Increased production at Tasiast, Paracatu, and La Coipa drives robust free cash flow
Tasiast 24k construction and initial commissioning complete leading to record quarterly production
TORONTO, Aug. 02, 2023 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, : KGC) (“Kinross” or the “Company”) today announced its results for the second-quarter ended June 30, 2023.
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 26 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.
Q2 2023 highlights from continuing operations:
- Production of 555,036 gold equivalent ounces (Au eq. oz.), a 22% year-over-year increase.
- Production cost of sales1 of $900 per Au eq. oz. sold and all-in sustaining cost2 of $1,296 per Au eq. oz. sold.
- Margins3 of $1,076 per Au eq. oz. sold.
- Operating cash flow4 of $528.6 million and adjusted operating cash flow2 of $459.1 million.
- Reported net earnings5 of $151.0 million, or $0.12 per share, with adjusted net earnings2, 6 of $167.6 million, or $0.14 per share2.
- Cash and cash equivalents of $478.4 million, and total liquidity7 of approximately $1.9 billion at June 30, 2023.
- Guidance reaffirmed: Kinross expects to produce 2.1 million Au eq. oz. (+/- 5%) and is on track to meet its 2023 guidance for production cost of sales, all-in sustaining cost and attributable capital expenditures.
- Debt refinancing: In July, Kinross issued $500.0 million in Senior Notes to refinance its 2024 Notes, extending the maturity to 2033.
- Kinross’ Board of Directors declared a quarterly dividend of $0.03 per common share payable on September 8, 2023 to shareholders of record at the close of business on August 24, 2023.
- Kinross published its 2022 Climate Report on July 21, 2023, detailing its Climate Change Strategy and a comprehensive summary of its progress over the past year with a target to be a net-zero greenhouse gas emissions Company by 2050.
Operational and development project highlights:
- Tasiast achieved record quarterly production and sales driven by strong grades and higher recoveries. The Tasiast 24k expansion project achieved a major milestone as construction and initial commissioning are now complete with the ramp-up process underway.
- Paracatu delivered another strong quarter with higher production and lower costs both quarter-over-quarter and year-over-year.
- La Coipa delivered higher quarterly and year-over-year production, and the lowest costs in the portfolio.
- Manh Choh received its key operating permits in May and remains on track for initial production in the second half of 2024.
- At Great Bear, Kinross recently signed an Advanced Exploration Agreement with the Wabauskang and Lac Seul First Nations as the Company moves from surface exploration to underground exploration. The Company is using directional core drilling to more efficiently target the resource, and is progressing studies and permitting for its advanced exploration program.
CEO commentary:
J. Paul Rollinson, President and CEO, made the following comments in relation to 2023 second-quarter results:
“Our portfolio of mines performed well during the quarter contributing to a strong first half of the year. Our margins grew by 27%, operating earnings were significantly higher, and free cash flow more than doubled compared with the same period last year. Tasiast, Paracatu and La Coipa delivered approximately 70% of our production and our lowest costs for the quarter, including record production at Tasiast, and we remain on track to meet our annual production and cost outlook for 2023.
“Our pipeline of projects continued to make strong progress. During the quarter, construction and initial commissioning was completed at the Tasiast 24k project, on schedule and on budget. The Tasiast 24k project is expected to increase production and lower costs while generating significant free cash flow. Manh Choh is advancing on plan to come online in the second half of 2024 following the receipt of its key operating permits in May.
“At Great Bear, we are pleased to have recently signed an Advanced Exploration Agreement with our partners the Wabauskang and Lac Seul First Nations on whose traditional territories the project is located. We recognize that respect, collaboration and consideration for our First Nation partners is central to our license to operate in the area. We are committed to developing a project that honours Indigenous rights and brings long-term socio-economic benefits, consistent with how Kinross operates in all of our host communities.
“We also released our annual Climate Report, which provides a transparent and comprehensive account of our reporting in this important area. We advanced our climate change strategy in 2022 as well as a number of energy-efficiency projects that support our goal of achieving net-zero emissions by 2050. The solar plant at Tasiast is on schedule to come online by the end of the year and is expected to reduce greenhouse gas emissions by approximately 530,000 tonnes over the life of mine.”
Summary of financial and operating results
Three months endedSix months ended June 30,June 30, (unaudited, in millions of U.S. dollars, except ounces, per share amounts, and per ounce amounts) 2023 2022 2023 2022 Operating Highlights Total gold equivalent ounces from continuing operations(a),(b) Produced 555,036 453,978 1,021,058 832,399 Sold 552,969 439,078 1,043,299 812,806 Financial Highlights from Continuing Operations(a) Metal sales$ 1,092.3$821.5 $ 2,021.6$1,522.4 Production cost of sales$ 497.9$450.8 $ 981.8$813.9 Depreciation, depletion and amortization$ 239.3$180.5 $ 451.2$347.0 Operating earnings$ 237.8$64.0 $ 381.7$166.5 Net earnings (loss) from continuing operations attributable to common shareholders$ 151.0$(9.3)$ 241.2$72.0 Basic earnings (loss) per share from continuing operations attributable to common shareholders$ 0.12$(0.01)$ 0.20$0.06 Diluted earnings (loss) per share from continuing operations attributable to common shareholders$ 0.12$(0.01)$ 0.20$0.06 Adjusted net earnings from continuing operations attributable to common shareholders(c)$ 167.6$37.4 $ 255.2$106.2 Adjusted net earnings from continuing operations per share(c)$ 0.14$0.03 $ 0.21$0.08 Net cash flow of continuing operations provided from operating activities$ 528.6$257.1 $ 787.6$355.0 Adjusted operating cash flow from continuing operations(c)$ 459.1$251.9 $ 791.9$501.0 Capital expenditures from continuing operations(d) $ 281.9$149.4 $ 503.1$250.1 Free cash flow from continuing operations(c)$ 246.7$107.7 $ 284.5$104.9 Average realized gold price per ounce from continuing operations(e)$ 1,976$1,872 $ 1,937$1,874 Production cost of sales from continuing operations per equivalent ounce(b) sold(f)$ 900$1,027 $ 941$1,001 Production cost of sales from continuing operations per ounce sold on a by-product basis(c)$ 845$1,018 $ 885$994 All-in sustaining cost from continuing operations per ounce sold on a by-product basis(c)$ 1,262$1,335 $ 1,272$1,285 All-in sustaining cost from continuing operations per equivalent ounce(b) sold(c)$ 1,296$1,341 $ 1,308$1,290 Attributable all-in cost(g) from continuing operations per ounce sold on a by-product basis(c)$ 1,596$1,596 $ 1,606$1,536 Attributable all-in cost(g) from continuing operations per equivalent ounce(b) sold(c)$ 1,614$1,599 $ 1,624$1,539The following operating and financial results are based on second-quarter gold equivalent production:
Production: Kinross produced 555,036 Au eq. oz. in Q2 2023 from continuing operations, compared with 453,978 Au eq. oz. in Q2 2022. The 22% year-over-year increase was primarily attributable to higher production at La Coipa, and higher grades and recoveries at Paracatu and Tasiast.
Average realized gold price: The average realized gold price from continuing operations in Q2 2023 was $1,976 per ounce, compared with $1,872 per ounce in Q2 2022.
Revenue: During the second quarter, revenue from continuing operations increased to $1,092.3 million, compared with $821.5 million during Q2 2022. The 33% increase is due to an increase in gold equivalent ounces sold and an increase in average realized gold price.
Production cost of sales: Production cost of sales1 from continuing operations per Au eq. oz. sold was $900 for the quarter, compared with $1,027 in Q2 2022. The 12% decrease was primarily due to the increase in gold equivalent ounces sold.
Production cost of sales from continuing operations per Au oz. sold2 on a by-product basis was $845 in Q2 2023, compared with $1,018 in Q2 2022, based on gold sales of 525,921 ounces and silver sales of 2,214,686 ounces.
Margins3: Kinross’ margin from continuing operations per Au eq. oz. sold increased to $1,076 for Q2 2023, compared with the Q2 2022 margin of $845.
All-in sustaining cost2: All-in sustaining cost from continuing operations per Au eq. oz. sold was $1,296 in Q2 2023, compared with $1,341 in Q2 2022.
In Q2 2023, all-in sustaining cost from continuing operations per Au oz. sold on a by-product basis was $1,262, compared with $1,335 in Q2 2022.
Operating cash flow: Operating cash flow from continuing operations4 was $528.6 million for Q2 2023, compared with $257.1 million for Q2 2022.
Adjusted operating cash flow from continuing operations2 increased to $459.1 million in Q2 2023, compared with $251.9 million for Q2 2022.
Free cash flow2: Free cash flow from continuing operations in Q2 2023 was $246.7 million, compared with $107.7 million in Q2 2022.
Earnings: Reported net earnings5 from continuing operations was $151.0 million, or $0.12 per share for Q2 2023, compared with reported net loss of $9.3 million, or $0.01 per share, for Q2 2022. The increase in reported net earnings was mainly due to the increase in margins.
Adjusted net earnings from continuing operations2,6 was $167.6 million, or $0.14 per share, for Q2 2023, compared with $37.4 million, or $0.03 per share, for Q2 2022.
Capital expenditures: Capital expenditures from continuing operations increased to $281.9 million for Q2 2023, compared with $149.4 million for Q2 2022, primarily due to an increase in capital stripping at Tasiast, Fort Knox and Bald Mountain and development activities at Manh Choh.
Balance sheet
As of June 30, 2023, Kinross had cash and cash equivalents of $478.4 million, compared with $418.1 million at December 31, 2022.
During the quarter, the Company repaid $200.0 million on its revolving credit facility and $20.0 million of scheduled principal payments on its Tasiast Loan. On July 5, 2023, Kinross completed a $500.0 million offering of debt securities and will use the net proceeds towards the redemption of all of the outstanding Senior Notes due March 15, 2024, on August 10, 2023.
In connection with the divestiture of its Russian assets in 2022, the Company has received $40.0 million during the quarter. All proceeds from the sale have now been received.
The Company had available credit8 of approximately $1.5 billion and total liquidity7 of approximately $1.9 billion as of June 30, 2023.
Return of capital
As part of its continuing quarterly dividend program, the Company declared a dividend of $0.03 per common share payable on September 8, 2023, to shareholders of record as of August 24, 2023.
In accordance with the parameters of the share buyback program, Kinross has paused share repurchases to prioritize debt reduction in the near term. Going forward, the Company will continue to assess its capital allocation priorities dependent on market conditions and other relevant factors.
Operating results
Mine-by-mine summaries for 2023 second-quarter operating results may be found on pages 12 and 16 of this news release. Across the portfolio, all projects are on plan and met quarterly production targets. Highlights include the following:
Tasiast had another strong quarter and achieved record quarterly production and sales, largely due to strong grades and recoveries. Production was higher compared with the first quarter primarily due to higher throughputs after the planned shutdown in February, and as the operation continues its commissioning and ramp-ups to the sustained 24k tonnes per day (t/d). Production was higher year-over-year mainly due to improved recoveries and an increase in mill grades as mining has moved to the higher-grade section of West Branch 4. Cost of sales per ounce sold was lower quarter-over-quarter and year-over-year due to the increase in production.
Paracatu performed well during the quarter, with an increase in quarterly production driven by strong grades and recoveries, which contributed to the lower cost of sales per ounce sold. Year-over-year, production increased due to stronger grades and cost of sales per ounce sold decreased mainly due to the increased production.
At La Coipa, production was higher quarter-over-quarter mainly due to the planned mill shutdown in the first quarter to increase mill reliability and sustain higher throughput levels, partially offset by lower grades and recoveries. Year-over-year production was higher as the mill ramped up over the course of last year. Production cost of sales per ounce sold was lower than both comparable periods due to the increase in production.
At Fort Knox, production was higher compared with the previous quarter mainly due to an increase in mill throughput and higher grades. Year-over-year production decreased primarily as a result of fewer tonnes placed on the Barnes Creek heap leach facility, partially offset by higher grades. Cost of sales per ounce sold was largely in line quarter-over-quarter and year-over-year.
At Round Mountain, production decreased slightly compared with the previous quarter mainly due to lower grades and recoveries. Year-over-year production increased slightly, largely due to an increase in tonnes placed on the heap leach pads. Cost of sales per ounce sold was lower quarter-over-quarter mainly due to an increase in ounces stacked on the heap leach pads, and largely in line year-over-year.
At Bald Mountain, production was higher quarter-over-quarter primarily due to an increase in ounces recovered from the heap leach pads, partially offset by lower grades. Year-over-year production was lower as a result of fewer tonnes placed on the heap leach pads and lower grades. Cost of sales per ounce sold was slightly higher quarter-over-quarter due to higher maintenance costs, and year-over-year due to lower production. Following the unprecedented winter snowfall, mining rates have ramped up and Bald Mountain remains on target for full-year production.
Development projects and exploration update
Tasiast
Tasiast 24k construction and initial commissioning is now complete, on schedule and on budget. The successful tie-in of the new pre-classification circuit was completed in June, all components of the 24k project are in operation with the ramp-up process underway. The process plant has regularly achieved the designed 24,000 t/d throughput for sustained periods of time. The operation is expected to ramp-up for the balance of the year to consistently achieve 24,000 t/d (average) on an annual basis.
The 34MW Tasiast solar power plant continues to advance and is on schedule for completion by the end of the year. Civil works are nearly complete and mechanical works are well advanced with a focus on the installation of the photovoltaic modules. Electrical works are underway and planning for commissioning has begun.
Great Bear
The Company continues to make excellent progress at the Great Bear project in Red Lake, Ontario. In the second quarter, Kinross drilled approximately 56,000 metres as part of its robust exploration and infill drilling program. Kinross’ focus this year is on inferred drilling in the area half a kilometre to one kilometre below surface. This work will be complemented by exploration drilling along strike of the LP Fault zone and around the Hinge and Limb zones that have seen little exploration drilling for new mineralization beyond the known zones, with the goal of further delineating the deposit at depth as well as adding inferred resource ounces. Drilling-to-date has demonstrated potential for a meaningful increase in the underground resource and Kinross expects to declare a resource update as part of its year-end results.
Since its last update on May 9, 2023, the Company has received additional assay results, with a selection of the new results from targets at the LP Fault zone highlighted in the table below. Notable exploration results at Great Bear in the second quarter include:
BR-805 (Yauro) – 6.7 m @ 19.31 g/t at a vertical depth of 730m*BR-796 (Yuma) – 4.6m @ 5.7 g/t at a vertical depth of 860mBR-769A (Yauro) – 3.4m @ 4.2 g/t at a vertical depth of 540mBR-804 (Yauro) – 3.8m @ 8.4 g/t, at a vertical depth of 745mResults-to-date continue to support the view of a high-grade deposit that underpins the prospect of a large, long-life mining complex with the recent results continuing to demonstrate the high-grade nature of the mineralization. Holes BR-805, BR-769A and BR-804 show the potential for continued resource growth at Yauro below the existing mineral resource. Hole BR-796 intercepted 4.6m @ 5.7 g/t at a depth of 860m at Yuma, demonstrating the continuity of the LP Fault zone between 500 and 1,000 metres.
The Company recently began using directional core drilling at Great Bear, which allows multiple drill holes to branch off from a single pilot hole. This decreases the amount of drilling required to reach deep targets, thereby reducing costs, improving productivity, and enabling the precise targeting of the resource from different angles. Initial trials earlier this year were highly successful, and the system is now being used on 6 of the 11 drills on site to target the LP Fault and Hinge zones.
The Company is also progressing studies and permitting for an advanced exploration program that would establish an underground decline to obtain a bulk sample and allow for more efficient exploration of deeper areas of the LP Fault zone, along with the nearby Hinge and Limb gold zones. Feasibility level engineering for advanced exploration infrastructure is approximately 70% complete, including geophysics and soils geotechnical drilling, and the procurement process for long-lead items such as the camp, power infrastructure and water treatment plant has been initiated.
Further, on July 19th, the Company together with the Wabauskang and Lac Seul First Nations signed an updated Advanced Exploration Agreement (the “AEX Agreement”), which replaces the existing Exploration Agreement. The AEX Agreement is designed to better reflect the changing nature of project activities in anticipation of the development of the underground decline. The AEX Agreement also reflects the importance of building positive and strong relationships through meaningful dialogue and consultation and continues the process of strengthening our partnership. Kinross is targeting a potential start of the surface construction for the advanced exploration program in 2024, subject to receipt of permits.
Chief Bill Petiquan, Wabauskang First Nation, said: “Through the sands of time there was foretold that a future of prosperity would come for our people. A time prepared in life this day would come. For centuries past, the hidden future is now being told. Our destiny has arrived. Today we stand with Kinross as Brothers, it is written in the wind. We will walk the same path the Creator left us.”
Chief Clifford Bull, Lac Seul First Nation, said: “This Advanced Exploration Agreement marks an important milestone in our relationship with Kinross. We are pleased to welcome Kinross into our territory. We look forward to building a strong relationship based on shared prosperity and respect for all of Creation.”
For the main project, Kinross continues to advance technical studies, including engineering and field testwork campaigns, with plans to release the results of this work in the form of a preliminary economic assessment in 2024. Metallurgical testwork is underway, as well as geochemical work that includes static testing, humidity cells, column testing, tailings residue sampling and field leach barrels. An extensive field bedrock and soils geotechnical drilling and testing program is planned to kickoff in August.
A comprehensive baseline study program encompassing air, noise, hydrogeology, geochemistry, archeology, water quality and a number of other metrics is progressing well. There are over 60 water monitoring wells installed around the site, as well as 25 surface water stations and 11 hydrometric stations which together enable understanding of the water quality and flow of water in and around the site. Permitting activities are progressing well, including pre-submission engagement with the Impact Assessment Agency of Canada (IAAC) in preparation for the Initial Project Description submission.
*Note: Hole BR-805 is considered a partial result as some assay results from this drill hole remain pending.
View an interactive 3D model of the Great Bear project: https://vrify.com/decks/13856?slide=278491
Selected Great Bear Drill Results
See Appendix A for full results.
Hole ID From
(m)To
(m)Width
(m)True
Width (m)Au
(g/t)
Target
BR-769A 701.00713.6012.6010.330.73YauroBR-769Aand721.30740.5019.2012.671.76 BR-769Aincluding734.80739.154.353.354.18 BR-769Aand773.20777.003.803.080.41 BR-796 1,048.751,056.007.256.600.53YumaBR-796and1,072.001,078.756.754.660.46 BR-796and1,106.001,111.955.954.645.71 BR-796including1,109.351,110.651.300.9623.87 BR-804 563.10567.254.152.950.64YauroBR-804and575.75586.1010.359.000.61 BR-804and659.00663.004.003.440.47 BR-804and721.80731.8010.007.700.93 BR-804and756.00765.009.008.281.11 BR-804and889.10892.103.002.640.92 BR-804and938.00941.903.903.472.28 BR-804and1,022.851,028.005.153.768.38 BR-804including1,025.001,026.901.901.4621.93 BR-804and1,115.351,124.058.706.611.18 BR-805 543.70549.555.854.450.53YauroBR-805and556.80560.904.103.320.50 BR-805and718.80722.403.603.131.10 BR-805and792.35834.5042.1536.254.52 BR-805including826.00834.508.506.7219.31 BR-805and923.30926.853.552.800.57 BR-805and941.00949.308.306.140.54 BR-805and961.60970.008.407.060.51 BR-805and993.901,005.0011.108.882.35 BR-805including993.90994.700.800.6426.40 BR-805and1,015.001,020.005.004.400.92 BR-812 612.40616.003.603.130.68YauroBR-812and623.90628.254.353.315.48 BR-812including623.90627.353.452.936.47 BR-812and871.25886.7515.5012.090.49 BR-812and901.35908.507.155.081.60 BR-821 995.30996.000.700.6057.00YauroBR-821and1,023.001,035.1012.1011.131.13 BR-821and1,053.401,057.804.402.950.38 BR-821and1,066.001,075.709.706.891.43 BR-821including1,072.701,075.703.001.953.06 BR-821and1,157.151,160.603.452.528.21 BR-821including1,159.251,159.750.500.4553.40 BR-821and1,175.301,187.5012.208.050.88
Results are preliminary in nature and are subject to on-going QA/QC. Lengths are subject to rounding.
See Appendix B for a LP Fault zone long section.
Manh Choh
At the 70%-owned Manh Choh project, activities remain on schedule and on budget, and the mine’s key operating permits were received in May. Construction activities at the mine area have commenced and continue to ramp-up with the mobilization of the mining business partner and construction companies to install the site facilities. Contracting and procurement activities are now complete for the Manh Choh site. Construction activities have commenced on the mill modifications at Fort Knox, where the Manh Choh ore will be processed. The Kinross operations team is now fully staffed while onboarding of key business partners to support the mining and ore transport is ongoing. As a key priority, all parties remain focused on local hiring and training opportunities to support the local towns and villages including long-term skills for individuals after mining concludes at Manh Choh.
The Company announced on July 27, 2022, that it was proceeding with the Manh Choh project as the operator of the joint venture. Initial production from Manh Choh is expected in the second half of 2024 and is expected to add approximately 640,000 attributable Au eq. oz. to the Company’s production profile over its approximately 4.5 year life-of-mine. Including Manh Choh, the Company expects to produce an average of approximately 400,000 attributable Au eq. oz. per year from 2024 to 2027 from its Alaskan assets.
Round Mountain and Gold Hill exploration and studies
At Round Mountain, the Company has completed Phase W1 and is continuing to mine Phase W2 while progressing optimization work on Phase S open pit and focusing on exploration and studies of the underground options at Phase X and Gold Hill.
The recent optimization work at Phase S has shown positive initial results, reducing the capital spend and strip ratio and improving economics. The Company will continue to study Phase S, and the associated ounces remain in reserves for potential future mining.
Construction of the Phase X exploration decline is progressing well, with 350 metres developed so far, and remains on plan to start definition drilling in early 2024.
View a Phase X animation here: https://youtu.be/d3aYE5sFIIQ
In terms of sequencing, Round Mountain could potentially transition open pit mining from Phase W2 to Phase S while developing and ramping up the Phase X underground, which could then be concurrently exploited with Phase S in the second half of the decade. Gold Hill underground development could follow Phase X, adding higher grade mill feed to supplement production from Phase S and Phase X towards the end of the decade.
The Gold Hill exploration 2023 drill program tested continuity within the mid-Atlantic vein zone and confirmed an 800m west strike extension with multiple high-grade intercepts within the Jersey vein zone.
Top Jersey vein zone intercepts
D-1195 – 2.1m @ 41.5 g/t Au-eq (400m strike extension)D-1195 – 2.3m @ 20.4 g/t Au-eq (400m strike extension)D-1194 – 1.9m @ 29.8 g/t Au-eq, new high grade in critical areaD-1196 – 1.9m @ 6.1 g/t Au-eq (800m strike extension)The new strike extensions, including the best intercept received to date in hole D-1195, demonstrate this robust system continues and still remains open to the west at depth.
Chile
Kinross’ activities in Chile are currently focused on La Coipa and potential opportunities to extend its mine life. The Lobo-Marte project continues to provide optionality as a potential large, low-cost mine upon the conclusion of mining at La Coipa. While the Company focuses its technical resources on La Coipa, it will continue to engage and build relationships with communities related to Lobo-Marte and government stakeholders.
Curlew Basin exploration
At the Curlew Basin exploration project in Washington State, underground exploration drill results continue to confirm vein extensions and continuity within high priority target areas. Exploration drilling will continue throughout the third quarter with the aim to build on the resource through proximal growth and to test the area of upside potential.
The top three significant intercepts (of 72) received during the quarter include:
K5 (1148) – 2.2m @ 41.3 g/t AuK5 (1403) – 6.8m @ 9.1 g/t Au including 3.1 @ 14.7 g/t AuK5 (1410) – 4.5m @ 10.8 g/t AuResults-to-date demonstrate thicker intervals of mineralization and are adding volume in key portions of the system. Hole 1148, which represents the best Curlew intercept in 10 years, tested the southern edge of K5 and documented a major change in vein orientation, resulting in a new open zone of higher-grade veins. Previous tests of K5-South from surface showed the zone had limited growth potential, and now this intercept and follow-up drilling unlock a new search space. Year-after-year, exploration continues to define new veins, proving the thesis there is more to explore within the entire Curlew Basin.
Company Guidance
The following section of the news release represents forward-looking information and users are cautioned that actual results may vary. We refer to the risks and assumptions contained in the Cautionary Statement on Forward-Looking Information on page 26.
The Company is on track to meet its 2023 production guidance of 2.1 million Au eq. oz. (+/- 5%). Production increased in the second quarter, as planned, and is expected to remain strong for the remainder of 2023. Kinross’ annual production is expected to remain stable in 2024 and 2025 at 2.1 million and 2.0 million attributable9 Au eq. oz. (+/- 5%), respectively.
The Company is also on track to meet its 2023 guidance for production cost of sales, all-in sustaining cost and attributable10 capital expenditures.
Organizational update
To support the ongoing success of its global projects and organic growth, Kinross is expanding on the changes to its Senior Leadership Team (SLT) announced last year, which created an enhanced focus on the technical and operational aspects of the business.
Technical services will be divided into two separate Senior Leadership Team roles - a Senior Vice President of Technical Services and a Senior Vice President of Global Projects, both of which will report to the President and CEO. This will further facilitate hands-on senior level, dedicated oversight and focused support of Kinross’ operations and projects. These changes are expected to create organizational efficiencies and unlock the full potential of Kinross’ existing assets and organic growth related to major development projects.
As such, Ned Jalil, currently Senior Vice President and Chief Technical Officer has decided to depart Kinross to pursue other opportunities and will remain in a transitionary role until the end of August. Kinross thanks Ned for his contributions to Kinross over the years.
William Dunford will assume the role of Senior Vice President, Technical Services. Since joining Kinross more than 16 years ago, William has held increasingly senior technical and operational roles, including as the General Manager of Kupol prior to its sale last year, and is currently the Vice President, Mining Operations, overseeing Kinross’ Mine Planning, Geotechnical, Strategic Business Planning, Maintenance, Continuous Improvement, and Business Performance Management functions. William’s combination of technical, operational, site and corporate experience will be an asset in this position. The Company is recruiting for the Senior Vice President, Global Projects role.
Environment, Social and Governance (ESG) update
Kinross published its third annual Climate Report, providing comprehensive climate-related disclosures and the Company’s greenhouse gas (GHG) emissions data for 2022. The Report outlines the Company’s progress towards meeting the goals of the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement. It also details Kinross’ Climate Change Strategy, which aims to reduce Scope 1 and Scope 2 GHG emissions intensity per ounce produced by 30% by 2030 over the 2021 baseline and achieve net-zero GHG emissions by 2050. Click here to access the Climate Report: https://www.kinross.com/2022-Climate-Report
As detailed in the Report, the Company advanced its multi-faceted Climate Change Strategy in 2022 structured on five key focus areas, which includes growing the role of renewable energy in Kinross’ overall energy portfolio. For example, at the Tasiast solar plant, the project, which is nearing completion, is expected to provide annualized fuel savings of 17 million litres of heavy oil, with a payback of less than five years. This translates into an 18% reduction of GHG emissions from the power plant over life of mine. Annualized GHG emissions reductions are estimated at 50 kilotonnes CO2e, and henceforth 22.5% of Tasiast’s energy generation will be from renewable sources.
Kinross has been reporting on climate-related data since 2005 and began reporting in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in 2020 with its inaugural Climate Report. The Climate Report follows the recommended TCFD framework, providing investors and broader stakeholders with timely information about Kinross’ global efforts to address climate change and manage climate-related risks to its business.
Conference call details
In connection with this news release, Kinross will hold a conference call and audio webcast on Thursday, August 3, 2023, at 8:00 a.m. ET to discuss the results, followed by a question-and-answer session. To access the call, please dial:
Canada & US toll-free – 1 (888) 330-2446; Passcode: 4915537
Outside of Canada & US – 1 (240) 789-2732; Passcode: 4915537
Replay (available up to 14 days after the call):
Canada & US toll-free – 1-800-770-2030; Passcode: 4915537
Outside of Canada & US – 1-647-362-9199; Passcode: 4915537
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’ 2023 second-quarter unaudited Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2023 second-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.
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 and Canada. Our focus is on delivering value based on the 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
Victoria Barrington
Senior Director, Corporate Communications
phone: 647-788-4153
[email protected]
Investor Relations Contact
Chris LichtenheldtVice-President, Investor Relations
phone: 416-365-2761
[email protected]
Review of operations
Three months ended June 30,(unaudited) Gold equivalent ounces Produced Sold Production cost of
sales ($millions) Production cost of
sales/equivalent ounce sold 20232022 20232022 2023 2022 2023 2022 Tasiast157,844129,140 152,564114,064 $ 99.5$93.3 $ 652$818Paracatu164,243129,423 163,889133,472 135.2 129.6 825 971La Coipa66,7447,414 67,3787,099 43.6 5.6 647 789 Fort Knox69,43877,184 69,20677,698 79.3 92.6 1,146 1,192Round Mountain57,44656,709 57,41251,455 85.5 74.8 1,489 1,454Bald Mountain39,32154,108 42,18154,472 54.5 54.5 1,292 1,001United States Total 166,205188,001 168,799183,625 219.3 221.9 1,299 1,208 Maricunga-- 339818 0.3 0.4 885 489 Continuing Operations Total555,036453,978 552,969439,078 497.9 450.8 900 1,027 Discontinued Operations Kupol-73,265 -36,358 - 18.4 $ -$506Chirano (100%)-33,609 -36,995 - 59.3 - 1,603 -106,874 -73,353 - 77.7 Six months ended June 30,
(unaudited) Gold equivalent ounces Produced Sold Production cost of
sales ($millions) Production cost of
sales/equivalent ounce sold 20232022 20232022 2023 2022 2023 2022 Tasiast288,889262,835 281,043244,259 $ 187.9$189.1 $ 669$774Paracatu287,577237,432 292,233235,358 253.2 236.2 866 1,004La Coipa120,3407,938 129,1587,099 88.5 5.6 685 789 Fort Knox134,825131,987 134,610130,511 156.9 160.0 1,166 1,226Round Mountain116,278102,028 115,63898,414 182.0 127.1 1,574 1,291Bald Mountain73,14990,179 89,46495,489 112.5 94.8 1,257 993United States Total 324,252324,194 339,712324,414 451.4 381.9 1,329 1,177 Maricunga-- 1,1531,676 0.8 1.1 694 656 Continuing Operations Total1,021,058832,399 1,043,299812,806 981.8 813.9 941 1,001 Discontinued Operations Kupol-169,156 -122,295 - 83.8 - 685Chirano (100%)-68,538 -72,805 - 106.9 - 1,468 -237,694 -195,100 - 190.7
Interim condensed consolidated balance sheets
2023 2022 Assets Current assets Cash and cash equivalents $ 478.4 $418.1 Restricted cash 8.7 10.1 Accounts receivable and other assets 240.2 318.2 Current income tax recoverable 5.5 8.5 Inventories 1,189.3 1,072.2 Unrealized fair value of derivative assets 16.9 25.5 1,939.0 1,852.6 Non-current assets Property, plant and equipment 7,815.4 7,741.4 Long-term investments 89.4 116.9 Other long-term assets 696.4 680.9 Deferred tax assets 6.5 4.6 Total assets $ 10,546.7 $10,396.4 Liabilities Current liabilities Accounts payable and accrued liabilities $ 556.4 $550.0 Current income tax payable 71.8 89.4 Current portion of long-term debt and credit facilities 531.5 36.0 Current portion of provisions 53.4 50.8 Other current liabilities 19.8 25.3 1,232.9 751.5 Non-current liabilities Long-term debt and credit facilities 1,943.9 2,556.9 Provisions 806.1 755.9 Long-term lease liabilities 19.5 23.1 Other long-term liabilities 133.3 125.3 Deferred tax liabilities 320.8 301.5 Total liabilities $ 4,456.5 $4,514.2 Equity Common shareholders' equity Common share capital $ 4,480.2 $4,449.5 Contributed surplus 10,643.1 10,667.5 Accumulated deficit (9,084.1) (9,251.6) Accumulated other comprehensive income (loss) (41.4) (41.7) Total common shareholders' equity 5,997.8 5,823.7 Non-controlling interests 92.4 58.5 Total equity 6,090.2 5,882.2 Total liabilities and equity $ 10,546.7 $10,396.4 Common shares Authorized Unlimited Unlimited Issued and outstanding 1,227,579,280 1,221,891,341
Interim condensed consolidated statements of operations
(unaudited, expressed in millions of U.S. dollars, except share and per share amounts) Three months ended Six months ended June 30, June 30, June 30, June 30, 2023 2022 2023 2022 Revenue Metal sales $ 1,092.3 $821.5 $ 2,021.6 $1,522.4 Cost of sales Production cost of sales 497.9 450.8 981.8 813.9 Depreciation, depletion and amortization 239.3 180.5 451.2 347.0 Total cost of sales 737.2 631.3 1,433.0 1,160.9 Gross profit 355.1 190.2 588.6 361.5 Other operating expense 36.0 56.3 67.2 71.5 Exploration and business development 49.3 39.9 83.3 63.3 General and administrative 32.0 30.0 56.4 60.2 Operating earnings 237.8 64.0 381.7 166.5 Other (expense) income - net (10.4) 0.7 (6.0) (6.0) Finance income 11.5 2.0 20.9 4.2 Finance expense (26.0) (23.5) (53.5) (44.7) Earnings from continuing operations before tax 212.9 43.2 343.1 120.0 Income tax expense - net (62.0) (52.7) (101.8) (48.2) Earnings (loss) from continuing operations after tax 150.9 (9.5) 241.3 71.8 Loss from discontinued operations after tax - (30.3) - (635.5) Net earnings (loss) $ 150.9 $(39.8) $ 241.3 $(563.7) Net earnings (loss) from continuing operations attributable to: Non-controlling interests $ (0.1) $(0.2) $ 0.1 $(0.2) Common shareholders $ 151.0 $(9.3) $ 241.2 $72.0 Net earnings (loss) from discontinued operations attributable to: Non-controlling interests $ - $0.7 $ - $0.6 Common shareholders $ - $(31.0) $ - $(636.1) Net earnings (loss) attributable to: Non-controlling interests $ (0.1) $0.5 $ 0.1 $0.4 Common shareholders $ 151.0 $(40.3) $ 241.2 $(564.1) Earnings (loss) per share from continuing operations attributable to common shareholders Basic $ 0.12 $(0.01) $ 0.20 $0.06 Diluted $ 0.12 $(0.01) $ 0.20 $0.06 Earnings (loss) per share from discontinued operations attributable to common shareholders $ - $(0.02) $ - $(0.50) Basic $ - $(0.02) $ - $(0.50) Diluted Earnings (loss) per share attributable to common shareholders Basic $ 0.12 $(0.03) $ 0.20 $(0.44) Diluted $ 0.12 $(0.03) $ 0.20 $(0.44)
Interim condensed consolidated statements of cash flows
