Company guidance maintained for pro-forma portfolio
Tasiast achieves record quarterly production
TORONTO, May 10, 2022 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) (“Kinross” or the “Company”) today announced its results for the first-quarter ended March 31, 2022.This news release contains forward-looking information about expected future events and financial and operating performance of the Company. Please refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 28 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.
In Q1 2022, Kinross announced its plan to divest all of its Russian assets. As such, the Company’s Russian assets have been excluded from its Q1 2022 results, along with comparative figures, due to the classification of these assets as discontinued as of March 31, 2022.
*Q1 2022 highlights from continuing operations: *
· *Tasiast* achieved record production in Q1 2022, with the 24k project progressing well and on schedule.
· *La Coipa* poured its first gold bar in February, on schedule and under budget.
· At the *Great Bear *project, exploration, study and permitting activities have ramped up since the completion of the acquisition on February 24, 2022, with assay results reaffirming the world-class potential of the deposit.
· Kinross’ Board of Directors declared a quarterly *dividend of $0.03 per common share *payable on June 16, 2022 to shareholders of record at the close of business on June 2, 2022.
· *Attributable gold equivalent production*^1 of 409,857 Au eq. oz. produced.
· *Attributable production cost of sales*^1, ^2 of $1,000 per Au eq. oz., *consolidated production cost of sales*^3 of $1,003 per Au eq. oz., and *attributable all-in sustaining cost*^1,2 of $1,245 per Au eq. oz. sold.
· *Margins*^4 of $872 per Au eq. oz. sold.
· *Adjusted operating cash flow*^2 of $261.0 million and *operating cash flow*^5 of $105.2 million.
· *Reported net earnings*^6 of $82.3 million, or $0.07 per share, with *adjusted net earnings*^2^, ^7 of $70.6 million, or $0.06 per share^2.
· *Cash and cash equivalents* of $454.2 million, and* total* *liquidity*^8 of approximately $1.7 billion at March 31, 2022.
*Pro-forma Company guidance: *
· Kinross maintained its 2022 company-wide guidance for its pro-forma portfolio after excluding its assets from Russia and Ghana due to their pending divestments. The Company has adjusted gold and oil price assumptions for cost of sales and all-in sustaining cost guidance to reflect current prices.
· Kinross expects to produce *2.15 and 2.3 million* Au eq. oz. (+/- 5%) in 2022 and 2023, respectively, which is expected to drive strong free cash flow.
· The Company expects to produce *2.1 million* Au eq. oz. in 2024 and an average of *two million Au eq. oz. per year over the remainder of the decade. *
· Taking into account current gold and oil prices, the Company maintained its *production cost of sales guidance* *of $830 per Au eq. oz.* *sold* (+/- 5%) for the year, with *all-in sustaining cost of sales^2 of $1,150 per eq. oz. sold* (+/-5%). Consolidated production cost of sales was $832^9 per Au eq. oz. sold and attributable all-in sustaining cost of sales was $1,138 per eq. oz. sold^1, 2, 9 for the year ended December 31, 2021.
· *Capital expenditures* expected to *decrease to $850 million* (+/- 5%) in 2022. Capital expenditures are expected to be *approximately $750 million per year in 2023 and 2024*, excluding potential inflationary impacts and based on the Company’s current production guidance.*Russia and Ghana divestments:*
· Kinross entered into an agreement with the Highland Gold group of companies to sell 100% of its Russian assets for total consideration of $680 million in cash on April 5, 2022. The parties are continuing to advance the closing process and the transaction remains subject to Russian government approval.
· Kinross entered into an agreement with Asante Gold Corporation (“Asante”) to sell the Company’s 90% interest in the Chirano mine in Ghana for total consideration of $225 million in cash and shares on April 25, 2022. The transaction closing is targeted for the end of May.
*Environment, Social, Governance (ESG):*
· Kinross published its 2021 Sustainability Report, detailing its approach and strong record on ESG. The Company continued to rank well among peers in major ESG rankings and ratings.
· In 2021, Kinross generated $3.5 billion in economic benefits in host countries through taxes, wages, procurement and community support.
· The Company recycled 80% of water used at site, maintaining a high rate consistent with its five-year average.
· Across the Company, approximately 99% of the total workforce and 92% of all management are from within host countries, both record highs for the Company.*CEO Commentary:*
J. Paul Rollinson, President and CEO, made the following comments in relation to 2022 first-quarter results:
“During the quarter, we announced the sale of our Russian assets, and in late April, announced the sale of our Chirano mine in Ghana. With these pending divestments, and the close of the acquisition of Great Bear Resources, our overall portfolio has been re-balanced, with approximately 70% of our production now expected to be generated by our mines in the Americas.
“We have maintained our guidance for our pro-forma portfolio, with a substantial production outlook of 2.15 million gold ounces in 2022, which is expected to grow to 2.3 million gold ounces in 2023. Going forward, we will prioritize balance sheet strength while also returning capital to our shareholders through dividends and our share buyback program.
“We are excited about the future for Kinross which includes a production profile that averages two million ounces a year to the end of the decade, anchored by two tier one assets – Paracatu and Tasiast – accounting for more than half of our production, and a world-class development project in Canada.
“Over the quarter, we achieved record production at Tasiast, and our project pipeline continued to advance well. The Tasiast 24k project remains on track, and we poured first gold at the La Coipa project. We are already making good progress on our exploration program at the Great Bear project and are seeing positive results to support our goal of declaring an initial inferred resource estimate with our 2022 year-end results and our vision of developing a large, long-life mining complex.
“In the important area of ESG, mining responsibly will remain at the core of our business. We were pleased to release our 2021 Sustainability Report, which detailed another year of strong performance. We continued to deliver on our responsible mining goals, ranked well among our peers in major ESG ratings, and provided significant economic benefits to the host countries and communities in which we do business. We are committed to continuously improving our ESG performance, as indicated by our commitment to reduce greenhouse gas emission intensity by 30% by 2030.”
*Summary of financial and operating results*
*Three months ended*
*March 31,*
(unaudited, in millions of U.S. dollars, except ounces, per share amounts, and per ounce amounts) *2022* 2021
*Operating Highlights*
Total gold equivalent ounces^(a),(g)
Produced^(c) *509,241* 563,166
Sold^(c) *495,475* 552,198
Total gold equivalent ounces from continuing operations^(a),(h)
Produced^(c) *413,350* 440,914
Sold^(c) *409,538* 430,045
Attributable gold equivalent ounces^(a),(g)
Produced^(c) *505,748* 558,777
Sold^(c) *491,894* 548,084
Attributable gold equivalent ounces from continuing operations^(a),(h)
Produced^(c) *409,857* 436,525
Sold^(c) *405,957* 425,931
*Financial Highlights from Continuing Operations*^*(h)*
Metal sales *$* *768.0* $ 768.7
Production cost of sales *$* *410.6* $ 345.2
Depreciation, depletion and amortization *$* *180.8* $ 188.8
Operating earnings *$* *102.5* $ 144.3
Net earnings from continuing operations attributable to common shareholders *$* *82.3* $ 76.2
Basic earnings per share from continuing operations attributable to common shareholders *$* *0.07* $ 0.06
Diluted earnings per share from continuing operations attributable to common shareholders *$* *0.06* $ 0.06
Adjusted net earnings from continuing operations attributable to common shareholders^(b) *$* *70.6* $ 102.4
Adjusted net earnings from continuing operations per share^(b) *$* *0.06* $ 0.08
Net cash flow of continuing operations provided from operating activities *$* *105.2* $ 145.1
Adjusted operating cash flow from continuing operations^(b) *$* *261.0* $ 298.9
Capital expenditures from continuing operations^(d) *$* *106.3* $ 191.6
Free cash flow from continuing operations^(b) *$* *(1.1* *)* $ (46.5 )
Average realized gold price per ounce from continuing operations^(e) *$* *1,875* $ 1,787
Consolidated production cost of sales from continuing operations per equivalent ounce^(c) sold^(f) *$* *1,003* $ 803
Attributable^(a) production cost of sales from continuing operations per equivalent ounce^(c) sold^(b) *$* *1,000* $ 798
Attributable^(a) production cost of sales from continuing operations per ounce sold on a by-product basis^(b) *$* *994* $ 789
Attributable^(a) all-in sustaining cost from continuing operations per ounce sold on a by-product basis^(b) *$* *1,241* $ 1,044
Attributable^(a) all-in sustaining cost from continuing operations per equivalent ounce^(c) sold^(b) *$* *1,245* $ 1,051
Attributable^(a) all-in cost from continuing operations per ounce sold on a by-product basis^(b) *$* *1,471* $ 1,432
Attributable^(a) all-in cost from continuing operations per equivalent ounce^(c) sold^(b) *$* *1,473* $ 1,435
(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 18 to 24 of this news release. Non-GAAP financial measures and ratios have no standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other issuers.
(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 first quarter of 2022 was 78.19:1 (first quarter of 2021 - 68.33:1).
(d) “Capital expenditures from continuing operations” is as reported as “Additions to property, plant and equipment” on the interim condensed consolidated statements of cash flows.
(e) “Average realized gold price per ounce from continuing operations” is defined as gold metal sales from continuing operations divided by total gold ounces sold from continuing operations.
(f) “Consolidated production cost of sales from continuing operations per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces sold from continuing operations.
(g) Total gold equivalent ounces produced and sold and attributable gold equivalent ounces produced and sold include results from the Kupol and Dvoinoye mines up to March 31, 2022.
(h) In the first quarter of 2022, the Company announced its plan to divest its Russian operations, which includes the Kupol and Dvoinoye mines and the Udinsk project. Results for the three months ended March 31, 2022 and 2021 are from continuing operations and exclude results from the Company’s Russian operations due to the classification of these operations as discontinued as of March 31, 2022.
The following operating and financial results are based on first-quarter gold equivalent production and include the results of Chirano, but exclude Russian operations except where noted:
*Attributable production*^1: Kinross produced 409,857 attributable Au eq. oz. in Q1 2022 from continuing operations, compared with 436,525 attributable Au eq. oz. in Q1 2021. The decrease was largely due to lower production at Round Mountain and Paracatu, partially offset by record high quarterly production at Tasiast.
*Average realized gold price*: The average realized gold price from continuing operations in Q1 2022 was $1,875 per ounce, compared with $1,787 per ounce in Q1 2021.
*Revenue*: During the first quarter, revenue from continuing operations was $768.0 million, in line with $768.7 million during Q1 2021.
*Attributable production cost of sales**^1, 2*: Attributable production cost of sales from continuing operations per Au eq. oz. sold increased to $1,000 for Q1 2022, compared with $798 in Q1 2021, mainly as a result of a decrease in ounces sold, inflationary pressures on consumables, and increases in operating waste mined at Tasiast, Paracatu and Fort Knox.
Attributable production cost of sales from continuing operations per Au oz. sold on a by-product basis was $994 in Q1 2022, compared with $789 in Q1 2021, based on gold sales of 407,104 ounces and silver sales of 190,342 ounces.
*Consolidated production cost of sales:* Consolidated production cost of sales from continuing operations per Au eq. oz. sold was $1,003 for Q1 2022, compared with $803 in Q1 2021.
*Margins*^4: Kinross’ margin from continuing operations per Au eq. oz. sold was $872 for Q1 2022, compared with the Q1 2021 margin of $984.
*Attributable all-in sustaining cost*^1,^2: Attributable all-in sustaining cost from continuing operations per Au eq. oz. sold was $1,245 in Q1 2022, compared with $1,051 in Q1 2021.
In Q1 2022, attributable all-in sustaining cost from continuing operations per Au oz. sold on a by-product basis from continuing operations was $1,241, compared with $1,044 in Q1 2021.
*Operating cash flow*: Adjusted operating cash flow from continuing operations^2 was $261.0 million in Q1 2022, compared with $298.9 million for Q1 2021.
Operating cash flow from continuing operations was $105.2 million for Q1 2022, compared with $145.1 million for Q1 2021.
*Free cash flow*^2*: *Free cash flow from continuing operations was a net outflow of $1.1 million in Q1 2022, compared with a net outflow of $46.5 million for Q1 2021. The decrease in free cash outflow was mainly due to lower capital expenditures. The net free cash outflow of $1.1 million in Q1 2022 includes $156 million of working capital outflows.
*Earnings*: Adjusted net earnings from continuing operations^2, 7 were $70.6 million, or $0.06 per share^2, for Q1 2022, compared with $102.4 million, or $0.08 per share, for Q1 2021.
Reported net earnings^6 from continuing operations were $82.3 million, or $0.07 per share for Q1 2022, compared with reported net earnings of $76.2 million, or $0.06 per share, for Q1 2021. The increase in reported net earnings was mainly due to a decrease in income tax expense, partially offset by an increase in production cost of sales.
Reported net loss from the Russian discontinued operations^10 was $606.1 million in Q1 2022, which includes an impairment charge of $671.0 million related to the re-measurement of the Russian operations to fair value less costs to sell.
*Capital expenditures*: Capital expenditures from continuing operations decreased to $106.3 million for Q1 2022, compared with $191.6 million for Q1 2021. The decrease was primarily due to mine sequencing at Fort Knox, Tasiast and Round Mountain involving an increase in operating waste mined and a decrease in capital stripping, partially offset by increased expenditures for development activities at La Coipa.
*Balance sheet *
As of March 31, 2022, Kinross had cash and cash equivalents of $454.2 million, compared with $531.5 million at December 31, 2021. The decrease was primarily due to the reclassification of $134.0 million of cash and cash equivalents to assets held for sale as a result of the Company’s announced sale of its Russian assets.
On March 7, 2022, the Company arranged a new $1.0 billion term loan. The three-year term loan will mature on March 7, 2025, has no mandatory amortization payments, and has a flexible repayment schedule. Kinross used the proceeds of the financing to settle amounts drawn under its $1.5 billion revolving credit facility in connection with the closing of its acquisition of Great Bear Resources.
The Company had additional available credit^11 of $1,261.0 million as of March 31, 2022 and total liquidity^8 of approximately $1.7 billion.
*Operating results*
Mine-by-mine summaries for 2022 first-quarter operating results may be found on pages 13 and 17 of this news release. Highlights include the following:
*Tasiast* performed well and achieved record production during the quarter. The increase in production was mainly due to higher grades, with higher mill throughput contributing to the production increase versus the previous quarter. Cost of sales per ounce sold increased quarter-over-quarter and year-over-year mainly as a result of higher operating waste mined, with higher contractor and maintenance costs also contributing to the increase versus Q1 2021. Tasiast expects to increase production over the year as it mines higher grades and increases throughput.
At *Paracatu*, production decreased quarter-over-quarter and year-over-year primarily due to lower throughput and lower grades as a result of planned mine sequencing and temporary mill downtime. Cost of sales per ounce sold was higher compared with the previous quarter and year mainly due to lower production. Higher operating waste mined, maintenance costs and inflationary pressures also contributed to the higher costs versus Q1 2021. Production and costs are expected to improve at Paracatu throughout the year, as mining is expected to move to higher grade areas of the orebody.
At *Fort Knox*, production was lower compared with the previous quarter mainly due to lower grades, mill throughput and ounces recovered from the heap leach pads, and was largely in line with Q1 2021. Production is expected to increase in the second half of the year as ounces recovered from the heap leach pads typically improve due to seasonality. Cost of sales per ounce sold was higher quarter-over-quarter mainly due to lower production, and increased year-over-year mainly due to higher operating waste mined and increased costs related to contractors, reagents, power, and fuel.
At *Round Mountain*, production decreased quarter-over-quarter due to lower ounces recovered from the heap leach pads and lower mill throughput, partially offset by higher mill grade. Compared with the same period in 2021, production decreased mainly due to fewer ounces recovered from the heap leach pads. Cost of sales per ounce sold increased quarter-over-quarter and year-over-year primarily due to lower production, higher operating waste mined and higher fuel, power and maintenance costs.
The Round Mountain mine optimization program is progressing on schedule to be completed in the second half of the year. The program is continuing to assess shallower pit wall slope angles over a larger area of the pit to enhance stability, along with an optimal mine plan sequence for Phase W, Phase S and Phase X. These include longer-term mine plan scenarios post-2024 that optimize stripping requirements while continuing to evaluate the underground potential for portions of Phase W and Phase X.
The program’s interim results are now contemplating a mine plan sequence that divides mining of Phase W into four parts. The first two parts would be mined over the next three to four years as part of the open pit, given stripping had already commenced in these areas, and would account for approximately 20% of Round Mountain’s mineral reserve estimates. Phase S mining is expected to start later this year (at December 31, 2021, 938 Au koz. at Phase S were converted to proven and probable reserves). Mining for the third and fourth parts of Phase W is expected to commence post-2024 and could potentially include underground mining as the Company continues to explore opportunities at Phase X.
At *Bald Mountain*, production was lower quarter-over-quarter and year-over-year mainly due to timing of ounces recovered from the heap leach pads in the north area of the mine. Production is expected to increase in the second half of the year due to higher heap leach recoveries. Cost of sales per ounce sold was higher compared with the previous quarter and year primarily due to lower production and higher contractor and fuel costs.
At *La Coipa*, the first gold bar was poured in February 2022 and the mine produced 524 Au eq. oz. during the quarter. The project was delivered on schedule and under budget despite the challenging global environment over the past two years. The plant is expected to ramp up over the next few months to reach full operating capacity mid-year. The Company continues to study opportunities to further extend mine life by incorporating adjacent pits into the mine plan.
At *Chirano*, production was largely in line quarter-over-quarter and decreased year-over-year mainly due to lower grades from underground mining. Cost of sales per ounce sold was lower compared with the previous quarter due to higher gold sales, and was higher year-over-year mainly due to lower production.
*Development projects*
*Tasiast 24k *
At the *Tasiast 24k* project, the process plant is now regularly reaching throughput of 21,000 tonnes per day (t/d), with efforts underway to further reduce commissioning downtime. The second phase of the project continues to progress well and is on track to meet throughput of 24,000 t/d by mid-2023. Engineering is planned to be substantially completed during Q2 2022 and construction of the site’s third leach tank is now 70% complete.
*Great Bear project update*
On February 24, 2022, Kinross announced that it had completed the acquisition of Great Bear Resources Ltd. On April 7, 2022, the Company provided an update on development at the *Great Bear* project in Red Lake, Ontario, with assay results from 60 holes drilled in the LP Fault zone continuing to confirm gold mineralization, which is open along strike and at depth. Kinross has received additional assay results from 25 holes since the last update which continue to support the Company’s view of a high-grade, top tier deposit that underpins the prospect of developing a large, long-life mining complex.
Kinross remains on track to declare an initial inferred mineral resource for the Great Bear project as part of its 2022 year-end results and commence a pre-feasibility study in 2023.
See Appendix A: Figure 1 for a LP Fault zone long section and the location of drill holes in the table below, and Appendix B for a full list of recent significant, composited assay results.
*Hole ID* *From
*(m) *To*
(m) *Width
*(m) *True
Width
*(m) *Au*
(g/t) *Target*
BR-470 140.25 143.25 3.00 2.90 8.82 Discovery
BR-471 151.60 160.00 8.40 7.90 1.82 Discovery
BR-471 including 153.10 153.75 0.65 0.60 18.20
BR-471 and 202.50 204.00 1.50 1.40 7.38
BR-478 38.40 39.00 0.60 0.50 10.40 Discovery
BR-517 544.80 545.55 0.75 0.70 8.87 Yauro
BR-517 and 550.30 562.75 12.45 11.70 0.49
BR-530 498.75 499.25 0.50 0.50 8.11 Discovery
BR-534 604.60 605.50 0.90 0.80 10.70 BR Discovery
BR-534 and 631.00 664.70 33.70 30.70 1.73
BR-553 514.15 517.75 3.60 3.40 2.61 Yauro
BR-553 and 725.60 730.20 4.60 4.40 4.68
BR-553 and 758.00 758.65 0.65 0.60 24.70
BR-561 219.80 225.25 5.45 5.40 1.05 Viggo
BR-561 including 222.35 223.55 1.20 1.20 3.20
BR-565 175.05 196.50 21.45 20.10 7.50 Viggo
BR-565 including 176.50 180.00 3.50 3.30 37.69
BR-565 and 376.35 377.50 1.15 1.10 21.00
BR-565 and 394.50 396.00 1.50 1.40 7.27
Exploration, study, and permitting activities continue to ramp up at the project, with approximately 200,000 metres of exploration and infill drilling expected to be completed in 2022. The drilling program will continue to focus on the LP Fault zone, the most significant discovery to date at the project. There are currently eight diamond drills and two reverse-circulation (RC) rigs active on site. The RC rigs are being utilized for a grade control program that is expected to inform the continuity and distribution of the high grade in the LP zone, while also testing grade control methodology. Since March 2022, approximately 11,800 metres of the planned 35,000-metre grade control program have been drilled.
Kinross is also analyzing an advanced exploration program that would establish an underground decline and workings. The advanced program would allow for underground drilling for more efficient exploration of deeper areas of the LP Fault, along with the nearby Hinge and Limb gold zones, as well as bulk sampling. The Company is targeting a potential start of the advanced program as early as 2024.
Baseline environmental surveys and local community socio-economic studies required for the permitting process are underway, and the Company is now working with a team of experts who have permitted multiple operating mines in Ontario. Kinross is also continuing its local stakeholder engagement program and working to foster strong relationships with local communities and with its partners in the Wabauskang and Lac Seul First Nations, on whose traditional territories the project is located.
*Manh Choh *
At the 70%-owned *Manh Choh* project in Alaska, feasibility study work is progressing well and is expected to be completed on schedule by the end of 2022. Permit applications are advancing as planned, with the Company now liaising with regulators on comments received regarding key permit applications submitted at the end of last year. Kinross has also signed an extension of the community support agreement with the Native Village of Tetlin and is continuing to prioritize transparent community engagements and generating local economic benefits as it develops the project. Initial production is on schedule to commence in late 2024, subject to permitting.
*Lobo-Marte *
The *Lobo-Marte* project in Chile continues to provide optionality for Kinross’ long-term portfolio as a potential large, low-cost mine, following the completion of the project feasibility study in November 2021. The timing and go-forward decision for the project will depend on a range of factors, including the gold price environment and projections, economic returns, permitting, priorities in the Company’s portfolio and other potential opportunities in the region, including mine life extensions at La Coipa. Should further La Coipa mine life extension opportunities be successful, Lobo-Marte’s timing is expected to be affected accordingly.
*Company guidance update*
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 28 of this news release. This Company Guidance section references all-in sustaining cost per equivalent ounce sold, which is a non-GAAP ratio with no standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other issuers. The definition of this non-GAAP ratio and comparable reconciliation is included on pages 18 to 24 of this news release.
Kinross has adjusted its 2022 company-wide guidance previously disclosed on February 16, 2022 to exclude its assets from Russia and Ghana for full-year 2022 and other future guidance figures due to their pending divestments. As Kinross’ share of Chirano (90%) is now excluded from guidance, all guidance figures are no longer on an attributable basis, but on a total basis.
*Production guidance *
On a pro-forma portfolio basis, Kinross maintained its 2022 production guidance of 2.15 million Au eq. oz. (+/- 5%). The Company continues to expect higher production in the second half of the year, which is largely driven by increased production at Paracatu, Tasiast and La Coipa.
The Company’s 2023 and 2024 production guidance have been adjusted to 2.3 and 2.1 million Au eq. oz. (+/- 5%), respectively. Kinross expects to maintain a substantial production profile with estimated average production of two million Au eq. oz. per year over the remainder of the decade.
*Annual gold equivalent production guidance*
(+/- 5%)
2022 2.15 million oz.
2023 2.3 million oz.
2024 2.1 million oz.
*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 forecast for its 2023 and 2024 capital forecast. Kinross continues to closely monitor the impact of inflationary pressures on its operations and projects.
*Cost guidance *
*2022 Guidance*
(+/- 5%) *2021 Actual*^*9*
Production cost of sales per Au eq. oz. $830 $832
All-in sustaining cost per Au eq. oz.^2 $1,150 $1,138^1
Taking into account current gold and oil prices, Kinross’ production cost of sales forecast has been maintained at $830 per Au eq. oz. (+/- 5%) for 2022. Production cost of sales per ounce is expected to decrease during the second half of the year largely due to the anticipated increase in production.
The 2022 guidance for all-in sustaining cost will be $1,150 per eq. oz. sold (+/- 5%).
The following assumptions related to gold and oil prices have been used to forecast the Company’s cost of sales and all-in sustaining cost guidance:
· a gold price of $1,800 per ounce;
· an oil price of $100 per barrel;
· including a $10 per barrel change in the price of oil would be expected to result in an approximate $4 impact on fuel consumption costs on production cost of sales per ounce.The other key assumptions and sensitivities disclosed in the Company’s original guidance on February 16, 2022 have not changed.
*Capital expenditures guidance *
The 2022 capital expenditures forecast has been lowered to $850 million (+/- 5%). Kinross’ capital expenditures outlook for 2023 and 2024 is approximately $750 million per year, excluding inflationary impacts and based on Kinross’ current production guidance. As the Company continues to develop and optimize its portfolio, other projects, such as Manh Choh and Great Bear, may be incorporated into its capital expenditures forecast over the 2023 - 2024 timeframe.
*Other 2022 guidance updates *
The 2022 forecast for *exploration* has been increased to approximately $140 million, all of which is expected to be expensed. The increase is primarily related to the inclusion of the comprehensive exploration program planned at the Great Bear project.
The 2022 forecast for *overhead *(general and administrative and business development expenses) has been reduced to approximately $145 million.
*Other operating costs* expected to be incurred in 2022 are now estimated to be $120 million (+/- 5%), which are principally due to care and maintenance, reclamation, and pandemic-related mitigation measures.
Based on an assumed gold price of $1,800 per ounce, and with other budget assumptions maintained, *tax expense* is expected to be $150 million and *taxes paid* is expected to be $125 million. Adjusting the Brazilian real to the respective exchange rate of 5.58 to the U.S. dollar in effect at December 31, 2021, tax expense would be expected to be $190 million. Tax expense is expected to increase by 22% of any profit resulting from higher gold prices. Taxes paid is expected to increase by approximately $5 million for every $100 increase in the realized gold price.
*Depreciation, depletion and amortization* is now forecast to be approximately $440 per Au eq. oz. sold (+/- 5%).
The* interest paid* forecast has been updated to be approximately $95 million, which includes approximately $40 million of capitalized interest.
*Exploration update *
Exploration activities continued to focus on promising targets around current operations and areas where existing infrastructure can be leveraged. Initial highlights from 2022 include:
*Round Mountain*: Activities continued to focus on extending the *Gold Hill* mineralized vein structures, with promising results, which includes high grades, received during the quarter. Gold Hill is located approximately seven kilometres north of Round Mountain.
· *D-1165* – 3.2m @ 10.32 g/t Au (incl. 2.1m @ 15.24 g/t Au) – the results confirm the 230-metre down-dip extension of the “Alexandria” vein, which was discovered in late 2021.
· *D-1164* – 1.9m @ 5.82 g/t Au (incl. 0.4m @ 22.0 g/t Au)
· *D-1164* – 2.1m @ 5.94 g/t Au (incl. 0.4m @ 23.3 g/t Au).
The two intercepts at D-1164 are along a 100-metre west extension of several high-grade, sub-vertical holes between the main Gold Hill vein and the Alexandria vein. New geophysical data confirmed multiple deposit-scale trends open along strike at Gold Hill. Work on the planned drift for underground exploration at *Phase X* continues to advance well.
*Curlew Basin Exploration (CBX)*: At the CBX program, located approximately 35 kilometres north of the Kettle River mill, underground drilling continues to intersect previously unidentified veins after underground drilling commenced in Q3 2021 following the completion of dewatering and exploration drift development. Recent drilling from late 2021 has identified 22 new mineralized veins, including an extension of the “Galaxie” vein (which was discovered last year) along a 150-metre strike and at 100-metre depth. Drilling results from the quarter include:
· *Hole# 1103* – 6.4m @ 4.95 g/t Au (TW) – Stealth target
· *Hole# 1103* – 3.2m @ 5.62 g/t Au (TW) – Galaxie target
· *Hole# 1101* – 6.8m @ 3.73 g/t Au (TW) – West Zone target*Divestment of Russia assets *
On April 5, 2022, Kinross announced that it had entered into an agreement with the Highland Gold Mining group of companies and its affiliates to sell 100% of its Russian assets for total consideration of $680 million in cash. The total cash consideration includes $400 million for the Kupol mine and $280 million for the Udinsk project. Kinross will receive $100 million at closing and the remaining total consideration is scheduled to be received in annual payments from 2023 through to 2027.
The deferred payments are secured by an extensive security package that includes share pledges, financial guarantees and an escrow account, with all payments payable in U.S. dollars. The parties are continuing to advance the closing process and the transaction remains subject to Russian government approval. In light of unprecedented circumstances, the timing and outcome of such an approval is uncertain.
*Divestment of Ghana assets *
On April 25, 2022, Kinross announced that it had entered into an agreement with Asante to sell its 90% interest in the Chirano mine in Ghana for total consideration of $225 million in cash and shares. Upon closing of the transaction, Kinross is to receive $115 million in cash and $50 million in Asante common shares, provided that the issuance of Asante common shares will not result in Kinross exceeding a 9.9% ownership in Asante. The agreement also provides for total deferred payments of $60 million in cash. If the 9.9% share ownership limit is reached, the remainder of the $50 million is to be paid by increasing the deferred cash payments. The transaction closing is targeted for the end of May 2022.
*Environment, Social and Governance*
Kinross published its *2021 Sustainability Report* today, detailing the Company’s ESG approach and performance. Through its values-based approach, the Company ensures that ESG is a core part of its culture, business strategy and future growth plans.
Access the full Sustainability Report here: *https://www.kinross.com/2021-Sustainability-Report*
For highlights of the Report, read here: *https://www.kinross.com/Kinross-releases-2021-sustainability-report*
Kinross ranked well among peers in major ESG rankings and ratings and maintained its top-tier governance record. The Company increased its S&P Global score, moving to the 94^th percentile for 2021, the highest ever ranking for Kinross, and maintained its “A” position with MSCI.
Kinross obtained independent limited assurance of selected ESG performance metrics and, following the Company’s normal practice, has provided Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) indices. The Company expects to publish its 2021 Task Force on Climate-Related Financial Disclosures (TCFD) climate report in Q2 2022.
Other highlights from the Report include:
· In 2021, Kinross generated $3.5 billion in economic benefits through taxes, wages, procurement and community support, including donations. Since 2010, $40 billion has been contributed to the economies of Kinross’ host countries.· As part of Kinross’ commitment to proactively mitigating and reducing environmental impacts, all sites maintained robust water management systems and, in 2021, 80% of total water withdrawn was recycled.· The Company is committed to fostering a safe, inclusive and diverse workplace that is representative of the communities where it operates. Approximately 99% of Kinross’ total workforce, and 92% of management, are from within host countries, record highs for the Company.In the first quarter of 2022, Kinross provided significant donations to several organizations. This includes a $1 million donation for response and rebuilding efforts to support the Appiatse community in Ghana after a tragic explosion and a $1 million donation to the Canadian Red Cross Ukraine Humanitarian Crisis Appeal to assist those affected by the ongoing conflict in Ukraine. Kinross also donated $1 million to support the development of the Troth Yeddha’ Indigenous Studies Center at the University of Alaska Fairbanks (UAF) to support Indigenous-focused academic, research and cultural programs.
*Conference call details *
In connection with this news release, Kinross will hold a conference call and audio webcast on Wednesday, May 11, 2022 at 7:45 a.m. EDT to discuss the results, followed by a question-and-answer session. To access the call, please dial:
*Canada & US toll-free* – (833) 968-2237; Passcode: 5893677
*Outside of Canada & US* – (825) 312-2059; Passcode: 5893677
Replay (available up to 14 days after the call):
*Canada & US toll-free* – (800) 770-2030; Passcode: 5893677
*Outside of Canada & US* – +1 (647) 362-9199; Passcode: 5893677
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’ 2022 first-quarter unaudited Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2022 first-quarter unaudited Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished 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.
*Virtual Annual Meeting of Shareholders*
Kinross’ Annual Meeting of Shareholders will be held on Wednesday, May 11, 2022 at 10:00 a.m. EDT.
The Company has again elected to hold a virtual meeting via a live audio webcast given the continued impact and uncertainty of the COVID-19 pandemic. Kinross believes this is a prudent approach that prioritizes safety while still providing the same level of disclosure, transparency and participation as previous meetings.
The virtual meeting will be accessible online at: *web.lumiagm.com/468209904**. *
Voting and participation instructions for eligible shareholders are provided in the Company’s Notice of Annual Meeting of Shareholders and Management Information Circular.
The link to the virtual meeting will also be accessible at www.kinross.com and will be archived for later use.
*About Kinross Gold Corporation *
Kinross is a Canadian-based global senior gold mining company with operations and projects in the United States, Brazil, Mauritania, Chile, Canada, Russia and Ghana. Our focus on delivering value is based on our core principles of responsible mining, operational excellence, disciplined growth and balance sheet strength. 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 March 31, (unaudited)* *Gold equivalent ounces*
*Produced* *Sold* *Production cost of
sales*($millions) *Production cost of sales/equivalent ounce sold*
*2022* 2021 *2022* 2021 *2022* 2021 *2022* 2021
Fort Knox *54,803* 55,815 *52,813* 55,561 *$* *67.4* $ 57.7 *$* *1,276* $ 1,038
Round Mountain *45,319* 74,286 *46,959* 73,878 *52.3* 63.1 *1,114* 854
Bald Mountain *36,071* 51,408 *41,017* 48,250 *40.3* 37.0 *983* 767
Paracatu *108,009* 126,547 *101,886* 126,811 *106.6* 82.8 *1,046* 653
La Coipa *524* - *-* - *-* - *-* -
Maricunga *-* - *858* 731 *0.6* 0.5 *699* 684
*Americas Total* *244,726* 308,056 *243,533* 305,231 *267.2* 241.1 *1,097* 790
Tasiast *133,695* 88,964 *130,195* 83,670 *95.8* 51.3 *736* 613
Chirano (100%) *34,929* 43,894 *35,810* 41,144 *47.6* 52.8 *1,329* 1,283
*West Africa Total* *168,624* 132,858 *166,005* 124,814 *143.4* 104.1 *864* 834
Less: Chirano non-controlling
interest (10%) *(3,493* *)* (4,389 ) *(3,581* *)* (4,114 ) *(4.8* *)* (5.3 )
*West Africa Attributable Total* *165,131* 128,469 *162,424* 120,700 *138.6* 98.8 *$* *853* $ 819
*Attributable Total* *409,857* 436,525 *405,957* 425,931 *405.8* 339.9 *1,000* 798
Add: Chirano non-controlling
interest (10%) *3,493* 4,389 *3,581* 4,114 *4.8* 5.3
*Continuing Operations Total* *413,350* 440,914 *409,538* 430,045 *410.6* 345.2 *$* *1,003* $ 803
*Discontinued Operations*
Kupol *95,891* 122,252 *85,937* 122,153 *65.4* 74.7 *$* *761* $ 612*Interim condensed consolidated balance sheets*
(unaudited, expressed in millions of U.S. dollars, except share amounts)
*As at*
*March 31,* December 31,
*2022* 2021
*Assets*
Current assets
Cash and cash equivalents *$* *454.2* $ 531.5
Restricted cash *13.1* 11.4
Accounts receivable and other assets *123.6* 214.5
Current income tax recoverable *6.7* 10.2
Inventories *1,044.4* 1,151.3
Unrealized fair value of derivative assets *49.2* 30.0
Assets held for sale *498.4* -
*2,189.6* 1,948.9
Non-current assets
Property, plant and equipment *8,248.3* 7,617.7
Goodwill *-* 158.8
Long-term investments *108.2* 98.2
Investment in joint venture *7.0* 7.1
Other long-term assets *568.9* 590.9
Deferred tax assets *-* 6.5
*Total assets* *$* *11,122.0* $ 10,428.1
*Liabilities*
Current liabilities
Accounts payable and accrued liabilities *$* *441.8* $ 492.7
Current income tax payable *16.8* 95.0
Current portion of long-term debt and credit facilities *40.0* 40.0
Current portion of provisions *85.4* 90.0
Other current liabilities *23.7* 23.7
Liabilities held for sale *53.4* -
*661.1* 741.4
Non-current liabilities
Long-term debt and credit facilities *2,688.8* 1,589.9
Provisions *735.9* 847.9
Long-term lease liabilities *33.4* 35.1
Other long-term liabilities *146.1* 127.4
Deferred tax liabilities *418.9* 436.8
*Total liabilities* *$* *4,684.2* $ 3,778.5
*Equity*
Common shareholders' equity
Common share capital *$* *4,710.2* $ 4,427.7
Contributed surplus *10,698.4* 10,664.4
Accumulated deficit *(9,055.1* *)* (8,492.4 )
Accumulated other comprehensive income (loss) *14.2* (18.8 )
*Total common shareholders' equity* *6,367.7* 6,580.9
Non-controlling interests *70.1* 68.7
*Total equity* *6,437.8* 6,649.6
*Total liabilities and equity* *$* *11,122.0* $ 10,428.1
*Common shares*
*Authorized* *Unlimited* Unlimited
*Issued and outstanding* *1,297,256,784* 1,244,332,772
*Interim condensed consolidated statements of operations*
(unaudited, expressed in millions of U.S. dollars, except share and per share amounts)
*Three months ended*
*March 31,* March 31,
*2022* 2021
*Revenue*
Metal sales *$* *768.0* $ 768.7
*Cost of sales*
Production cost of sales *410.6* 345.2
Depreciation, depletion and amortization *180.8* 188.8
*Total cost of sales* *591.4* 534.0
*Gross profit* *176.6* 234.7
Other operating expense *19.1* 39.6
Exploration and business development *24.8* 20.1
General and administrative *30.2* 30.7
*Operating earnings* *102.5* 144.3
Other (expense) income - net *(5.0* *)* 4.2
Finance income *2.2* 1.5
Finance expense *(22.0* *)* (19.0 )
*Earnings from continuing operations before tax* *77.7* 131.0
Income tax recovery (expense) - net *4.5* (55.1 )
Earnings from continuing operations after tax *82.2* 75.9
(Loss) earnings from discontinued operations after tax *$* *(606.1* *)* $ 73.3
*Net (loss) earnings* *$* *(523.9* *)* $ 149.2
*Net (loss) earnings from continuing operations attributable to:*
Non-controlling interests *$* *(0.1* *)* $ (0.3 )
Common shareholders *$* *82.3* $ 76.2
*Net (loss) earnings attributable to:*
Non-controlling interests *$* *(0.1* *)* $ (0.3 )
Common shareholders *$* *(523.8* *)* $ 149.5
*Earnings per share from continuing operations attributable to common shareholders*
Basic *$* *0.07* $ 0.06
Diluted *$* *0.06* $ 0.06
*(Loss) earnings per share attributable to common shareholders*
Basic *$* *(0.41* *)* $ 0.12
Diluted *$* *(0.41* *)* $ 0.12
*Interim condensed consolidated statements of cash flows*
(unaudited, expressed in millions of U.S. dollars)
*Three months ended*
*March 31,* March 31,
*2022* 2021
*Net inflow (outflow) of cash related to the following activities:*
*Operating:*
Earnings from continuing operations after tax *$* *82.2* $ 75.9
Adjustments to reconcile net earnings from continuing operations to net cash provided from operating activities:
Depreciation, depletion and amortization *180.8* 188.8
Share-based compensation expense *3.0* 3.8
Finance expense *22.0* 19.0
Deferred tax (recovery) expense *(20.0* *)* 2.9
Foreign exchange losses and other *4.9* 8.5
Reclamation recovery *(11.9* *)* -
Changes in operating assets and liabilities:
Accounts receivable and other assets *43.8* (3.0 )
Inventories *(90.5* *)* (32.9 )
Accounts payable and accrued liabilities *(25.2* *)* (21.6 )
*Cash flow provided from operating activities* *189.1* 241.4
Income taxes paid *(83.9* *)* (96.3 )
*Net cash flow of continuing operations provided from operating activities* *105.2* 145.1
*Net cash flow of discontinued operations provided from operating activities* *91.4* 134.7
*Investing:*
Additions to property, plant and equipment *(106.3* *)* (191.6 )
Interest paid capitalized to property, plant and equipment *(11.0* *)* (23.2 )
Acquisitions net of cash acquired *(1,027.5* *)* -
Net additions to long-term investments and other assets *(13.9* *)* (1.9 )
(Increase) decrease in restricted cash - net *(1.7* *)* 2.4
Interest received and other - net *1.1* 0.5
*Net cash flow of continuing operations used in investing activities* *(1,159.3* *)* (213.8 )
*Net cash flow of discontinued operations used in investing activities* *(11.2* *)* (155.0 )
*Financing:*
Proceeds from drawdown of debt *1,097.6* -
Interest paid *(24.7* *)* (23.6 )
Payment of lease liabilities *(5.4* *)* (7.6 )
Dividends paid to common shareholders *(38.9* *)* (37.8 )
Other - net *5.9* 4.6
*Net cash flow of continuing operations provided from (used in) financing activities* *1,034.5* (64.4 )
*Net cash flow of discontinued operations used in financing activities* *-* -
*Effect of exchange rate changes on cash and cash equivalents of continuing operations* *-* (0.2 )
*Effect of exchange rate changes on cash and cash equivalents of discontinued operations* *(3.9* *)* (1.2 )
*Increase (decrease) in cash and cash equivalents* *56.7* (154.8 )
*Cash and cash equivalents, beginning of period* *531.5* 1,210.9
*Reclassified to assets held for sale* *(134.0* *)* -
*Cash and cash equivalents, end of period* *$* *454.2* $ 1,056.1
*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)(e)* *Gold Eq Production*^*(c)* *Gold Eq Sales*^*(c)* *Production cost of sales* *Production cost of sales/oz*^*(d)* *Total Cap Ex*^*(f)* *DD&A*
(%) ('000 tonnes) ('000 tonnes) ('000 tonnes) (g/t) (g/t) (%) (ounces) (ounces) ($ millions) ($/ounce) ($ millions) ($ millions)
*Americas* *Fort Knox*
*Q1 2022* *100* *13,743* *1,852* *13,010* *0.66* *0.17* *80**%* *54,803* *52,813* *$* *67.4* *$* *1,276* *$* *2.9* *$* *20.9*
Q4 2021 100 9,203 2,148 8,185 0.73 0.19 82% 73,830 74,384 $ 74.1 $ 996 $ 31.6 $ 30.9
Q3 2021 100 8,024 2,221 6,395 0.77 0.20 82% 71,336 71,482 $ 67.7 $ 947 $ 37.4 $ 29.7
Q2 2021 100 9,560 1,939 7,864 0.70 0.22 81% 63,302 62,163 $ 67.7 $ 1,089 $ 18.7 $ 26.7
Q1 2021 100 8,174 1,751 7,396 0.57 0.20 80% 55,815 55,561 $ 57.7 $ 1,038 $ 25.4 $ 22.5
*Round Mountain*
*Q1 2022* *100* *3,767* *929* *3,208* *0.80* *0.36* *79**%* *45,319* *46,959* *$* *52.3* *$* *1,114* *$* *16.0* *$* *12.1*
Q4 2021 100 1,755 1,057 1,529 0.64 0.33 75% 51,549 52,723 $ 51.8 $ 982 $ 50.3 $ 14.5
Q3 2021 100 1,531 915 4,442 0.63 0.29 76% 63,242 61,405 $ 60.8 $ 990 $ 23.7 $ 16.3
Q2 2021 100 2,551 1,133 2,552 0.54 0.38 76% 67,928 71,935 $ 60.2 $ 837 $ 20.2 $ 17.4
Q1 2021 100 3,843 976 4,019 0.70 0.46 81% 74,286 73,878 $ 63.1 $ 854 $ 31.3 $ 17.0
*Bald Mountain*
*Q1 2022* *100* *3,870* *-* *3,870* *-* *0.63* *nm* *36,071* *41,017* *$* *40.3* *$* *983* *$* *5.8* *$* *35.1*
Q4 2021 100 5,222 - 5,222 - 0.52 nm 61,036 53,559 $ 50.1 $ 935 $ 17.2 $ 57.2
Q3 2021 100 5,941 - 5,941 - 0.46 nm 55,559 52,874 $ 48.8 $ 923 $ 7.7 $ 59.4
Q2 2021 100 5,875 - 5,875 - 0.57 nm 36,887 41,383 $ 41.6 $ 1,005 $ 5.2 $ 39.1
Q1 2021 100 2,025 - 2,025 - 0.48 nm 51,408 48,250 $ 37.0 $ 767 $ 8.9 $ 40.2
*Paracatu*
*Q1 2022* *100* *6,165* *13,645* *-* *0.33* *-* *75**%* *108,009* *101,886* *$* *106.6* *$* *1,046* *$* *16.0* *$* *39.6*
Q4 2021 100 13,036 15,451 - 0.35 - 77% 138,669 145,691 $ 116.9 $ 802 $ 49.6 $ 47.7
Q3 2021 100 14,107 15,085 - 0.37 - 76% 134,425 133,924 $ 103.7 $ 774 $ 30.0 $ 44.5
Q2 2021 100 12,624 14,138 - 0.37 - 76% 150,919 143,474 $ 108.7 $ 758 $ 27.5 $ 50.7
Q1 2021 100 12,612 15,372 - 0.38 - 75% 126,547 126,811 $ 82.8 $ 653 $ 20.8 $ 37.7
*Maricunga*
*Q1 2022* *100* *-* *-* *-* *-* *-* *nm* *-* *858* *$* *0.6* *$* *699* *$* *-* *$* *0.1*
Q4 2021 100 - - - - - nm - 821 $ 0.6 $ 731 $ - $ 0.1
Q3 2021 100 - - - - - nm - 655 $ 0.5 $ 763 $ - $ 0.3
Q2 2021 100 - - - - - nm - 580 $ 0.4 $ 690 $ - $ 0.1
Q1 2021 100 - - - - - nm - 731 $ 0.5 $ 684 $ - $ 0.1
*West Africa*
*Tasiast*
*Q1 2022* *100* *3,462* *1,524* *-* *2.54* *-* *94**%* *133,695* *130,195* *$* *95.8* *$* *736* *$* *19.4* *$* *57.1*
Q4 2021 100 1,061 1,068 - 1.50 - 94% 15,253 15,006 $ 10.8 $ 720 $ 52.5 $ 13.1
Q3 2021 100 822 - - - - 0% 3,847 4,822 $ 8.3 $ 1,721 $ 68.1 $ 21.3
Q2 2021 100 818 1,161 - 1.67 - 95% 62,438 70,695 $ 53.2 $ 753 $ 70.2 $ 54.2
Q1 2021 100 843 1,504 - 1.85 - 96% 88,964 83,670 $ 51.3 $ 613 $ 68.6 $ 48.3
*Chirano - 100%*
*Q1 2022* *100* *651* *875* *-* *1.32* *-* *86**%* *34,929* *35,810* *$* *47.6* *$* *1,329* *$* *5.5* *$* *14.3*
Q4 2021 100 625 869 - 1.48 - 85% 34,561 31,633 $ 45.7 $ 1,445 $ 7.5 $ 15.8
Q3 2021 100 802 881 - 1.54 - 87% 37,588 34,999 $ 49.4 $ 1,411 $ 9.3 $ 17.0
Q2 2021 100 933 862 - 1.54 - 88% 38,625 40,517 $ 53.7 $ 1,325 $ 12.8 $ 19.0
Q1 2021 100 735 821 - 1.81 - 88% 43,894 41,144 $ 52.8 $ 1,283 $ 10.1 $ 21.2
*Chirano - 90%*^*(g)*
*Q1 2022* *90* *651* *875* *-* *1.32* *-* *86**%* *31,436* *32,229* *$* *42.8* *$* *1,329* *$* *5.0* *$* *12.9*
Q4 2021 90 625 869 - 1.48 - 85% 31,105 28,470 $ 41.1 $ 1,445 $ 6.8 $ 14.2
Q3 2021 90 802 881 - 1.54 - 87% 33,829 31,499 $ 44.5 $ 1,411 $ 8.4 $ 15.3
Q2 2021 90 933 862 - 1.54 - 88% 34,762 36,465 $ 48.3 $ 1,325 $ 11.5 $ 17.1
Q1 2021 90 735 821 - 1.81 - 88% 39,505 37,030 $ 47.5 $ 1,283 $ 9.1 $ 19.1
(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) 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: Q1 2022: 78.19:1; Q4 2021: 76.89:1; Q3 2021: 73.45:1; Q2 2021: 68.05:1; Q1 2021: 68.33:1.
(d) “Production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by gold equivalent ounces sold.
(e) "nm" means not meaningful.
(f) "Capital expenditures" is as reported as “Additions to property, plant and equipment” on the interim condensed consolidated statements of cash flows.
(g) Figures for gold equivalent production, gold equivalent sales, production cost of sales, capital expenditures and depreciation, depletion and amortization for all quarters presented are based on Kinross' 90% share of Chirano and are calculated as Chirano 100% as reported above, less 10%. For Q1 2022: Production cost of sales is calculated as $47.6 million less 10%, or $4.8 million. Total capital expenditures is calculated as $5.5 million less 10%, or $0.5 million. Depreciation, depletion and amortization is calculated as $14.3 million less 10%, or $1.4 million. All other quarters presented are calculated in the same manner.
*Reconciliation of non-GAAP financial measures and ratios*
The Company has included certain non-GAAP financial measures and ratios in this document. These financial measures and ratios are not defined under International Financial Reporting Standards (IFRS) and should not be considered in isolation. The Company believes that these financial measures and ratios, together with financial measures and ratios determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these financial measures and ratios is meant to provide additional information and should not be used as a substitute for performance measures and ratios prepared in accordance with IFRS. These financial measures and ratios are not necessarily standard and therefore may not be comparable to other issuers.
*Adjusted net earnings from continuing operations attributable to common shareholders *and* adjusted net earnings from continuing operations per share *are non-GAAP financial measures and ratios 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 and ratios, 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 from continuing operations and adjusted net earnings from continuing operations per share measures and ratios are not necessarily indicative of net earnings from continuing operations and earnings per share measures and ratios as determined under IFRS.
The following table provides a reconciliation of net earnings from continuing operations to adjusted net earnings from continuing operations for the periods presented:
* * * *
(unaudited, expressed in millions of U.S dollars,
except per share amounts)
*Three months ended*
*March 31,*
*2022* 2021
Net earnings from continuing operations attributable to common shareholders - as reported *$* *82.3* $ 76.2
Adjusting items:
Foreign exchange losses (gains) *2.4* (5.8 )
Foreign exchange (gains) losses on translation of tax basis and foreign exchange
on deferred income taxes within income tax expense *(15.7* *)* 6.3
Taxes in respect of prior periods *5.9* 8.7
Reclamation recovery *(11.9* *)* -
COVID-19 costs^(a) *-* 5.6
Round Mountain pit wall stabilization costs *-* 3.5
Other^(b) *9.3* 12.0
Tax effects of the above adjustments *(1.7* *)* (4.1 )
*(11.7* *)* 26.2
Adjusted net earnings from continuing operations attributable to common shareholders *$* *70.6* $ 102.4
Weighted average number of common shares outstanding - Basic *1,264.5* 1,259.2
Adjusted net earnings from continuing operations per share *$* *0.06* $ 0.08
Basic earnings from continuing operations per share attributable to common shareholders *$* *0.07* $ 0.06
(a) Includes COVID-19 related labour, health and safety, donations and other support program costs. For the three months ended March 31, 2022, adjusted net earnings has not been adjusted for COVID-19 related costs of $5.7 million incurred at operating sites.
(b) Other includes various impacts, such as one-time costs at sites, and gains and losses on the sale of assets and hedges, which the Company believes are not reflective of the Company’s underlying performance for the reporting period.
*Free cash flow from continuing operations* is a non-GAAP financial measure and is defined as net cash flow of continuing operations provided from operating activities less capital expenditures. The Company believes that that this measure, which is used internally to evaluate the Company’s underlying cash generation performance and the ability to repay creditors and return cash to shareholders, provides investors with the ability to better evaluate the Company’s underlying performance. However, the free cash flow from continuing operations measure is not necessarily indicative of operating earnings or net cash flow of continuing operations provided from operating activities as dete
Tasiast achieves record quarterly production
TORONTO, May 10, 2022 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) (“Kinross” or the “Company”) today announced its results for the first-quarter ended March 31, 2022.This news release contains forward-looking information about expected future events and financial and operating performance of the Company. Please refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 28 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.
In Q1 2022, Kinross announced its plan to divest all of its Russian assets. As such, the Company’s Russian assets have been excluded from its Q1 2022 results, along with comparative figures, due to the classification of these assets as discontinued as of March 31, 2022.
*Q1 2022 highlights from continuing operations: *
· *Tasiast* achieved record production in Q1 2022, with the 24k project progressing well and on schedule.
· *La Coipa* poured its first gold bar in February, on schedule and under budget.
· At the *Great Bear *project, exploration, study and permitting activities have ramped up since the completion of the acquisition on February 24, 2022, with assay results reaffirming the world-class potential of the deposit.
· Kinross’ Board of Directors declared a quarterly *dividend of $0.03 per common share *payable on June 16, 2022 to shareholders of record at the close of business on June 2, 2022.
· *Attributable gold equivalent production*^1 of 409,857 Au eq. oz. produced.
· *Attributable production cost of sales*^1, ^2 of $1,000 per Au eq. oz., *consolidated production cost of sales*^3 of $1,003 per Au eq. oz., and *attributable all-in sustaining cost*^1,2 of $1,245 per Au eq. oz. sold.
· *Margins*^4 of $872 per Au eq. oz. sold.
· *Adjusted operating cash flow*^2 of $261.0 million and *operating cash flow*^5 of $105.2 million.
· *Reported net earnings*^6 of $82.3 million, or $0.07 per share, with *adjusted net earnings*^2^, ^7 of $70.6 million, or $0.06 per share^2.
· *Cash and cash equivalents* of $454.2 million, and* total* *liquidity*^8 of approximately $1.7 billion at March 31, 2022.
*Pro-forma Company guidance: *
· Kinross maintained its 2022 company-wide guidance for its pro-forma portfolio after excluding its assets from Russia and Ghana due to their pending divestments. The Company has adjusted gold and oil price assumptions for cost of sales and all-in sustaining cost guidance to reflect current prices.
· Kinross expects to produce *2.15 and 2.3 million* Au eq. oz. (+/- 5%) in 2022 and 2023, respectively, which is expected to drive strong free cash flow.
· The Company expects to produce *2.1 million* Au eq. oz. in 2024 and an average of *two million Au eq. oz. per year over the remainder of the decade. *
· Taking into account current gold and oil prices, the Company maintained its *production cost of sales guidance* *of $830 per Au eq. oz.* *sold* (+/- 5%) for the year, with *all-in sustaining cost of sales^2 of $1,150 per eq. oz. sold* (+/-5%). Consolidated production cost of sales was $832^9 per Au eq. oz. sold and attributable all-in sustaining cost of sales was $1,138 per eq. oz. sold^1, 2, 9 for the year ended December 31, 2021.
· *Capital expenditures* expected to *decrease to $850 million* (+/- 5%) in 2022. Capital expenditures are expected to be *approximately $750 million per year in 2023 and 2024*, excluding potential inflationary impacts and based on the Company’s current production guidance.*Russia and Ghana divestments:*
· Kinross entered into an agreement with the Highland Gold group of companies to sell 100% of its Russian assets for total consideration of $680 million in cash on April 5, 2022. The parties are continuing to advance the closing process and the transaction remains subject to Russian government approval.
· Kinross entered into an agreement with Asante Gold Corporation (“Asante”) to sell the Company’s 90% interest in the Chirano mine in Ghana for total consideration of $225 million in cash and shares on April 25, 2022. The transaction closing is targeted for the end of May.
*Environment, Social, Governance (ESG):*
· Kinross published its 2021 Sustainability Report, detailing its approach and strong record on ESG. The Company continued to rank well among peers in major ESG rankings and ratings.
· In 2021, Kinross generated $3.5 billion in economic benefits in host countries through taxes, wages, procurement and community support.
· The Company recycled 80% of water used at site, maintaining a high rate consistent with its five-year average.
· Across the Company, approximately 99% of the total workforce and 92% of all management are from within host countries, both record highs for the Company.*CEO Commentary:*
J. Paul Rollinson, President and CEO, made the following comments in relation to 2022 first-quarter results:
“During the quarter, we announced the sale of our Russian assets, and in late April, announced the sale of our Chirano mine in Ghana. With these pending divestments, and the close of the acquisition of Great Bear Resources, our overall portfolio has been re-balanced, with approximately 70% of our production now expected to be generated by our mines in the Americas.
“We have maintained our guidance for our pro-forma portfolio, with a substantial production outlook of 2.15 million gold ounces in 2022, which is expected to grow to 2.3 million gold ounces in 2023. Going forward, we will prioritize balance sheet strength while also returning capital to our shareholders through dividends and our share buyback program.
“We are excited about the future for Kinross which includes a production profile that averages two million ounces a year to the end of the decade, anchored by two tier one assets – Paracatu and Tasiast – accounting for more than half of our production, and a world-class development project in Canada.
“Over the quarter, we achieved record production at Tasiast, and our project pipeline continued to advance well. The Tasiast 24k project remains on track, and we poured first gold at the La Coipa project. We are already making good progress on our exploration program at the Great Bear project and are seeing positive results to support our goal of declaring an initial inferred resource estimate with our 2022 year-end results and our vision of developing a large, long-life mining complex.
“In the important area of ESG, mining responsibly will remain at the core of our business. We were pleased to release our 2021 Sustainability Report, which detailed another year of strong performance. We continued to deliver on our responsible mining goals, ranked well among our peers in major ESG ratings, and provided significant economic benefits to the host countries and communities in which we do business. We are committed to continuously improving our ESG performance, as indicated by our commitment to reduce greenhouse gas emission intensity by 30% by 2030.”
*Summary of financial and operating results*
*Three months ended*
*March 31,*
(unaudited, in millions of U.S. dollars, except ounces, per share amounts, and per ounce amounts) *2022* 2021
*Operating Highlights*
Total gold equivalent ounces^(a),(g)
Produced^(c) *509,241* 563,166
Sold^(c) *495,475* 552,198
Total gold equivalent ounces from continuing operations^(a),(h)
Produced^(c) *413,350* 440,914
Sold^(c) *409,538* 430,045
Attributable gold equivalent ounces^(a),(g)
Produced^(c) *505,748* 558,777
Sold^(c) *491,894* 548,084
Attributable gold equivalent ounces from continuing operations^(a),(h)
Produced^(c) *409,857* 436,525
Sold^(c) *405,957* 425,931
*Financial Highlights from Continuing Operations*^*(h)*
Metal sales *$* *768.0* $ 768.7
Production cost of sales *$* *410.6* $ 345.2
Depreciation, depletion and amortization *$* *180.8* $ 188.8
Operating earnings *$* *102.5* $ 144.3
Net earnings from continuing operations attributable to common shareholders *$* *82.3* $ 76.2
Basic earnings per share from continuing operations attributable to common shareholders *$* *0.07* $ 0.06
Diluted earnings per share from continuing operations attributable to common shareholders *$* *0.06* $ 0.06
Adjusted net earnings from continuing operations attributable to common shareholders^(b) *$* *70.6* $ 102.4
Adjusted net earnings from continuing operations per share^(b) *$* *0.06* $ 0.08
Net cash flow of continuing operations provided from operating activities *$* *105.2* $ 145.1
Adjusted operating cash flow from continuing operations^(b) *$* *261.0* $ 298.9
Capital expenditures from continuing operations^(d) *$* *106.3* $ 191.6
Free cash flow from continuing operations^(b) *$* *(1.1* *)* $ (46.5 )
Average realized gold price per ounce from continuing operations^(e) *$* *1,875* $ 1,787
Consolidated production cost of sales from continuing operations per equivalent ounce^(c) sold^(f) *$* *1,003* $ 803
Attributable^(a) production cost of sales from continuing operations per equivalent ounce^(c) sold^(b) *$* *1,000* $ 798
Attributable^(a) production cost of sales from continuing operations per ounce sold on a by-product basis^(b) *$* *994* $ 789
Attributable^(a) all-in sustaining cost from continuing operations per ounce sold on a by-product basis^(b) *$* *1,241* $ 1,044
Attributable^(a) all-in sustaining cost from continuing operations per equivalent ounce^(c) sold^(b) *$* *1,245* $ 1,051
Attributable^(a) all-in cost from continuing operations per ounce sold on a by-product basis^(b) *$* *1,471* $ 1,432
Attributable^(a) all-in cost from continuing operations per equivalent ounce^(c) sold^(b) *$* *1,473* $ 1,435
(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 18 to 24 of this news release. Non-GAAP financial measures and ratios have no standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other issuers.
(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 first quarter of 2022 was 78.19:1 (first quarter of 2021 - 68.33:1).
(d) “Capital expenditures from continuing operations” is as reported as “Additions to property, plant and equipment” on the interim condensed consolidated statements of cash flows.
(e) “Average realized gold price per ounce from continuing operations” is defined as gold metal sales from continuing operations divided by total gold ounces sold from continuing operations.
(f) “Consolidated production cost of sales from continuing operations per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces sold from continuing operations.
(g) Total gold equivalent ounces produced and sold and attributable gold equivalent ounces produced and sold include results from the Kupol and Dvoinoye mines up to March 31, 2022.
(h) In the first quarter of 2022, the Company announced its plan to divest its Russian operations, which includes the Kupol and Dvoinoye mines and the Udinsk project. Results for the three months ended March 31, 2022 and 2021 are from continuing operations and exclude results from the Company’s Russian operations due to the classification of these operations as discontinued as of March 31, 2022.
The following operating and financial results are based on first-quarter gold equivalent production and include the results of Chirano, but exclude Russian operations except where noted:
*Attributable production*^1: Kinross produced 409,857 attributable Au eq. oz. in Q1 2022 from continuing operations, compared with 436,525 attributable Au eq. oz. in Q1 2021. The decrease was largely due to lower production at Round Mountain and Paracatu, partially offset by record high quarterly production at Tasiast.
*Average realized gold price*: The average realized gold price from continuing operations in Q1 2022 was $1,875 per ounce, compared with $1,787 per ounce in Q1 2021.
*Revenue*: During the first quarter, revenue from continuing operations was $768.0 million, in line with $768.7 million during Q1 2021.
*Attributable production cost of sales**^1, 2*: Attributable production cost of sales from continuing operations per Au eq. oz. sold increased to $1,000 for Q1 2022, compared with $798 in Q1 2021, mainly as a result of a decrease in ounces sold, inflationary pressures on consumables, and increases in operating waste mined at Tasiast, Paracatu and Fort Knox.
Attributable production cost of sales from continuing operations per Au oz. sold on a by-product basis was $994 in Q1 2022, compared with $789 in Q1 2021, based on gold sales of 407,104 ounces and silver sales of 190,342 ounces.
*Consolidated production cost of sales:* Consolidated production cost of sales from continuing operations per Au eq. oz. sold was $1,003 for Q1 2022, compared with $803 in Q1 2021.
*Margins*^4: Kinross’ margin from continuing operations per Au eq. oz. sold was $872 for Q1 2022, compared with the Q1 2021 margin of $984.
*Attributable all-in sustaining cost*^1,^2: Attributable all-in sustaining cost from continuing operations per Au eq. oz. sold was $1,245 in Q1 2022, compared with $1,051 in Q1 2021.
In Q1 2022, attributable all-in sustaining cost from continuing operations per Au oz. sold on a by-product basis from continuing operations was $1,241, compared with $1,044 in Q1 2021.
*Operating cash flow*: Adjusted operating cash flow from continuing operations^2 was $261.0 million in Q1 2022, compared with $298.9 million for Q1 2021.
Operating cash flow from continuing operations was $105.2 million for Q1 2022, compared with $145.1 million for Q1 2021.
*Free cash flow*^2*: *Free cash flow from continuing operations was a net outflow of $1.1 million in Q1 2022, compared with a net outflow of $46.5 million for Q1 2021. The decrease in free cash outflow was mainly due to lower capital expenditures. The net free cash outflow of $1.1 million in Q1 2022 includes $156 million of working capital outflows.
*Earnings*: Adjusted net earnings from continuing operations^2, 7 were $70.6 million, or $0.06 per share^2, for Q1 2022, compared with $102.4 million, or $0.08 per share, for Q1 2021.
Reported net earnings^6 from continuing operations were $82.3 million, or $0.07 per share for Q1 2022, compared with reported net earnings of $76.2 million, or $0.06 per share, for Q1 2021. The increase in reported net earnings was mainly due to a decrease in income tax expense, partially offset by an increase in production cost of sales.
Reported net loss from the Russian discontinued operations^10 was $606.1 million in Q1 2022, which includes an impairment charge of $671.0 million related to the re-measurement of the Russian operations to fair value less costs to sell.
*Capital expenditures*: Capital expenditures from continuing operations decreased to $106.3 million for Q1 2022, compared with $191.6 million for Q1 2021. The decrease was primarily due to mine sequencing at Fort Knox, Tasiast and Round Mountain involving an increase in operating waste mined and a decrease in capital stripping, partially offset by increased expenditures for development activities at La Coipa.
*Balance sheet *
As of March 31, 2022, Kinross had cash and cash equivalents of $454.2 million, compared with $531.5 million at December 31, 2021. The decrease was primarily due to the reclassification of $134.0 million of cash and cash equivalents to assets held for sale as a result of the Company’s announced sale of its Russian assets.
On March 7, 2022, the Company arranged a new $1.0 billion term loan. The three-year term loan will mature on March 7, 2025, has no mandatory amortization payments, and has a flexible repayment schedule. Kinross used the proceeds of the financing to settle amounts drawn under its $1.5 billion revolving credit facility in connection with the closing of its acquisition of Great Bear Resources.
The Company had additional available credit^11 of $1,261.0 million as of March 31, 2022 and total liquidity^8 of approximately $1.7 billion.
*Operating results*
Mine-by-mine summaries for 2022 first-quarter operating results may be found on pages 13 and 17 of this news release. Highlights include the following:
*Tasiast* performed well and achieved record production during the quarter. The increase in production was mainly due to higher grades, with higher mill throughput contributing to the production increase versus the previous quarter. Cost of sales per ounce sold increased quarter-over-quarter and year-over-year mainly as a result of higher operating waste mined, with higher contractor and maintenance costs also contributing to the increase versus Q1 2021. Tasiast expects to increase production over the year as it mines higher grades and increases throughput.
At *Paracatu*, production decreased quarter-over-quarter and year-over-year primarily due to lower throughput and lower grades as a result of planned mine sequencing and temporary mill downtime. Cost of sales per ounce sold was higher compared with the previous quarter and year mainly due to lower production. Higher operating waste mined, maintenance costs and inflationary pressures also contributed to the higher costs versus Q1 2021. Production and costs are expected to improve at Paracatu throughout the year, as mining is expected to move to higher grade areas of the orebody.
At *Fort Knox*, production was lower compared with the previous quarter mainly due to lower grades, mill throughput and ounces recovered from the heap leach pads, and was largely in line with Q1 2021. Production is expected to increase in the second half of the year as ounces recovered from the heap leach pads typically improve due to seasonality. Cost of sales per ounce sold was higher quarter-over-quarter mainly due to lower production, and increased year-over-year mainly due to higher operating waste mined and increased costs related to contractors, reagents, power, and fuel.
At *Round Mountain*, production decreased quarter-over-quarter due to lower ounces recovered from the heap leach pads and lower mill throughput, partially offset by higher mill grade. Compared with the same period in 2021, production decreased mainly due to fewer ounces recovered from the heap leach pads. Cost of sales per ounce sold increased quarter-over-quarter and year-over-year primarily due to lower production, higher operating waste mined and higher fuel, power and maintenance costs.
The Round Mountain mine optimization program is progressing on schedule to be completed in the second half of the year. The program is continuing to assess shallower pit wall slope angles over a larger area of the pit to enhance stability, along with an optimal mine plan sequence for Phase W, Phase S and Phase X. These include longer-term mine plan scenarios post-2024 that optimize stripping requirements while continuing to evaluate the underground potential for portions of Phase W and Phase X.
The program’s interim results are now contemplating a mine plan sequence that divides mining of Phase W into four parts. The first two parts would be mined over the next three to four years as part of the open pit, given stripping had already commenced in these areas, and would account for approximately 20% of Round Mountain’s mineral reserve estimates. Phase S mining is expected to start later this year (at December 31, 2021, 938 Au koz. at Phase S were converted to proven and probable reserves). Mining for the third and fourth parts of Phase W is expected to commence post-2024 and could potentially include underground mining as the Company continues to explore opportunities at Phase X.
At *Bald Mountain*, production was lower quarter-over-quarter and year-over-year mainly due to timing of ounces recovered from the heap leach pads in the north area of the mine. Production is expected to increase in the second half of the year due to higher heap leach recoveries. Cost of sales per ounce sold was higher compared with the previous quarter and year primarily due to lower production and higher contractor and fuel costs.
At *La Coipa*, the first gold bar was poured in February 2022 and the mine produced 524 Au eq. oz. during the quarter. The project was delivered on schedule and under budget despite the challenging global environment over the past two years. The plant is expected to ramp up over the next few months to reach full operating capacity mid-year. The Company continues to study opportunities to further extend mine life by incorporating adjacent pits into the mine plan.
At *Chirano*, production was largely in line quarter-over-quarter and decreased year-over-year mainly due to lower grades from underground mining. Cost of sales per ounce sold was lower compared with the previous quarter due to higher gold sales, and was higher year-over-year mainly due to lower production.
*Development projects*
*Tasiast 24k *
At the *Tasiast 24k* project, the process plant is now regularly reaching throughput of 21,000 tonnes per day (t/d), with efforts underway to further reduce commissioning downtime. The second phase of the project continues to progress well and is on track to meet throughput of 24,000 t/d by mid-2023. Engineering is planned to be substantially completed during Q2 2022 and construction of the site’s third leach tank is now 70% complete.
*Great Bear project update*
On February 24, 2022, Kinross announced that it had completed the acquisition of Great Bear Resources Ltd. On April 7, 2022, the Company provided an update on development at the *Great Bear* project in Red Lake, Ontario, with assay results from 60 holes drilled in the LP Fault zone continuing to confirm gold mineralization, which is open along strike and at depth. Kinross has received additional assay results from 25 holes since the last update which continue to support the Company’s view of a high-grade, top tier deposit that underpins the prospect of developing a large, long-life mining complex.
Kinross remains on track to declare an initial inferred mineral resource for the Great Bear project as part of its 2022 year-end results and commence a pre-feasibility study in 2023.
See Appendix A: Figure 1 for a LP Fault zone long section and the location of drill holes in the table below, and Appendix B for a full list of recent significant, composited assay results.
*Hole ID* *From
*(m) *To*
(m) *Width
*(m) *True
Width
*(m) *Au*
(g/t) *Target*
BR-470 140.25 143.25 3.00 2.90 8.82 Discovery
BR-471 151.60 160.00 8.40 7.90 1.82 Discovery
BR-471 including 153.10 153.75 0.65 0.60 18.20
BR-471 and 202.50 204.00 1.50 1.40 7.38
BR-478 38.40 39.00 0.60 0.50 10.40 Discovery
BR-517 544.80 545.55 0.75 0.70 8.87 Yauro
BR-517 and 550.30 562.75 12.45 11.70 0.49
BR-530 498.75 499.25 0.50 0.50 8.11 Discovery
BR-534 604.60 605.50 0.90 0.80 10.70 BR Discovery
BR-534 and 631.00 664.70 33.70 30.70 1.73
BR-553 514.15 517.75 3.60 3.40 2.61 Yauro
BR-553 and 725.60 730.20 4.60 4.40 4.68
BR-553 and 758.00 758.65 0.65 0.60 24.70
BR-561 219.80 225.25 5.45 5.40 1.05 Viggo
BR-561 including 222.35 223.55 1.20 1.20 3.20
BR-565 175.05 196.50 21.45 20.10 7.50 Viggo
BR-565 including 176.50 180.00 3.50 3.30 37.69
BR-565 and 376.35 377.50 1.15 1.10 21.00
BR-565 and 394.50 396.00 1.50 1.40 7.27
Exploration, study, and permitting activities continue to ramp up at the project, with approximately 200,000 metres of exploration and infill drilling expected to be completed in 2022. The drilling program will continue to focus on the LP Fault zone, the most significant discovery to date at the project. There are currently eight diamond drills and two reverse-circulation (RC) rigs active on site. The RC rigs are being utilized for a grade control program that is expected to inform the continuity and distribution of the high grade in the LP zone, while also testing grade control methodology. Since March 2022, approximately 11,800 metres of the planned 35,000-metre grade control program have been drilled.
Kinross is also analyzing an advanced exploration program that would establish an underground decline and workings. The advanced program would allow for underground drilling for more efficient exploration of deeper areas of the LP Fault, along with the nearby Hinge and Limb gold zones, as well as bulk sampling. The Company is targeting a potential start of the advanced program as early as 2024.
Baseline environmental surveys and local community socio-economic studies required for the permitting process are underway, and the Company is now working with a team of experts who have permitted multiple operating mines in Ontario. Kinross is also continuing its local stakeholder engagement program and working to foster strong relationships with local communities and with its partners in the Wabauskang and Lac Seul First Nations, on whose traditional territories the project is located.
*Manh Choh *
At the 70%-owned *Manh Choh* project in Alaska, feasibility study work is progressing well and is expected to be completed on schedule by the end of 2022. Permit applications are advancing as planned, with the Company now liaising with regulators on comments received regarding key permit applications submitted at the end of last year. Kinross has also signed an extension of the community support agreement with the Native Village of Tetlin and is continuing to prioritize transparent community engagements and generating local economic benefits as it develops the project. Initial production is on schedule to commence in late 2024, subject to permitting.
*Lobo-Marte *
The *Lobo-Marte* project in Chile continues to provide optionality for Kinross’ long-term portfolio as a potential large, low-cost mine, following the completion of the project feasibility study in November 2021. The timing and go-forward decision for the project will depend on a range of factors, including the gold price environment and projections, economic returns, permitting, priorities in the Company’s portfolio and other potential opportunities in the region, including mine life extensions at La Coipa. Should further La Coipa mine life extension opportunities be successful, Lobo-Marte’s timing is expected to be affected accordingly.
*Company guidance update*
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 28 of this news release. This Company Guidance section references all-in sustaining cost per equivalent ounce sold, which is a non-GAAP ratio with no standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other issuers. The definition of this non-GAAP ratio and comparable reconciliation is included on pages 18 to 24 of this news release.
Kinross has adjusted its 2022 company-wide guidance previously disclosed on February 16, 2022 to exclude its assets from Russia and Ghana for full-year 2022 and other future guidance figures due to their pending divestments. As Kinross’ share of Chirano (90%) is now excluded from guidance, all guidance figures are no longer on an attributable basis, but on a total basis.
*Production guidance *
On a pro-forma portfolio basis, Kinross maintained its 2022 production guidance of 2.15 million Au eq. oz. (+/- 5%). The Company continues to expect higher production in the second half of the year, which is largely driven by increased production at Paracatu, Tasiast and La Coipa.
The Company’s 2023 and 2024 production guidance have been adjusted to 2.3 and 2.1 million Au eq. oz. (+/- 5%), respectively. Kinross expects to maintain a substantial production profile with estimated average production of two million Au eq. oz. per year over the remainder of the decade.
*Annual gold equivalent production guidance*
(+/- 5%)
2022 2.15 million oz.
2023 2.3 million oz.
2024 2.1 million oz.
*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 forecast for its 2023 and 2024 capital forecast. Kinross continues to closely monitor the impact of inflationary pressures on its operations and projects.
*Cost guidance *
*2022 Guidance*
(+/- 5%) *2021 Actual*^*9*
Production cost of sales per Au eq. oz. $830 $832
All-in sustaining cost per Au eq. oz.^2 $1,150 $1,138^1
Taking into account current gold and oil prices, Kinross’ production cost of sales forecast has been maintained at $830 per Au eq. oz. (+/- 5%) for 2022. Production cost of sales per ounce is expected to decrease during the second half of the year largely due to the anticipated increase in production.
The 2022 guidance for all-in sustaining cost will be $1,150 per eq. oz. sold (+/- 5%).
The following assumptions related to gold and oil prices have been used to forecast the Company’s cost of sales and all-in sustaining cost guidance:
· a gold price of $1,800 per ounce;
· an oil price of $100 per barrel;
· including a $10 per barrel change in the price of oil would be expected to result in an approximate $4 impact on fuel consumption costs on production cost of sales per ounce.The other key assumptions and sensitivities disclosed in the Company’s original guidance on February 16, 2022 have not changed.
*Capital expenditures guidance *
The 2022 capital expenditures forecast has been lowered to $850 million (+/- 5%). Kinross’ capital expenditures outlook for 2023 and 2024 is approximately $750 million per year, excluding inflationary impacts and based on Kinross’ current production guidance. As the Company continues to develop and optimize its portfolio, other projects, such as Manh Choh and Great Bear, may be incorporated into its capital expenditures forecast over the 2023 - 2024 timeframe.
*Other 2022 guidance updates *
The 2022 forecast for *exploration* has been increased to approximately $140 million, all of which is expected to be expensed. The increase is primarily related to the inclusion of the comprehensive exploration program planned at the Great Bear project.
The 2022 forecast for *overhead *(general and administrative and business development expenses) has been reduced to approximately $145 million.
*Other operating costs* expected to be incurred in 2022 are now estimated to be $120 million (+/- 5%), which are principally due to care and maintenance, reclamation, and pandemic-related mitigation measures.
Based on an assumed gold price of $1,800 per ounce, and with other budget assumptions maintained, *tax expense* is expected to be $150 million and *taxes paid* is expected to be $125 million. Adjusting the Brazilian real to the respective exchange rate of 5.58 to the U.S. dollar in effect at December 31, 2021, tax expense would be expected to be $190 million. Tax expense is expected to increase by 22% of any profit resulting from higher gold prices. Taxes paid is expected to increase by approximately $5 million for every $100 increase in the realized gold price.
*Depreciation, depletion and amortization* is now forecast to be approximately $440 per Au eq. oz. sold (+/- 5%).
The* interest paid* forecast has been updated to be approximately $95 million, which includes approximately $40 million of capitalized interest.
*Exploration update *
Exploration activities continued to focus on promising targets around current operations and areas where existing infrastructure can be leveraged. Initial highlights from 2022 include:
*Round Mountain*: Activities continued to focus on extending the *Gold Hill* mineralized vein structures, with promising results, which includes high grades, received during the quarter. Gold Hill is located approximately seven kilometres north of Round Mountain.
· *D-1165* – 3.2m @ 10.32 g/t Au (incl. 2.1m @ 15.24 g/t Au) – the results confirm the 230-metre down-dip extension of the “Alexandria” vein, which was discovered in late 2021.
· *D-1164* – 1.9m @ 5.82 g/t Au (incl. 0.4m @ 22.0 g/t Au)
· *D-1164* – 2.1m @ 5.94 g/t Au (incl. 0.4m @ 23.3 g/t Au).
The two intercepts at D-1164 are along a 100-metre west extension of several high-grade, sub-vertical holes between the main Gold Hill vein and the Alexandria vein. New geophysical data confirmed multiple deposit-scale trends open along strike at Gold Hill. Work on the planned drift for underground exploration at *Phase X* continues to advance well.
*Curlew Basin Exploration (CBX)*: At the CBX program, located approximately 35 kilometres north of the Kettle River mill, underground drilling continues to intersect previously unidentified veins after underground drilling commenced in Q3 2021 following the completion of dewatering and exploration drift development. Recent drilling from late 2021 has identified 22 new mineralized veins, including an extension of the “Galaxie” vein (which was discovered last year) along a 150-metre strike and at 100-metre depth. Drilling results from the quarter include:
· *Hole# 1103* – 6.4m @ 4.95 g/t Au (TW) – Stealth target
· *Hole# 1103* – 3.2m @ 5.62 g/t Au (TW) – Galaxie target
· *Hole# 1101* – 6.8m @ 3.73 g/t Au (TW) – West Zone target*Divestment of Russia assets *
On April 5, 2022, Kinross announced that it had entered into an agreement with the Highland Gold Mining group of companies and its affiliates to sell 100% of its Russian assets for total consideration of $680 million in cash. The total cash consideration includes $400 million for the Kupol mine and $280 million for the Udinsk project. Kinross will receive $100 million at closing and the remaining total consideration is scheduled to be received in annual payments from 2023 through to 2027.
The deferred payments are secured by an extensive security package that includes share pledges, financial guarantees and an escrow account, with all payments payable in U.S. dollars. The parties are continuing to advance the closing process and the transaction remains subject to Russian government approval. In light of unprecedented circumstances, the timing and outcome of such an approval is uncertain.
*Divestment of Ghana assets *
On April 25, 2022, Kinross announced that it had entered into an agreement with Asante to sell its 90% interest in the Chirano mine in Ghana for total consideration of $225 million in cash and shares. Upon closing of the transaction, Kinross is to receive $115 million in cash and $50 million in Asante common shares, provided that the issuance of Asante common shares will not result in Kinross exceeding a 9.9% ownership in Asante. The agreement also provides for total deferred payments of $60 million in cash. If the 9.9% share ownership limit is reached, the remainder of the $50 million is to be paid by increasing the deferred cash payments. The transaction closing is targeted for the end of May 2022.
*Environment, Social and Governance*
Kinross published its *2021 Sustainability Report* today, detailing the Company’s ESG approach and performance. Through its values-based approach, the Company ensures that ESG is a core part of its culture, business strategy and future growth plans.
Access the full Sustainability Report here: *https://www.kinross.com/2021-Sustainability-Report*
For highlights of the Report, read here: *https://www.kinross.com/Kinross-releases-2021-sustainability-report*
Kinross ranked well among peers in major ESG rankings and ratings and maintained its top-tier governance record. The Company increased its S&P Global score, moving to the 94^th percentile for 2021, the highest ever ranking for Kinross, and maintained its “A” position with MSCI.
Kinross obtained independent limited assurance of selected ESG performance metrics and, following the Company’s normal practice, has provided Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) indices. The Company expects to publish its 2021 Task Force on Climate-Related Financial Disclosures (TCFD) climate report in Q2 2022.
Other highlights from the Report include:
· In 2021, Kinross generated $3.5 billion in economic benefits through taxes, wages, procurement and community support, including donations. Since 2010, $40 billion has been contributed to the economies of Kinross’ host countries.· As part of Kinross’ commitment to proactively mitigating and reducing environmental impacts, all sites maintained robust water management systems and, in 2021, 80% of total water withdrawn was recycled.· The Company is committed to fostering a safe, inclusive and diverse workplace that is representative of the communities where it operates. Approximately 99% of Kinross’ total workforce, and 92% of management, are from within host countries, record highs for the Company.In the first quarter of 2022, Kinross provided significant donations to several organizations. This includes a $1 million donation for response and rebuilding efforts to support the Appiatse community in Ghana after a tragic explosion and a $1 million donation to the Canadian Red Cross Ukraine Humanitarian Crisis Appeal to assist those affected by the ongoing conflict in Ukraine. Kinross also donated $1 million to support the development of the Troth Yeddha’ Indigenous Studies Center at the University of Alaska Fairbanks (UAF) to support Indigenous-focused academic, research and cultural programs.
*Conference call details *
In connection with this news release, Kinross will hold a conference call and audio webcast on Wednesday, May 11, 2022 at 7:45 a.m. EDT to discuss the results, followed by a question-and-answer session. To access the call, please dial:
*Canada & US toll-free* – (833) 968-2237; Passcode: 5893677
*Outside of Canada & US* – (825) 312-2059; Passcode: 5893677
Replay (available up to 14 days after the call):
*Canada & US toll-free* – (800) 770-2030; Passcode: 5893677
*Outside of Canada & US* – +1 (647) 362-9199; Passcode: 5893677
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’ 2022 first-quarter unaudited Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2022 first-quarter unaudited Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished 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.
*Virtual Annual Meeting of Shareholders*
Kinross’ Annual Meeting of Shareholders will be held on Wednesday, May 11, 2022 at 10:00 a.m. EDT.
The Company has again elected to hold a virtual meeting via a live audio webcast given the continued impact and uncertainty of the COVID-19 pandemic. Kinross believes this is a prudent approach that prioritizes safety while still providing the same level of disclosure, transparency and participation as previous meetings.
The virtual meeting will be accessible online at: *web.lumiagm.com/468209904**. *
Voting and participation instructions for eligible shareholders are provided in the Company’s Notice of Annual Meeting of Shareholders and Management Information Circular.
The link to the virtual meeting will also be accessible at www.kinross.com and will be archived for later use.
*About Kinross Gold Corporation *
Kinross is a Canadian-based global senior gold mining company with operations and projects in the United States, Brazil, Mauritania, Chile, Canada, Russia and Ghana. Our focus on delivering value is based on our core principles of responsible mining, operational excellence, disciplined growth and balance sheet strength. 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 March 31, (unaudited)* *Gold equivalent ounces*
*Produced* *Sold* *Production cost of
sales*($millions) *Production cost of sales/equivalent ounce sold*
*2022* 2021 *2022* 2021 *2022* 2021 *2022* 2021
Fort Knox *54,803* 55,815 *52,813* 55,561 *$* *67.4* $ 57.7 *$* *1,276* $ 1,038
Round Mountain *45,319* 74,286 *46,959* 73,878 *52.3* 63.1 *1,114* 854
Bald Mountain *36,071* 51,408 *41,017* 48,250 *40.3* 37.0 *983* 767
Paracatu *108,009* 126,547 *101,886* 126,811 *106.6* 82.8 *1,046* 653
La Coipa *524* - *-* - *-* - *-* -
Maricunga *-* - *858* 731 *0.6* 0.5 *699* 684
*Americas Total* *244,726* 308,056 *243,533* 305,231 *267.2* 241.1 *1,097* 790
Tasiast *133,695* 88,964 *130,195* 83,670 *95.8* 51.3 *736* 613
Chirano (100%) *34,929* 43,894 *35,810* 41,144 *47.6* 52.8 *1,329* 1,283
*West Africa Total* *168,624* 132,858 *166,005* 124,814 *143.4* 104.1 *864* 834
Less: Chirano non-controlling
interest (10%) *(3,493* *)* (4,389 ) *(3,581* *)* (4,114 ) *(4.8* *)* (5.3 )
*West Africa Attributable Total* *165,131* 128,469 *162,424* 120,700 *138.6* 98.8 *$* *853* $ 819
*Attributable Total* *409,857* 436,525 *405,957* 425,931 *405.8* 339.9 *1,000* 798
Add: Chirano non-controlling
interest (10%) *3,493* 4,389 *3,581* 4,114 *4.8* 5.3
*Continuing Operations Total* *413,350* 440,914 *409,538* 430,045 *410.6* 345.2 *$* *1,003* $ 803
*Discontinued Operations*
Kupol *95,891* 122,252 *85,937* 122,153 *65.4* 74.7 *$* *761* $ 612*Interim condensed consolidated balance sheets*
(unaudited, expressed in millions of U.S. dollars, except share amounts)
*As at*
*March 31,* December 31,
*2022* 2021
*Assets*
Current assets
Cash and cash equivalents *$* *454.2* $ 531.5
Restricted cash *13.1* 11.4
Accounts receivable and other assets *123.6* 214.5
Current income tax recoverable *6.7* 10.2
Inventories *1,044.4* 1,151.3
Unrealized fair value of derivative assets *49.2* 30.0
Assets held for sale *498.4* -
*2,189.6* 1,948.9
Non-current assets
Property, plant and equipment *8,248.3* 7,617.7
Goodwill *-* 158.8
Long-term investments *108.2* 98.2
Investment in joint venture *7.0* 7.1
Other long-term assets *568.9* 590.9
Deferred tax assets *-* 6.5
*Total assets* *$* *11,122.0* $ 10,428.1
*Liabilities*
Current liabilities
Accounts payable and accrued liabilities *$* *441.8* $ 492.7
Current income tax payable *16.8* 95.0
Current portion of long-term debt and credit facilities *40.0* 40.0
Current portion of provisions *85.4* 90.0
Other current liabilities *23.7* 23.7
Liabilities held for sale *53.4* -
*661.1* 741.4
Non-current liabilities
Long-term debt and credit facilities *2,688.8* 1,589.9
Provisions *735.9* 847.9
Long-term lease liabilities *33.4* 35.1
Other long-term liabilities *146.1* 127.4
Deferred tax liabilities *418.9* 436.8
*Total liabilities* *$* *4,684.2* $ 3,778.5
*Equity*
Common shareholders' equity
Common share capital *$* *4,710.2* $ 4,427.7
Contributed surplus *10,698.4* 10,664.4
Accumulated deficit *(9,055.1* *)* (8,492.4 )
Accumulated other comprehensive income (loss) *14.2* (18.8 )
*Total common shareholders' equity* *6,367.7* 6,580.9
Non-controlling interests *70.1* 68.7
*Total equity* *6,437.8* 6,649.6
*Total liabilities and equity* *$* *11,122.0* $ 10,428.1
*Common shares*
*Authorized* *Unlimited* Unlimited
*Issued and outstanding* *1,297,256,784* 1,244,332,772
*Interim condensed consolidated statements of operations*
(unaudited, expressed in millions of U.S. dollars, except share and per share amounts)
*Three months ended*
*March 31,* March 31,
*2022* 2021
*Revenue*
Metal sales *$* *768.0* $ 768.7
*Cost of sales*
Production cost of sales *410.6* 345.2
Depreciation, depletion and amortization *180.8* 188.8
*Total cost of sales* *591.4* 534.0
*Gross profit* *176.6* 234.7
Other operating expense *19.1* 39.6
Exploration and business development *24.8* 20.1
General and administrative *30.2* 30.7
*Operating earnings* *102.5* 144.3
Other (expense) income - net *(5.0* *)* 4.2
Finance income *2.2* 1.5
Finance expense *(22.0* *)* (19.0 )
*Earnings from continuing operations before tax* *77.7* 131.0
Income tax recovery (expense) - net *4.5* (55.1 )
Earnings from continuing operations after tax *82.2* 75.9
(Loss) earnings from discontinued operations after tax *$* *(606.1* *)* $ 73.3
*Net (loss) earnings* *$* *(523.9* *)* $ 149.2
*Net (loss) earnings from continuing operations attributable to:*
Non-controlling interests *$* *(0.1* *)* $ (0.3 )
Common shareholders *$* *82.3* $ 76.2
*Net (loss) earnings attributable to:*
Non-controlling interests *$* *(0.1* *)* $ (0.3 )
Common shareholders *$* *(523.8* *)* $ 149.5
*Earnings per share from continuing operations attributable to common shareholders*
Basic *$* *0.07* $ 0.06
Diluted *$* *0.06* $ 0.06
*(Loss) earnings per share attributable to common shareholders*
Basic *$* *(0.41* *)* $ 0.12
Diluted *$* *(0.41* *)* $ 0.12
*Interim condensed consolidated statements of cash flows*
(unaudited, expressed in millions of U.S. dollars)
*Three months ended*
*March 31,* March 31,
*2022* 2021
*Net inflow (outflow) of cash related to the following activities:*
*Operating:*
Earnings from continuing operations after tax *$* *82.2* $ 75.9
Adjustments to reconcile net earnings from continuing operations to net cash provided from operating activities:
Depreciation, depletion and amortization *180.8* 188.8
Share-based compensation expense *3.0* 3.8
Finance expense *22.0* 19.0
Deferred tax (recovery) expense *(20.0* *)* 2.9
Foreign exchange losses and other *4.9* 8.5
Reclamation recovery *(11.9* *)* -
Changes in operating assets and liabilities:
Accounts receivable and other assets *43.8* (3.0 )
Inventories *(90.5* *)* (32.9 )
Accounts payable and accrued liabilities *(25.2* *)* (21.6 )
*Cash flow provided from operating activities* *189.1* 241.4
Income taxes paid *(83.9* *)* (96.3 )
*Net cash flow of continuing operations provided from operating activities* *105.2* 145.1
*Net cash flow of discontinued operations provided from operating activities* *91.4* 134.7
*Investing:*
Additions to property, plant and equipment *(106.3* *)* (191.6 )
Interest paid capitalized to property, plant and equipment *(11.0* *)* (23.2 )
Acquisitions net of cash acquired *(1,027.5* *)* -
Net additions to long-term investments and other assets *(13.9* *)* (1.9 )
(Increase) decrease in restricted cash - net *(1.7* *)* 2.4
Interest received and other - net *1.1* 0.5
*Net cash flow of continuing operations used in investing activities* *(1,159.3* *)* (213.8 )
*Net cash flow of discontinued operations used in investing activities* *(11.2* *)* (155.0 )
*Financing:*
Proceeds from drawdown of debt *1,097.6* -
Interest paid *(24.7* *)* (23.6 )
Payment of lease liabilities *(5.4* *)* (7.6 )
Dividends paid to common shareholders *(38.9* *)* (37.8 )
Other - net *5.9* 4.6
*Net cash flow of continuing operations provided from (used in) financing activities* *1,034.5* (64.4 )
*Net cash flow of discontinued operations used in financing activities* *-* -
*Effect of exchange rate changes on cash and cash equivalents of continuing operations* *-* (0.2 )
*Effect of exchange rate changes on cash and cash equivalents of discontinued operations* *(3.9* *)* (1.2 )
*Increase (decrease) in cash and cash equivalents* *56.7* (154.8 )
*Cash and cash equivalents, beginning of period* *531.5* 1,210.9
*Reclassified to assets held for sale* *(134.0* *)* -
*Cash and cash equivalents, end of period* *$* *454.2* $ 1,056.1
*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)(e)* *Gold Eq Production*^*(c)* *Gold Eq Sales*^*(c)* *Production cost of sales* *Production cost of sales/oz*^*(d)* *Total Cap Ex*^*(f)* *DD&A*
(%) ('000 tonnes) ('000 tonnes) ('000 tonnes) (g/t) (g/t) (%) (ounces) (ounces) ($ millions) ($/ounce) ($ millions) ($ millions)
*Americas* *Fort Knox*
*Q1 2022* *100* *13,743* *1,852* *13,010* *0.66* *0.17* *80**%* *54,803* *52,813* *$* *67.4* *$* *1,276* *$* *2.9* *$* *20.9*
Q4 2021 100 9,203 2,148 8,185 0.73 0.19 82% 73,830 74,384 $ 74.1 $ 996 $ 31.6 $ 30.9
Q3 2021 100 8,024 2,221 6,395 0.77 0.20 82% 71,336 71,482 $ 67.7 $ 947 $ 37.4 $ 29.7
Q2 2021 100 9,560 1,939 7,864 0.70 0.22 81% 63,302 62,163 $ 67.7 $ 1,089 $ 18.7 $ 26.7
Q1 2021 100 8,174 1,751 7,396 0.57 0.20 80% 55,815 55,561 $ 57.7 $ 1,038 $ 25.4 $ 22.5
*Round Mountain*
*Q1 2022* *100* *3,767* *929* *3,208* *0.80* *0.36* *79**%* *45,319* *46,959* *$* *52.3* *$* *1,114* *$* *16.0* *$* *12.1*
Q4 2021 100 1,755 1,057 1,529 0.64 0.33 75% 51,549 52,723 $ 51.8 $ 982 $ 50.3 $ 14.5
Q3 2021 100 1,531 915 4,442 0.63 0.29 76% 63,242 61,405 $ 60.8 $ 990 $ 23.7 $ 16.3
Q2 2021 100 2,551 1,133 2,552 0.54 0.38 76% 67,928 71,935 $ 60.2 $ 837 $ 20.2 $ 17.4
Q1 2021 100 3,843 976 4,019 0.70 0.46 81% 74,286 73,878 $ 63.1 $ 854 $ 31.3 $ 17.0
*Bald Mountain*
*Q1 2022* *100* *3,870* *-* *3,870* *-* *0.63* *nm* *36,071* *41,017* *$* *40.3* *$* *983* *$* *5.8* *$* *35.1*
Q4 2021 100 5,222 - 5,222 - 0.52 nm 61,036 53,559 $ 50.1 $ 935 $ 17.2 $ 57.2
Q3 2021 100 5,941 - 5,941 - 0.46 nm 55,559 52,874 $ 48.8 $ 923 $ 7.7 $ 59.4
Q2 2021 100 5,875 - 5,875 - 0.57 nm 36,887 41,383 $ 41.6 $ 1,005 $ 5.2 $ 39.1
Q1 2021 100 2,025 - 2,025 - 0.48 nm 51,408 48,250 $ 37.0 $ 767 $ 8.9 $ 40.2
*Paracatu*
*Q1 2022* *100* *6,165* *13,645* *-* *0.33* *-* *75**%* *108,009* *101,886* *$* *106.6* *$* *1,046* *$* *16.0* *$* *39.6*
Q4 2021 100 13,036 15,451 - 0.35 - 77% 138,669 145,691 $ 116.9 $ 802 $ 49.6 $ 47.7
Q3 2021 100 14,107 15,085 - 0.37 - 76% 134,425 133,924 $ 103.7 $ 774 $ 30.0 $ 44.5
Q2 2021 100 12,624 14,138 - 0.37 - 76% 150,919 143,474 $ 108.7 $ 758 $ 27.5 $ 50.7
Q1 2021 100 12,612 15,372 - 0.38 - 75% 126,547 126,811 $ 82.8 $ 653 $ 20.8 $ 37.7
*Maricunga*
*Q1 2022* *100* *-* *-* *-* *-* *-* *nm* *-* *858* *$* *0.6* *$* *699* *$* *-* *$* *0.1*
Q4 2021 100 - - - - - nm - 821 $ 0.6 $ 731 $ - $ 0.1
Q3 2021 100 - - - - - nm - 655 $ 0.5 $ 763 $ - $ 0.3
Q2 2021 100 - - - - - nm - 580 $ 0.4 $ 690 $ - $ 0.1
Q1 2021 100 - - - - - nm - 731 $ 0.5 $ 684 $ - $ 0.1
*West Africa*
*Tasiast*
*Q1 2022* *100* *3,462* *1,524* *-* *2.54* *-* *94**%* *133,695* *130,195* *$* *95.8* *$* *736* *$* *19.4* *$* *57.1*
Q4 2021 100 1,061 1,068 - 1.50 - 94% 15,253 15,006 $ 10.8 $ 720 $ 52.5 $ 13.1
Q3 2021 100 822 - - - - 0% 3,847 4,822 $ 8.3 $ 1,721 $ 68.1 $ 21.3
Q2 2021 100 818 1,161 - 1.67 - 95% 62,438 70,695 $ 53.2 $ 753 $ 70.2 $ 54.2
Q1 2021 100 843 1,504 - 1.85 - 96% 88,964 83,670 $ 51.3 $ 613 $ 68.6 $ 48.3
*Chirano - 100%*
*Q1 2022* *100* *651* *875* *-* *1.32* *-* *86**%* *34,929* *35,810* *$* *47.6* *$* *1,329* *$* *5.5* *$* *14.3*
Q4 2021 100 625 869 - 1.48 - 85% 34,561 31,633 $ 45.7 $ 1,445 $ 7.5 $ 15.8
Q3 2021 100 802 881 - 1.54 - 87% 37,588 34,999 $ 49.4 $ 1,411 $ 9.3 $ 17.0
Q2 2021 100 933 862 - 1.54 - 88% 38,625 40,517 $ 53.7 $ 1,325 $ 12.8 $ 19.0
Q1 2021 100 735 821 - 1.81 - 88% 43,894 41,144 $ 52.8 $ 1,283 $ 10.1 $ 21.2
*Chirano - 90%*^*(g)*
*Q1 2022* *90* *651* *875* *-* *1.32* *-* *86**%* *31,436* *32,229* *$* *42.8* *$* *1,329* *$* *5.0* *$* *12.9*
Q4 2021 90 625 869 - 1.48 - 85% 31,105 28,470 $ 41.1 $ 1,445 $ 6.8 $ 14.2
Q3 2021 90 802 881 - 1.54 - 87% 33,829 31,499 $ 44.5 $ 1,411 $ 8.4 $ 15.3
Q2 2021 90 933 862 - 1.54 - 88% 34,762 36,465 $ 48.3 $ 1,325 $ 11.5 $ 17.1
Q1 2021 90 735 821 - 1.81 - 88% 39,505 37,030 $ 47.5 $ 1,283 $ 9.1 $ 19.1
(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) 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: Q1 2022: 78.19:1; Q4 2021: 76.89:1; Q3 2021: 73.45:1; Q2 2021: 68.05:1; Q1 2021: 68.33:1.
(d) “Production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by gold equivalent ounces sold.
(e) "nm" means not meaningful.
(f) "Capital expenditures" is as reported as “Additions to property, plant and equipment” on the interim condensed consolidated statements of cash flows.
(g) Figures for gold equivalent production, gold equivalent sales, production cost of sales, capital expenditures and depreciation, depletion and amortization for all quarters presented are based on Kinross' 90% share of Chirano and are calculated as Chirano 100% as reported above, less 10%. For Q1 2022: Production cost of sales is calculated as $47.6 million less 10%, or $4.8 million. Total capital expenditures is calculated as $5.5 million less 10%, or $0.5 million. Depreciation, depletion and amortization is calculated as $14.3 million less 10%, or $1.4 million. All other quarters presented are calculated in the same manner.
*Reconciliation of non-GAAP financial measures and ratios*
The Company has included certain non-GAAP financial measures and ratios in this document. These financial measures and ratios are not defined under International Financial Reporting Standards (IFRS) and should not be considered in isolation. The Company believes that these financial measures and ratios, together with financial measures and ratios determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these financial measures and ratios is meant to provide additional information and should not be used as a substitute for performance measures and ratios prepared in accordance with IFRS. These financial measures and ratios are not necessarily standard and therefore may not be comparable to other issuers.
*Adjusted net earnings from continuing operations attributable to common shareholders *and* adjusted net earnings from continuing operations per share *are non-GAAP financial measures and ratios 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 and ratios, 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 from continuing operations and adjusted net earnings from continuing operations per share measures and ratios are not necessarily indicative of net earnings from continuing operations and earnings per share measures and ratios as determined under IFRS.
The following table provides a reconciliation of net earnings from continuing operations to adjusted net earnings from continuing operations for the periods presented:
* * * *
(unaudited, expressed in millions of U.S dollars,
except per share amounts)
*Three months ended*
*March 31,*
*2022* 2021
Net earnings from continuing operations attributable to common shareholders - as reported *$* *82.3* $ 76.2
Adjusting items:
Foreign exchange losses (gains) *2.4* (5.8 )
Foreign exchange (gains) losses on translation of tax basis and foreign exchange
on deferred income taxes within income tax expense *(15.7* *)* 6.3
Taxes in respect of prior periods *5.9* 8.7
Reclamation recovery *(11.9* *)* -
COVID-19 costs^(a) *-* 5.6
Round Mountain pit wall stabilization costs *-* 3.5
Other^(b) *9.3* 12.0
Tax effects of the above adjustments *(1.7* *)* (4.1 )
*(11.7* *)* 26.2
Adjusted net earnings from continuing operations attributable to common shareholders *$* *70.6* $ 102.4
Weighted average number of common shares outstanding - Basic *1,264.5* 1,259.2
Adjusted net earnings from continuing operations per share *$* *0.06* $ 0.08
Basic earnings from continuing operations per share attributable to common shareholders *$* *0.07* $ 0.06
(a) Includes COVID-19 related labour, health and safety, donations and other support program costs. For the three months ended March 31, 2022, adjusted net earnings has not been adjusted for COVID-19 related costs of $5.7 million incurred at operating sites.
(b) Other includes various impacts, such as one-time costs at sites, and gains and losses on the sale of assets and hedges, which the Company believes are not reflective of the Company’s underlying performance for the reporting period.
*Free cash flow from continuing operations* is a non-GAAP financial measure and is defined as net cash flow of continuing operations provided from operating activities less capital expenditures. The Company believes that that this measure, which is used internally to evaluate the Company’s underlying cash generation performance and the ability to repay creditors and return cash to shareholders, provides investors with the ability to better evaluate the Company’s underlying performance. However, the free cash flow from continuing operations measure is not necessarily indicative of operating earnings or net cash flow of continuing operations provided from operating activities as dete
