Kinross reports strong 2020 third-quarter results

Kinross Gold Corporation
·29 min read

Significant increase in earnings and cash flow
Company on track to meet annual guidance for ninth consecutive year

TORONTO, Nov. 04, 2020 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the third quarter ended September 30, 2020.
( This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Lookin g Information located on page 18 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)

2020 third-quarter highlights:

 

Q3 2020 results

First nine months
2020 results

2020 guidance
(+/- 5%)

Gold equivalent production 1
(ounces)

 

603,312

 

1,742,616

2.4 million

Production cost of sales 1 , 2
($ per Au eq. oz.)

$737

$738

$720

All-in sustaining cost 1, 2
($ per Au eq. oz.)

$958

$978

$970

Capital expenditures

$212.1 million

$617.8 million

$900 million

  • Kinross remains on track to meet its original 2020 guidance for production , cost of sales per ounce , all-in sustaining cost per ounce and capital expenditures for the ninth consecutive year, despite impacts from the COVID-19 pandemic.

  • Production 1 , 2 of 603,312 attributable gold equivalent ounces (Au eq. oz.), and sales of 588,559 Au eq. oz.

  • Production cost of sales 1, 2 of $737 per Au eq. oz. and a ll-in sustaining cost 1, 2 of $958 per Au eq. oz. sold, both of which are within the Companys 2020 guidance range.

  • Attributable margin per Au eq. oz. sold 3 increased 60% to $1,171 per Au eq. oz. compared with Q3 2019, significantly outpacing the year-over-year 30% increase in the average realized gold price 4 .

  • Operating cash flow more than doubled to $544.1 million, and adjusted operating cash flow 2 increased by 86% to $549.6 million, compared with Q3 2019.

  • Reported net earnings 5 nearly quadrupled to $240.7 million, or $0.19 per share, and adjusted net earnings 2 nearly tripled to $310.2 million, or $0.25 per share, compared with Q3 2019.

  • Cash and cash equivalents of $933.5 million and total liquidity of $2.5 billion at September 30, 2020. The Company also further improved its debt metrics, including its net debt to EBITDA ratio.

  • Kinross Board of Directors declared a quarterly dividend of $0.03 per common share payable on December 10, 2020 to shareholders of record at the close of business on November 25, 2020. The Company also declared a dividend on September 17, 2020 and announced plans to pay a regular quarterly dividend.

  • In August 2020, Kinross released its biennial Sustainability Report , highlighting the Companys strong environmental, social and governance (ESG) record.

  • On September 17, 2020, the Company announced a growing three-year production profile , with production expected to increase 20% to 2.9 million Au eq. oz. in 2023.

  • On September 30, 2020, Kinross acquired 70% of the Pea k project in Alaska. As the project operator, the Company expects to process Peak ore at its Fort Knox mill, benefitting both the project and mine.

  • On October 20, 2020, Kinross provided a long-term production outlook , with expected average annual production of 2.5 million Au eq. oz. out to 2029.

CEO c ommentary :  
J. Paul Rollinson, President and CEO, made the following c omments in relation to 2020 third -quarter results :

Kinross delivered another strong quarter, generating robust free cash flow and a significant increase in earnings. Our mines continued to perform well as our global teams have effectively managed the operational challenges caused by the COVID-19 pandemic. As a result, we are well on track to meet our annual guidance for production and costs for the ninth consecutive year.

Year-over-year, our margins grew by 60% to $1,171 per gold ounce sold, which substantially outpaced the 30% increase in the average realized gold price. We also continued to strengthen our investment grade balance sheet and ended the quarter with approximately $935 million in cash and total liquidity of $2.5 billion.

In September, we were pleased to announce an expected 20% increase in production over the next three years to 2.9 million gold equivalent ounces, along with plans for a quarterly dividend to return capital to our shareholders. We also provided a long-term production outlook which forecasts Kinross producing an average of 2.5 million gold equivalent ounces annually through to 2029.

Our robust financial position, diverse operating portfolio, attractive project pipeline and successful track record of exploration and project development provides a strong foundation from which to continue building value well into the future.

Financial results

Summary of financial and operating results

 

 

 

 

 

 

 

 

Three months ended

Nine months ended

 

 

September 30,

September 30,

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

 

 

2020

 

2019

 

2020

 

2019

Operating Highlights

 

 

 

 

Total gold equivalent ounces (a)

 

 

 

 

Produced (c)

 

607,744

 

612,697

 

1,755,363

 

1,877,546

Sold (c)

 

593,218

 

597,635

 

1,738,379

 

1,841,841

 

 

 

 

 

 

Attributable gold equivalent ounces (a)

 

 

 

 

Produced (c)

 

603,312

 

608,033

 

1,742,616

 

1,862,315

Sold (c)

 

588,559

 

592,689

 

1,725,778

 

1,826,373

 

 

 

 

 

 

Financial Highlights

 

 

 

 

Metal sales

$

1,131.3

$

877.1

$

3,018.3

$

2,501.1

Production cost of sales

$

439.4

$

440.6

$

1,289.2

$

1,278.4

Depreciation, depletion and amortization

$

204.8

$

176.9

$

608.3

$

520.9

Reversal of impairment charge

$

-

$

-

$

48.3

$

-

Operating earnings

$

393.4

$

162.6

$

907.1

$

422.3

Net earnings attributable to common shareholders

$

240.7

$

60.9

$

559.1

$

197.1

Basic earnings per share attributable to common shareholders

$

0.19

$

0.05

$

0.44

$

0.16

Diluted earnings per share attributable to common shareholders

$

0.19

$

0.05

$

0.44

$

0.16

Adjusted net earnings attributable to common shareholders (b)

$

310.2

$

104.0

$

631.7

$

266.9

Adjusted net earnings per share (b)

$

0.25

$

0.08

$

0.50

$

0.21

Net cash flow provided from operating activities

$

544.1

$

231.7

$

1,276.5

$

816.3

Adjusted operating cash flow (b)

$

549.6

$

295.4

$

1,385.1

$

813.9

Capital expenditures (d)

$

212.1

$

242.6

$

617.8

$

762.3

Average realized gold price per ounce (b)

$

1,908

$

1,467

$

1,736

$

1,358

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

$

741

$

737

$

742

$

694

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

$

737

$

735

$

738

$

692

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

$

707

$

716

$

717

$

677

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

$

934

$

1,016

$

962

$

949

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

$

958

$

1,028

$

978

$

958

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

$

1,226

$

1,305

$

1,226

$

1,261

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

$

1,243

$

1,309

$

1,237

$

1,264

 

 

 

 

 

 

(a)    Total includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) and Peak (70%) production and costs .
(b)    The definition and reconciliation of these non-GAAP financial measures is included on pages 13 to 17 of this news release.
(c)    Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market prices for the commodities for each period. The ratio for the third quarter of 2020 was 78.68:1 (third quarter of 2019 86.73:1). The ratio for the first nine months of 2020 was 90.15:1 (first nine months of 2019 86.13:1).
(d)    Capital expenditures is as reported as Additions to property, plant and equipment on the interim condensed consolidated statement of cash flows and excludes Interest paid capitalized to property, plant and equipment.

The following operating and financial results are based on 2020 third-quarter gold equivalent production. Production and cost measures are on an attributable basis:

Production 1 : Kinross produced 603,312 attributable Au eq. oz. in Q3 2020, compared with 608,033 Au eq. oz. in Q3 2019. The slight decrease was largely due to lower production at Paracatu, Maricunga and Kupol, largely offset by increases at Fort Knox and Bald Mountain.

Average realized gold price 3 : The average realized gold price in Q3 2020 increased 30% to $1,908 per ounce, compared with $1,467 per ounce in Q3 2019.

Revenue : Revenue from metal sales increased by 29% to $1,131.3 million in Q3 2020, compared with $877.1 million during the same period in 2019.

Production cost of sales 1 , 2 : Production cost of sales per Au eq. oz. was $737 for Q3 2020 and was in line with $735 for Q3 2019. Production cost of sales per Au oz. on a by-product basis decreased to $707 in Q3 2020, compared with $716 in Q3 2019, based on Q3 2020 attributable gold sales of 573,173 ounces and attributable silver sales of 1,210,707 ounces.

Margins: Kinross attributable margin per Au eq. oz. sold 3 increased by 60% to $1,171 for Q3 2020, compared with the Q3 2019 margin of $732, and significantly outpacing the year-over-year 30% increase in average realized gold price.

All-in sustaining cost 1, 2 : All-in sustaining cost per Au eq. oz. sold decreased to $958 in Q3 2020, compared with $1,028 in Q3 2019. All-in sustaining cost per Au oz. sold on a by-product basis decreased to $934 in Q3 2020, compared with $1,016 in Q3 2019. The decrease in all-in sustaining cost was primarily a result of lower capital expenditures.

Operating cash flow : Adjusted operating cash flow 2 for Q3 2020 increased by 86% to $549.6 million, compared with $295.4 million for Q3 2019, primarily due to the increase in margins.

Net operating cash flow increased by 135% to $544.1 million for Q3 2020, compared with $231.7 million for Q3 2019.

Earnings : Adjusted net earnings 2 nearly tripled to $310.2 million, or $0.25 per share, for Q3 2020, compared with $104.0 million, or $0.08 per share, for Q3 2019, primarily due to the increase in margins.

Reported net earnings 5 nearly quadrupled to $240.7 million, or $0.19 per share, for Q3 2020, compared with $60.9 million, or $0.05 per share, for Q3 2019.

Capital expenditures : Capital expenditures were $212.1 million for Q3 2020, compared with $242.6 million for Q3 2019, primarily due to decreases in spending at Bald Mountain and Tasiast.

Balance s heet and financial position

As of September 30, 2020, Kinross had cash and cash equivalents of $933.5 million, compared with $1,527.1 million at June 30, 2020. The decrease was primarily related to the full repayment of the $750 million drawn from the Companys $1.5 billion credit facility earlier in the year as a precaution against uncertainties caused by the COVID-19 pandemic and the acquisition of the Peak project. Strong free cash flow generated during Q3 2020 partially offset the cash used for the repayment and acquisition.

The Company had additional available credit of $1,565.3 million as of September 30, 2020, and total liquidity of approximately $2.5 billion. Kinross had total debt of approximately $1.9 billion, of which $500 million in senior notes are due in September 2021, which the Company intends to repay.

Kinross continues to prioritize maintaining and strengthening its investment grade balance sheet.

Operating results

The Companys comprehensive response to the COVID-19 pandemic continued to maintain the safety of its global workforce and host communities while mitigating operational impacts.

Mine-by-mine summaries for 2020 third-quarter results can be found on pages eight and 12 of this news release. Operational highlights from Q3 2020 include the following:

Americas

Fort Knox performed well during the quarter, with higher production and lower cost of sales per ounce sold compared with Q2 2020 mainly due to strong mill performance. The operation delivered higher production compared with Q3 2019 as a result of higher mill grades and mill throughput. Cost of sales per ounce sold decreased year-over-year due to increased production and mill throughput, partially offset by higher operating waste mined.

Round Mountain s production was largely in line with Q2 2020, with cost of sales per ounce sold decreasing mainly as a result of lower contractor costs. Year-over-year production decreased primarily as a result of lower mill grades, partially offset by higher ounces recovered from the heap leach pads. Cost of sales per ounce sold was lower compared with Q3 2019 mainly due to a decrease in operating waste mined and lower fuel costs.

At Bald Mountain , both production and cost of sales per ounce sold were largely consistent with Q2 2020. Production increased compared with Q3 2019 as more ounces were recovered from the Vantage Complex heap leach pad due to higher grades. Cost of sales per ounce sold increased year-over-year mainly due to higher royalty expenses driven by higher gold prices.

At Paracatu , production was lower quarter-over-quarter mainly due to a decrease in mill throughput as a result of planned maintenance and lower grades. The lower throughput, and a decrease in recoveries, contributed to the lower production year-over-year. Production is expected to improve in the fourth quarter as mining is expected to transition to higher grade ore. Cost of sales per ounce sold increased compared with Q2 2020 and Q3 2019 mainly as a result of lower ounces produced, higher contractor costs and maintenance supplies, partially offset by favourable foreign exchange movements.

Russia

At Kupol and Dvoinoye , production was largely in line with the previous quarter and was lower year-over-year mainly due to anticipated lower grades at Kupol. Cost of sales per ounce sold was lower compared with Q2 2020 and Q3 2019, primarily due to reduced mining activity at Dvoinoye. Favourable foreign exchange rates also contributed to the year-over-year decrease in cost of sales per ounce sold, which was partially offset by higher royalties associated with the increase in the average realized gold price.

West Africa

Tasiast performed well, with higher production quarter-over-quarter and year-over-year. While production in the second quarter was negatively impacted by a strike, Q3 2020 production improved as a result of record mill grades and higher mill throughput, with Tasiast achieving a record production month in August. Cost of sales per ounce sold increased compared with Q2 2020 mainly due to higher royalty expenses and increased milling supplies. Compared with Q3 2019, production increased due to higher mill grades, which was partially offset by lower mill throughput and recoveries, while cost of sales per ounce sold was largely consistent.

During the quarter, Tasiasts mining rate continued to ramp up and is now operating at near full capacity after rates were affected by the strike in Q2 2020 and COVID-19 impacts earlier in the year. As a result of lower mining rates, approximately 100k Au eq. oz. of production is expected to be deferred from 2021 to 2022. Kinross does not expect any impacts to Tasiasts life of mine production.

At Chirano , production increased compared with the previous quarter primarily due to higher mill throughput, and cost of sales per ounce sold increased due to higher milling costs. Year-over-year production was lower as a result of lower grades, and cost of sales per ounce sold increased due to higher milling costs and maintenance supplies, partially offset by lower operating waste mined.

L ong-term production outlook

On September 17, 2020, Kinross announced a growing three-year production profile, with production expected to increase by approximately half a million ounces, or 20%, to 2.9 million Au eq. oz. in 2023. The Company expects production 1 (+/- 5%) of 2.4 million Au eq. oz. in 2021, 2.7 million Au eq. oz. in 2022, and 2.9 million Au eq. oz. in 2023.

On October 20, 2020, Kinross provided a long-term production outlook, with expected average annual production of 2.5 million Au eq. oz. 1 to 2029. Kinross production outlook is based on long-life assets that anchor the Companys global portfolio, along with numerous growth projects in all operating regions.

Development p rojects

Alaska projects

At the Fort Knox Gilmore project, work on infrastructure and processing facilities is now substantially complete. First ore was placed on the new Barnes Creek heap leach pad in early October, as construction of the pad was completed on time and under budget during the quarter. Stripping is progressing well, and the Company expects to accelerate production at the Gilmore project to bring ounces forward as part of Kinross growing three-year production profile.

On September 30, 2020, the Company acquired a 70% interest in the open pit Peak project in Alaska for total cash consideration of $93.7 million. As the project operator, Kinross expects to process Peak ore at its Fort Knox mill. Processing ore at Fort Knox avoids mill construction at Peak and is expected to decrease execution risk, lower capital expenditures, drive attractive returns, and reduce the projects environmental footprint and permitting requirements. Blending the higher grade ore from Peak with Fort Knox ore is expected to extend mill operation at Fort Knox, reduce overall costs and increase cash flow. The project is expected to benefit the state and local communities, in particular, the Upper Tanana Athabascan Village of Tetlin.

Kinross expects to commence production at Peak in 2024, with total production of approximately 1 million Au eq. oz. over 4.5 years at average mining grades of approximately 6 g/t. Kinross plans to commence a drilling program before year end to further develop the projects resource base, and expects to complete permitting and a feasibility study by the end of 2022.

Tasiast 24k

The Tasiast 24k project is advancing well and remains on schedule to increase throughput capacity to 21,000 t/d by the end of 2021, and then to 24,000 t/d by mid-2023. The project is now approximately 45% complete, with civil and mechanical works progressing well in the processing plant, including the gravity circuit, thickener and screens. Work on power plant construction, which was previously delayed by COVID-19 impacts, is now ramping up.

Chulbatkan license Udinsk project

At the Udinsk development project the first project the Company expects to develop on the larger Chulbatkan license study work is advancing well. The 2020 drill program has ramped back up after challenges related to COVID-19 earlier in the year, and as of the end of Q3 2020, approximately 50,000 metres of drilling have been completed. All of the current estimated mineral resources at Chulbatkan are located at Udinsk, which has a footprint that represents less than 1% of the approximately 450 sq. kilometre Chulbatkan license area.

On the Chulbatkan license, a geochemistry and geophysics exploration program completed outside of Udinsk has returned positive results, with new anomalies identified. The large, prospective Chulbatkan license area provides exploration potential that is incremental to the Udinsk project.

La Coipa Restart and Lobo-Marte

The La Coipa Restart project is progressing well and is on schedule to begin pre-stripping in early 2021, with first production expected in mid-2022. An access road to the Phase 7 pit has been established and refurbishments of the fleet that was successfully transferred from Maricunga in April 2020 are progressing well. Early work on refurbishing the plant and existing infrastructure is also advancing well as the team continues to work to offset challenges to project timing caused by COVID-19 impacts. The Company continues to study opportunities to incorporate adjacent deposits with existing mineral reserves and resources into the La Coipa mine plan and potentially extend mine life.

At the Lobo-Marte project, work on permitting and the feasibility study (FS) is advancing, with the FS on schedule to be completed in Q4 2021. The Company is targeting production at Lobo-Marte to commence in 2027 after the completion of mining at La Coipa. Kinross continues to believe that Lobo-Marte offers the potential of a long-life, cornerstone asset with attractive costs.

2020 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 Forw ard-Looking Information on page 18 of this news release.

On September 17, 2020, the Company reinstated its 2020 guidance originally announced on February 12, 2020.

Kinross is on track to meet its production 1 guidance of 2.4 million Au eq. oz. (+/- 5%), its cost of sales per ounce 1 guidance of $720 per Au eq. oz. sold (+/- 5%), and its all-in sustaining cost 1 guidance of $970 per Au eq. oz. sold (+/- 5%) for 2020. The Company also remains on track to meet its capital expenditures guidance of $900 million (+/- 5%).

2019 Sustainability Report

In August 2020, Kinross released its biennial Sustainability Report (Report) detailing the Companys progress over the past two years in delivering on its commitment to responsible mining. The Report provides a transparent account of Kinross sustainability performance, including ESG activities, and an in-depth review of the Companys relationships with host communities, workforce and host governments.

Health and safety remains Kinross top priority and is exemplified by its strong safety performance. Incident frequency rates have remained among the lowest in the industry, and on par with, or better than rates in low-risk, non-industrial sectors. In line with this commitment, the Report provides comprehensive information on Kinross COVID-19 Response , which includes rigorous measures to keep its employees safe, mitigate the spread of the virus, maintain business continuity and production, and support employees and host communities.

The Company continued to deliver socio-economic value, and provided benefits to host countries with a total of $3.2 billion spent in-country in 2019 through taxes, wages, procurement and community support.

Kinross has adopted the World Gold Councils Responsible Gold Mining Principles (RGMPs), proceeded with the implementation of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and continued to advance the UN Sustainable Development Goals (SDGs). The Report follows the Global Reporting Initiative (GRI) framework, fulfills Kinross commitment as a participant in the UN Global Compact, and includes metrics from the Mining and Metals Standard of the Sustainability Accounting Standards Board (SASB).

Q 3 2020 c onference call details

In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, November 5, 2020 at 8:00 a.m. ET followed by a question-and-answer session. Please enter the p asscode: 8369428 to access the call.

Canada & US toll-free +1 (833) 968-2237; Passcode: 8369428
Outside of Canada & US +1 (825) 312-2059; Passcode: 8369428

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

Canada & US toll-free +1 (800) 585-8367; Passcode: 8369428
Outside of Canada & US +1 (416) 621-4642; Passcode: 8369428

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 news release should be read in conjunction with Kinross 2020 third-quarter unaudited Financial Statements and Managements Discussion and Analysis report at www.kinross.com . Kinross third-quarter unaudited Financial Statements and Managements 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 (symbol: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
phone: 416-365-3390                        
tom.elliott@kinross.com

Review of o perations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, (unaudited)

 

Gold equivalent ounces

 

 

 

 

 

 

 

 

Produced

 

Sold

 

Production cost of sales
($millions)

 

Production cost of
sales/equivalent ounce sold

 

2020

 

2019

 

 

2020

 

2019

 

 

 

2020

 

 

2019

 

 

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

Fort Knox

72,705

 

54,027

 

 

73,267

 

51,606

 

 

$

69.5

 

$

58.3

 

 

$

949

$

1,130

Round Mountain

76,039

 

82,195

 

 

72,717

 

81,617

 

 

 

49.7

 

 

57.5

 

 

 

683

 

705

Bald Mountain

49,339

 

33,995

 

 

37,492

 

37,644

 

 

 

32.1

 

 

30.6

 

 

 

856

 

813

Paracatu

131,000

 

146,396

 

 

128,782

 

145,662

 

 

 

96.6

 

 

99.5

 

 

 

750

 

683

Maricunga

3,132

 

18,016

 

 

4,442

 

9,203

 

 

 

1.0

 

 

7.0

 

 

 

225

 

761

Americas Total

332,215

 

334,629

 

 

316,700

 

325,732

 

 

 

248.9

 

 

252.9

 

 

 

786

 

776

 

 

 

 

 

 

 

 

 

 

 

 

Kupol

128,144

 

137,562

 

 

126,637

 

136,088

 

 

 

69.2

 

 

82.6

 

 

 

546

 

607

Russia Total

128,144

 

137,562

 

 

126,637

 

136,088

 

 

 

69.2

 

 

82.6

 

 

 

546

 

607

 

 

 

 

 

 

 

 

 

 

 

 

Tasiast

103,065

 

93,865

 

 

103,295

 

86,357

 

 

 

65.2

 

 

55.1

 

 

 

631

 

638

Chirano (100%)

44,320

 

46,641

 

 

46,586

 

49,458

 

 

 

56.1

 

 

50.0

 

 

 

1,204

 

1,011

West Africa Total

147,385

 

140,506

 

 

149,881

 

135,815

 

 

 

121.3

 

 

105.1

 

 

 

809

 

774

 

 

 

 

 

 

 

 

 

 

 

 

Operations Total

607,744

 

612,697

 

 

593,218

 

597,635

 

 

 

439.4

 

 

440.6

 

 

 

741

 

737

Less Chirano non-controlling interest (10%)

(4,432

)

(4,664

)

 

(4,659

)

(4,946

)

 

 

(5.6

)

 

(5.0

)

 

 

 

Attributable Total

603,312

 

608,033

 

 

588,559

 

592,689

 

 

$

433.8

 

$

435.6

 

 

$

737

$

735

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, (unaudited)

 

Gold equivalent ounces

 

 

 

 

 

 

 

 

Produced

 

Sold

 

Production cost of sales ($millions)

 

Production cost of
sales/equivalent ounce sold

 

2020

 

2019

 

 

2020

 

2019

 

 

 

2020

 

 

2019

 

 

 

2020

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

Fort Knox

180,402

 

147,080

 

 

180,500

 

145,283

 

 

$

200.2

 

$

147.8

 

 

$

1,109

$

1,017

Round Mountain

234,855

 

258,163

 

 

229,519

 

252,337

 

 

 

157.4

 

 

171.3

 

 

 

686

 

679

Bald Mountain

139,795

 

121,814

 

 

129,462

 

112,421

 

 

 

110.5

 

 

86.8

 

 

 

854

 

772

Paracatu

394,217

 

479,339

 

 

390,625

 

478,579

 

 

 

267.7

 

 

301.2

 

 

 

685

 

629

Maricunga

3,132

 

35,380

 

 

6,912

 

26,301

 

 

 

2.6

 

 

19.8

 

 

 

376

 

753

Americas Total

952,401

 

1,041,776

 

 

937,018

 

1,014,921

 

 

 

738.4

 

 

726.9

 

 

 

788

 

716

 

 

 

 

 

 

 

 

 

 

 

 

Kupol

380,012

 

395,334

 

 

379,432

 

391,375

 

 

 

225.4

 

 

230.8

 

 

 

594

 

590

Russia Total

380,012

 

395,334

 

 

379,432

 

391,375

 

 

 

225.4

 

 

230.8

 

 

 

594

 

590

 

 

 

 

 

 

 

 

 

 

 

 

Tasiast

295,481

 

288,124

 

 

295,924

 

280,863

 

 

 

174.9

 

 

180.0

 

 

 

591

 

641

Chirano (100%)

127,469

 

152,312

 

 

126,005

 

154,682

 

 

 

150.5

 

 

140.7

 

 

 

1,194

 

910

West Africa Total

422,950

 

440,436

 

 

421,929

 

435,545

 

 

 

325.4

 

 

320.7

 

 

 

771

 

736

 

 

 

 

 

 

 

 

 

 

 

 

Operations Total

1,755,363

 

1,877,546

 

 

1,738,379

 

1,841,841

 

 

 

1,289.2

 

 

1,278.4

 

 

 

742

 

694

Less Chirano non-controlling interest (10%)

(12,747

)

(15,231

)

 

(12,601

)

(15,468

)

 

 

(15.0

)

 

(14.1

)

 

 

 

Attributable Total

1,742,616

 

1,862,315

 

 

1,725,778

 

1,826,373

 

 

$

1,274.2

 

$

1,264.3

 

 

$

738

$

692

 

 

 

 

 

 

 

 

 

 

 

 

Interim condensed c onsolidated balance sheets

 

 

 

 

 

 

(unaudited, expressed in millions of U.S. dollars, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

As at

 

 

 

September 30,

 

December 31,

 

 

 

 

2020

 

 

 

2019

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

933.5

 

 

$

575.1

 

 

Restricted cash

 

 

13.1

 

 

 

15.2

 

 

Accounts receivable and other assets

 

 

182.4

 

 

 

137.4

 

 

Current income tax recoverable

 

 

157.0

 

 

 

43.2

 

 

Inventories

 

 

1,032.0

 

 

 

1,053.8

 

 

 

 

 

2,318.0

 

 

 

1,824.7

 

 

Non-current assets

 

 

 

 

 

Property, plant and equipment

 

 

6,836.3

 

 

 

6,340.0

 

 

Goodwill

 

 

158.8

 

 

 

158.8

 

 

Long-term investments

 

 

106.2

 

 

 

126.2

 

 

Investment in joint venture

 

 

18.3

 

 

 

18.4

 

 

Other long-term assets

 

 

570.4

 

 

 

572.7

 

 

Deferred tax assets

 

 

-

 

 

 

35.2

 

 

Total assets

 

$

10,008.0

 

 

$

9,076.0

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

468.2

 

 

$

469.3

 

 

Dividend payable

 

 

37.7

 

 

 

-

 

 

Current income tax payable

 

 

72.8

 

 

 

68.0

 

 

Current portion of long-term debt and credit facilities

 

 

499.6

 

 

 

-

 

 

Current portion of provisions

 

 

56.7

 

 

 

57.9

 

 

Other current liabilities

 

 

40.2

 

 

 

20.3

 

 

Deferred payment obligation

 

 

141.5

 

 

 

-

 

 

 

 

 

1,316.7

 

 

 

615.5

 

 

   Non-current liabilities

 

 

 

 

 

   Long-term debt and credit facilities

 

 

1,423.1

 

 

 

1,837.4

 

 

   Provisions

 

 

815.6

 

 

 

838.6

 

 

   Long-term lease liabilities

 

 

28.9

 

 

 

38.9

 

 

   Unrealized fair value of derivative liabilities

 

 

14.0

 

 

 

0.8

 

 

   Other long-term liabilities

 

 

94.6

 

 

 

107.7

 

 

   Deferred tax liabilities

 

 

435.5

 

 

 

304.5

 

 

Total liabilities

 

$

4,128.4

 

 

 $

3,743.4

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

   Common shareholders' equity

 

 

 

 

 

Common share capital

 

$

4,473.6

 

 

$

14,926.2

 

 

Contributed surplus

 

 

10,705.7

 

 

 

242.1

 

 

Accumulated deficit

 

 

(9,308.0

)

 

 

(9,829.4

)

 

Accumulated other comprehensive income (loss)

 

 

(48.6

)

 

 

(20.4

)

 

Total common shareholders' equity

 

 

5,822.7

 

 

 

5,318.5

 

 

   Non-controlling interests

 

 

56.9

 

 

 

14.1

 

 

Total equity

 

 

5,879.6

 

 

 

5,332.6

 

 

Total liabilities and equity

 

$

10,008.0

 

 

$

9,076.0

 

 

 

 

 

 

 

 

Common shares

 

 

 

 

 

Authorized

 

 

Unlimited

 

 

 

Unlimited

 

 

Issued and outstanding

 

 

1,258,287,630

 

 

 

1,253,765,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interim condensed c onsolidated statements of operations

 

 

 

 

 

 

 

 

 

 

(unaudited, expressed in millions of U.S. dollars, except share and per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

Revenue

 

 

 

 

 

 

 

 

 

Metal sales

 

$

1,131.3

 

 

$

877.1

 

 

$

3,018.3

 

 

$

2,501.1

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

 

 

 

 

Production cost of sales

 

 

439.4

 

 

 

440.6

 

 

 

1,289.2

 

 

 

1,278.4

 

 

Depreciation, depletion and amortization

 

 

204.8

 

 

 

176.9

 

 

 

608.3

 

 

 

520.9

 

 

Reversal of impairment charge

 

 

-

 

 

 

-

 

 

 

(48.3

)

 

 

-

 

 

Total cost of sales

 

 

644.2

 

 

 

617.5

 

 

 

1,849.2

 

 

 

1,799.3

 

 

Gross profit

 

 

487.1

 

 

 

259.6

 

 

 

1,169.1

 

 

 

701.8

 

 

Other operating expense

 

 

43.6

 

 

 

29.1

 

 

 

118.4

 

 

 

91.5

 

 

Exploration and business development

 

 

24.8

 

 

 

35.6

 

 

 

61.8

 

 

 

83.5

 

 

General and administrative

 

 

25.3

 

 

 

32.3

 

 

 

81.8

 

 

 

104.5

 

 

Operating earnings

 

 

393.4

 

 

 

162.6

 

 

 

907.1

 

 

 

422.3

 

 

Other income (expense) - net

 

 

(3.4

)

 

 

5.2

 

 

 

5.2

 

 

 

5.4

 

 

Finance income

 

 

0.8

 

 

 

2.3

 

 

 

3.8

 

 

 

6.3

 

 

Finance expense

 

 

(27.4

)

 

 

(23.8

)

 

 

(85.9

)

 

 

(77.4

)

 

Earnings before tax

 

 

363.4

 

 

 

146.3

 

 

 

830.2

 

 

 

356.6

 

 

Income tax expense - net

 

 

(121.8

)

 

 

(85.5

)

 

 

(269.3

)

 

 

(160.1

)

 

Net earnings

 

$

241.6

 

 

$

60.8

 

 

$

560.9

 

 

$

196.5

 

 

Net earnings (loss) attributable to:

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

$

0.9

 

 

$

(0.1

)

 

$

1.8

 

 

$

(0.6

)

 

Common shareholders

 

$

240.7

 

 

$

60.9

 

 

$

559.1

 

 

$

197.1

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to common shareholders

 

 

 

 

 

 

 

 

 

Basic

 

$

0.19

 

 

$

0.05

 

 

$

0.44

 

 

$

0.16

 

 

Diluted

 

$

0.19

 

 

$

0.05

 

 

$

0.44

 

 

$

0.16

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding (millions)

 

 

 

 

 

 

 

 

 

Basic

 

 

1,258.1

 

 

 

1,252.8

 

 

 

1,256.8

 

 

 

1,251.9

 

 

Diluted

 

 

1,269.0

 

 

 

1,263.9

 

 

 

1,267.6

 

 

 

1,261.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Interim condensed c onsolidated statements of cash flows

 

 

 

 

 

 

 

 

 

 

(unaudited, expressed in millions of U.S. dollars)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

September 30,

 

September 30,

 

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

Net inflow (outflow) of cash related to the following activities:

 

 

 

 

 

 

 

 

 

Operating:

 

 

 

 

 

 

 

 

 

Net earnings

 

$

241.6

 

 

$

60.8

 

 

$

560.9

 

 

$

196.5

 

 

Adjustments to reconcile net earnings to net cash provided from operating activities:

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

204.8

 

 

 

176.9

 

 

 

608.3

 

 

 

520.9

 

 

Reversal of impairment charge

 

 

-

 

 

 

-

 

 

 

(48.3

)

 

 

-

 

 

Share-based compensation expense

 

 

3.1

 

 

 

3.3

 

 

 

10.4

 

 

 

10.9

 

 

Finance expense

 

 

27.4

 

 

 

23.8

 

 

 

85.9

 

 

 

77.4

 

 

Deferred tax expense (recovery)

 

 

63.4

 

 

 

15.3

 

 

 

175.9

 

 

 

(16.1

)

 

Foreign exchange losses (gains) and other

 

 

9.3

 

 

 

(1.4

)

 

 

(8.0

)

 

 

7.6

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable and other assets

 

 

(40.9

)

 

 

(76.2

)

-

 

(168.6

)

 

 

(101.9

)

 

Inventories

 

 

(13.0

)

 

 

(40.5

)

 

 

26.3

 

 

 

9.5

 

 

Accounts payable and accrued liabilities

 

 

78.4

 

 

 

131.6

 

 

 

190.6

 

 

 

174.0

 

 

Cash flow provided from operating activities

 

 

574.1

 

 

 

293.6

 

 

 

1,433.4

 

 

 

878.8

 

 

Income taxes paid

 

 

(30.0

)

 

 

(61.9

)

 

 

(156.9

)

 

 

(62.5

)

 

Net cash flow provided from operating activities

 

 

544.1

 

 

 

231.7

 

 

 

1,276.5

 

 

 

816.3

 

 

Investing:

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

 

(212.1

)

 

 

(242.6

)

 

 

(617.8

)

 

 

(762.3

)

 

Interest paid capitalized to property, plant and equipment

 

 

(16.9

)

 

 

(22.9

)

 

 

(43.0

)

 

 

(44.7

)

 

Acquisitions

 

 

(122.5

)

 

 

-

 

 

 

(250.8

)

 

 

(30.0

)

 

    Net proceeds from the sale of (additions to) long-term investments and other assets

 

2.4

 

 

 

(0.6

)

 

 

(0.9

)

 

 

(12.9

)

 

Net proceeds from the sale of property, plant and equipment

 

 

1.1

 

 

 

0.8

 

 

 

3.3

 

 

 

2.9

 

 

Decrease (increase) in restricted cash - net

 

 

0.2

 

 

 

0.6

 

 

 

(22.9

)

 

 

(0.2

)

 

Interest received and other - net

 

 

0.7

 

 

 

1.1

 

 

 

2.4

 

 

 

3.2

 

 

Net cash flow used in investing activities

 

 

(347.1

)

 

 

(263.6

)

 

 

(929.7

)

 

 

(844.0

)

 

Financing:

 

 

 

 

 

 

 

 

 

Proceeds from drawdown of debt

 

 

-

 

 

 

40.0

 

 

 

950.0

 

 

 

300.0

 

 

Repayment of debt

 

 

(750.0

)

 

 

(95.0

)

 

 

(850.0

)

 

 

(200.0

)

 

Interest paid

 

 

(34.1

)

 

 

(26.6

)

 

 

(63.1

)

 

 

(55.0

)

 

Payment of lease liabilities

 

 

(4.0

)

 

 

(3.2

)

 

 

(13.5

)

 

 

(10.4

)

 

Other - net

 

 

1.0

 

 

 

1.0

 

 

 

(3.6

)

 

 

0.8

 

 

Net cash flow (used in) provided from financing activities

 

 

(787.1

)

 

 

(83.8

)

 

 

19.8

 

 

 

35.4

 

 

Effect of exchange rate changes on cash and cash equivalents

 

 

(3.5

)

 

 

(1.7

)

 

 

(8.2

)

 

 

1.3

 

 

(Decrease) increase in cash and cash equivalents

 

 

(593.6

)

 

 

(117.4

)

 

 

358.4

 

 

 

9.0

 

 

Cash and cash equivalents, beginning of period

 

 

1,527.1

 

 

 

475.4

 

 

 

575.1

 

 

 

349.0

 

 

Cash and cash equivalents, end of period

 

$

933.5

 

 

$

358.0

 

 

$

933.5

 

 

$

358.0

 

 

 

 

 

 

 

 

 

 

 

 


 Operating Summary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mine

Period

Ownership

Tonnes Ore Mined (a)

Ore Processed (Milled) (a)

Ore Processed (Heap Leach) (a)

Grade (Mill)

Grade (Heap Leach)

Recovery (b)(h)

Gold Eq Production (e)

Gold Eq Sales (e)

Production cost of sales

Production cost of sales/oz

Cap Ex (g)

DD&A

 

 

 

(%)

('000 tonnes)

('000 tonnes)

('000 tonnes)

(g/t)

(g/t)

(%)

(ounces)

(ounces)

($ millions)

($/ounce)

($ millions)

($ millions)

Americas

Fort Knox

Q3 2020

100

7,202

2,664

5,497

0.67

0.1983%72,70573,267$ 69.5$ 949$ 39.7$ 27.9Q2 20201006,1162,0484,7830.730.2383%56,03156,465 66.1$1,171 33.9 23.3Q1 20201006,7951,8595,6940.600.2380%51,66750,768 64.6$1,272 19.1 22.8Q4 20191007,6482,6155,4980.430.2081%53,18355,040 65.9$1,197 37.1 25.0Q3 20191007,0942,0975,2500.520.2183%54,02751,606 58.3$1,130 37.4 24.7Round MountainQ3 20201006,0859725,8840.790.3983%76,03972,717$ 49.7$ 683$ 39.2$ 11.6Q2 20201004,4319114,3570.800.3684%74,35171,087 51.6$726 36.9 10.2Q1 20201003,7009543,5940.830.4383%84,46585,715 56.1$654 41.8 12.6Q4 20191007,4088827,1401.000.3682%103,501108,402 79.3$732 62.7 12.6Q3 20191007,1281,0047,5571.050.3285%82,19581,617 57.5$705 43.1 9.1Bald MountainQ3 20201004,922-4,922-0.56nm49,33937,492$ 32.1$ 856$ 23.4$ 27.1Q2 20201004,051-4,051-0.53nm48,36849,594 42.7$861 29.6 30.2Q1 20201003,254-3,254-0.55nm42,08742,376 35.7$842 31.5 26.7Q4 20191002,928-3,007-0.48nm66,14765,381 49.8$762 54.6 36.3Q3 20191006,494-6,494-0.41nm33,99537,644 30.6$813 38.9 14.8ParacatuQ3 202010012,46813,673-0.38-74%131,000128,782$ 96.6$ 750$ 27.2$ 42.4Q2 202010015,22314,703-0.40-74%138,851140,646 83.6$594 49.1 45.2Q1 202010012,35013,224-0.39-75%124,367121,197 87.5$722 14.4 37.7Q4 201910012,39314,168-0.38-76%140,224140,430 111.1$791 21.4 42.8Q3 201910012,44214,731-0.38-78%146,396145,662 99.5$683 36.8 39.5MaricungaQ3 2020100-----nm3,1324,442$ 1.0$ 225$ -$ 0.2Q2 2020100-----nm-1,159 0.8$690 - 0.3Q1 2020100-----nm-1,311 0.8$610 - 0.3Q4 2019100-----nm3,22117,455 11.7$670 - 0.4Q3 2019100-----nm18,0169,203 7.0$761 - 0.4RussiaKupol (c)(d)(f)Q3 2020100365430-8.99-95%128,144126,637$ 69.2$ 546$ 6.1$ 27.0Q2 2020100386416-9.73-95%130,983130,771 79.3$606 5.9 31.1Q1 2020100500425-8.73-95%120,885122,024 76.9$630 5.6 34.4Q4 2019100468435-9.14-95%132,009135,083 83.3$617 15.8 34.8Q3 2019100338431-9.65-95%137,562136,088 82.6$607 7.6 32.2West AfricaTasiastQ3 20201001,3381,244-2.78-94%103,065103,295$ 65.2$ 631$ 50.0$ 50.2Q2 20201001,1341,168-2.40 94%88,57998,679 57.8$586 40.6 54.8Q1 20201001,1601,467-2.31-95%103,83793,950 51.9$552 69.2 40.3Q4 20191001,1291,379-2.39-96%102,973101,940 50.4$494 86.1 35.0Q3 20191001,0101,297-2.37-97%93,86586,357 55.1$638 68.3 32.0Chirano - 100%Q3 2020100768815-1.87-88%44,32046,586$ 56.1$ 1,204$ 5.0$ 16.1Q2 2020100679785-1.85-88%38,68340,084 46.6$1,163 5.8 13.1Q1 2020100690873-1.73-88%44,46539,335 47.8$1,215 5.1 15.9Q4 2019100737844-2.00-91%48,98447,186 49.0$1,038 8.0 21.4Q3 2019100714801-2.02-92%46,64149,458 50.0$1,011 4.7 22.0Chirano - 90%Q3 202090768815-1.87-88%39,88841,927$ 50.5$ 1,204$ 4.5$ 14.5Q2 202090679785-1.85-88%34,81536,076 41.9$1,163 5.2 11.8Q1 202090690873-1.73-88%40,01935,401 43.0$1,215 4.7 14.3Q4 201990737844-2.00-91%44,08642,468 44.1$1,038 7.2 19.3Q3 201990714801-2.02-92%41,97744,512 45.0$1,011 4.3 19.8 (a)Tonnes of ore mined and processed represent 100% Kinross for all periods presented.(b)Due to the nature of heap leach operations, recovery rates at Maricunga and Bald Mountain cannot be accurately measured on a quarterly basis. Recovery rates at Fort Knox, Round Mountain and Tasiast represent mill recovery only.(c)The Kupol segment includes the Kupol and Dvoinoye mines.(d)Kupol silver grade and recovery were as follows: Q3 2020: 74.19 g/t, 88%; Q2 2020: 70.36 g/t, 86%; Q1 2020: 80.02 g/t, 84%; Q4 2019: 65.63 g/t, 85%; Q3 2019: 67.44 g/t, 88%.(e)Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent based on the ratio of the average spot market prices for the commodities for each period. The ratios for the quarters presented are as follows: Q3 2020: 78.68:1; Q2 2020: 104.49:1, Q1 2020: 93.34:1, Q4 2019: 85.59:1; Q3 2019: 86.73:1.(f)Dvoinoye ore processed and grade were as follows: Q3 2020: 115,054, 9.44 g/t; Q2 2020: 113,472, 9.55 g/t; Q1 2020: 117,502, 9.24 g/t; Q4 2019: 100,685, 9.89 g/t; Q3 2019: 113,497, 9.82 g/t;(g)"Capital expenditures" is as reported as “Additions to property, plant and equipment” on the interim condensed consolidated statement of cash flows and excludes “Interest paid capitalized to property, plant and equipment”.(h)"nm" means not meaningful

Reconciliation of non-GAAP financial measures

The Company has included certain non-GAAP financial measures in this document. These measures are not defined under International Financial Reporting Standards (“IFRS”) and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other issuers.

Adjusted net earnings attributable to common shareholders and adjusted net earnings per share are non-GAAP measures which determine the performance of the Company, excluding certain impacts which the Company believes are not reflective of the Company’s underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, reassessment of prior year taxes and/or taxes otherwise not related to the current period, impairment charges (reversals), gains and losses and other one-time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results. Management believes that these measures, which are used internally to assess performance and in planning and forecasting future operating results, provide investors with the ability to better evaluate underlying performance, particularly since the excluded items are typically not included in public guidance. However, adjusted net earnings and adjusted net earnings per share measures are not necessarily indicative of net earnings and earnings per share measures as determined under IFRS.

The following table provides a reconciliation of net earnings to adjusted net earnings for the periods presented:

Adjusted Net Earnings

(unaudited, expressed in millions of U.S dollars, except per share amounts)

Three months ended

Nine months ended

September 30,

September 30,

2020

2019

2020

2019

Net earnings attributable to common shareholders - as reported

$

240.7

$

60.9

$

559.1

$

197.1

Adjusting items:

Foreign exchange losses (gains)

6.5

(8.6

)

(0.9

)

(6.6

)

Foreign exchange losses on translation of tax basis and foreign exchange on deferred income taxes within income tax expense

42.7

20.7


96.6

13.9

Taxes in respect of prior periods

5.5

22.0


11.6

33.4

Reversal of impairment charge(a)

-

-

(48.3

)

-

COVID-19 and Tasiast strike costs(b)

19.6

-

49.1

-

U.S. CARES Act net benefit

-

-


(25.4

)

-

Fort Knox pit wall slide related costs

-

5.7


-

17.1

Restructuring costs

-

3.0


-

12.2

Other

(3.1

)

2.7


(2.9

)

4.9

Tax effect of the above adjustments

(1.7

)

(2.4

)

(7.2

)

(5.1

)

69.5

43.1

72.6

69.8

Adjusted net earnings attributable to common shareholders

$

310.2

$

104.0

$

631.7

$

266.9

Weighted average number of common shares outstanding - Basic

1,258.1

1,252.8

1,256.8

1,251.9

Adjusted net earnings per share

$

0.25

$

0.08

$

0.50

$

0.21

(a) During the nine months ended September 30, 2020, the Company recognized a non-cash reversal of impairment charge of $48.3 million related to property, plant and equipment at Lobo-Marte. There was no tax impact of this impairment reversal.
(b) Includes $2.3 million and $8.3 million of Tasiast strike costs in the third quarter and first nine months of 2020, respectively, as well as additional COVID-19 related labour, health & safety, donations and other support program costs of $17.3 million and $40.8 million in the third quarter and first nine months of 2020, respectively.

The Company makes reference to a non-GAAP measure for adjusted operating cash flow. Adjusted operating cash flow is defined as cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company’s regular operating cash flow, and excluding changes in working capital. Working capital can be volatile due to numerous factors, including the timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The Company uses adjusted operating cash flow internally as a measure of the underlying operating cash flow performance and future operating cash flow-generating capability of the Company. However, the adjusted operating cash flow measure is not necessarily indicative of net cash flow from operations as determined under IFRS.

The following table provides a reconciliation of adjusted operating cash flow for the periods presented:

Adjusted Operating Cash Flow

(unaudited, expressed in millions of U.S dollars, except per share amounts)

Three months ended

Nine months ended

September 30,

September 30,

2020

2019

2020

2019

Net cash flow provided from operating activities - as reported

$

544.1

$

231.7

$

1,276.5

$

816.3

Adjusting items:

Tax payments in respect of prior years

-

16.7

-

16.7

Working capital changes:

Accounts receivable and other assets

40.9

76.2

168.6

101.9

Inventories

13.0

40.5

(26.3

)

(9.5

)

Accounts payable and other liabilities, including income taxes paid

(48.4

)

(69.7

)

(33.7

)

(111.5

)

5.5

63.7

108.6

(2.4

)

Adjusted operating cash flow

$

549.6

$

295.4

$

1,385.1

$

813.9

Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of sales as per the interim condensed consolidated financial statements divided by the total number of gold equivalent ounces sold. This measure converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.

Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.

Management uses these measures to monitor and evaluate the performance of its operating properties. The following table presents a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for the periods presented:

Consolidated and Attributable Production Cost of Sales
Per Equivalent Ounce Sold

(unaudited, expressed in millions of U.S. dollars, except ounces and production cost of sales per equivalent ounce)

Three months ended

Nine months ended

September 30,

September 30,

2020

2019

2020

2019

Production cost of sales - as reported

$

439.4

$

440.6

$

1,289.2

$

1,278.4

Less: portion attributable to Chirano non-controlling interest(a)

(5.6

)

(5.0

)

(15.0

)

(14.1

)

Attributable(b) production cost of sales

$

433.8

$

435.6

$

1,274.2

$

1,264.3

Gold equivalent ounces sold

593,218

597,635

1,738,379

1,841,841

Less: portion attributable to Chirano non-controlling interest(j)

(4,659

)

(4,946

)

(12,601

)

(15,468

)

Attributable(b) gold equivalent ounces sold

588,559

592,689

1,725,778

1,826,373

Consolidated production cost of sales per equivalent ounce sold

$

741

$

737

$

742

$

694

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

$

737

$

735

$

738

$

692

See page 17 of this news release for details of the footnotes referenced within the table above.

Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP measure which calculates the Company’s non-gold production as a credit against its per ounce production costs, rather than converting its non-gold production into gold equivalent ounces and crediting it to total production, as is the case in co-product accounting. Management believes that this measure provides investors with the ability to better evaluate Kinross’ production cost of sales per ounce on a comparable basis with other major gold producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-product accounting.

The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the periods presented:

Attributable Production Cost of Sales Per Ounce Sold
on a By-Product Basis

(unaudited, expressed in millions of U.S. dollars, except ounces and production cost of sales per ounce)

Three months ended

Nine months ended

September 30,

September 30,

2020

2019

2020

2019

Production cost of sales - as reported

$

439.4

$

440.6

$

1,289.2

$

1,278.4

Less: portion attributable to Chirano non-controlling interest(a)

(5.6

)

(5.0

)

(15.0

)

(14.1

)

Less: attributable(b) silver revenue(c)

(28.8

)

(22.1

)

(62.7

)

(54.7

)

Attributable(b) production cost of sales net of silver by-product revenue

$

405.0

$

413.5

$

1,211.5

$

1,209.6

Gold ounces sold

577,822

582,629

1,702,089

1,801,660

Less: portion attributable to Chirano non-controlling interest(j)

(4,649

)

(4,938

)

(12,575

)

(15,444

)

Attributable(b) gold ounces sold

573,173

577,691

1,689,514

1,786,216

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

$

707

$

716

$

717

$

677

See page 17 of this news release for details of the footnotes referenced within the table above.

In November 2018, the World Gold Council (“WGC”) published updates to its guidelines for reporting all-in sustaining costs and all-in costs to address how the costs associated with leases, after a company’s adoption of IFRS 16, should be treated. The WGC is a market development organization for the gold industry and is an association whose membership comprises leading gold mining companies including Kinross. Although the WGC is not a mining industry regulatory organization, it worked closely with its member companies to develop these non-GAAP measures. Adoption of the all-in sustaining cost and all-in cost metrics is voluntary and not necessarily standard, and therefore, these measures presented by the Company may not be comparable to similar measures presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing measures reported by Kinross.

All-in sustaining cost includes both operating and capital costs required to sustain gold production on an ongoing basis. The value of silver sold is deducted from the total production cost of sales as it is considered residual production. Sustaining operating costs represent expenditures incurred at current operations that are considered necessary to maintain current production. Sustaining capital represents capital expenditures at existing operations comprising mine development costs and ongoing replacement of mine equipment and other capital facilities, and does not include capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.

All-in cost is comprised of all-in sustaining cost as well as operating expenditures incurred at locations with no current operation, or costs related to other non-sustaining activities, and capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.

Attributable all-in sustaining cost and all-in cost per ounce sold on a by-product basis are calculated by adjusting total production cost of sales, as reported on the interim condensed consolidated statement of operations, as follows:

Attributable All-In Sustaining Cost and All-In Cost Per Ounce Sold
on a By-Product Basis

(unaudited, expressed in millions of U.S. dollars, except ounces and costs per ounce)

Three months ended

Nine months ended

September 30,

September 30,

2020

2019

2020

2019

Production cost of sales - as reported

$

439.4

$

440.6

$

1,289.2

$

1,278.4

Less: portion attributable to Chirano non-controlling interest(a)

(5.6

)

(5.0

)

(15.0

)

(14.1

)

Less: attributable(b) silver revenue(c)

(28.8

)

(22.1

)

(62.7

)

(54.7

)

Attributable(b) production cost of sales net of silver by-product revenue

$

405.0

$

413.5

$

1,211.5

$

1,209.6

Adjusting items on an attributable(b) basis:

General and administrative(d)

25.3

29.3

81.8

92.3

Other operating expense - sustaining(e)

3.2

4.9

8.8

16.4

Reclamation and remediation - sustaining(f)

12.1

11.9

38.0

35.2

Exploration and business development - sustaining(g)

12.8

18.5

35.1

50.6

Additions to property, plant and equipment - sustaining(h)

73.0

106.2

237.3

282.4

Lease payments - sustaining(i)

3.8

2.8

12.6

9.2

All-in Sustaining Cost on a by-product basis - attributable(b)

$

535.2

$

587.1

$

1,625.1

$

1,695.7

Other operating expense - non-sustaining(e)

15.6

12.5

38.9

40.7

Reclamation and remediation - non-sustaining(f)

1.2

1.7

3.7

5.2

Exploration - non-sustaining(g)

11.7

16.7

25.9

32.2

Additions to property, plant and equipment - non-sustaining(h)

138.7

135.6

376.8

478.1

Lease payments - non-sustaining(i)

0.2

0.4

0.9

1.2

All-in Cost on a by-product basis - attributable(b)

$

702.6

$

754.0

$

2,071.3

$

2,253.1

Gold ounces sold

577,822

582,629

1,702,089

1,801,660

Less: portion attributable to Chirano non-controlling interest(j)

(4,649

)

(4,938

)

(12,575

)

(15,444

)

Attributable(b) gold ounces sold

573,173

577,691

1,689,514

1,786,216

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

$

934

$

1,016

$

962

$

949

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

$

1,226

$

1,305

$

1,226

$

1,261

See page 17 of this news release for details of the footnotes referenced within the table above.

The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP measures, the Company’s production of silver is converted into gold equivalent ounces and credited to total production.

Attributable all-in sustaining cost and all-in cost per equivalent ounce sold are calculated by adjusting total production cost of sales, as reported on the interim condensed consolidated statement of operations, as follows:

Attributable All-In Sustaining Cost and All-In Cost
Per Equivalent Ounce Sold

(unaudited, expressed in millions of U.S. dollars, except ounces and costs per equivalent ounce)

Three months ended

Nine months ended

September 30,

September 30,