to late 2023.
  • Chirano: Exploring the depth extensions of Akwaaba, Paboase and Tano increased the site’s estimated mineral reserves by 94 Au koz. in 2018. As well, 142 Au koz. was added to measured and  indicated resource estimates and 179 Au koz. to inferred resource estimates. These additions have extended the Chirano mine life by one year to 2021. Exploration results have also shown the increased depth potential at Chirano.
  • Bald Mountain: The drill extensions at Redbird south extensions, Saga, and Winrock added 260 Au koz. to inferred mineral resource estimates at Bald Mountain. During the year, Kinross acquired the remaining 50% portion of the joint venture (JV) area within the Bald Mountain land package that it did not already own and the Company has outlined a series of generative targets, which are planned to be explored in 2019.

For 2019, the brownfields exploration program will follow up on the mineralized targets identified in 2018 with infill drilling and geologic modelling with the goal of converting the mineralization to estimated measured, indicated and inferred mineral resources.

  • Kupol-Dvoinoye: Kinross is expected to spend up to $20 million in 2019 to continue exploring and delineating high potential targets at Kupol and Dvoinoye. At Kupol, the program will continue to explore for depth extensions of the Kupol Central deeps and hanging wall trends. A portion of the budget has also been allocated for exploration of brownfield targets around the mine site. The program at Dvoinoye involves infilling intercepts which were identified in 2018 at the Zone 37 West target. A significant number of brownfield targets are planned to be drill tested during 2019.
  • Chirano: Following successful results in 2018, the Company is increasing exploration spending at Chirano to $7 million to drill depth extensions at Akwaaba and Paboase. The program also includes drifting from the Paboase underground to the Tano underground, where economic gold mineralization was encountered at depth in 2018.
  • Bald Mountain: Kinross is increasing exploration spending to $12 million at Bald Mountain in 2019. This is expected to be allocated to infill drill programs with the goal of upgrading estimated mineral resources to mineral reserves at Top, Redbird, Saga, Winrock and Yelland. Exploration will also focus on other target areas for mineral resource growth, including targets within the Central Zone (which was previously the JV area).
  • Fort Knox: Kinross will continue to explore the western extension of Gilmore in 2019 as well as continue exploration at the East Wall target. Brownfield targets around the Fort Knox site will also be tested in 2019, including Gil-Sourdough, a satellite deposit from the main Fort Knox deposit.

A more detailed summary of the 2018 highlights is presented below. Additional details may be found in the Appendices. “Appendix A” provides illustrations and captions, and “Appendix B” provides complete drilling results and drill hole location data and accompanying explanatory notes corresponding to the values below.

Appendix A: https://www.kinross.com/files/doc_news/2019/02/Appendix-A_Q4-YE-2018-ExplorationFigures_February-13.pdf  
Appendix B:  https://www.kinross.com/files/doc_news/2019/02/Appendix-B_Q4-YE-2018-Exploration-Drill-Results_February-13.xlsx

Kupol - Dvoinoye

Exploration during 2018 at Kupol and Dvoinoye successfully added 258 Au koz. to estimated mineral reserves and 40 Au koz. to estimated measured and indicated resources, mainly from Kupol and Zone 1 and Zone 37 at Dvoinoye.

A total of approximately 98,000 metres was drilled at Kupol depth extension at the Central Zone, the Northeast Extension and at the Kupol hanging wall target areas. (See Appendix A: Figure 1) During the early part of the year, a review of the 2017 interpreted mineralized wireframes identified a potential down plunge extension, where the Premolar fault separates the northern end of the North Upper domain from the southern end of the North Extension domain. Follow-up drilling resulted in the confirmation of mineralization within the down plunged zone. The Company will continue to focus on infill and depth extension in 2019. (See Appendix A: Figure 2)

The Kupol Deeps (an area stretching from Big Bend to the southern limit of North Upper – see Appendix A: Figure 3) drilling encountered a series of good intercepts that generated most of the inferred resource additions at Kupol. Mineralization, though narrow, is open at depth for which the Company will continue to drill test in 2019. The Northeast Deeps is the direct extension of the Kupol Main vein outside the Kupol mining lease. Drilling in 2018 intersected narrow quartz-carbonate veinlets and breccia fill on the main structure with some high grades.

Results from 2018 drilling indicate that the hanging wall can be traced along the length of the Kupol main vein, however, drilling was widely spaced along the strike and it was challenging to trace the narrow but high-grade veins over appreciable strike length. The Company plans to drill from the underground through current Kupol workings to better target the high-grade veins in 2019.

During the latter part of 2018, drilling provided critical stratigraphic information, which resulted in a new interpretation of the entire Kupol far hanging wall (East Wedge) vein, now seen to consist of a 0.5 km trend, directly east of Kupol. Some of the holes confirmed northward continuation of the favourable Moroshka andesite with altered zones around narrow low-grade quartz veins. At this stage, this interpretation is mostly based on a few holes that will be tested in 2019. (See Appendix A: Figure 1) In addition to the hanging wall, the Kupol Footwall remains largely untested and will be a focus in 2019.

Kupol Mining Licence and Kupol West Property significant down-hole drill intercepts

Hole ID From (m) To (m) Interval (m) True Width
(m)
Au (g/t) Ag (g/t)
Central Strike Deeps
KP18-1406 302 309 7 4 21.80 65.34
KP18-1389 439 445 6 3 12.74 83.95
KP18-1413 412 420 8 4 8.27 120.15
KP18-1438 29 37 8 6 6.23 84.39
KP18-1357 622 627 5 3 8.10 63.94
KP18-1408 494 503 10 5 4.33 25.73
KP18-1371 699 727 27 11 1.29 19.43
KP18-1367 573 574 1 1 26.91 12.06
South Zone
KP18-1465 354 361 7 4 9.75 153.14
KP18-1465 365 378 12 8 3.42 59.32
Northeast Extension
KP18-1429 405 408 2 1 96.89 1217.81
KP18-1393 485 486 1 1 121.90 1773.70
KP18-1439 455 456 1 1 83.77 1362.66
KP18-1387 473 474 1 1 24.34 733.95

At Dvoinoye, a total of approximately 43,000 metres of drilling was achieved during the year, which is double the original plan at the beginning of the year as initial results were very positive. Drilling at Zone 37 West constitutes most of the total drilling at Dvoinoye. The area is west of the Dvoinoye main underground mine. Drilling provided encouraging intercepts that the Company then followed up in order to test the high grades. The veins at Zone 37 West intersected to date point to a series of short strike and parallel domains that are planned for additional testing during 2019. In addition to Zone 37 West, Zone 1, and the September area were also tested in 2018 (see Appendix A: Figure 4).

Dvoinoye significant down-hole drill intercepts

Hole ID From (m) To (m) Interval (m) True Width
(m)
Au (g/t) Ag (g/t)
September Northeast
SP18-026 186 192 6 2 33.90 19.53
SP18-018 32 33 1 1 376.18 192.42
SP18-011 85 87 3 1 37.73 27.03
SP18-018 34 36 2 2 34.59 67.89
SP18-023 71 85 14 5 4.33 4.90
Zone 1 Southwest
Z1-18-004 60 61 1 1 65.18 21.00
Z1-18-014 77 80 3 1 16.79 5.94
Zone 37 West
VO18-042 337 341 4 3 130.10 109.34
VO18-018 345 351 6 2 45.41 57.96
VO18-042 348 352 5 3 6.81 23.16
VO18-031 331 335 4 2 6.45 28.17

Kinross is expected to increase exploration spending in Russia to approximately $20 million in 2019 to continue exploring high potential targets in the Kupol and Dvoinoye land packages. For full drill results and explanatory notes, see Appendix B.

Kupol - Dvoinoye Mineral Reserve and Mineral Resource Estimates4
  2017
(Au koz)
Depletion
(Au koz)
Exploration &
Engineering

 (Au koz)
2018*
(Au koz)
Proven and Probable
Reserves
2,011 (466 ) 288 1,832
Measured and
Indicated Resources
323 -   39 362
Inferred Resources 151 -   368 519

*Totals may not fully add up due to rounding.

Chirano

At Chirano, the exploration focus continues to add incremental ounces to the mine life. In 2018, a total of approximately 34,000 metres of drilling was completed at Akwaaba, Paboase, Tano, Mamnao, and Obra. Most of the program focused on infilling the depth potential at Akwaaba and Paboase. In both cases, the results increased the estimated underground reserve leading to a one-year addition to Chirano’s estimated mine life. In total, 94 Au koz. was added to estimated mineral reserves, 142 Au koz. added to estimated measured and indicated mineral resources and 179 Au koz. was added to estimated inferred mineral resources from exploration activities in 2018.

Chirano  Mineral Reserve and Mineral Resource Estimates4
  2017
(Au koz)
Depletion
(Au koz)
Exploration &
Engineering

 (Au koz)
2018*
(Au koz)
Proven and Probable
Reserves
567 (205 ) 54 415
Measured and
Indicated Resources
746 -   19 765
Inferred Resources 152 -   173 325

*Totals may not fully add up due to rounding.

At Akwaaba, a previously untested hanging wall breccia was drilled, which has proven to be more continuous with depth. Further testing of the upper portions of this mineralized zone is planned for 2019. Within the main orebody, drilling in 2018 extended the indicated reserve base by 100 metres while mineralization remains open at depth. At Paboase, drilling extended the reserve base by 100 metres and recent grade-control close-spaced drilling is returning assay grades higher than the exploration hole results. Though the width of the orebody is becoming narrow, it is interpreted as a feature (pinch and swell) with this type of deposit, and as seen at the upper elevations, a thicker width is expected to be encountered. Mineralization is open at depth.

During 2018, a study was conducted to assess the possibility of underground mining at Tano via the Paboase underground infrastructure. A number of holes were planned to infill a portion of the Tano orebody to confirm if the grades used in the study could be achieved. The results were encouraging, and a drift from Paboase to Tano is being constructed to allow for underground drilling. Drift construction is expected to be completed by mid-2019. The Mamnao orebody was drilled to close the gap between the south and central pit to assess if there is enough potential between the two pits. The results received were encouraging and the Company is planning to mine Mamnao and Akoti South by open pit methods. During the latter part of 2018, three holes were drilled at Obra to investigate the potential to commence a study for the viability of mining Obra by underground mining methods. The holes returned encouraging results and a model will be updated in 2019 for the study. A budget of $7 million has been allocated to Chirano for 2019 to drill the depth extensions of Akwaaba, Paboase, and Tano. (See Appendix A: Figure 5)

Chirano significant down-hole drill intercepts

Hole ID From (m) To (m) Interval (m) True Width (m) Au (g/t)
Akwaaba
CHDD2619UG 145 164 18 17 9.58
CHDD2598UG 114 142 28 24 4.26
CHDD2693UG 208 232 24 23 4.43
CHDD2669UG 161 193 32 25 3.60
CHDD2603UG 129 169 40 30 2.54
CHDD2629UG 165 173 8 7 12.29
Mamnao
CHRC2685 82 100 18 12 3.86
CHRC2667 63 84 21 20 2.85
CHRC2662 144 156 12 9 3.51
CHRC2668 100 115 15 11 2.12
CHRC2688 159 170 11 7 2.82
CHRC2678 141 152 11 9 2.40
Obra
CHRC2692D 414 492 78 56 2.79
CHRC2665D 474 546 72 53 2.60
CHRC2677D 547 606 59 51 2.26
Paboase
CHDD2560UG 275 296 21 13 6.24
CHDD2564UG 200 212 12 9 10.60
CHDD2566UG 231 254 23 15 4.71
CHDD2570UG 252 263 11 8 5.75
CHDD2571UG 325 342 16 8 3.73
CHDD2562UG 254 261 7 7 8.51
Suraw
CHRC2577DW1 375 385 10 8 4.03
Tano
CHRC2615DW1 504 524 20 16 4.05
CHRC2632D 472 490 18 15 3.24
CHRC2617D 519 536 17 11 3.44
CHRC2615D 531 547 16 11 2.87
CHRC2569D 583 601 18 12 2.41
CHRC2639DW1 542 557 15 10 2.63

For full drill results and explanatory notes, see Appendix B.

Bald Mountain

2018 exploration at Bald Mountain focused on near mine opportunities expected to increase the resource base as well as providing a direct impact on operational planning and sequencing of the numerous pits within the large land package (see Appendix A: Figure 6).

A total of $12 million was spent on the 2018 Bald Mountain exploration program, for which a total of approximately 54,000 metres of drilling was achieved at Top, Redbird, Saga, Winrock, and generative targets. With the acquisition of the remaining 50% of the JV area, Kinross will focus on exploring for more proximal intrusion-related ores with grades greater than 1 g/t. Approximately 260 Au koz. was added to inferred mineral resource estimates at Bald Mountain from exploration in 2018.

At Top, drilling confirmed the continuity of high-grade mineralization along the Skarn fault in the northern section of Top 2 over significant thickness, as well as in the hanging wall area along the F-fault. The geologic model, resource estimation and engineering are expected to be completed in Q1 2019 and are expected to optimize the mine sequencing plan for Top (see Appendix A: Figure 7). At Redbird, drilling at the southern end of the orebody confirmed a shallow high-grade mineralization. In addition, extension drilling has identified an encouraging northwest trend structure that will be further explored in 2019. At Winrock, drilling was aimed at growing the orebody to the south of the historic resource. Results were encouraging, with additional drilling planned for 2019. There were other targets such as ZZ Top in the North Mine area, east of the Top 1 pit, Yelland in the South Mine area, as well as Stageline and Rattlesnake in the Central Zone (previously JV area) that were also drilled. Significant results were achieved from Stageline and ZZ Top. Targets generated in 2017 were further refined in 2018, and will be part of the follow-up programs planned for the budgeted $12 million 2019 exploration program.

Bald Mountain significant down-hole drill intercepts

Hole ID From (m) To (m) Interval (m) Au (g/t)
Rat
R18-001 101 113 12 25.24
R18-001 113 155 43 0.72
Redbird
RB18-019 219 262 43 4.58
RBD18-028 321 365 44 2.89
RB18-014 258 340 82 1.23
RB18-012 131 139 8 8.96
RB18-037 355 392 37 1.70
RB18-009 166 210 44 1.39
Saga
SGD18-026 55 272 216 0.74
SGW18-001 55 154 99 0.55
PZ18-017 123 210 87 0.55
SGW18-005 181 250 69 0.64
SG18-011 84 123 40 0.99
SG18-017 137 169 32 0.98
Top
T18-012A 337 477 140 0.92
TD18-003 223 286 62 1.59
TD18-002 142 260 118 0.52
TD18-007 354 391 37 1.60
T18-015A 463 524 61 0.71
TD18-009 418 433 15 2.27
Winrock
WR18-003 117 125 8 7.72
WR18-028 107 122 15 3.08
WR18-007 139 168 29 1.29
WR18-036 18 30 12 2.47
WRD18-012 34 43 9 3.09
Yelland
YL18-014 270 280 11 5.05
YL18-009 247 264 17 3.12
YL18-009 264 291 27 1.20
YL18-001 229 251 23 1.27

For full drill results and explanatory notes, see Appendix B.

Bald Mountain Mineral Reserve and Mineral Resource Estimates4
  2017
(Au koz)
Depletion
(Au koz)
Exploration & Engineering
 (Au koz)
2018*
(Au koz)
Proven and Probable Reserves 1,698 (334 ) (17 ) 1,347
Measured and Indicated Resources 3,349 -   (55 ) 3,294
Inferred Resources 597 -   248   845

*Totals may not fully add up due to rounding.

Fort Knox

The Company continues to explore for mineralization extensions of the Fort Knox orebody (see Appendix A: Figure 8). A total of approximately 11,000 metres of drilling was completed during 2018. At the East Wall, drilling has shown upside in both grade and depth at the contact along the southern flank. However, results were generally neutral as new drilling also indicated that the granite is deeper and lower-grade at the northern edge. 

Exploration also selected samples for assay from capitalized dewatering and geotechnical drilling that was ongoing throughout 2018. These holes were primarily along the western edge of Fort Knox. Geological and assay data from these drill holes further refined the shape of the granite-schist contact and extended ore-shears to the west of the current reserve pit.

Re-logging and reinterpretation of the Gil-Sourdough deposit was carried out during the year in preparation for a 2019 drilling program. Re-logging identified a northeast striking, steeply dipping fault system in the heart of the North Gil ore body which the Company plans to test in 2019.

Drilling will continue in 2019 to probe mineralization at the East Wall with a goal of converting and upgrading resources, as well as exploring the Gil-Sourdough gold deposit.

Fort Knox significant down-hole drill intercepts

Hole ID From (m) To (m) Interval (m) Au (g/t)
East Wall
FFC18-1768 399 433 34 2.19
FFC18-1742 311 344 34 0.76
Phase 10
PL18-462 175 232 56 1.60
PL18-459 233 305 72 0.35

For full drill results and explanatory notes, see Appendix B.

Fort Knox Mineral Reserve and Mineral Resource Estimates4
  2017
(Au koz)
Depletion
(Au koz)
Exploration & Engineering
 (Au koz)
2018*
(Au koz)
Proven and Probable Reserves 1,245 (250 ) 2,041   3,036
Measured and Indicated Resources 3,229 -   (1,432 ) 1,797
Inferred Resources 689 (5 ) 125   808

*Totals may not fully add up due to rounding.

Round Mountain

A total of approximately 5,000 metres of drilling was completed at Phase S (south pit layback) and at Phase V (north pit layback). Re-logging of the oxidation boundaries at Phase S was also carried out, resulting in the addition of 53 Au koz. to estimated mineral reserves. The re-logging also improved the geological understanding of Phase W and X (previously termed as W-2).

Round Mountain significant down-hole drill intercepts

Hole ID From (m) To (m) Interval (m) Au (g/t)
South Layback
P-4360 338 364 26 1.53
Phase V
P-4372 114 139 24 0.79
P-4376 90 117 27 0.60
P-4369 126 149 23 0.53

For full drill results and explanatory notes, see Appendix B.


Round Mountain Mineral Reserve and Mineral Resource Estimates4
  2017
(Au koz)
Depletion
(Au koz)
Exploration & Engineering
 (Au koz)
2018*
(Au koz)
Proven and Probable Reserves 2,884 (329 ) 113   2,668
Measured and Indicated Resources 2,393 (51 ) (61 ) 2,281
Inferred Resources 2,115 (10 ) (47 ) 2,058

*Totals may not fully add up due to rounding.

Curlew Basin Project (Kettle River)

The 2018 program was re-focused to drill targets within and around the Curlew district and Kettle area from the Curlew Basin due to increased mine rehabilitation requirements. A total of approximately 9,000 metres were drilled in 2018. Drilling at the Curlew district (outside of the Curlew Basin Project) has assisted in reinterpretation of the geologic and hydrothermal characteristics of the area drilled. Breccias intersected in some of the holes are consistent with the mineralisation found at Kettle. At the Basin Edge target, drilling intersected veining, alteration, and magnetic susceptibility indicating an epithermal signature. The Company plans to test these district interpretations in 2019.

Tasiast

The Tasiast exploration program focused on the Tasiast mining lease area, including the Gap between West Branch South and the northern edge of the Tasiast Sud license, as well as Piment and the North Mine area (north of Prolongation). During the year, the Company re-allocated part of Tasiast’s budget to Chirano and Bald Mountain when the Tasiast Sud program was put on hold.

Drilling at the Gap highlighted erratic zones of anomalous mineralization along the main Tasiast trend to the south with a general shallow plunge to the south. The drilling spacing along strike is too wide for a meaningful geologic conclusion to be made. The depth extension of the Piment orebody was drilled to test the high-grade shoot beneath Piment pit to assess if it would be suitable for an underground mining study. Results received continue to show the presence of a shallow angle shoot system. The North Mine area drilling resulted in outlining some resource addition from C68 Central.

Tasiast significant down-hole drill intercepts

Hole ID From (m) To (m) Interval (m) True Width
(m)
Au (g/t)
C6.8
TA16758RC 87 94 7 6 7.38
TA16759RC 39 63 24 20 2.09
TA16764RC  55  80 25  20 1.47
TA16763RC 13 28 15 12 2.28
TA16763RC  102  116 14  11 2.34
C6.9
TA16672RC 20 38 18 16 2.77
TA16668RC 10 40 30 26 1.30
Piment Deeps
TA15040RC 140 161 21 19 4.77
TA14988RD 381 394 13 12 7.57
TA15035RC 144 179 35 34 2.58
TA14986ARD 358 367 9 8 6.31
TA15037RC 190 231 41 39 0.98
West Branch South
TA15999RC 274 280 6 5 7.82
TA15991RC 240 250 10 9 4.30
TA15990RC 112 126 14 12 2.11
TA15065RC 30 46 16 14 1.03

For full drill results and explanatory notes, see Appendix B.

Greenfields exploration update

While brownfields exploration remains Kinross’ core exploration focus, the Company also continues to pursue greenfields opportunities. In 2018, Kinross focused on targets in Nevada, Alaska, the Abitibi region in Quebec and Ontario, Manitoba, areas of Eastern Russia, and northern Finland’s greenstone belts.

Kinross also pursues greenfields opportunities and high margin types of deposits through strategic investments and partnerships with high quality junior exploration companies. The Company believes fostering good relationships with management teams that have a successful track record of discovery, and keeping a solid pipeline of quality targets that demonstrate scope and scale for significant discovery, are key components of the greenfields exploration strategy.

In North America, Kinross explored 11 projects in both JV and 100%-owned Kinross claims. Kinross and its JV partners undertook geochemical sampling, ground and airborne geophysical surveys and drilling programs. Indications of mineralization and prospective targets were generated at several projects, and first and second phase drilling programs were undertaken in 2018. The Company and its JV partners have also identified new opportunities in Nevada, Quebec, Ontario, Manitoba, the Yukon, and Finland, and are assessing potential drilling programs at these projects for 2019.

Conference call details

In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, February 14, 2019 at 8 a.m. ET to discuss the results, followed by a question-and-answer session. To access the call, please dial:

Canada & US toll-free – (877) 201-0168; Conference ID: 4097875
Outside of Canada & US – +1 (647) 788-4901; Conference ID: 4097875

Replay (available up to 14 days after the call):

Canada & US toll-free – (800) 585-8367; Conference ID: 4097875
Outside of Canada & US – +1 (416) 621-4642; Conference ID: 4097875

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’ 2018 year-end Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2018 year-end Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished with the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.

About Kinross Gold Corporation

Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (KGC).

Media Contact
Louie Diaz
Senior 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

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
  2018 2017   2018 2017   2018 2017   2018 2017
                       
Fort Knox  52,194  95,182    51,889  94,724   $  49.1 $  58.7   $  946 $  620
Round Mountain  96,715  98,249    91,769  104,198    70.0  81.6    763  783
Bald Mountain  47,211  105,080    68,288  99,363    46.9  47.0    687  473
Kettle River - Buckhorn  -   3,906    -   3,949    -   0.4    -  101
Paracatu  145,634  66,023    152,395  62,843    116.6  59.8    765  952
Maricunga  7,226  19,039    19,399  11,201    16.1  6.9    830  616
Americas Total  348,980  387,479    383,740  376,278    298.7  254.4    778  676
                       
Kupol  123,478  145,301    124,408  141,518    68.7  73.8    552  521
Russia Total  123,478  145,301    124,408  141,518    68.7  73.8    552  521
                       
Tasiast  91,548  60,274    83,780  54,993    69.5  43.0    830  782
Chirano (100%)  51,273  66,285    49,173  61,973    39.5  43.3    803  699
West Africa Total  142,821  126,559    132,953  116,966    109.0  86.3    820  738
                       
Operations Total  615,279  659,339    641,101  634,762    476.4  414.5    743  653
Less Chirano non-controlling
interest (10%)
 (5,127)  (6,629)    (4,918)  (6,197)    (4.0)  (4.3)      
Attributable Total  610,152  652,710    636,183  628,565   $  472.4 $  410.2   $  743 $  653


                       
Years ended December 31,   Gold equivalent ounces              
  Produced   Sold   Production cost of sales ($millions)   Production cost of sales/equivalent ounce sold
  2018 2017   2018 2017   2018 2017   2018 2017
                       
Fort Knox  255,569  381,115    256,037  381,779   $  214.4 $  239.9   $  837 $  628
Round Mountain  385,601  436,932    381,478  438,051    277.6  302.5    728  691
Bald Mountain  284,646  282,715    318,091  262,916    174.1  168.9    547  642
Kettle River - Buckhorn  -   76,570    927  77,087    -   36.8    -  477
Paracatu  521,575  359,959    523,417  356,251    430.5  310.2    822  871
Maricunga  60,066  91,127    89,959  41,316    65.7  19.9    730  482
Americas Total  1,507,457  1,628,418    1,569,909  1,557,400    1,162.3  1,078.2    740  692
                       
Kupol  489,947  580,451    494,835  577,007    288.2  300.9    582  521
Russia Total  489,947  580,451    494,835  577,007    288.2  300.9    582  521
                       
Tasiast  250,965  243,240    243,241  236,256    237.3  178.2    976  754
Chirano (100%)  226,699  246,027    224,927  251,212    172.7  200.1    768  797
West Africa Total  477,664  489,267    468,168  487,468    410.0  378.3    876  776
                       
Operations Total  2,475,068  2,698,136    2,532,912  2,621,875    1,860.5  1,757.4    735  670
Less Chirano non-controlling
interest (10%)
 (22,670)  (24,603)    (22,493)  (25,121)    (17.3)  (20.0)      
Attributable Total  2,452,398  2,673,533    2,510,419  2,596,754   $  1,843.2 $  1,737.4   $  734 $  669

Consolidated balance sheets

(expressed in millions of United States dollars, except share amounts)        
         
    As at
    December 31,   December 31,
    2018   2017
         
Assets        
Current assets        
Cash and cash equivalents   $  349.0   $  1,025.8
Restricted cash    12.7    12.1
Accounts receivable and other assets    101.4    91.3
Current income tax recoverable    79.0    43.9
Inventories    1,052.0    1,094.3
Unrealized fair value of derivative assets    3.8    17.0
     1,597.9    2,284.4
Non-current assets        
Property, plant and equipment    5,519.1    4,887.2
Goodwill    162.7    162.7
Long-term investments    155.9    188.0
Investments in joint ventures and associate    18.3    23.7
Unrealized fair value of derivative assets    0.8    3.9
Other long-term assets    564.1    574.0
Deferred tax assets    45.0    33.3
Total assets   $  8,063.8   $  8,157.2
         
Liabilities        
Current liabilities        
Accounts payable and accrued liabilities   $  465.9   $  482.6
Current income tax payable    21.7    35.1
Current portion of provisions    72.6    66.5
Current portion of unrealized fair value of derivative liabilities    22.2    1.1
Deferred payment obligation    30.0    - 
     612.4    585.3
  Non-current liabilities        
  Long-term debt    1,735.0    1,732.6
  Provisions    816.4    830.5
  Unrealized fair value of derivative liabilities    9.6    0.2
  Other long-term liabilities    97.9    133.8
  Deferred tax liabilities    265.2    255.6
Total liabilities    3,536.5    3,538.0
         
Equity        
  Common shareholders' equity        
Common share capital   $  14,913.4   $  14,902.5
Contributed surplus    239.8    240.7
Accumulated deficit    (10,548.0)    (10,580.7)
Accumulated other comprehensive income (loss)    (98.5)    21.1
Total common shareholders' equity    4,506.7    4,583.6
  Non-controlling interest    20.6    35.6
Total equity    4,527.3    4,619.2
Total liabilities and equity   $  8,063.8   $  8,157.2
         
Common shares        
Authorized   Unlimited   Unlimited
Issued and outstanding   1,250,228,821    1,247,003,940
         
         
         

Consolidated statements of operations

(expressed in millions of United States dollars, except share and per share amounts)        
    Years ended
    December 31,   December 31,
    2018   2017
         
Revenue        
Metal sales   $  3,212.6   $  3,303.0
         
Cost of sales        
Production cost of sales    1,860.5    1,757.4
Depreciation, depletion and amortization    772.4    819.4
Impairment, net of reversals    -     21.5
Total cost of sales    2,632.9    2,598.3
Gross profit    579.7    704.7
Other operating expense    137.0    129.6
Exploration and business development    109.2    106.0
General and administrative    133.0    132.6
Operating earnings    200.5    336.5
Other income (expense) - net    3.2    188.1
Equity in losses of joint ventures and associate    (0.3)    (1.3)
Finance income    11.0    13.5
Finance expense    (101.2)    (117.8)
Earnings before tax    113.2    419.0
Income tax (expense) recovery - net    (138.8)    23.2
Net (loss) earnings   $  (25.6)   $  442.2
Net (loss) earnings attributable to:        
  Non-controlling interest   $  (2.0)   $  (3.2)
  Common shareholders   $  (23.6)   $  445.4
(Loss) earnings per share attributable to common shareholders        
         
Basic   $  (0.02)   $  0.36
Diluted   $  (0.02)   $  0.35
         
Weighted average number of common shares outstanding
(millions)
       
Basic    1,249.5    1,246.6
Diluted    1,249.5    1,257.0
         


Consolidated statements of cash flows

         
(expressed in millions of United States dollars)        
         
         
    Years ended
    December 31,   December 31,
    2018   2017
Net inflow (outflow) of cash related to the following activities:        
         
Operating:        
Net (loss) earnings   $  (25.6)   $  442.2
Adjustments to reconcile net (loss) earnings to net cash provided from
operating activities:
       
Depreciation, depletion and amortization    772.4    819.4
Gain on disposition of associate and other interests - net    (2.1)    (55.2)
Impairment, net of reversals    -     (75.5)
Equity in losses of joint ventures and associate    0.3    1.3
Share-based compensation expense    14.6    13.6
Finance expense    101.2    117.8
Deferred tax expense (recovery)    8.9    (76.4)
Foreign exchange losses (gains) and other    12.5    (31.9)
Reclamation (recovery) expense    (8.0)    11.4
Changes in operating assets and liabilities:        
Accounts receivable and other assets    (22.7)    108.6
Inventories    (5.7)    (86.7)
Accounts payable and accrued liabilities    69.8    (48.5)
Cash flow provided from operating activities    915.6    1,140.1
Income taxes paid    (126.9)    (188.5)
Net cash flow provided from operating activities    788.7    951.6
         
Investing:        
Additions to property, plant and equipment    (1,043.4)    (897.6)
Acquisitions    (304.2)    - 
Net additions to long-term investments and other assets    (52.9)    (73.8)
Net proceeds from the sale of property, plant and equipment    6.4    8.5
Net proceeds from disposition of associate and other interests    -      269.6
Increase in restricted cash    (0.6)    (0.5)
Interest received and other    7.7    6.6
Net cash flow used in investing activities    (1,387.0)    (687.2)
Financing:        
Net proceeds from issuance/drawdown of debt    80.0    494.7
Repayment of debt    (80.0)    (500.0)
Interest paid    (57.9)    (62.9)
Issuance of common shares on exercise of options    0.5    0.8
Dividend paid to non-controlling interest    (13.0)    - 
Other    (2.2)    (1.6)
Net cash flow used in financing activities    (72.6)    (69.0)
Effect of exchange rate changes on cash and cash equivalents    (5.9)    3.4
(Decrease) increase in cash and cash equivalents    (676.8)    198.8
Cash and cash equivalents, beginning of period    1,025.8    827.0
Cash and cash equivalents, end of period   $  349.0   $  1,025.8
         


...
Operating Summary                            
  Mine Period Ownership Tonnes Ore Mined (1) Ore
Processed (Milled) (1)
Ore
Processed (Heap Leach) (1)
Grade (Mill) Grade (Heap Leach) Recovery (2) Gold Eq Production (5) Gold Eq Sales (5) Production cost of sales Production cost of sales/oz Cap Ex (7) DD&A
      (%) ('000 tonnes) ('000 tonnes) ('000 tonnes) (g/t) (g/t) (%) (ounces) (ounces) ($ millions) ($/ounce) ($ millions) ($ millions)
Americas Fort Knox Q4 2018 100  5,645  2,856  2,927  0.44  0.19 83%  52,194  51,889  $49.1  $946  $30.5  $21.9
Q3 2018 100  5,306  2,718  3,262  0.42  0.19 81%  51,984  52,197  53.0  $1,015  32.6  26.0
Q2 2018 100  4,620  3,106  4,279  0.44  0.18 80%  71,463  72,340  70.1  $969  16.8  38.8
Q1 2018 100  9,075  3,110  5,839  0.70  0.20 82%  79,928  79,611  42.2  $530  9.6  23.0
Q4 2017 100  8,276  3,239  4,464  0.96  0.23 82%  95,182  94,724  58.7  $620  27.3  23.6
Round Mountain Q4 2018 100  4,386  987  4,172  1.38  0.43 83%  96,715  91,769  $70.0  $763  $68.0  $9.6
Q3 2018 100  5,023  980  4,410  1.43  0.42 82%  94,153  96,496  69.0  $715  47.1  12.7
Q2 2018 100  4,721  853  4,361  1.44  0.37 86%  97,650  95,432  72.0  $754  43.6  13.9
Q1 2018 100  7,893  832  8,175  1.62  0.28 86%  97,083  97,781  66.6  $681  26.4  14.8
Q4 2017 100  5,429  864  4,201  1.46  0.46 84%  98,249  104,198  81.6  $783  66.2  15.3
Bald Mountain (8) Q4 2018 100  4,929  -   5,406  -   0.47 nm  47,211  68,288  $46.9