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Kinross reports 2021 fourth-quarter and full-year results

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Kinross Gold Corporation
Kinross Gold Corporation

Returned more than $250 million to shareholders in 2021

Production outlook of 2.65 million, 2.8 million and 2.6 million ounces in 2022, 2023 and 2024, respectively, to drive free cash flow growth

TORONTO, Feb. 16, 2022 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) (“Kinross” or the “Company”) today announced its results for the fourth-quarter and year ended December 31, 2021.

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

2021 full-year results and 2022 guidance:

2021 guidance
(+/- 5%)

2021 full-year results

2022 guidance
(+/- 5%)

Attributable gold equivalent production1
(ounces)

2.1 million

2.07 million

2.65 million

Attributable production cost of sales1, 2
($ per Au eq. oz.)

$830

$828

$830

Consolidated production cost of sales3
($ per Au eq. oz.)

-

$832

$835

Attributable all-in sustaining cost1, 2
($ per Au eq. oz.)

$1,110

$1,138

$1,130

Capital expenditures

$900 million

$939 million

$1,050 million

  • Attributable production1 is expected to increase 28% year-over-year to 2.65 million Au eq. oz. in 2022, and to further increase to 2.8 million Au eq. oz. in 2023 driving significant free cash flow2 growth.

  • Kinross expects to produce 2.6 million attributable Au eq. oz. in 2024 and an average of at least 2.5 million attributable Au eq. oz. per year over the remainder of the decade.

2021 Q4 highlights:

  • Tasiast achieved Q4 2021 production target as throughput successfully ramped up to complete mill re-start.

  • La Coipa project began commissioning on time and on budget in February 2022. Life of mine production estimates increased by 45% to 1 million Au eq. oz. extending mine life to early 2026.

  • Kinross increased proven and probable mineral reserve estimates to 32.6 million Au oz.4, adding 2.7 million Au oz. in 2021, mainly due to additions at Udinsk and Round Mountain.

  • In 2021, Kinross returned more than $250 million in capital to shareholders consisting of $151.1 million in dividends and, as part of its share buyback program, $100.2 million in the repurchase and cancellation of 17.6 million common shares.

  • Kinross’ Board of Directors declared a quarterly dividend of $0.03 per common share payable on March 24, 2022 to shareholders of record at the close of business on March 9, 2022.

  • On December 8, 2021, Kinross announced an agreement to acquire Great Bear Resources and its flagship Dixie project in Red Lake, Ontario, which has significant potential to become a top-tier, large scale operation.

2021 Q4 and year-end financial results:

  • Attributable production1 of 487,621 Au eq. oz. produced in Q4 2021, and 2,067,549 Au eq. oz. in 2021.

  • Attributable production cost of sales1,2 of $864 per Au eq. oz. in Q4 2021, and $828 per Au eq. oz. in 2021.

  • Consolidated production cost of sales3 of $868 per Au eq. oz. in Q4 2021 and $832 per Au eq. oz. in 2021.

  • Attributable all-in sustaining cost1,2 of $1,312 per Au eq. oz. sold in Q4 2021, and $1,138 per Au eq. oz. sold in 2021.

  • Margins5 of $929 per Au eq. oz. sold in Q4 2021, and $965 for 2021.

  • Adjusted operating cash flow2 was $356.0 million in Q4 2021, and $1,309.9 million in 2021.

  • Operating cash flow6 of $197.3 million in Q4 2021, and $1,135.2 million in 2021.

  • Free cash flow2 was a net outflow of $100.7 million in Q4 2021, and a net inflow of $196.6 million in 2021.

  • Reported net loss7 of $2.7 million in Q4 2021, and reported net earnings of $221.2 million, or $0.18 per share, in 2021.

  • Adjusted net earnings2, 8 of $101.8 million, or $0.08 per share in Q4 2021, and $541.3 million, or $0.43 per share, in 2021.

  • Cash and cash equivalents of $531.5 million, and total liquidity9 of $1.9 billion at December 31, 2021. The Company repaid $500 million in Senior Notes on June 1, 2021.

Environment, Social, Governance (ESG):

  • Kinross’ ESG performance continued to rank in the top quartile of its peer group, as measured by Sustainalytics, MSCI, ISS, Vigeo, Refinitiv and S&P Global CSA’s ESG ratings.

  • The Company outlined its Climate Change Strategy, with the target of reducing the intensity of its scope 1 and scope 2 emissions by 30% by 2030.

  • Injury frequency rates remained in line with Kinross’ three-year averages, however, this was overshadowed by a tragic fatality at Chirano and a mill fire at Tasiast.

  • Kinross continued to work to mitigate the risks associated with the ongoing COVID-19 pandemic, and provided support to bolster vaccination rates of its workforce.

  • The Company established an ESG Executive Committee to help further strengthen ESG governance.

CEO Commentary:
J. Paul Rollinson, President and CEO, made the following comments in relation to 2021 fourth-quarter and year-end results:

“Despite some challenges during 2021, we produced approximately 2.1 million ounces. We expect to increase our production in 2022 and 2023 to 2.65 million and 2.8 million ounces, respectively, to drive robust free cash flow. Our long-term production profile remains strong, with expected production of 2.6 million ounces in 2024 and an annual average production estimate of at least 2.5 million ounces over the remainder of the decade.

“We are pleased to report that the Tasiast mill is now operating at sustained throughput levels comparable to the first half of 2021. Our development projects are also advancing well and we have started commissioning at La Coipa, where we have increased life of mine production estimates to approximately 1 million ounces and extended estimated mine life to early 2026. Kinross also successfully added to its mineral reserve estimates, which increased by 2.7 million ounces to 32.6 million gold equivalent ounces at year-end 2021.

“In addition, we enhanced our return of capital to shareholders by returning more than $250 million through our quarterly dividend and share buyback programs. We also finalized our agreement with the Government of Mauritania to underpin our strong partnership and announced an agreement to acquire Great Bear Resources to further strengthen our long-term growth pipeline.

“Safety and sustainability continue to be priorities, and we again ranked in the top quartile of our peer group as measured by a number of ESG ranking agencies in 2021. We also outlined a Climate Change Strategy, with the objective of a 30% reduction in intensity of scope 1 and scope 2 emissions by 2030.”

Financial results

Summary of financial and operating results

Three months ended

Years ended

December 31,

December 31,

(in millions of U.S. dollars, except ounces, per share amounts, and per ounce amounts)

2021

2020

2021

2020

Operating Highlights

Total gold equivalent ounces(a)

Produced(c)

491,077

627,944

2,083,016

2,383,307

Sold(c)

489,710

637,169

2,075,738

2,375,548

Attributable gold equivalent ounces(a)

Produced(c)

487,621

624,032

2,067,549

2,366,648

Sold(c)

486,547

633,149

2,060,909

2,358,927

Financial Highlights

Metal sales

$

879.5

$

1,195.1

$

3,729.4

$

4,213.4

Production cost of sales

$

425.2

$

436.5

$

1,726.1

$

1,725.7

Depreciation, depletion and amortization

$

199.3

$

234.0

$

840.9

$

842.3

Impairment charges (reversals) and asset derecognition - net

$

144.5

$

(602.6

)

$

144.5

$

(650.9

)

Operating (loss) earnings

$

(45.5

)

$

992.3

$

463.6

$

1,899.4

Net (loss) earnings attributable to common shareholders

$

(2.7

)

$

783.3

$

221.2

$

1,342.4

Basic (loss) earnings per share attributable to common shareholders

$

-

$

0.62

$

0.18

$

1.07

Diluted (loss) earnings per share attributable to common shareholders

$

-

$

0.62

$

0.17

$

1.06

Adjusted net earnings attributable to common shareholders(b)

$

101.8

$

335.1

$

541.3

$

966.8

Adjusted net earnings per share(b)

$

0.08

$

0.27

$

0.43

$

0.77

Net cash flow provided from operating activities

$

197.3

$

681.1

$

1,135.2

$

1,957.6

Adjusted operating cash flow(b)

$

356.0

$

527.6

$

1,309.9

$

1,912.7

Capital expenditures(d)

$

298.0

$

298.3

$

938.6

$

916.1

Free cash flow(b)

$

(100.7

)

$

382.8

$

196.6

$

1,041.5

Average realized gold price per ounce(e)

$

1,797

$

1,875

$

1,797

$

1,774

Consolidated production cost of sales per equivalent ounce(c) sold(f)

$

868

$

685

$

832

$

726

Attributable(a) production cost of sales per equivalent ounce(c) sold(b)

$

864

$

682

$

828

$

723

Attributable(a) production cost of sales per ounce sold on a by-product basis(b)

$

839

$

653

$

799

$

700

Attributable(a) all-in sustaining cost per ounce sold on a by-product basis(b)

$

1,299

$

991

$

1,118

$

970

Attributable(a) all-in sustaining cost per equivalent ounce(c) sold(b)

$

1,312

$

1,013

$

1,138

$

987

Attributable(a) all-in cost per ounce sold on a by-product basis(b)

$

1,681

$

1,309

$

1,458

$

1,248

Attributable(a) all-in cost per equivalent ounce(c) sold(b)

$

1,684

$

1,322

$

1,467

$

1,260

(a)

"Total includes 100% of Chirano production. “Attributable" includes Kinross' share of Chirano (90%) production and costs and Manh Choh (70%) costs.

(b)

The definition and reconciliation of these non-GAAP financial measures and ratios is included on pages 19 to 24 of this news release.

(c)

"Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market prices for the commodities for each period. The ratio for 2021 was 71.51:1 (2020 - 86.32:1). The ratio for Q4 2021 was 76.89:1 (Q4 2020 – 77.02:1).

(d)

“Capital expenditures” is as reported as “Additions to property, plant and equipment” on the consolidated statements of cash flows.

(e)

“Average realized gold price per ounce” is defined as gold metal sales divided by the total number of gold ounces sold.

(f)

“Consolidated production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces sold.

The following operating and financial results are based on fourth-quarter and year-end 2021 gold equivalent production:

Attributable production1: Kinross produced 487,621 attributable Au eq. oz. in Q4 2021, compared with 624,032 attributable Au eq. oz. in Q4 2020. The decrease was largely due to lower production at Tasiast and Round Mountain.

Over the full year, Kinross produced 2,067,549 attributable Au eq. oz., in line with the Company’s revised production guidance, compared with full-year 2020 production of 2,366,648 attributable Au eq. oz. The decrease was mainly due to the temporary suspension of milling operations at Tasiast as a result of a mill fire in June 2021 and deferred mining activities at Round Mountain after wall instability was detected in Q1 2021. The decrease was slightly offset by increases in production at Fort Knox and at Bald Mountain.

Average realized gold price: The average realized gold price in Q4 2021 was $1,797 per ounce, compared with $1,875 per ounce in Q4 2020. For full-year 2021, the average realized gold price per ounce was $1,797, compared with $1,774 per ounce for full-year 2020.

Revenue: During the fourth quarter, revenue was $879.5 million, compared with $1,195.1 million during Q4 2020. Revenue was $3,729.4 million for full-year 2021, compared with $4,213.4 million for full-year 2020.

Attributable production cost of sales1, 2: Attributable production cost of sales per Au eq. oz. sold was $864 for Q4 2021, compared with $682 in Q4 2020, mainly as a result of higher costs at Paracatu, and higher costs and an increase in sales at Fort Knox. Attributable production cost of sales per Au eq. oz. sold was $828 for full-year 2021, in line with the Company’s revised guidance, compared with $723 per Au eq. oz. for full-year 2020. The increase was mainly due to higher costs at Paracatu and Round Mountain, and an increase in sales at Fort Knox.

Attributable production cost of sales per Au oz. sold on a by-product basis was $839 in Q4 2021 compared with $653 in Q4 2020, based on gold sales of 473,306 ounces and silver sales of 1,018,034 ounces. Attributable production cost of sales per Au eq. oz. sold on a by-product basis was $799 for full-year 2021, compared with $700 for full-year 2020, based on 2021 gold sales of 2,000,262 ounces and silver sales of 4,341,895 ounces.

Consolidated production cost of sales: Consolidated production cost of sales per Au eq. oz. sold was $868 for Q4 2021, compared with $685 in Q4 2020, and was $832 for full-year 2021 versus $726 in 2020.

Margins5: Kinross’ margin per Au eq. oz. sold was $929 for Q4 2021, compared with the Q4 2020 margin of $1,190. Full-year 2021 margin per Au eq. oz. sold was $965, compared with $1,048 for full-year 2020.

Attributable all-in sustaining cost1, 2: Attributable all-in sustaining cost per Au eq. oz. sold was $1,312 in Q4 2021, compared with $1,013 in Q4 2020. Full-year attributable all-in sustaining cost per Au eq. oz. sold was $1,138, and was within the Company’s 2021 revised guidance range, compared with $987 for full-year 2020.

In Q4 2021, attributable all-in sustaining cost per Au oz. sold on a by-product basis was $1,299, compared with $991 in Q4 2020. Attributable all-in sustaining cost per Au oz. sold on a by-product basis was $1,118 for full-year 2021, compared with $970 in 2020.

Operating cash flow: Adjusted operating cash flow2 for Q4 2021 was $356.0 million, compared with $527.6 million for Q4 2020. Adjusted operating cash flow2 for full-year 2021 was $1,309.9 million, compared with $1,912.7 million in 2020.

Operating cash flow was $197.3 million for Q4 2021, compared with $681.1 million for Q4 2020. Operating cash flow for full-year 2021 was $1,135.2 million, compared with $1,957.6 million for full-year 2020 mainly due to the decrease in operating earnings, higher taxes paid and unfavourable working capital movements.

Free cash flow2: Free cash flow was a net cash outflow of $100.7 million in Q4 2021, compared with a net cash inflow of $382.8 million for Q4 2020. For the full year, free cash flow was $196.6 million, compared with $1,041.5 million the previous year. The decrease in both periods were mainly due to lower margins, higher taxes paid and unfavourable working capital movements.

Earnings: Adjusted net earnings2 were $101.8 million, or $0.08 per share, for Q4 2021, compared with $335.1 million, or $0.27 per share, for Q4 2020. Full-year adjusted net earnings2 were $541.3 million, or $0.43 per share, compared with $966.8 million, or $0.77 per share, for full-year 2020, primarily due to the decrease in revenue and an increase in exploration expenses.

Reported net loss8 was $2.7 million for Q4 2021, compared with reported net earnings of $783.3 million, or $0.62 per share, for Q4 2020. Reported net earnings in full-year 2021 were $221.2 million, or $0.18 per share, compared with $1,342.4 million, or $1.07 per share, in 2020. The decrease in reported net earnings for both periods was mainly as a result of the temporary suspension of milling operations at Tasiast and the deferred mining activity at Round Mountain. A non-cash, after-tax write-down of $106.1 million at Bald Mountain related to a reduced estimate of recoverable ounces from the Vantage heap leach pad in the South area of the mine also contributed to the decrease in net earnings.

Capital expenditures: Capital expenditures were $298.0 million for Q4 2021, in line with $298.3 million for Q4 2020. Capital expenditures for full-year 2021 were $938.6 million and were within the Company’s annual guidance range, compared with $916.1 in 2020. The increase was primarily due to higher expenditures for development activities at La Coipa, the studies at Lobo-Marte and Udinsk, and an increase in capital stripping at Tasiast, partially offset by reduced capital stripping at Bald Mountain, Round Mountain and Fort Knox.

Balance sheet

As of December 31, 2021, Kinross had cash and cash equivalents of $531.5 million, compared with $1,210.9 million at December 31, 2020. The decrease was primarily due to capital expenditures, the $500.0 million repayment of senior notes, the final installment of $141.5 million paid for the Chulbatkan license, and the return of capital of $251.3 million in the form of dividends and share buybacks, partially offset by operating cash flows.

The Company had additional available credit10 of $1,361.2 million as of December 31, 2021 and total liquidity9 of approximately $1.9 billion.

Share buyback and dividend

In 2021, Kinross enhanced shareholder returns through its share buyback and quarterly dividend programs, which are underpinned by the Company’s investment grade balance sheet, free cash flow profile and expected production growth. During the past year, Kinross returned a total of $251.3 million in capital to shareholders.

Kinross has repurchased and cancelled 17.6 million of its common shares for $100.2 million as of December 31, 2021 through its share buyback program.

The Company declared a dividend of $0.03 per common share payable on March 24, 2022 to shareholders of record as of March 9, 2022, as part of its quarterly dividend program. In 2021, Kinross returned a total of $151.1 million in dividends.

Operating results

Mine-by-mine summaries for 2021 fourth-quarter and full-year operating results may be found on pages 14 and 18 of this news release. Highlights include the following:

Americas

Paracatu production for the full year increased compared with full-year 2020 largely due to higher throughput and the timing of ounces processed through the mill, which was largely offset by a decrease in grades. Full-year production cost of sales per ounce sold was higher year-over-year mainly due to increases in operating waste mined, contractor and energy costs, as well as inflationary pressures on consumables, partially offset by favourable foreign exchange movements. In Q4 2021, higher mill throughput contributed to the increase in production compared with the previous quarter, while higher operating waste mined and maintenance costs contributed to the increase in cost of sales per ounce sold.

Fort Knox performed well in 2021, as full-year production increased, and cost of sales per ounce sold decreased, compared with full-year 2020. Fort Knox’s positive results were largely as a result of lower-cost ounces recovered from the new Barnes Creek heap leach pad after construction was completed at the Gilmore project in early 2021. Production in Q4 2021 improved quarter-over-quarter, mainly due to timing of ounces processed at the mill, largely offset by fewer ounces recovered from the heap leach pads. Cost of sales per ounce sold was higher quarter-over-quarter primarily as a result of increases in operating waste mined and energy costs. Fort Knox also achieved first production at the Gil satellite deposits during Q4 2021.

At Round Mountain, full-year production was lower year-over-year as a result of deferred mining activities in the north wall of the Phase W area after wall instability was detected in Q1 2021. Production decreased quarter-over-quarter primarily due to fewer ounces recovered from the heap leach pads. Full-year cost of sales per ounce sold increased year-over-year mainly due to lower production, higher operating waste mined, and higher taxes related to production. Cost of sales per ounce sold was largely in line quarter-over-quarter.

The Company implemented initiatives to stabilize the wall in 2021, including dewatering and moving waste material from the pit rim. As a result of the mine optimization program, which was initiated in Q1 2021, 938 Au koz. at Phase S were converted to proven and probable mineral reserves at December 31, 2021 and additional challenges were identified in the west wall of the Phase W area which may affect Round Mountain’s annual production plans post 2024. The program is evaluating further initiatives to enhance wall stability, including shallower pit wall slope angles over a more extensive area, and alternative mine plan opportunities, such as incorporating the Phase S pushback.

The alternative mine plan opportunities also include modified open pit sequencing for Phase W and Phase S and the potential for underground mining for portions of Phase W and Phase X. The Company is planning to construct a drift for underground exploration at Phase X in 2022 after positive exploration results in 2021. Given the mine optimization program’s expanded parameters, results of the analysis are now expected in the second half of 2022.

At Bald Mountain, full-year production increased compared with 2020 mainly due to timing of ounces recovered from the heap leach pads, but was less than expected due to the carbonaceous material encountered at the Vantage heap leach pad. Full-year cost of sales per ounce sold was higher year-over-year largely due to higher operating waste mined and taxes related to production. During Q4 2021, production and cost of sales per ounce sold increased versus the prior quarter mainly due to more ounces recovered from the pads in the North area and higher fuel costs, respectively.

Russia

At Kupol and Dvoinoye, full-year production was lower than full-year 2020 mainly as a result of anticipated lower grades after mining activities were completed at Dvoinoye in November 2020 and the continued processing of related stockpiles. Quarter-over-quarter, lower grades resulted in lower production, as Kupol continued to transition to mining narrower veins. Full-year cost of sales per ounce sold increased compared with 2020 largely as a result of lower production, and decreased quarter-over-quarter mainly due to lower labour costs.

West Africa

Tasiast’s full-year and quarterly production was lower, and cost of sales per ounce sold higher, versus the comparable periods in 2020 primarily due to the mill fire in June 2021. Tasiast made excellent progress re-starting the mill in the second half of the year and completed a successful recommissioning with no material mechanical issues encountered. In Q4 2021, the site achieved its production target of 15,000 Au eq. oz. after re-starting the plant processing lower grade stockpile ore. Throughput gradually ramped up during the quarter, with the mill reaching throughput of 19,000-20,000 tonnes per day in January 2022 on a sustained basis.

In January 2022, the Company reached an agreement with the Government of Mauritania (“Government”) regarding two licenses located west, east and north of the main Tasiast operation. Kinross has agreed to renew exploration activities at these licenses and has committed to spend $10 million in exploration over the next three years. As part of its commitment, the Company is budgeting $5 million for exploration in 2022 at these licenses.

At Chirano, full-year production decreased compared with 2020 mainly due to lower grades, partially offset by higher throughput. Full-year cost of sales per ounce sold was higher mainly due to lower production and higher contractor and energy costs. Production decreased quarter-over-quarter mainly due to lower grades, and cost of sales per ounce sold increased over Q3 2021 mainly as a result of the lower production. The mine site exploration program continued to yield excellent results in 2021 and added 400 Au koz. to Chirano’s mineral resource estimates, helping extend mine life by one year to 2026, with opportunities for further mine life extensions.

Great Bear Resources acquisition update

On December 8, 2021, Kinross announced that it had entered into a definitive agreement (“Agreement”) to acquire Great Bear Resources Ltd. (“Great Bear”), which includes the flagship Dixie project located in the prolific Red Lake mining district in Ontario, Canada. The Dixie project has excellent potential to become a top tier deposit that could support a large, long-life mine complex and bolster Kinross’ long-term production outlook.

Under the terms of the Agreement, Kinross has agreed to an upfront payment of approximately $1.4 billion (C$1.8 billion), representing C$29.0011 per Great Bear common share on a fully-diluted basis. The upfront payment will be payable at the election of Great Bear shareholders in cash and Kinross common shares subject to pro-ration to a maximum cash consideration of approximately $1.1 billion (C$1.4 billion) and a maximum of approximately 80.7 million Kinross common shares. The Agreement also includes a payment of contingent consideration in the form of contingent value rights that may be exchanged for 0.1330 of a Kinross common share per Great Bear common share. The contingent consideration will be payable in connection with Kinross’ public announcement of commercial production at the Dixie project, provided that a cumulative total of at least 8.5 million gold ounces of mineral reserves and measured and indicated mineral resources are disclosed.

Upon completion of the transaction, Kinross expects to rapidly advance exploration activities at the LP Fault zone, the most significant discovery to date at Dixie. These activities include 200,000 metres of planned drilling in 2022, which is expected to largely focus on infill drilling and multiple other targets. Kinross plans to undertake a comprehensive exploration and development program at the Dixie project which aims to support Kinross’ vision of a quality, high-grade, open-pit mine and a longer-term, sizeable underground mine.

Great Bear security holders approved the Agreement on February 14, 2022, with approximately 98% of the votes cast in favour of the acquisition. The Company received final court approval on February 16, 2022, and the transaction is expected to close next week.

Company Guidance
The following section of the news release represents forward-looking information and users are cautioned that actual results may vary. We refer to the risks and assumptions contained in the Cautionary Statement on Forward-Looking Information on page 24] of this news release.

This Company Guidance section references attributable production cost of sales per equivalent ounce sold and per ounce sold on a by-product basis and attributable all-in sustaining cost per equivalent ounce sold and per ounce sold on a by-product basis, all of which are non-GAAP financial ratios. The definitions of these non-GAAP financial ratios and comparable reconciliations are included on pages 19 to 24 of this news release.

Attributable production guidance1

In 2022, Kinross expects to produce 2.65 million attributable Au eq. oz. (+/- 5%) from its operations, which is a 28% increase from the Company’s 2021 production. Kinross’ annual production is expected to further increase to 2.8 million attributable Au eq. oz. (+/- 5%) in 2023. The Company expects to produce 2.6 million attributable Au eq. oz. in 2024 and has maintained its strong production profile of estimated average production of at least 2.5 million Au eq. oz. per year over the remainder of the decade.

Annual attributable gold equivalent production guidance
(+/- 5%)

2022

2.65 million oz.

2023

2.8 million oz.

2024

2.6 million oz.

In 2022, attributable production is expected to be higher in the second half of the year, which is largely driven by production from La Coipa, as it is scheduled to reach full operating capacity at mid-year, as well as higher production expected at Paracatu and Tasiast.

Kinross made modest adjustments to its 2022 and 2023 production mid-point guidance estimates, with 2022 expected to be impacted by the COVID-19 Omicron variant’s effect on productivity and supply chain logistics at Tasiast, and fewer ounces expected from the Vantage heap leach pad at Bald Mountain. In 2023, the Company’s production outlook is expected to be impacted by the deferral of some production at several sites, including La Coipa, Bald Mountain, Kupol and Chirano. These deferrals are expected to extend mine life and increase total life of mine production. The Phase W deferral at Round Mountain also impacted the Company’s 2023 production outlook, while the 2024 production outlook excludes the Manh Choh project.

The expected attributable production growth in 2022 and 2023, and Kinross’ strong long-term production profile, represents additional ounces enabled by planned life of mine extensions and projects resulting from the Company’s previous capital investments, continuous improvement programs, and an exploration strategy focused on promising prospects around existing operations.

Inflation impact

The ongoing global impacts of the COVID-19 pandemic and inflation have been factored into the Company’s 2022 attributable cost of sales and capital expenditures guidance. Potential additional inflationary impacts have been excluded from the Company’s directional forecasts on 2023 attributable cost of sales and 2023-2024 capital costs.

Attributable cost of sales guidance1

Attributable production cost of sales is expected to be $830 per Au eq. oz. (+/- 5%) for 2022. Attributable production cost of sales per ounce is expected to be higher in the first half of the year and decrease during the second half of the year largely due to the anticipated increase in production.

Kinross’ attributable production cost of sales per ounce sold outlook for 2023 is expected to be lower compared with 2022, excluding impacts of inflation, mainly due to the planned growth in production.

The Company expects its attributable all-in sustaining cost to be $1,130 per equivalent ounce sold (+/- 5%) for 2022, which is largely in line with 2021 results.

2022 by-product production and cost guidance

Accounting basis

2022 Guidance
(+/- 5%)

2021 Actual

Gold equivalent basis

Attributable production (Au eq. oz.)1

2.65 million

2.07 million

Attributable production cost of sales per Au eq. oz. 1,2

$830

$828

Consolidated production cost of sales per Au eq. oz.

$835

$832

Attributable all-in sustaining cost per Au eq. oz. 1,2

$1,130

$1,138

By-product basis

Gold ounces1

2.5 million

2.02 million

Silver ounces

11.6 million

4.3 million

Attributable production cost of sales per Au oz. 1,2

$790

$799

Attributable all-in sustaining cost per Au oz. 1,2

$1,100

$1,118

2022 regional attributable production guidance1

Region

2022 production guidance
(Au eq. oz.)

Percentage of total forecast production12

Americas

1.53 million (+/- 5%)

58%

West Africa (attributable)

770,000 (+/- 10%)

29%

Russia

350,000 (+/- 5%)

13%

TOTAL (attributable)

2.65 million (+/- 5%)

100%

2022 regional attributable cost guidance1

Region

2022 guidance
production cost of sales
(per Au eq. oz. sold)

2021 production cost of sales
(per Au eq. oz. sold)

Americas

$880 (+/- 5%)

$860

West Africa (consolidated)

$710 (+/-10%)

$1,008

West Africa (attributable) 1,2, 13

$700 (+/- 10%)

$991

Russia

$870 (+/- 5%)

$637

TOTAL

$835 (+/- 5%)

$832

TOTAL (attributable) 1,2

$830 (+/- 5%)

$828

Material assumptions used to forecast 2022 production cost of sales are as follows:

  • a gold price of $1,500 per ounce;

  • a silver price of $20 per ounce;

  • an oil price of $70 per barrel;

  • foreign exchange rates of:

    • 5.0 Brazilian reais to the U.S. dollar;

    • 1.25 Canadian dollars to the U.S. dollar;

    • 70 Russian roubles to the U.S. dollar;

    • 750 Chilean pesos to the U.S. dollar;

    • 5.50 Ghanaian cedis to the U.S. dollar;

    • 35 Mauritanian ouguiyas to the U.S. dollar; and

    • 0.85 U.S. dollar to the Euro.

Taking into account existing currency and oil hedges:

  • a 10% change in foreign currency exchange rates would be expected to result in an approximate $20 impact on attributable production cost of sales per ounce14;

  • specific to the Russian rouble, a 10% change in this exchange rate would be expected to result in an approximate $25 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 $30 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 fuel consumption costs on attributable production cost of sales per ounce; and

  • a $100 change in the price of gold would be expected to result in an approximate $5 impact on attributable production cost of sales per ounce as a result of a change in royalties.

Capital expenditures guidance

Total capital expenditures for 2022 are forecast to be approximately $1,050 million (+/- 5%) and are summarized in the table below. The capital expenditures guidance is higher than previous estimates mainly due to inflationary pressures, a pull forward of planned spending at Udinsk to de-risk the project schedule, additional stripping at La Coipa with the inclusion of Puren into the project plan, and the inclusion of approximately $50 million for ESG initiatives such as the Tasiast solar power project.

Kinross’ capital expenditures outlook for 2023 and 2024 is expected to be largely in line with 2022 at approximately $1 billion per year. The outlook is based on Kinross’ current baseline production guidance and includes projects such as Udinsk, La Coipa’s Puren deposit and scope changes in the portfolio, which were not included in the Company’s previous multi-year capital expenditure outlook. As Kinross continues to develop and optimize its portfolio, other projects may be incorporated into its capital expenditures, as well as inflation impacts, over the 2023-2024 timeframe. These projects include Manh Choh, which is not included in the 2023 and 2024 capital expenditures outlook.

Region

Forecast 2022
sustaining capital
(million)

Forecast 2022
non-sustaining capital
(million)

Total forecast capital
(+/- 5%) (million)

Americas

$430

$235

$665

West Africa

$40

$170

$210

Russia

$30

$140

$170

Corporate

$5
________

$0
________

$5
________

TOTAL

$505

$545

$1,050

2022 sustaining capital includes the following forecast spending estimates:

Mine development:

$170 million (Americas); $10 million (Russia); $5 million (West Africa)

Mobile equipment:

$65 million (Americas); $10 million (Russia); $5 million (West Africa)

Tailings facilities:

$65 million (Americas); $5 million (West Africa)

Mill facilities:

$30 million (Americas); $10 million (West Africa); $5 million (Russia)

Leach facilities:

$40 million (Americas)

2022 non-sustaining capital includes the following forecast spending estimates:

Development and growth projects and studies:

$135 million

La Coipa Restart (including Puren):

$130 million

Udinsk:

$120 million

Tasiast West Branch stripping:

$65 million

ESG projects:

$50 million

Tasiast 24k project:

$45 million

Other 2022 guidance

The 2022 forecast for exploration is approximately $130 million, all of which is expected to be expensed, and is a $10 million increase from last year’s forecast. The exploration program (greenfields and brownfields) will follow up on 2021’s exploration success, including focusing on the Kupol Synergy Zone of Influence (“KSP”), the 130 kilometre radius around Kupol based on an economic trucking distance to the mill, and starting an underground exploration drift at Round Mountain. The exploration forecast does not include activities planned at the Dixie project in Red Lake, Ontario, pending the expected closing of the Great Bear acquisition.

The 2022 forecast for overhead (general and administrative and business development expenses) is approximately $160 million, which is largely in line with last year’s guidance. The Company has made cost improvements over recent years, with 2022 annual overhead guidance down $45 million over the past five years.

Other operating costs expected to be incurred in 2022 are approximately $125 million (+/- 5%), which are principally due to care and maintenance, reclamation, and pandemic-related mitigation measures.

Based on an assumed gold price of $1,500 per ounce and other budget assumptions, tax expense is expected to be $50 million and taxes paid is expected to be $170 million. Adjusting the Brazilian real and Russian rouble to the respective exchange rates of 5.58 and 74.3 to the U.S. dollar in effect at December 31, 2021, tax expense would be expected to be $105 million. Tax expense is expected to increase by 24% of any profit resulting from higher gold prices. Taxes paid is expected to increase by approximately $20 million for every $100 increase in the realized gold price.

Depreciation, depletion and amortization is forecast to be approximately $400 per Au eq. oz. (+/- 5%).

Interest paid is forecast to be approximately $85 million, which includes $35 million of capitalized interest. The interest paid forecast does not include any interest payment related to the expected financing of the Great Bear acquisition.

Environment, Social and Governance

In alignment with its values and culture, Kinross continued to deliver strong ESG performance over the year, ranking in the top quartile of its peer group as measured by ESG ratings from Sustainalytics, MSCI, ISS, Vigeo, Refinitiv and S&P Global’s CSA. Kinross was recognized as one of the industry’s top 10 for ESG performance in the S&P Global Sustainability Yearbook. The Company also retained its “A” level rating by MSCI, and is on track to complete external assurance in conformance with the World Gold Council’s Responsible Gold Mining Principles.

The Company’s injury frequency rates remained low and were in line with its three-year averages, however, these results were overshadowed by a tragic fatality at its Chirano mine and a mill fire at Tasiast. While the latter did not result in injuries, these incidents prompted Safety Stand-Downs, and company-wide, cross-functional discussions about Kinross’ safety culture to share learnings and improve safety performance.

In Alaska, Kinross’ commitment to environmental stewardship was highlighted by its partnership with Trout Unlimited to support the Alaska Abandoned Mine Restoration Initiative (click here for video). The Company committed over $500,000 to support the initiative’s first project, the continued restoration of a historic mining district in which Kinross has not operated. The initiative is the first partnership of its kind in Alaska, with a major mining company and a conservation organization working alongside federal and state land-management agencies to restore the environment and mitigate the impact of historic mining. The Company met or exceeded all site level targets for permitting, water management and closure planning, and also maintained its record of zero tailings breaches for the 29th consecutive year.

In recognition of the global importance of addressing climate change, Kinross outlined its Climate Change Strategy, and has set a target to achieve a 30% reduction in intensity of scope 1 and scope 2 emissions by 2030. Please see the following news release for more information: https://www.kinross.com/Kinross-announces-details-of-its-Climate-Change-Strategy.

In 2021, the Company published its inaugural Climate Report following the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Kinross also continues to incorporate energy efficient projects into its portfolio and embed climate change considerations into strategic business decisions, including initiating development of a solar power plant at Tasiast, studying to build a power line to connect Udinsk to the regional grid and signing a power purchase agreement for 100% renewable power at La Coipa.

Kinross’ global teams continued efforts to mitigate the risks associated with the ongoing COVID-19 pandemic, and provided support to bolster vaccination rates of its workforce. In February 2022, Kinross donated over $1 million to support response efforts and those affected by the tragic explosion in Apiate, Ghana as the community works to recover and rebuild.

Kinross established an ESG Executive Committee that will report to Senior Leadership and to the Board of Directors on a quarterly basis to help further evolve and strengthen its ESG governance and strategy. The Company also advanced its Inclusion and Diversity (“I&D”) commitment with the establishment of a Global Inclusion and Diversity Council (“GIDC”), which is made up of Kinross’ senior leaders, including the President and CEO. The GIDC was established following a commitment made to the BlackNorth Initiative and is tasked with providing input into the Company’s I&D strategy and action plan.

For more information on Kinross’ sustainability performance, see the Company’s 2020 Sustainability Report and its ESG Analyst Centre page. The Report follows the Global Reporting Initiative (GRI) and Sustainability Accounting Board (SASB) reporting standards and fulfills Kinross’ commitment as a participant in the UN Global Compact.

Conference call details

In connection with this news release, Kinross will hold a conference call and audio webcast on Thursday, February 17, 2022 at 8 a.m. ET to discuss the results, followed by a question-and-answer session. To access the call, please dial:

Canada & US toll-free – +1 (833) 968-2237; Passcode: 6090916
Outside of Canada & US – +1 (825) 312-2059; Passcode: 6090916

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

Canada & US toll-free – +1 (800) 585-8367; Passcode: 6090916
Outside of Canada & US – +1 (416) 621-4642; Passcode: 6090916

You may also access the conference call on a listen-only basis via webcast at our website www.kinross.com. The audio webcast will be archived on www.kinross.com.

This release should be read in conjunction with Kinross’ 2021 year-end Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2021 year-end Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished with the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.

About Kinross Gold Corporation

Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Our focus is on delivering value based on the core principles of operational excellence, balance sheet strength, disciplined growth and responsible mining. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol:KGC).

Media Contact
Louie Diaz
Vice-President, Corporate Communications
phone: 416-369-6469
louie.diaz@kinross.com

Investor Relations Contact
Chris Lichtenheldt
Vice-President, Investor Relations
phone: 416-365-2761
chris.lichtenheldt@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

2021

2020

2021

2020

2021

2020

2021

2020

Fort Knox

73,830

57,523

74,384

57,849

$

74.1

$

51.1

$

996

$

883

Round Mountain

51,549

89,422

52,723

89,709

51.8

62.2

982

693

Bald Mountain

61,036

51,487

53,559

57,087

50.1

45.4

935

795

Paracatu

138,669

148,218

145,691

150,881

116.9

91.2

802

604

Maricunga

-

414

821

2,035

0.6

1.1

731

541

Americas Total

325,084

347,064

327,178

357,561

293.5

251.0

897

702

Kupol

116,179

130,731

115,893

131,541

75.2

79.1

649

601

Russia Total

116,179

130,731

115,893

131,541

75.2

79.1

649

601

Tasiast

15,253

111,028

15,006

107,865

10.8

60.8

720

564

Chirano (100%)

34,561

39,121

31,633

40,202

45.7

45.6

1,445

1,134

West Africa Total

49,814

150,149

46,639

148,067

56.5

106.4

1,211

719

Less: Chirano non-controlling
interest (10%)

(3,456

)

(3,912

)

(3,163

)

(4,020

)

(4.6

)

(4.6

)

West Africa Attributable Total

46,358

146,237

43,476

144,047

51.9

101.8

$

1,194

$

707

Attributable Total

487,621

624,032

486,547

633,149

420.6

431.9

864

682

Add: Chirano non-controlling
interest (10%)

3,456

3,912

3,163

4,020

4.6

4.6

Operations Total

491,077

627,944

489,710

637,169

425.2

436.5

$

868

$

685

Years ended December 31,

Gold equivalent ounces

Produced

Sold

Production cost of
sales
($millions)

Production cost of
sales/equivalent ounce sold

2021

2020

2021

2020

2021

2020

2021

2020

Fort Knox

264,283

237,925

263,590

238,349

$

267.2

$

251.3

$

1,014

$

1,054

Round Mountain

257,005

324,277

259,941

319,228

235.9

219.6

908

688

Bald Mountain

204,890

191,282

196,066

186,549

177.5

155.9