Delivered strong quarterly performance and on track to meet production and cost guidance
Paracatu and Tasiast achieved record quarterly production and significantly lower costs
TORONTO, May 07, 2019 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the first-quarter ended March 31, 2019.
(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 18 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
2019 first-quarter highlights:
|Q1 2019 results||2019 guidance |
|Gold equivalent production1 |
|Production cost of sales2 |
($ per Au eq. oz.)
|All-in sustaining cost2 |
($ per Au eq. oz.)
|Capital expenditures||$264.8 million||$1,050 million|
- Company on track to meet 2019 annual guidance for production, production cost of sales per ounce, all-in sustaining cost per ounce, and capital expenditures.
- Operating cash flow of $251.6 million and adjusted operating cash flow2 of $230.8 million.
- Reported net earnings3 of $64.7 million, or $0.05 per share, and adjusted net earnings2,3 of $83.3 million, or $0.07 per share.
- Cash and cash equivalents of $406.9 million and total liquidity of approximately $1.8 billion at March 31, 2019, with no debt maturities until 2021.
Operations and organic development projects highlights:
- Paracatu delivered record quarterly production and its lowest costs since 2010 mainly due to improved grade control, mill efficiencies, high recoveries, and lower power costs.
- Tasiast achieved record quarterly production and its lowest costs since 2011, as the mine continued its strong performance since the completion of the Phase One project.
- The Round Mountain Phase W project is nearing completion, with Phase W ore now being placed on the newly completed heap leach pad.
- The Bald Mountain Vantage Complex project is well-advanced, with commissioning of processing facilities now commenced as scheduled. Ore is now being placed on the new heap leach pad.
- The Fort Knox Gilmore project is on schedule to start stripping in Q3 2019, with initial ore expected in early 2020. Heap leach construction activities are proceeding well.
- The completed Lobo-Marte project scoping study shows encouraging results for a potential return to long-term production in Chile, with Lobo-Marte production commencing after the La Coipa Restart project's mine life, where a feasibility study is on schedule to be completed in Q3 2019.
- The Company expects to complete the evaluation of low-cost alternative approaches to increase throughput at Tasiast in the second half of 2019.
J. Paul Rollinson, President and CEO, made the following comments in relation to 2019 first-quarter results:
“We had an excellent first quarter built on strong operational performance and disciplined cost management. We continue to maintain our financial strength and solid liquidity and are once again well positioned to deliver on our annual production and cost guidance for the year.
“Our three largest operations – Paracatu, Tasiast and Kupol – all exceeded expectations. At Paracatu, improved grade control, mill efficiencies, high recoveries and lower power costs resulted in record quarterly production and the lowest production costs since 2010. Tasiast set another production record in the quarter and costs continued to decline. Kupol continued its consistent high performance and delivered yet another strong quarter.
“During the quarter we advanced work on our development pipeline. The Nevada projects at Round Mountain Phase W and Bald Mountain Vantage Complex are nearing completion and entering their commissioning phases. The Fort Knox Gilmore project is on schedule and heap leach construction activities are ramping up. We completed the scoping study for Lobo-Marte and the results highlight the potential for long-term production in Chile in conjunction with the La Coipa Restart project. At Tasiast, we are continuing to evaluate low-cost alternative approaches to increase throughput, which we are targeting for completion in the second half of 2019.”
Summary of financial and operating results
|Three months ended|
|(in millions, except ounces, per share amounts, and per ounce amounts)||2019||2018|
|Total gold equivalent ounces(1)|
|Attributable gold equivalent ounces(1)|
|Production cost of sales||$||411.7||$||444.6|
|Depreciation, depletion and amortization||$||164.1||$||193.1|
|Net earnings attributable to common shareholders||$||64.7||$||106.1|
|Basic earnings per share attributable to common shareholders||$||0.05||$||0.09|
|Diluted earnings per share attributable to common shareholders||$||0.05||$||0.08|
|Adjusted net earnings attributable to common shareholders(2)||$||83.3||$||125.2|
|Adjusted net earnings per share(2)||$||0.07||$||0.10|
|Net cash flow provided from operating activities||$||251.6||$||293.5|
|Adjusted operating cash flow(2)||$||230.8||$||363.7|
|Average realized gold price per ounce(2)||$||1,304||$||1,330|
|Consolidated production cost of sales per equivalent ounce(3) sold(2)||$||683||$||659|
|Attributable(1) production cost of sales per equivalent ounce(3) sold(2)||$||682||$||658|
|Attributable(1) production cost of sales per ounce sold on a by-product basis(2)||$||668||$||644|
|Attributable(1) all-in sustaining cost per ounce sold on a by-product basis(2)||$||917||$||835|
|Attributable(1) all-in sustaining cost per equivalent ounce(3) sold(2)||$||925||$||846|
|Attributable(1) all-in cost per ounce sold on a by-product basis(2)||$||1,239||$||1,124|
|Attributable(1) all-in cost per equivalent ounce(3) sold(2)||$||1,240||$||1,128|
- "Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
- The definitions and reconciliation of these non-GAAP financial measures is included on pages 13 to 17 of this news release.
- "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 first quarter of 2019 was 83.74:1 (first quarter of 2018 - 79.25:1)
The following operating and financial results are based on first quarter 2019 gold equivalent production. Production and cost measures are on an attributable basis:
Production: Kinross produced 606,031 attributable Au eq. oz. in the first quarter of 2019, compared with 653,937 Au eq. oz. in the first quarter of 2018.
Production cost of sales: Production cost of sales per Au eq. oz.2 was $682 for the first quarter of 2019, compared with $658 for the first quarter of 2018. Production cost of sales per Au oz. on a by-product basis2 was $668 in Q1 2019, compared with $644 in Q1 2018, based on Q1 2019 attributable gold sales of 584,427 ounces and attributable silver sales of 1,107,143 ounces.
All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold2 was $925 in Q1 2019, compared with $846 in Q1 2018. All-in sustaining cost per Au oz. sold on a by-product basis2 was $917 in Q1 2019, compared with $835 in Q1 2018.
Revenue: Revenue from metal sales was $786.2 million in the first quarter of 2019, compared with $897.2 million during the same period in 2018, mainly due to a decrease in gold equivalent ounces sold and a lower realized gold price.
Average realized gold price4: The average realized gold price in Q1 2019 was $1,304 per ounce, compared with $1,330 per ounce in Q1 2018.
Margins: Kinross’ attributable margin per Au eq. oz. sold5 was $622 for the first quarter of 2019, compared with the Q1 2018 margin of $672 per Au eq. oz. sold.
Operating cash flow: Adjusted operating cash flow2 was $230.8 million for the first quarter of 2019, compared with $363.7 million for Q1 2018, mainly as a result of a decrease in margins due to a lower realized gold price.
Net operating cash flow was $251.6 million for the first quarter of 2019, compared with $293.5 million for Q1 2018.
Earnings: Adjusted net earnings2,3 was $83.3 million, or $0.07 per share, for Q1 2019, compared with adjusted net earnings of $125.2 million, or $0.10 per share, for Q1 2018.
Reported net earnings3 was $64.7 million, or $0.05 per share, for Q1 2019, compared with earnings of $106.1 million, or $0.09 per share, in Q1 2018. The decrease was mainly as a result of lower operating earnings, partially offset by a decrease in income tax expense.
Capital expenditures: Capital expenditures was $264.8 million for Q1 2019, compared with $246.9 million for the same period last year, mainly due to increased spending at our U.S. projects offset by lower spending at Tasiast.
Mine-by-mine summaries for 2019 first-quarter operating results may be found on pages eight and 12 of this news release. Highlights include the following:
Paracatu continued its strong performance, achieving record quarterly production and the lowest cost of sales per ounce sold since Q4 2010. Recoveries remained strong during the quarter while improvements in grade control, higher mill efficiencies and increased mill throughput contributed to the record production. Cost of sales per ounce sold decreased year-over-year due to lower operating waste mined, favourable foreign exchange movements, and lower power costs. Cost of sales per ounce sold decreased quarter-over-quarter mainly due to lower maintenance costs, reduced contractor and tire costs, and lower power costs.
At Round Mountain, production was lower compared with Q4 2018 mainly due to lower mill throughput, as the site mined harder ore during the quarter, and fewer ounces produced from the heap leach pads. Lower mill grades also contributed to the lower production compared with Q1 2018. Cost of sales per ounce sold was lower compared with both periods mainly due to a decrease in operating waste mined.
At Bald Mountain, production was largely in line compared with the previous quarter and was lower compared with Q1 2018 mainly due to the timing of ounces recovered from the heap leach pads. Cost of sales per ounce sold was lower quarter-over-quarter mainly due to lower operating waste mined, and higher year-over-year as a result of a decrease in gold produced from the heap leach, partially offset by lower operating waste mined.
At Fort Knox, production decreased as anticipated, with Q1 2019 performance reflecting the mining and reduced milling strategy at the mine. The lower production versus the previous quarter and year was due to the combined effects of lower mill tonnages, the timing of heap leach recoveries, the continued effects of the pit wall slide in Q1 2018, and geotechnical instability as a result of higher than average rainfall in the second half of 2018. The lower production contributed to the higher cost of sales per ounce sold quarter-over-quarter and year-over year.
At Maricunga, gold production was better than expected, as rinsing of heap materials placed on the pads prior to the suspension of mining activities continued during the quarter. Cost of sales per ounce sold was lower compared with Q4 2018 and Q1 2018 mainly due to lower processing costs.
At Kupol and Dvoinoye, production increased quarter-over-quarter and year-over-year mainly due to higher grades at Kupol. Cost of sales per ounce sold increased compared with Q4 2018 largely due to higher operating waste mined and higher operating costs at Dvoinoye. Increased fuel costs also contributed to higher cost of sales versus Q1 2018, which was partially offset by lower labour costs and favourable foreign exchange movements.
Development at the Dvoinoye Zone 1 deposit is proceeding on schedule and production is expected to commence in mid-2019.
Tasiast achieved another record production quarter, and decreased cost of sales per ounce, as the site continues to benefit from the Phase One expansion. Excellent mill throughput rates, which exceeded expectations, and higher mill grades and recoveries, contributed to the increased production and lower cost per ounce. Decreases in contractor expense and maintenance supplies also contributed to the lower cost per ounce, which were at their lowest level since Q1 2011.
Chirano continued to perform well, with production mainly in line with Q4 2018. Production was lower versus Q1 2018 mainly due to an expected decrease in grades. Cost of sales per ounce sold was higher quarter-over-quarter and year-over-year mainly due to higher operating waste mined, as the site re-started open pit mining during the quarter.
Organic development projects and opportunities
Tasiast phased expansion
Tasiast continued its strong performance since the completion of the Phase One expansion. The mine achieved record quarterly production, and decreased cost of sales per ounce, as the new SAG mill continued to outperform, with throughput during Q1 2019 averaging approximately 15,000 tonnes per day (tpd), excluding the planned mill shutdown days for relining and inspection.
While the Phase Two expansion remains a viable option, Kinross is targeting the second half of 2019 to complete an evaluation of lower cost alternative approaches to increase throughput and preserve, and potentially enhance, the overall value proposition. This includes taking into account the strong Phase One performance and increasing throughput to 30,000 tpd. The evaluation also includes opportunities for an initial incremental step to increase throughput to above 20,000 tpd at a significantly lower capital cost through de-bottlenecking, continuous improvement and further optimization of the current processing circuit.
The Company is advancing the project financing for Tasiast, as due diligence activities and discussions regarding commercial terms continue to progress well. Kinross is seeking to obtain a total of $300 million in financing from Export Development Canada, the International Financial Corporation, and two commercial banks, and is targeting completion of the financing in the second half of 2019.
Round Mountain Phase W
The Round Mountain Phase W project is near completion, and continues to be on schedule and on budget. Construction of the new heap leach pad is now complete, with Phase W ore currently being placed on the pads. Commissioning of the processing circuit has commenced ahead of schedule, with initial solution being applied to the pads to prepare for completion of the vertical carbon-in-column (VCIC) plant, which is approximately 80% complete. Construction of mine infrastructure, including the truck shop, warehouse, wash bay and fuel island, is now 60% complete.
Bald Mountain Vantage Complex
The Bald Mountain Vantage Complex project is well-advanced, as the VCIC plant is approximately 70% complete, and the heap leach pad is approximately 90% complete, with ore being placed on completed portions of the pad. While unusually severe winter weather has challenged the project budget and schedule, commissioning of the processing circuit commenced as scheduled at the end of Q1 2019 with solution now being applied on the heap to build solution grade. The project cost forecast is now expected to be approximately $130 million, mainly due to weather challenges, higher than anticipated construction contract rates, and issues with the supply of some of the fabricated components. Construction of support infrastructure, including the truck shop, warehouse and wash bay, is 60% complete. An operations readiness task force has been established to ensure a smooth transition of the project to Operations.
Fort Knox Gilmore
The Fort Knox Gilmore project is progressing on schedule and on budget, with initial ore expected in early 2020. Procurement and contracting for 2019 heap construction activities are proceeding well, with the majority of contracts issued and awarded, and contractors mobilizing to site. Stripping is on schedule to commence in Q3 2019, with expansion of the dewatering system continuing on plan.
La Coipa Restart and Lobo-Marte
The Company continues to evaluate the potential for a return to long-term production in Chile, which includes the La Coipa Restart project followed by the Lobo-Marte project, one of the highest grade deposits in the Maricunga district, and located approximately 80 kilometres southeast of La Coipa.
The scoping study for Lobo-Marte has been completed and contemplates production commencing after the La Coipa project's mine life, along with a heap leach and SART (sulphidization, acidification, recycling and thickening) plant operation. Kinross has previously leveraged SART technology in the region with positive results.
Preliminary estimates for Lobo-Marte include a mine life that could extend more than 10 years, with total life of mine production of approximately 4.1 million Au oz. at a grade of 1.2 g/t. The initial estimate for capital is $750 million (+/- 20%), with an approximate three-year construction timeline after project approval. Lobo-Marte is now progressing to a pre-feasibility study (PFS) with permitting efforts also underway. The PFS is expected to be completed in mid-2020.
Kinross is on schedule to complete the La Coipa Restart feasibility study in Q3 2019. The La Coipa feasibility study and the Lobo-Marte PFS are expected to determine the degree to which resources such as personnel, water, energy and capital equipment can be shared and leveraged for synergies and efficiencies between the two potential projects.
Balance sheet and financial flexibility
As of March 31, 2019, Kinross had cash and cash equivalents of $406.9 million, compared with $349.0 million at December 31, 2018.
The Company also had available credit of $1,417.2 million, for total liquidity of approximately $1.8 billion, and no debt maturities until 2021.
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 18 of this news release.
Kinross expects to meet its production guidance of 2.5 million Au eq. oz. (+/- 5%) for the year. The Company also expects to be within its production cost of sales guidance of $730 per Au eq. oz. (+/- 5%) and all-in sustaining cost guidance of $995 per Au eq. oz. (+/-5%) in 2019.
The Company is on track to meet its 2019 capital expenditure forecast of approximately $1,050 million (+/-5%).
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast on Wednesday, May 8, 2019 at 7:45 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: 3886121
Outside of Canada & US – +1 (647) 788-4901; Conference ID: 3886121
Replay (available up to 14 days after the call):
Canada & US toll-free – (800) 585-8367; Conference ID: 3886121
Outside of Canada & US – +1 (416) 621-4642; Conference ID: 3886121
Kinross’ Annual and Special Meeting of Shareholders will also be held on Wednesday, May 8, 2019 at 10:00 a.m. ET at the Glenn Gould Studio, 250 Front Street West, Toronto, Ontario, Canada. A live audio webcast (listen-only mode) of the meeting will be available at www.kinross.com and will also be archived for later access.
This news release should be read in conjunction with Kinross’ 2019 first-quarter unaudited Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2019 first-quarter unaudited Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished to the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.
About Kinross Gold Corporation
Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (KGC).
Senior Director, Corporate Communications
Investor Relations Contact
Senior Vice-President, Investor Relations and Corporate Development
Review of operations
|Three months ended March 31,||Gold equivalent ounces|
|Produced||Sold||Production cost of |
|Production cost of |
sales/equivalent ounce sold
|Kettle River - Buckhorn||-||-||-||927||-||-||-||-|
|West Africa Total||153,680||118,957||153,841||124,943||110.0||93.7||715||750|
|Less Chirano non-controlling |
Consolidated balance sheets
|(unaudited expressed in millions of United States dollars, except share amounts)|
|March 31,||December 31,|
|Cash and cash equivalents||$||406.9||$||349.0|
|Accounts receivable and other assets||92.7||101.4|
|Current income tax recoverable||73.4||79.0|
|Unrealized fair value of derivative assets||6.9||3.8|
|Property, plant and equipment||5,656.2||5,519.1|
|Investments in joint ventures||18.3||18.3|
|Unrealized fair value of derivative assets||2.0||0.8|
|Other long-term assets||581.9||564.1|
|Deferred tax assets||48.4||45.0|
|Accounts payable and accrued liabilities||$||384.4||$||465.9|
|Current income tax payable||58.9||21.7|
|Current portion of provisions||63.3||72.6|
|Other current liabilities||22.6||52.2|
|Long-term debt and credit facilities||1,870.6||1,735.0|
|Long-term lease liabilities||41.7||-|
|Unrealized fair value of derivative liabilities||3.4||9.6|
|Other long-term liabilities||101.5||97.9|
|Deferred tax liabilities||236.8||265.2|
|Common shareholders' equity|
|Common share capital||$||14,919.2||$||14,913.4|
|Accumulated other comprehensive income (loss)||(80.1||)||(98.5||)|
|Total common shareholders' equity||4,590.4||4,506.7|
|Total liabilities and equity||$||8,217.3||$||8,063.8|
|Issued and outstanding||1,252,293,410||1,250,228,821|
Consolidated statements of operations
|(unaudited expressed in millions of United States dollars, except share and per share amounts)|
|Three months ended|
|March 31,||March 31,|
|Cost of sales|
|Production cost of sales||411.7||444.6|
|Depreciation, depletion and amortization||164.1||193.1|
|Total cost of sales||575.8||637.7|
|Other operating expense||32.9||25.4|
|Exploration and business development||19.5||20.5|
|General and administrative||42.6||35.7|
|Other income (expense) - net||2.7||5.9|
|Equity in losses of joint ventures||-||(0.1||)|
|Earnings before tax||92.7||160.2|
|Income tax expense - net||(28.1||)||(54.0||)|
|Net earnings (loss) attributable to:|
|Earnings per share attributable to common shareholders|
|Weighted average number of common shares outstanding |
Consolidated statements of cash flows
|(unaudited expressed in millions of United States dollars)|
|Three months ended|
|March 31,||March 31,|
|Net inflow (outflow) of cash related to the following activities:|
|Adjustments to reconcile net earnings to net cash provided from |
|Depreciation, depletion and amortization||164.1||193.1|
|Equity in losses of joint ventures||-||0.1|
|Share-based compensation expense||4.6||4.0|
|Deferred tax (recovery) expense||(37.2||)||11.4|
|Foreign exchange losses and other||7.2||22.0|
|Changes in operating assets and liabilities:|
|Accounts receivable and other assets||14.6||(2.4||)|
|Accounts payable and accrued liabilities||(14.2||)||(23.2||)|
|Cash flow provided from operating activities||268.6||315.1|
|Income taxes paid||(17.0||)||(21.6||)|
|Net cash flow provided from operating activities||251.6||293.5|
|Additions to property, plant and equipment||(264.8||)||(246.9||)|
|Settlement of deferred payment obligation and acquisition||(30.0||)||(35.1||)|
|Net additions to long-term investments and other assets||(6.4||)||(14.3||)|
|Net proceeds from the sale of property, plant and equipment||0.9||3.0|
|Increase in restricted cash||(0.6||)||(0.7||)|
|Interest received and other||0.9||2.6|
|Net cash flow used in investing activities||(300.0||)||(291.4||)|
|Net proceeds from issuance/drawdown of debt||160.0||-|
|Repayment of debt||(25.0||)||-|
|Payment of finance lease liabilities||(3.3||)||-|
|Net cash flow provided from (used in) financing activities||104.6||(29.6||)|
|Effect of exchange rate changes on cash and cash equivalents||1.7||(0.4||)|
|Increase (decrease) in cash and cash equivalents||57.9||(27.9||)|
|Cash and cash equivalents, beginning of period||349.0||1,025.8|
|Cash and cash equivalents, end of period||$||406.9||$||997.9|
|Mine||Period||Ownership||Tonnes Ore |
|Grade (Mill)|| Grade |
|Recovery (2)||Gold Eq Production |
|Gold Eq |
|Cap Ex (7)||DD&A|
|(%)||('000 tonnes)||('000 tonnes)||('000 tonnes)||(g/t)||(g/t)||(%)||(ounces)||(ounces)||($ millions)||($/ounce)||($ millions)||($ millions)|
|Americas||Fort Knox||Q1 2019||100||5,796||1,556||4,295||0.72||0.22||84%||37,613||37,937||$||38.8||$||1,023||$||28.9||$||18.0|
|Round Mountain||Q1 2019||100||3,904||845||3,557||1.31||0.38||86%||85,135||83,614||$||56.0||$||670||$||64.2||$||7.9|