Form 6-K KINROSS GOLD CORP For: Feb 12
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2020
Commission File Number: 001-13382
KINROSS GOLD CORPORATION
(Translation of registrant's name into English)
17th Floor, 25 York Street,
Toronto, Ontario M5J 2V5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F:
Form 20-F ¨ Form 40-F x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2b:
This Current Report on Form 6-K, dated Feb 12, 2020 is specifically incorporated by reference into Kinross Gold Corporation's Registration Statements on Form S-8 [Registration No. 333-217099, filed on April 3, 2017 and Registration Nos. 333-180824, 333-180823 and 333-180822, filed on April 19, 2012.]
Page 2 |
This report on Form 6-K is being furnished for the sole purpose of providing copies of the two press releases dated February 12, 2020 in which Kinross Gold Corporation reported results for the fourth quarter and full-year ended December 31, 2019 and provided an update on development projects and 2019 full-year exploration results.
INDEX
Table of Contents
SIGNATURES
EXHIBIT INDEX
99.1 | Press Release dated February 12, 2020 in which Kinross reported fourth-quarter and full year results |
99.2 | Press Release dated February 12, 2020 in which Kinross provided an update on development projects and 2019 full-year exploration results. |
Page 3 |
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
KINROSS GOLD CORPORATION
Signed: //Kathleen M. Grandy//
Vice President, Legal and Corporate Secretary
February 12, 2020
Exhibit 99.1
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
For more information,
please see Kinross’
2019 Q4/year-end
Financial Statements and MD&A
at www.kinross.com
NEWS RELEASE
Kinross reports 2019 fourth-quarter and full-year results
Meets production and cost guidance for eighth consecutive year
Tasiast delivers record annual production and costs; Paracatu achieves record annual production
Solid production with lower all-in sustaining cost per ounce and capital expenditures forecast in 2020
Toronto, Ontario – February 12, 2020 – Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the fourth-quarter and year-end December 31, 2019.
(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 21 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
2019 full-year results and 2020 guidance:
2019 guidance (+/- 5%) |
2019 full-year results |
2020 guidance (+/- 5%) | |
Gold equivalent production1 (ounces) |
2.5 million | 2.5 million | 2.4 million |
Production cost of sales1, 2 ($ per Au eq. oz.) |
$730 | $706 | $720 |
All-in sustaining cost1, 2 ($ per Au eq. oz.) |
$995 | $983 | $970 |
Capital expenditures | $1,050 million | $1,105 million3 | $900 million3 |
CEO Commentary:
J. Paul Rollinson, President and CEO, made the following comments in relation to 2019 fourth-quarter and year-end results:
“In 2019, our portfolio of mines performed strongly, as we increased production and lowered costs year-over-year and generated robust free cash flow. Our strong performance ensured we met our production, cost and capital guidance for the eighth consecutive year.
“Our three largest producers in 2019 – Paracatu, Kupol and Tasiast – accounted for 61% of our total production and delivered the lowest costs in the portfolio. Paracatu and Tasiast each had an outstanding year, posting record annual production, with Tasiast also delivering record low costs.
“In terms of 2019 financial performance, Kinross increased operating cash flow by 55% to $1.2 billion, more than tripled adjusted net earnings to $423 million, grew our margins by 28%, and improved liquidity to $2 billion while continuing to invest in our development projects.
“We also took steps to strengthen our future production profile. We approved and launched the capital efficient Tasiast 24k expansion project and completed the IFC-led project financing. We improved our development pipeline by acquiring the high-quality and highly prospective Chulbatkan project in Russia and are now proceeding with the La Coipa Restart project in Chile. In addition, we made excellent progress at our U.S. projects, commencing production at our Round Mountain Phase W and Bald Mountain Vantage Complex projects in Nevada, and advancing Fort Knox Gilmore in Alaska.
“In 2020, we expect to continue our strong performance, producing approximately 2.4 million gold equivalent ounces, with all-in sustaining costs and capital expenditures guidance lower than last year. In 2021, generating strong free cash flow will continue to be a priority, with production expected to be at or above 2019 levels and capital expenditures and all-in sustaining costs expected to decrease compared with 2020. We currently expect a further reduction in capital expenditures and all-in sustaining costs for 2022, with production expected to remain at the 2.5 million ounce level.”
1 Unless otherwise stated, production figures in this news release are based on Kinross’ 90% share of Chirano production.
2 These figures are non-GAAP financial measures and are defined and reconciled on pages 16 to 20 of this news release.
3 2020 capital expenditures guidance excludes capitalized interest of $55 million. The 2019 capital expenditures guidance and capital expenditures results includes capitalized interest of $65 million and $45 million, respectively.
p. 1 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
2019 Q4 and full-year highlights:
· | Production1: 645,344 gold equivalent ounces (Au eq. oz.) in Q4 2019 and 2,507,659 Au eq. oz. in 2019. |
· | Revenue: $996.2 million in Q4 2019 and $3,497.3 million in 2019. |
· | Production cost of sales2: $744 per Au eq. oz. in Q4 2019 and $706 per Au eq. oz. in 2019. |
· | All-in sustaining cost2: $1,050 per Au eq. oz. sold in Q4 2019 and $983 per Au eq. oz. sold in 2019. All-in sustaining cost per Au oz. sold on a by-product basis was $1,041 in Q4 2019 and $974 per Au oz. sold in 2019. |
· | Operating cash flow: $408.6 million in Q4 2019 and $1,224.9 million in 2019. |
· | Adjusted operating cash flow2: $387.6 million in Q4 2019 and $1,201.5 million for 2019. |
· | Reported net earnings1: $521.5 million, or $0.41 per share in Q4 2019, and $718.6 million, or $0.57 per share, in 2019. |
· | Adjusted net earnings2,3: adjusted net earnings of $156.0 million, or $0.13 per share in Q4 2019, and adjusted net earnings of $422.9 million, or $0.34 per share, in 2019. |
· | Margins2: attributable margins of $741 per Au eq. oz. sold in Q4 2019 and $686 per Au eq. oz. sold for 2019. |
Operations highlights:
· | Paracatu delivered record annual production of approximately 620,000 Au eq. oz., mainly due to benefits from an asset optimization program that improved mill efficiencies and enhanced the understanding of the orebody. |
· | Tasiast achieved record production and costs in 2019, as the mine continued to benefit from the Phase One expansion and the mill’s strong performance. Year-over-year production increased by 140,000 Au eq. oz., or 56%, with cost of sales per ounce decreasing by $374 per ounce sold, or 38%. |
· | Kupol-Dvoinoye production was 8% higher year-over-year primarily due to higher-grade ore processed from Kupol’s Northeast Extension and Moroshka deposits. |
· | Round Mountain performed well in full-year 2019 with the completion of the Phase W project and increases in ounces recovered from the heap leach pads and lower full-year cost of sales. |
Balance sheet and liquidity:
· | Cash and cash equivalents of $575.1 million, and total liquidity of $2,028.2 million at December 31, 2019. No debt maturities until September 2021. |
· | Completed the $300 million project financing for Tasiast with the IFC (a member of the World Bank Group), Export Development Canada and two commercial banks. |
· | Sold remaining shares in Lundin Gold Inc. for gross proceeds of approximately $113 million. |
· | Sold royalty portfolio to Maverix Metals Inc. (“Maverix”) for total consideration of approximately $74 million, which includes $25 million in cash and approximately 11.2 million Maverix common shares. |
Environment, Social, Governance (ESG):
· | Maintained industry-leading health and safety performance. |
· | Delivered strong environmental management and sustainability performance; achieved lowest energy-use and greenhouse gas emission intensities among gold industry peers. |
· | Published best practice approach to safe and responsible tailings management, based on an overriding commitment to safety and environmental stewardship. |
· | Governance standards continued to be robust: achieved 33% Board gender diversity target and welcomed two new independent Board members. |
4 Net earnings/loss figures in this release represent “net (loss) earnings from continuing operations attributable to common shareholders”
5 Attributable margin per equivalent ounce sold is a non-GAAP financial measure defined as “average realized gold price per ounce” less “attributable production cost of sales per gold equivalent ounce sold.”
p. 2 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Financial results
Summary of financial and operating results
Three months ended | Years ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
(in millions, except ounces, per share amounts, and per ounce amounts) | 2019 | 2018 | 2019 | 2018 | ||||||||||||
Operating Highlights | ||||||||||||||||
Total gold equivalent ounces(1) | ||||||||||||||||
Produced(3) | 650,242 | 615,279 | 2,527,788 | 2,475,068 | ||||||||||||
Sold(3) | 670,917 | 641,101 | 2,512,758 | 2,532,912 | ||||||||||||
Attributable gold equivalent ounces(1) | ||||||||||||||||
Produced(3) | 645,344 | 610,152 | 2,507,659 | 2,452,398 | ||||||||||||
Sold(3) | 666,199 | 636,183 | 2,492,572 | 2,510,419 | ||||||||||||
Financial Highlights | ||||||||||||||||
Metal sales | $ | 996.2 | $ | 786.5 | $ | 3,497.3 | $ | 3,212.6 | ||||||||
Production cost of sales | $ | 500.5 | $ | 476.4 | $ | 1,778.9 | $ | 1,860.5 | ||||||||
Depreciation, depletion and amortization | $ | 210.4 | $ | 184.3 | $ | 731.3 | $ | 772.4 | ||||||||
Reversals of impairment charges | $ | (361.8 | ) | $ | - | $ | (361.8 | ) | $ | - | ||||||
Operating earnings | $ | 568.8 | $ | 25.1 | $ | 991.1 | $ | 200.5 | ||||||||
Net earnings (loss) attributable to common shareholders | $ | 521.5 | $ | (27.7 | ) | $ | 718.6 | $ | (23.6 | ) | ||||||
Basic earnings (loss) per share attributable to common shareholders | $ | 0.41 | $ | (0.02 | ) | $ | 0.57 | $ | (0.02 | ) | ||||||
Diluted earnings (loss) per share attributable to common shareholders | $ | 0.41 | $ | (0.02 | ) | $ | 0.57 | $ | (0.02 | ) | ||||||
Adjusted net earnings attributable to common shareholders(2) | $ | 156.0 | $ | 13.5 | $ | 422.9 | $ | 128.1 | ||||||||
Adjusted net earnings per share(2) | $ | 0.13 | $ | 0.01 | $ | 0.34 | $ | 0.10 | ||||||||
Net cash flow provided from operating activities | $ | 408.6 | $ | 183.5 | $ | 1,224.9 | $ | 788.7 | ||||||||
Adjusted operating cash flow(2) | $ | 387.6 | $ | 135.8 | $ | 1,201.5 | $ | 874.2 | ||||||||
Capital expenditures | $ | 298.2 | $ | 273.0 | $ | 1,105.2 | $ | 1,043.4 | ||||||||
Average realized gold price per ounce(2) | $ | 1,485 | $ | 1,226 | $ | 1,392 | $ | 1,268 | ||||||||
Consolidated production cost of sales per equivalent ounce(3) sold(2) | $ | 746 | $ | 743 | $ | 708 | $ | 735 | ||||||||
Attributable(1) production cost of sales per equivalent ounce(3) sold(2) | $ | 744 | $ | 743 | $ | 706 | $ | 734 | ||||||||
Attributable(1) production cost of sales per ounce sold on a by-product basis(2) | $ | 728 | $ | 733 | $ | 691 | $ | 723 | ||||||||
Attributable(1) all-in sustaining cost per ounce sold on a by-product basis(2) | $ | 1,041 | $ | 955 | $ | 974 | $ | 959 | ||||||||
Attributable(1) all-in sustaining cost per equivalent ounce(3) sold(2) | $ | 1,050 | $ | 961 | $ | 983 | $ | 965 | ||||||||
Attributable(1) all-in cost per ounce sold on a by-product basis(2) | $ | 1,337 | $ | 1,287 | $ | 1,282 | $ | 1,275 | ||||||||
Attributable(1) all-in cost per equivalent ounce(3) sold(2) | $ | 1,340 | $ | 1,286 | $ | 1,284 | $ | 1,274 |
(1) | "Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production. |
(2) | The definition and reconciliation of these non-GAAP financial measures is included on pages 16 to 20 of this news release. |
(3) | “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 2019 was 85.99:1 (2018 - 80.74:1). The ratio for Q4 2019 was 85.59:1 (Q4 2018 - 84.42:1). |
The following operating and financial results are based on fourth-quarter and year-end 2019 gold equivalent production. Production and cost measures are on an attributable basis:
Production: Kinross produced 645,344 attributable Au eq. oz. in the fourth quarter of 2019, compared with 610,152 in the fourth quarter of 2018, mainly due to record quarterly production at Tasiast and higher production at Round Mountain and Bald Mountain.
Kinross produced 2,507,659 attributable Au eq. oz. for full-year 2019, which was in line with the Company’s 2019 annual guidance, and an increase compared with full-year 2018 production of 2,452,398 Au eq. oz.
Production cost of sales: Production cost of sales per Au eq. oz.2 was $744 for Q4 2019, compared with $743 for the fourth quarter of 2018. Production cost of sales per Au oz. on a by-product basis2 was $728 in Q4 2019, compared with $733 in Q4 2018, based on Q4 2019 attributable gold sales of 652,462 ounces and attributable silver sales of 1,175,772 ounces.
p. 3 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Production cost of sales per Au eq. oz. was $706 for full-year 2019, which was at the low end of the Company’s 2019 guidance. This compares with production cost of sales of $734 per Au eq. oz. for full-year 2018. The full-year decrease was mainly due lower costs at Paracatu, Tasiast and Round Mountain. Production cost of sales per Au oz. on a by-product basis2 was $691 for full-year 2019, compared with $723 for full-year 2018, based on 2019 attributable gold sales of 2,438,678 ounces and attributable silver sales of 4,633,932 ounces.
All-in sustaining cost2: All-in sustaining cost per Au eq. oz. sold was $1,050 in Q4 2019, compared with $961 in Q4 2018. All-in sustaining cost per Au oz. sold on a by-product basis increased to $1,041 in Q4 2019, compared with $955 in Q4 2018.
All-in sustaining cost per Au eq. oz. sold was $983 for full-year 2019, which was within the Company’s 2019 guidance range, compared with $965 for full-year 2018. All-in sustaining cost per Au oz. sold on a by-product basis was $974 for full-year 2019, compared with $959 for full-year 2018.
Revenue: Revenue from metal sales was $996.2 million in the fourth quarter of 2019, compared with $786.5 million during the same period in 2018.
Revenue for full-year 2019 increased to $3,497.3 million, compared with $3,212.6 million for full-year 2018.
Average realized gold price6: The average realized gold price in Q4 2019 increased 21% to $1,485 per ounce, compared with $1,226 per ounce in Q4 2018.
The average realized gold price per ounce increased 10% to $1,392 for full-year 2019, compared with $1,268 per ounce for full-year 2018.
Margins5: Kinross’ attributable margin per Au eq. oz. sold increased 53% to $741 per Au eq. oz. for the fourth quarter of 2019, compared with the Q4 2018 margin of $483 per Au eq. oz. sold.
Full-year 2019 margin per Au eq. oz. sold increased 28% to $686, compared with $534 for full-year 2018.
Operating cash flow: Adjusted operating cash flow2 increased significantly to $387.6 million for the fourth quarter of 2019, compared with $135.8 million for Q4 2018. Adjusted operating cash flow for full-year 2019 increased 37% to $1,201.5 million, compared with $874.2 million for full-year 2018.
Net operating cash flow was $408.6 million for the fourth quarter of 2019, compared with $183.5 million for Q4 2018. Net operating cash flow for full-year 2019 increased 55% to $1,224.9 million, compared with $788.7 million for full-year 2018.
Impairment reversal: At December 31, 2019, Kinross recorded non-cash after-tax impairment reversals totalling $293.6 million, including $161.1 million at Tasiast and $132.5 million at Paracatu. The reversals were entirely related to property, plant and equipment, and were mainly due to an increase in the Company’s long-term gold price estimates.
Earnings/loss: Adjusted net earnings2,3 increased to $156.0 million, or $0.13 per share, for Q4 2019, compared with adjusted net earnings of $13.5 million, or $0.01 per share, for Q4 2018. Full-year 2019 adjusted net earnings more than tripled to $422.9 million, or $0.34 per share, compared with adjusted net earnings of $128.1 million, or $0.10 per share, for full-year 2018, mainly due to higher margins.
Reported net earnings increased to $521.5 million, or $0.41 per share, for Q4 2019, compared with net loss of $27.7 million, or $0.02 per share, in Q4 2018. Full-year 2019 reported net earnings increased to $718.6 million, or $0.57 per share, compared with net loss of $23.6 million, or $0.02 per share, for full-year 2018. The increase was mainly due to higher margins, non-cash impairment reversals, a gain of $72.7 million on the sale of the royalty portfolio, and a decrease in depreciation, depletion and amortization.
6 Average realized gold price is a non-GAAP financial measure and is defined as gold metal sales divided by the total number of gold ounces sold.
p. 4 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Capital expenditures3: Capital expenditures were $298.2 million for Q4 2019, compared with $273.0 million for the same period last year.
Capital expenditures for full-year 2019 were $1,105.2 million, compared with $1,043.4 million for 2018, primarily due to increased spending on projects at Bald Mountain, Fort Knox and Round Mountain, partially offset by lower spending at Tasiast. Capital expenditures were within the Company’s guidance.
Balance sheet
As of December 31, 2019, Kinross had cash and cash equivalents of $575.1 million, compared with $349.0 million at December 31, 2018. The increase was primarily due to net operating cash flow inflows, partially offset by capital expenditures at the Company’s development projects.
The Company has available credit of $1,453.1 million as of year-end 2019, for total liquidity of $2,028.2 million.
Operating results
Mine-by-mine summaries for 2019 fourth-quarter and full-year operating results may be found on pages 11 and 15 of this news release.
Highlights include the following:
Americas
Paracatu had an outstanding year in 2019, achieving record annual production of 619,563 Au eq. oz. while lowering costs. The strong performance was mainly due to an asset optimization program started in 2018, which resulted in improved mill efficiencies and an enhanced understanding of the orebody. Full-year production increased approximately 98,000 Au eq. oz., or 19%, compared with 2018, as both throughput and recoveries improved. Full-year cost of sales per ounce sold decreased by approximately 19% compared with 2018 mainly due to operational efficiencies, lower power costs, and favourable foreign exchange movements. During Q4 2019 cost of sales per ounce sold increased versus Q3 2019 mainly due to higher maintenance costs, as the crusher was repaired during the quarter. Quarterly production was slightly lower compared with Q3 2019 mainly due to lower throughput.
Round Mountain performed well for full-year 2019. While there was a slight year-over-year reduction in annual production, Q4 2019 production increased 26% compared with Q3 2019 mainly due to strong performance from the heap leach pads as a result of the Phase W project. Full-year cost of sales per ounce sold was lower versus 2018 primarily due to lower operating waste. Cost of sales per ounce sold in Q4 2019 was largely in line quarter-over-quarter.
At Bald Mountain, full-year production was lower compared with 2018 mainly due to a slower-than-anticipated ramp up at the Vantage Complex project and unfavourable weather conditions at the site early in the year. As expected, production was significantly higher in Q4 2019, increasing by 95% compared with Q3 2019, as more ounces were recovered from the Vantage Complex. Cost of sales per ounce sold for 2019 was higher compared with 2018 mostly due to lower production. Cost of sales per ounce sold decreased during Q4 2019 compared with Q3 2019 primarily due an increase in production.
At Fort Knox, production for 2019 was lower compared with 2018 mainly due to a decrease in mill throughput, while 2019 cost of sales per ounce sold increased compared with the previous year mainly due to lower production and higher maintenance costs. Production and cost of sales per ounce sold for Q4 2019 were largely in line with the previous quarter.
Maricunga delivered higher-than-expected annual production from the rinsing of materials placed on the heap leach pads prior to the suspension of mining activities. Full-year cost of sales per ounce sold were largely in line with 2018. The mine has now transitioned into care and maintenance, with final production occurring in Q4 2019. For tax planning purposes, the sale of residual gold ounces are expected to continue during 2020.
p. 5 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Russia
The Russia region continued its strong and consistent performance in 2019. Combined full-year production at Kupol and Dvoinoye was 8% higher compared with 2018 primarily due to higher grade ore processed from Kupol’s Northeast Extension and Moroshka deposits. Production quarter-over-quarter was lower primarily due to planned lower mill grades at Kupol. Full-year cost of sales per ounce sold was higher compared with 2018 primarily due to an increase in operating waste mined, and was largely in line quarter-over-quarter.
West Africa
Tasiast outperformed in 2019, achieving record production and a record low cost of sales per ounce sold, as the mine continued to benefit from the Phase One expansion and the mill’s strong performance. During 2019, production increased by approximately 140,000 Au eq. oz., or 56%, while cost of sales decreased by $374 per ounce sold, or 38%, compared with 2018. Tasiast finished the year strongly, achieving a record quarterly production of 102,973 Au eq. oz. at a cost of sales of $494 per ounce sold, the lowest in its history. The mine also achieved a record average throughput of 15,000 tonnes per day during the quarter. Higher grades, operational efficiencies and lower operating waste during Q4 2019 also contributed to a decrease in costs compared with the same period in 2018.
At Chirano, full-year production decreased slightly compared with 2018 mainly due to lower grades. Production for Q4 2019 was higher compared with the previous quarter primarily as a result of improved mill throughput. Cost of sales per ounce sold was higher for full-year 2019 mainly due to an increase in operating waste mined associated with the return to open pit mining, and was largely in line quarter-over-quarter.
2020 Outlook
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 21 of this news release.
In 2020, Kinross expects to produce 2.4 million Au eq. oz. (+/- 5%) from its operations. In 2021, annual production is expected to be at or above 2019 levels, and is expected to remain at the 2.5 million Au eq. oz. level for 2022.
The slight forecast decrease compared to full-year 2019 production is primarily due to Maricunga transitioning to care and maintenance, and expected lower production at Paracatu following its record year, partially offset by an expected production increase at Tasiast and Fort Knox.
Production is expected to be relatively flat quarter-over-quarter throughout 2020, with a slight increase in the fourth quarter. Tasiast is expected to have higher production in the first half of the year mainly as a result of higher grade ore. Paracatu and Round Mountain are expected to have higher production in the second half of the year mainly due to anticipated higher grades at Paracatu and more ounces recovered at Round Mountain as the benefits of Phase W continue to be realized.
Production cost of sales is expected to be $720 per Au eq. oz. (+/- 5%) for 2020. The Company expects all-in sustaining cost to be $970 (+/- 5%) per ounce sold on both a gold equivalent and by-product basis for 2020, which is lower than full-year 2019 all-in sustaining cost per ounce, mainly due to the expected lower cost of sales per ounce sold and capital expenditures for 2020. All-in sustaining cost per ounce is expected to decrease in 2021 and 2022, compared with 2020 levels.
The table below summarizes the 2020 forecast for production and production cost of sales on a gold equivalent and by-product accounting basis:
p. 6 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Accounting basis |
2020 Guidance
|
Gold equivalent basis | |
Production (Au eq. oz.)1,2 | 2.4 million |
Average production cost of sales per Au eq. oz. 1,2 | $720 |
All-in sustaining cost per Au eq. oz. 1,2 | $970 |
By-product basis | |
Gold ounces1 | 2.3 million |
Silver ounces | 4.0 million |
Average production cost of sales per Au oz. 1,2 | $710 |
The following table provides a summary of the 2020 production and production cost of sales forecast by region:
Region | Forecast 2020 production (Au eq. oz.) |
Percentage
of total forecast production7 |
Forecast 2020 production
| |||
Americas | 1.3 million (+/- 5%) | 54% | $770 (+/- 5%) | |||
West Africa (attributable)* | 600,000 (+/- 10%) | 25% | $670 (+/- 10%) | |||
Russia | 500,000 (+/- 3%) | 21% | $650 (+/- 3%) | |||
Total | 2.4 million (+/- 5%) | 100% | $720 (+/- 5%) | |||
*Based on Kinross’ 90% share of Chirano |
Material assumptions used to forecast 2020 production cost of sales are as follows:
· | a gold price of $1,200 per ounce, |
· | a silver price of $16 per ounce, |
· | an oil price of $65 per barrel, |
· | foreign exchange rates of: |
o | 3.50 Brazilian reais is to the U.S. dollar, |
o | 1.30 Canadian dollars to the U.S. dollar, |
o | 60 Russian roubles to the U.S. dollar, |
o | 650 Chilean pesos to the U.S. dollar, |
o | 5.0 Ghanaian cedis to the U.S. dollar, |
o | 35 Mauritanian ouguiyas to the U.S. dollar, and |
o | 1.11 U.S. dollars to the Euro. |
Taking into account existing currency and oil hedges:
· | a 10% change in foreign currency exchange rates would be expected to result in an approximate $14 impact on production cost of sales per ounce8; |
· | specific to the Russian rouble, a 10% change in this exchange rate would be expected to result in an approximate $15 impact on Russian production cost of sales per ounce; |
· | specific to the Brazilian real, a 10% change in this exchange rate would be expected to result in an approximate $25 impact on Brazilian production cost of sales per ounce; |
· | a $10 per barrel change in the price of oil would be expected to result in an approximate $4 impact on production cost of sales per ounce; |
· | a $100 change in the price of gold would be expected to result in an approximate $4 impact on production cost of sales per ounce as a result of a change in royalties. |
7The percentages are calculated based on the mid-point of regional 2020 forecast production.
8 Refers to all of the currencies in the countries where the Company has mining operations, fluctuating simultaneously by 10% in the same direction, either appreciating or depreciating, taking into consideration the impact of hedging and the weighting of each currency within our consolidated cost structure.
p. 7 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Total capital expenditures for 2020 are forecast to be approximately $900 million3 (+/- 5%) and are summarized in the table below.
Capital expenditures for 2021 are expected to be lower by approximately $100 million compared with 2020 capital guidance. Capital expenditures are expected to be further reduced in 2022 compared with 2021 levels.
Region |
Forecast
2020 |
Forecast
2020 |
Total
forecast capital | |||
Americas | $265 | $270 | $535 | |||
West Africa | $35 | $280 | $315 | |||
Russia | $25 | $20 | $45 | |||
Corporate | $5 | $0 | $5 | |||
TOTAL | $330 | $570 | $900* |
*Starting in 2020, the Company will exclude capitalized interest from its capital expenditures guidance and intends to report interest as a separate item going forward in order to provide greater transparency.
Sustaining capital includes the following forecast spending estimates:
· | Mine development: | $110 million (Americas); $15 million (Russia); $10 million (West Africa) | |
· | Mobile equipment: | $70 million (Americas); $10 million (Russia); $5 million (West Africa) | |
· | Tailings facilities: | $50 million (Americas); $5 million (West Africa) | |
· | Mill facilities: | $20 million (Americas); $5 million (West Africa) | |
· | Leach facilities: | $15 million (Americas) |
Non-sustaining capital includes the following forecast spending estimates:
· | Tasiast West Branch stripping: | $225 million | |
· | Round Mountain Phase W (primarily stripping): | $125 million | |
· | Fort Knox Gilmore: | $95 million | |
· | Tasiast 24k project: | $55 million | |
· | La Coipa Restart | $45 million | |
· | Development projects and other: | $25 million |
The 2020 forecast for exploration is approximately $90 million, all of which is expected to be expensed. The increase compared to full-year 2019 is primarily due to the addition of Chulbatkan to the Company’s project pipeline.
The 2020 forecast for overhead (general and administrative and business development expenses) is approximately $150 million, approximately $20 million less than 2019 results primarily as a result of Kinross’ comprehensive cost and efficiency review across the organization. 2020 annual overhead guidance is down $55 million compared with 2015 overhead guidance.
Other operating costs expected to be incurred in 2020 are approximately $100 million, which includes approximately $50 million of care and maintenance costs in Chile and at Kettle River-Buckhorn.
Based on assumed gold price of $1,200 and other budget assumptions, tax expense is expected to be a recovery of $25 million and
taxes paid is expected to be $110 million. Adjusting the Brazilian real to the exchange rate of 4.03 at the end of 2019, tax expense
is expected to be $30 million. Tax expense is expected to increase at 23% of any profit resulting from higher gold prices. For
every $100 increase in the realized gold price, taxes paid is expected to increase by $20 million.
p. 8 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Depreciation, depletion and amortization is forecast to be approximately $340 (+/-5%) per Au eq. oz.
Interest paid is forecast to be approximately $110 million, which includes $55 million of capitalized interest.
Tasiast project financing
On December 16, 2019, Kinross signed a $300 million project financing for Tasiast with the IFC (a member of the World Bank Group), Export Development Canada, and with the participation of ING Bank and Société Générale. The loan is non-recourse to Kinross, underscores the attractive foreign investment climate in Mauritania, and was signed following a comprehensive due diligence process with the lenders, including site visits, meetings with the Government of Mauritania, and significant technical and environmental reviews and evaluations. The first funding draw from the loan is expected later in Q1 2020.
Sale of Lundin Gold shares
As part of its portfolio management strategy and to further strengthen its balance sheet, on December 9, 2019 Kinross sold its remaining share position in Lundin Gold Inc. to a syndicate of buyers for gross proceeds of approximately $113 million.
Sale of royalty portfolio to Maverix Metals
On December 19, 2019, Kinross completed the sale of its royalty portfolio to Maverix for total consideration of $73.9 million, which includes $25 million in cash and approximately 11.2 million Maverix common shares, representing a 9.4% ownership interest in Maverix. The transaction enables Kinross to realize the value of its royalty portfolio and retain upside exposure through its meaningful equity position in Maverix.
Environment, Social, Governance highlights (ESG)
Kinross’ performance in its First Priorities – safety, environment and social responsibility – remains among the best in the industry, with a 2019 safety record on par with rates in low-risk non-industrial sectors. In 2019, we made major advancements in the implementation of critical risk management systems that are designed to prevent serious injuries and fatalities. Kinross’ robust approach to environmental management includes addressing climate change impacts and risks. Overall, the Company’s energy-use and greenhouse gas emission intensities are the lowest amongst gold industry peers. In 2019, Kinross published its best practice approach to safe and responsible tailings management, which is based on an overriding commitment to safety and the environment. For its strong sustainability performance, Kinross was recently ranked in the top 10 among metals and mining companies in The Sustainability Yearbook 2020, published by S&P Global in collaboration with RobecoSAM.
Kinross engages directly with local communities around its operations to understand their economic, social and development goals, working together to ensure that meaningful, long-term benefits are realized through job creation, training programs, procurement, tax payments, and targeted community programs. In 2019, Kinross interacted with more than 90,000 stakeholders and registered more than 650,000 beneficiaries from its community projects. Employing a diverse workforce comprised of 98% of people from host countries also enabled Kinross to contribute greater economic value in the areas where it operates.
Studies measuring quality of life metrics have found significant improvements in communities around the Company’s mines at Paracatu and Tasiast. In Chile, 60% of local Colla indigenous people around the La Coipa project now have access to electricity after solar panels were installed in their communities. In Chirano, more than 90% of people in communities around the mine now have access to safer piped water, compared to less than 40% in 2000, as a result of significant improvements in essential infrastructure over the past 15 years.
Kinross’ robust corporate governance standards for its Board of Directors continue to be driven by a focus on delivering value through a mix of skills and experience, diversity, director independence and succession planning. In 2019, Kinross appointed a new Chair of the Board and welcomed two new Board members. Kinross maintained its top tier governance performance by, among other things, achieving its 33% Board gender diversity target and reducing average Board tenure. Kinross was the top ranked gold mining company in The Globe and Mail’s 2019 annual corporate governance survey for the second consecutive year.
p. 9 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
In September 2019, the World Gold Council (WGC) launched its Responsible Gold Mining Principles (RGMPs), which are an overarching framework that defines responsible gold mining. Kinross was a participant in the WGC committee that developed the RGMPs, which are largely consistent with the Company’s current approach. Kinross is well-positioned to be in substantial conformance, including obtaining external assurance within the next three years.
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, February 13, 2020 at 8 a.m. ET to discuss the results, followed by a question-and-answer session. To access the call, please dial:
Canada & US toll-free – (877) 201-0168;
Conference ID: 1756358
Outside of Canada & US – +1 (647) 788-4901; Conference ID: 1756358
Replay (available up to 14 days after the call):
Canada & US toll-free – (800) 585-8367;
Conference ID: 1756358
Outside of Canada & US – +1 (416) 621-4642; Conference ID: 1756358
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 our website at www.kinross.com.
This release should be read in conjunction with Kinross’ 2019 year-end Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2019 year-end Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished with the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.
About Kinross Gold Corporation
Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol: KGC).
Media Contact
Louie Diaz
Senior Director, Corporate Communications
phone: 416-369-6469
Investor Relations Contact
Tom Elliott
Senior Vice-President, Investor Relations and Corporate Development
phone: 416-365-3390
p. 10 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Review of operations
Three months ended December 31, | Gold equivalent ounces | |||||||||||||||||||||||||||||||
Produced | Sold | Production cost of sales ($millions) | Production cost of sales/equivalent ounce sold | |||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||
Fort Knox | 53,183 | 52,194 | 55,040 | 51,889 | $ | 65.9 | $ | 49.1 | $ | 1,197 | $ | 946 | ||||||||||||||||||||
Round Mountain | 103,501 | 96,715 | 108,402 | 91,769 | 79.3 | 70.0 | 732 | 763 | ||||||||||||||||||||||||
Bald Mountain | 66,147 | 47,211 | 65,381 | 68,288 | 49.8 | 46.9 | 762 | 687 | ||||||||||||||||||||||||
Kettle River - Buckhorn | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Paracatu | 140,224 | 145,634 | 140,430 | 152,395 | 111.1 | 116.6 | 791 | 765 | ||||||||||||||||||||||||
Maricunga | 3,221 | 7,226 | 17,455 | 19,399 | 11.7 | 16.1 | 670 | 830 | ||||||||||||||||||||||||
Americas Total | 366,276 | 348,980 | 386,708 | 383,740 | 317.8 | 298.7 | 822 | 778 | ||||||||||||||||||||||||
Kupol | 132,009 | 123,478 | 135,083 | 124,408 | 83.3 | 68.7 | 617 | 552 | ||||||||||||||||||||||||
Russia Total | 132,009 | 123,478 | 135,083 | 124,408 | 83.3 | 68.7 | 617 | 552 | ||||||||||||||||||||||||
Tasiast | 102,973 | 91,548 | 101,940 | 83,780 | 50.4 | 69.5 | 494 | 830 | ||||||||||||||||||||||||
Chirano (100%) | 48,984 | 51,273 | 47,186 | 49,173 | 49.0 | 39.5 | 1,038 | 803 | ||||||||||||||||||||||||
West Africa Total | 151,957 | 142,821 | 149,126 | 132,953 | 99.4 | 109.0 | 667 | 820 | ||||||||||||||||||||||||
Operations Total | 650,242 | 615,279 | 670,917 | 641,101 | 500.5 | 476.4 | 746 | 743 | ||||||||||||||||||||||||
Less Chirano non-controlling interest (10%) | (4,898 | ) | (5,127 | ) | (4,718 | ) | (4,918 | ) | (4.9 | ) | (4.0 | ) | ||||||||||||||||||||
Attributable Total | 645,344 | 610,152 | 666,199 | 636,183 | $ | 495.6 | $ | 472.4 | $ | 744 | $ | 743 |
Years ended December 31, | Gold equivalent ounces | |||||||||||||||||||||||||||||||
Produced | Sold | Production cost of sales ($millions) | Production cost of sales/equivalent ounce sold | |||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||
Fort Knox | 200,263 | 255,569 | 200,323 | 256,037 | $ | 213.7 | $ | 214.4 | $ | 1,067 | $ | 837 | ||||||||||||||||||||
Round Mountain | 361,664 | 385,601 | 360,739 | 381,478 | 250.6 | 277.6 | 695 | 728 | ||||||||||||||||||||||||
Bald Mountain | 187,961 | 284,646 | 177,802 | 318,091 | 136.6 | 174.1 | 768 | 547 | ||||||||||||||||||||||||
Kettle River - Buckhorn | - | - | - | 927 | - | - | - | - | ||||||||||||||||||||||||
Paracatu | 619,563 | 521,575 | 619,009 | 523,417 | 412.3 | 430.5 | 666 | 822 | ||||||||||||||||||||||||
Maricunga | 38,601 | 60,066 | 43,756 | 89,959 | 31.5 | 65.7 | 720 | 730 | ||||||||||||||||||||||||
Americas Total | 1,408,052 | 1,507,457 | 1,401,629 | 1,569,909 | 1,044.7 | 1,162.3 | 745 | 740 | ||||||||||||||||||||||||
Kupol | 527,343 | 489,947 | 526,458 | 494,835 | 314.1 | 288.2 | 597 | 582 | ||||||||||||||||||||||||
Russia Total | 527,343 | 489,947 | 526,458 | 494,835 | 314.1 | 288.2 | 597 | 582 | ||||||||||||||||||||||||
Tasiast | 391,097 | 250,965 | 382,803 | 243,241 | 230.4 | 237.3 | 602 | 976 | ||||||||||||||||||||||||
Chirano (100%) | 201,296 | 226,699 | 201,868 | 224,927 | 189.7 | 172.7 | 940 | 768 | ||||||||||||||||||||||||
West Africa Total | 592,393 | 477,664 | 584,671 | 468,168 | 420.1 | 410.0 | 719 | 876 | ||||||||||||||||||||||||
Operations Total | 2,527,788 | 2,475,068 | 2,512,758 | 2,532,912 | 1,778.9 | 1,860.5 | 708 | 735 | ||||||||||||||||||||||||
Less Chirano non-controlling interest (10%) | (20,129 | ) | (22,670 | ) | (20,186 | ) | (22,493 | ) | (19.0 | ) | (17.3 | ) | ||||||||||||||||||||
Attributable Total | 2,507,659 | 2,452,398 | 2,492,572 | 2,510,419 | $ | 1,759.9 | $ | 1,843.2 | $ | 706 | $ | 734 |
p. 11 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Consolidated balance sheets
(expressed in millions of United States dollars, except share amounts)
As at | ||||||||
December 31, | December 31, | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 575.1 | $ | 349.0 | ||||
Restricted cash | 15.2 | 12.7 | ||||||
Accounts receivable and other assets | 130.2 | 101.4 | ||||||
Current income tax recoverable | 43.2 | 79.0 | ||||||
Inventories | 1,053.8 | 1,052.0 | ||||||
Unrealized fair value of derivative assets | 7.2 | 3.8 | ||||||
1,824.7 | 1,597.9 | |||||||
Non-current assets | ||||||||
Property, plant and equipment | 6,340.0 | 5,519.1 | ||||||
Goodwill | 158.8 | 162.7 | ||||||
Long-term investments | 126.2 | 155.9 | ||||||
Investment in joint venture | 18.4 | 18.3 | ||||||
Unrealized fair value of derivative assets | 4.5 | 0.8 | ||||||
Other long-term assets | 568.2 | 564.1 | ||||||
Deferred tax assets | 35.2 | 45.0 | ||||||
Total assets | $ | 9,076.0 | $ | 8,063.8 | ||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 469.3 | $ | 465.9 | ||||
Current income tax payable | 68.0 | 21.7 | ||||||
Current portion of provisions | 57.9 | 72.6 | ||||||
Other current liabilities | 20.3 | 52.2 | ||||||
615.5 | 612.4 | |||||||
Non-current liabilities | ||||||||
Long-term debt and credit facilities | 1,837.4 | 1,735.0 | ||||||
Provisions | 838.6 | 816.4 | ||||||
Long-term lease liabilities | 38.9 | - | ||||||
Unrealized fair value of derivative liabilities | 0.8 | 9.6 | ||||||
Other long-term liabilities | 107.7 | 97.9 | ||||||
Deferred tax liabilities | 304.5 | 265.2 | ||||||
Total liabilities | 3,743.4 | 3,536.5 | ||||||
Equity | ||||||||
Common shareholders' equity | ||||||||
Common share capital | $ | 14,926.2 | $ | 14,913.4 | ||||
Contributed surplus | 242.1 | 239.8 | ||||||
Accumulated deficit | (9,829.4 | ) | (10,548.0 | ) | ||||
Accumulated other comprehensive income (loss) | (20.4 | ) | (98.5 | ) | ||||
Total common shareholders' equity | 5,318.5 | 4,506.7 | ||||||
Non-controlling interest | 14.1 | 20.6 | ||||||
Total equity | 5,332.6 | 4,527.3 | ||||||
Total liabilities and equity | $ | 9,076.0 | $ | 8,063.8 | ||||
Common shares | ||||||||
Authorized | Unlimited | Unlimited | ||||||
Issued and outstanding | 1,253,765,724 | 1,250,228,821 |
p. 12 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Consolidated statements of operations
(expressed in millions of United States dollars, except share and per share amounts)
Years ended | ||||||||
December 31, | December 31, | |||||||
2019 | 2018 | |||||||
Revenue | ||||||||
Metal sales | $ | 3,497.3 | $ | 3,212.6 | ||||
Cost of sales | ||||||||
Production cost of sales | 1,778.9 | 1,860.5 | ||||||
Depreciation, depletion and amortization | 731.3 | 772.4 | ||||||
Reversals of impairment charges | (361.8 | ) | - | |||||
Total cost of sales | 2,148.4 | 2,632.9 | ||||||
Gross profit | 1,348.9 | 579.7 | ||||||
Other operating expense | 108.5 | 137.0 | ||||||
Exploration and business development | 113.5 | 109.2 | ||||||
General and administrative | 135.8 | 133.0 | ||||||
Operating earnings | 991.1 | 200.5 | ||||||
Other income - net | 72.6 | 3.2 | ||||||
Equity in earnings (losses) of joint ventures - net | 0.1 | (0.3 | ) | |||||
Finance income | 7.9 | 11.0 | ||||||
Finance expense | (107.9 | ) | (101.2 | ) | ||||
Earnings before tax | 963.8 | 113.2 | ||||||
Income tax expense - net | (246.7 | ) | (138.8 | ) | ||||
Net earnings (loss) | $ | 717.1 | $ | (25.6 | ) | |||
Net earnings (loss) attributable to: | ||||||||
Non-controlling interest | $ | (1.5 | ) | $ | (2.0 | ) | ||
Common shareholders | $ | 718.6 | $ | (23.6 | ) | |||
Earnings (loss) per share attributable to common shareholders | ||||||||
Basic | $ | 0.57 | $ | (0.02 | ) | |||
Diluted | $ | 0.57 | $ | (0.02 | ) | |||
Weighted average number of common shares outstanding (millions) | ||||||||
Basic | 1,252.3 | 1,249.5 | ||||||
Diluted | 1,262.3 | 1,249.5 |
p. 13 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Consolidated statements of cash flows
(expressed in millions of United States dollars) | ||||||||
Years ended | ||||||||
December 31, | December 31, | |||||||
2019 | 2018 | |||||||
Net inflow (outflow) of cash related to the following activities: | ||||||||
Operating: | ||||||||
Net earnings (loss) | $ | 717.1 | $ | (25.6 | ) | |||
Adjustments to reconcile net earnings (loss) to net cash provided from operating activities: | ||||||||
Depreciation, depletion and amortization | 731.3 | 772.4 | ||||||
Gain on disposition of associate and other interests - net | - | (2.1 | ) | |||||
Reversals of impairment charges | (361.8 | ) | - | |||||
Equity in (earnings) losses of joint ventures - net | (0.1 | ) | 0.3 | |||||
Share-based compensation expense | 14.3 | 14.6 | ||||||
Finance expense | 107.9 | 101.2 | ||||||
Deferred tax expense | 41.1 | 8.9 | ||||||
Foreign exchange (gains) losses and other | (53.1 | ) | 12.5 | |||||
Reclamation recovery | (11.9 | ) | (8.0 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable and other assets | (64.5 | ) | (22.7 | ) | ||||
Inventories | 53.8 | (5.7 | ) | |||||
Accounts payable and accrued liabilities | 165.9 | 69.8 | ||||||
Cash flow provided from operating activities | 1,340.0 | 915.6 | ||||||
Income taxes paid | (115.1 | ) | (126.9 | ) | ||||
Net cash flow provided from operating activities | 1,224.9 | 788.7 | ||||||
Investing: | ||||||||
Additions to property, plant and equipment | (1,105.2 | ) | (1,043.4 | ) | ||||
Acquisitions | (30.0 | ) | (304.2 | ) | ||||
Net proceeds from the sale of (additions to) long-term investments and other assets | 71.6 | (52.9 | ) | |||||
Net proceeds from the sale of property, plant and equipment | 31.9 | 6.4 | ||||||
Increase in restricted cash | (2.5 | ) | (0.6 | ) | ||||
Interest received and other - net | 7.6 | 7.7 | ||||||
Net cash flow used in investing activities | (1,026.6 | ) | (1,387.0 | ) | ||||
Financing: | ||||||||
Proceeds from drawdown of debt | 300.0 | 80.0 | ||||||
Repayment of debt | (200.0 | ) | (80.0 | ) | ||||
Payment of lease liabilities | (14.3 | ) | - | |||||
Interest paid | (55.6 | ) | (57.9 | ) | ||||
Dividends paid to non-controlling interest | (5.0 | ) | (13.0 | ) | ||||
Other - net | - | (1.7 | ) | |||||
Net cash flow provided from (used in) financing activities | 25.1 | (72.6 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 2.7 | (5.9 | ) | |||||
Increase (decrease) in cash and cash equivalents | 226.1 | (676.8 | ) | |||||
Cash and cash equivalents, beginning of period | 349.0 | 1,025.8 | ||||||
Cash and cash equivalents, end of period | $ | 575.1 | $ | 349.0 |
p. 14 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Operating Summary | |||||||||||||||
Mine | Period | Ownership | Tonnes Ore Mined (1) |
Ore
Processed (Milled) (1) |
Ore
Processed (Heap Leach) (1) |
Grade (Mill) |
Grade (Heap Leach) |
Recovery
(2) |
Gold
Eq Production (5) |
Gold
Eq Sales (5) |
Production cost of sales |
Production cost of sales/oz |
Cap
Ex (7) |
DD&A | |
(%) | ('000 tonnes) | ('000 tonnes) | ('000 tonnes) | (g/t) | (g/t) | (%) | (ounces) | (ounces) | ($ millions) | ($/ounce) | ($ millions) | ($ millions) | |||
Americas | Fort Knox | Q4 2019 | 100 | 7,648 | 2,615 | 5,498 | 0.43 | 0.20 | 81% | 53,183 | 55,040 | $ 65.9 | $ 1,197 | $ 37.1 | $ 25.0 |
Q3 2019 | 100 | 7,094 | 2,097 | 5,250 | 0.52 | 0.21 | 83% | 54,027 | 51,606 | 58.3 | $ 1,130 | 40.9 | 24.7 | ||
Q2 2019 | 100 | 4,829 | 1,811 | 3,440 | 0.59 | 0.20 | 81% | 55,440 | 55,740 | 50.7 | $ 910 | 35.0 | 22.6 | ||
Q1 2019 | 100 | 5,796 | 1,556 | 4,295 | 0.72 | 0.22 | 84% | 37,613 | 37,937 | 38.8 | $ 1,023 | 28.9 | 18.0 | ||
Q4 2018 | 100 | 5,645 | 2,856 | 2,927 | 0.44 | 0.19 | 83% | 52,194 | 51,889 | 49.1 | $ 946 | 30.5 | 21.9 | ||
Round Mountain | Q4 2019 | 100 | 7,408 | 882 | 7,140 | 1.00 | 0.36 | 82% | 103,501 | 108,402 | $ 79.3 | $ 732 | $ 62.7 | $ 12.6 | |
Q3 2019 | 100 | 7,128 | 1,004 | 7,557 | 1.05 | 0.32 | 85% | 82,195 | 81,617 | 57.5 | $ 705 | 48.3 | 9.1 | ||
Q2 2019 | 100 | 4,074 | 909 | 3,910 | 1.17 | 0.33 | 86% | 90,833 | 87,106 | 57.8 | $ 664 | 58.9 | 10.2 | ||
Q1 2019 | 100 | 3,904 | 845 | 3,557 | 1.31 | 0.38 | 86% | 85,135 | 83,614 | 56.0 | $ 670 | 64.2 | 7.9 | ||
Q4 2018 | 100 | 4,386 | 987 | 4,172 | 1.38 | 0.43 | 83% | 96,715 | 91,769 | 70.0 | $ 763 | 68.0 | 9.6 | ||
Bald Mountain (8) | Q4 2019 | 100 | 2,928 | - | 3,007 | - | 0.48 | nm | 66,147 | 65,381 | $ 49.8 | $ 762 | $ 54.6 | $ 36.3 | |
Q3 2019 | 100 | 6,494 | - | 6,494 | - | 0.41 | nm | 33,995 | 37,644 | 30.6 | $ 813 | 44.0 | 14.8 | ||
Q2 2019 | 100 | 3,725 | - | 4,138 | - | 0.36 | nm | 40,564 | 31,547 | 27.0 | $ 856 | 57.5 | 12.2 | ||
Q1 2019 | 100 | 2,659 | - | 2,836 | - | 0.48 | nm | 47,255 | 43,230 | 29.2 | $ 675 | 64.6 | 16.2 | ||
Q4 2018 | 100 | 4,929 | - | 5,406 | - | 0.47 | nm | 47,211 | 68,288 | 46.9 | $ 687 | 40.4 | 22.4 | ||
Paracatu | Q4 2019 | 100 | 12,393 | 14,168 | - | 0.38 | - | 76% | 140,224 | 140,430 | $ 111.1 | $ 791 | $ 21.4 | $ 42.8 | |
Q3 2019 | 100 | 12,442 | 14,731 | - | 0.38 | - | 78% | 146,396 | 145,662 | 99.5 | $ 683 | 39.0 | 39.5 | ||
Q2 2019 | 100 | 12,307 | 14,439 | - | 0.48 | - | 80% | 186,167 | 186,520 | 106.8 | $ 573 | 34.6 | 45.2 | ||
Q1 2019 | 100 | 12,393 | 14,283 | - | 0.38 | - | 80% | 146,776 | 146,397 | 94.9 | $ 648 | 16.5 | 35.9 | ||
Q4 2018 | 100 | 11,680 | 13,479 | - | 0.44 | - | 81% | 145,634 | 152,395 | 116.6 | $ 765 | 33.3 | 41.7 | ||
Maricunga (8) | Q4 2019 | 100 | - | - | - | - | - | nm | 3,221 | 17,455 | $ 11.7 | $ 670 | $ - | $ 0.4 | |
Q3 2019 | 100 | - | - | - | - | - | nm | 18,016 | 9,203 | 7.0 | $ 761 | - | 0.4 | ||
Q2 2019 | 100 | - | - | - | - | - | nm | 6,648 | 9,474 | 8.0 | $ 844 | - | 0.5 | ||
Q1 2019 | 100 | - | - | - | - | - | nm | 10,716 | 7,624 | 4.8 | $ 630 | - | 0.4 | ||
Q4 2018 | 100 | - | - | - | - | - | nm | 7,226 | 19,399 | 16.1 | $ 830 | - | 0.6 | ||
Russia | Kupol (3)(4)(6) | Q4 2019 | 100 | 468 | 435 | - | 9.14 | - | 95% | 132,009 | 135,083 | $ 83.3 | $ 617 | $ 15.8 | $ 34.8 |
Q3 2019 | 100 | 338 | 431 | - | 9.65 | - | 95% | 137,562 | 136,088 | 82.6 | $ 607 | 7.8 | 32.2 | ||
Q2 2019 | 100 | 431 | 432 | - | 9.23 | - | 94% | 127,684 | 124,873 | 70.2 | $ 562 | 8.2 | 30.7 | ||
Q1 2019 | 100 | 362 | 425 | - | 9.62 | - | 93% | 130,088 | 130,414 | 78.0 | $ 598 | 8.2 | 27.4 | ||
Q4 2018 | 100 | 400 | 425 | - | 8.77 | - | 95% | 123,478 | 124,408 | 68.7 | $ 552 | 19.4 | 30.1 | ||
West Africa | Tasiast | Q4 2019 | 100 | 1,129 | 1,379 | - | 2.39 | - | 96% | 102,973 | 101,940 | $ 50.4 | $ 494 | $ 86.3 | $ 35.0 |
Q3 2019 | 100 | 1,010 | 1,297 | - | 2.37 | - | 97% | 93,865 | 86,357 | 55.1 | $ 638 | 74.3 | 32.0 | ||
Q2 2019 | 100 | 819 | 1,281 | - | 2.19 | - | 97% | 92,901 | 94,748 | 58.9 | $ 622 | 75.2 | 32.2 | ||
Q1 2019 | 100 | 1,962 | 1,269 | - | 2.37 | - | 97% | 101,358 | 99,758 | 66.0 | $ 662 | 75.7 | 31.0 | ||
Q4 2018 | 100 | 3,267 | 1,301 | - | 2.19 | - | 94% | 91,548 | 83,780 | 69.5 | $ 830 | 71.1 | 28.5 | ||
Chirano - 100% | Q4 2019 | 90 | 737 | 844 | - | 2.00 | - | 91% | 48,984 | 47,186 | $ 49.0 | $ 1,038 | $ 8.0 | $ 21.4 | |
Q3 2019 | 90 | 714 | 801 | - | 2.02 | - | 92% | 46,641 | 49,458 | 50.0 | $ 1,011 | 4.8 | 22.0 | ||
Q2 2019 | 90 | 619 | 904 | - | 1.95 | - | 92% | 53,349 | 51,141 | 46.7 | $ 913 | 2.7 | 23.8 | ||
Q1 2019 | 90 | 499 | 908 | - | 1.97 | - | 92% | 52,322 | 54,083 | 44.0 | $ 814 | 3.3 | 25.4 | ||
Q4 2018 | 90 | 527 | 840 | - | 2.08 | - | 92% | 51,273 | 49,173 | 39.5 | $ 803 | 5.7 | 28.3 | ||
Chirano - 90% | Q4 2019 | 90 | 737 | 844 | - | 2.00 | - | 91% | 44,086 | 42,468 | $ 44.1 | $ 1,038 | $ 7.2 | $ 19.3 | |
Q3 2019 | 90 | 714 | 801 | - | 2.02 | - | 92% | 41,977 | 44,512 | 45.0 | $ 1,011 | 4.3 | 19.8 | ||
Q2 2019 | 90 | 619 | 904 | - | 1.95 | - | 92% | 48,014 | 46,027 | 42.0 | $ 913 | 2.4 | 21.4 | ||
Q1 2019 | 90 | 499 | 908 | - | 1.97 | - | 92% | 47,090 | 48,675 | 39.6 | $ 814 | 3.0 | 22.9 | ||
Q4 2018 | 90 | 527 | 840 | - | 2.08 | - | 92% | 46,146 | 44,255 | 35.5 | $ 802 | 5.1 | 25.5 |
(1) | Tonnes of ore mined and processed represent 100% Kinross for all periods presented. |
(2) | 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. |
(3) | The Kupol segment includes the Kupol and Dvoinoye mines. |
(4) | Kupol silver grade and recovery were as follows: Q4 2019: 65.63 g/t, 84.8%; Q3 2019: 67.44 g/t, 87.8%; Q2 2019: 75.29 g/t, 84.9%; Q1 2019: 69.61 g/t, 82.1%; Q4 2018: 73.35 g/t, 83.5%. |
(5) | 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: Q4 2019: 85.59:1; Q3 2019: 86.73:1; Q2 2019: 87.98:1; Q1 2019: 83.74:1; Q4 2018: 84.42:1. |
(6) | Dvoinoye ore processed and grade were as follows: Q4 2019: 100,685, 9.89 g/t; Q3 2019: 113,497, 9.82 g/t; Q2 2019: 113,872, 9.24 g/t; Q1 2019: 135,529, 7.46 g/t; Q4 2018: 104,495, 9.82 g/t. |
(7) | Capital expenditures are presented on a cash basis, consistent with the statement of cash flows. |
(8) | "nm" means not meaningful. |
p. 15 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Reconciliation of non-GAAP financial measures
The Company has included certain non-GAAP financial measures in this document. These measures are not defined under IFRS and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other issuers.
Adjusted net earnings attributable to common shareholders and adjusted net earnings per share are non-GAAP measures which determine the performance of the Company, excluding certain impacts which the Company believes are not reflective of the Company’s underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, reassessment of prior year taxes and/or taxes otherwise not related to the current period, impairment charges (reversals), gains and losses and other one-time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results. Management believes that these measures, which are used internally to assess performance and in planning and forecasting future operating results, provide investors with the ability to better evaluate underlying performance, particularly since the excluded items are typically not included in public guidance. However, adjusted net earnings and adjusted net earnings per share measures are not necessarily indicative of net earnings and earnings per share measures as determined under IFRS.
The following table provides a reconciliation of net earnings (loss) to adjusted net earnings for the periods presented:
Adjusted Net Earnings (Loss) | ||||||||||||||||
(in millions, except per share amounts) | Three months ended | Years ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net earnings (loss) attributable to common shareholders - as reported | $ | 521.5 | $ | (27.7 | ) | $ | 718.6 | $ | (23.6 | ) | ||||||
Adjusting items: | ||||||||||||||||
Foreign exchange (gains) losses | 6.0 | 5.5 | (0.6 | ) | 4.3 | |||||||||||
Foreign exchange (gains) losses on translation of tax basis and foreign exchange on deferred income taxes within income tax expense | (12.3 | ) | 8.3 | 1.6 | 62.0 | |||||||||||
Gain on disposition of royalty portfolio | (72.7 | ) | - | (72.7 | ) | - | ||||||||||
Reversals of impairment charges(a) | (361.8 | ) | - | (361.8 | ) | - | ||||||||||
Taxes in respect of prior periods | (0.1 | ) | 36.3 | 33.3 | 59.9 | |||||||||||
Reclamation and remediation recoveries | (11.9 | ) | (8.0 | ) | (11.9 | ) | (3.5 | ) | ||||||||
Tasiast Phase One commissioning costs | - | - | - | 6.4 | ||||||||||||
Fort Knox pit wall slide related costs | 8.0 | 16.5 | 25.1 | 37.9 | ||||||||||||
Restructuring costs | - | - | 12.2 | - | ||||||||||||
U.S. Tax Reform impact | - | (8.7 | ) | - | (8.7 | ) | ||||||||||
Other | 2.7 | (0.1 | ) | 7.6 | 5.1 | |||||||||||
Tax effect of the above adjustments(a) | 76.6 | (8.6 | ) | 71.5 | (11.7 | ) | ||||||||||
(365.5 | ) | 41.2 | (295.7 | ) | 151.7 | |||||||||||
Adjusted net earnings attributable to common shareholders | $ | 156.0 | $ | 13.5 | $ | 422.9 | $ | 128.1 | ||||||||
Weighted average number of common shares outstanding - Basic | 1,253.5 | 1,250.2 | 1,252.3 | 1,249.5 | ||||||||||||
Adjusted net earnings per share | $ | 0.13 | $ | 0.01 | $ | 0.34 | $ | 0.10 | ||||||||
a) | During the year ended December 31, 2019, the Company recognized non-cash reversals of impairment charges of $361.8 million related to property, plant and equipment at Paracatu and Tasiast. The tax impact on the impairment reversal at Paracatu was an expense of $68.2 million. There was no tax impact on the impairment reversal at Tasiast. |
The Company makes reference to a non-GAAP measure for adjusted operating cash flow. Adjusted operating cash flow is defined as cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company’s regular operating cash flow, and excluding changes in working capital. Working capital can be volatile due to numerous factors, including the timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The Company uses adjusted operating cash flow internally as a measure of the underlying operating cash flow performance and future operating cash flow-generating capability of the Company. However, the adjusted operating cash flow measure is not necessarily indicative of net cash flow from operations as determined under IFRS.
p. 16 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
The following table provides a reconciliation of adjusted operating cash flow for the periods presented:
Adjusted Operating Cash Flow | ||||||||||||||||
(in millions) | Three months ended | Years ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net cash flow provided from operating activities - as reported | $ | 408.6 | $ | 183.5 | $ | 1,224.9 | $ | 788.7 | ||||||||
Adjusting items: | ||||||||||||||||
Tax payments in respect of prior years | - | - | 16.7 | - | ||||||||||||
Working capital changes: | ||||||||||||||||
Accounts receivable and other assets | (37.4 | ) | (95.4 | ) | 64.5 | 22.7 | ||||||||||
Inventories | (44.3 | ) | 19.8 | (53.8 | ) | 5.7 | ||||||||||
Accounts payable and other liabilities, including income taxes paid | 60.7 | 27.9 | (50.8 | ) | 57.1 | |||||||||||
(21.0 | ) | (47.7 | ) | (23.4 | ) | 85.5 | ||||||||||
Adjusted operating cash flow | $ | 387.6 | $ | 135.8 | $ | 1,201.5 | $ | 874.2 | ||||||||
Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of sales as per the consolidated financial statements divided by the total number of gold equivalent ounces sold. This measure converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.
Management uses these measures to monitor and evaluate the performance of its operating properties. The following table presents a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for the periods presented:
Consolidated and Attributable Production Cost of Sales Per Equivalent Ounce Sold | ||||||||||||||||
(in millions, except ounces and production cost of sales per equivalent | Three months ended | Years ended | ||||||||||||||
ounce) | December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Production cost of sales - as reported | $ | 500.5 | $ | 476.4 | $ | 1,778.9 | $ | 1,860.5 | ||||||||
Less: portion attributable to Chirano non-controlling interest(1) | (4.9 | ) | (4.0 | ) | (19.0 | ) | (17.3 | ) | ||||||||
Attributable(2) production cost of sales | $ | 495.6 | $ | 472.4 | $ | 1,759.9 | $ | 1,843.2 | ||||||||
Gold equivalent ounces sold | 670,917 | 641,101 | 2,512,758 | 2,532,912 | ||||||||||||
Less: portion attributable to Chirano non-controlling interest(10) | (4,718 | ) | (4,918 | ) | (20,186 | ) | (22,493 | ) | ||||||||
Attributable(2) gold equivalent ounces sold | 666,199 | 636,183 | 2,492,572 | 2,510,419 | ||||||||||||
Consolidated production cost of sales per equivalent ounce sold | $ | 746 | $ | 743 | $ | 708 | $ | 735 | ||||||||
Attributable(2) production cost of sales per equivalent ounce sold | $ | 744 | $ | 743 | $ | 706 | $ | 734 | ||||||||
p. 17 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP measure which calculates the Company’s non-gold production as a credit against its per ounce production costs, rather than converting its non-gold production into gold equivalent ounces and crediting it to total production, as is the case in co-product accounting. Management believes that this measure provides investors with the ability to better evaluate Kinross’ production cost of sales per ounce on a comparable basis with other major gold producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-product accounting.
The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the periods presented:
Attributable Production Cost of Sales Per Ounce Sold on a By-Product Basis | ||||||||||||||||
(in millions, except ounces and production cost of sales per ounce) | Three months ended | Years ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Production cost of sales - as reported | $ | 500.5 | $ | 476.4 | $ | 1,778.9 | $ | 1,860.5 | ||||||||
Less: portion attributable to Chirano non-controlling interest(1) | (4.9 | ) | (4.0 | ) | (19.0 | ) | (17.3 | ) | ||||||||
Less: attributable(2) silver revenue(3) | (20.4 | ) | (15.2 | ) | (75.1 | ) | (66.4 | ) | ||||||||
Attributable(2) production cost of sales net of silver by-product revenue | $ | 475.2 | $ | 457.2 | $ | 1,684.8 | $ | 1,776.8 | ||||||||
Gold ounces sold | 657,179 | 628,842 | 2,458,839 | 2,480,529 | ||||||||||||
Less: portion attributable to Chirano non-controlling interest(10) | (4,717 | ) | (4,912 | ) | (20,161 | ) | (22,460 | ) | ||||||||
Attributable(2) gold ounces sold | 652,462 | 623,930 | 2,438,678 | 2,458,069 | ||||||||||||
Attributable(2) production cost of sales per ounce sold on a by-product basis | $ | 728 | $ | 733 | $ | 691 | $ | 723 | ||||||||
In November 2018, the World Gold Council (“WGC”) published updates to its guidelines for reporting all-in sustaining costs and all-in costs to address how the costs associated with leases, after a company’s adoption of IFRS 16, should be treated. The WGC is a market development organization for the gold industry and is an association whose membership comprises leading gold mining companies including Kinross. Although the WGC is not a mining industry regulatory organization, it worked closely with its member companies to develop these non-GAAP measures. Adoption of the all-in sustaining cost and all-in cost metrics is voluntary and not necessarily standard, and therefore, these measures presented by the Company may not be comparable to similar measures presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing measures reported by Kinross.
All-in sustaining cost includes both operating and capital costs required to sustain gold production on an ongoing basis. The value of silver sold is deducted from the total production cost of sales as it is considered residual production. Sustaining operating costs represent expenditures incurred at current operations that are considered necessary to maintain current production. Sustaining capital represents capital expenditures at existing operations comprising mine development costs and ongoing replacement of mine equipment and other capital facilities, and does not include capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.
All-in cost is comprised of all-in sustaining cost as well as operating expenditures incurred at locations with no current operation, or costs related to other non-sustaining activities, and capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.
Attributable all-in sustaining cost and all-in cost per ounce sold on a by-product basis are calculated by adjusting total production cost of sales, as reported on the consolidated statement of operations, as follows:
p. 18 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Attributable All-In Sustaining Cost and All-In Cost Per Ounce Sold | ||||||||||||||||
on a By-Product Basis | ||||||||||||||||
(in millions, except ounces and costs per ounce) | Three months ended | Years ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Production cost of sales - as reported | $ | 500.5 | $ | 476.4 | $ | 1,778.9 | $ | 1,860.5 | ||||||||
Less: portion attributable to Chirano non-controlling interest(1) | (4.9 | ) | (4.0 | ) | (19.0 | ) | (17.3 | ) | ||||||||
Less: attributable(2) silver revenue(3) | (20.4 | ) | (15.2 | ) | (75.1 | ) | (66.4 | ) | ||||||||
Attributable(2) production cost of sales net of silver by-product revenue | $ | 475.2 | $ | 457.2 | $ | 1,684.8 | $ | 1,776.8 | ||||||||
Adjusting items on an attributable(2) basis: | ||||||||||||||||
General and administrative(4) | 31.3 | 32.8 | 123.6 | 133.0 | ||||||||||||
Other operating expense - sustaining(5) | 8.3 | (20.2 | ) | 24.7 | 6.2 | |||||||||||
Reclamation and remediation - sustaining(6) | 13.0 | 11.6 | 48.2 | 52.2 | ||||||||||||
Exploration and business development - sustaining(7) | 15.4 | 12.3 | 66.0 | 53.2 | ||||||||||||
Additions to property, plant and equipment - sustaining(8) | 132.7 | 102.2 | 415.1 | 335.0 | ||||||||||||
Lease payments - sustaining(9) | 3.5 | - | 12.7 | - | ||||||||||||
All-in Sustaining Cost on a by-product basis - attributable(2) | $ | 679.4 | $ | 595.9 | $ | 2,375.1 | $ | 2,356.4 | ||||||||
Other operating expense - non-sustaining(5) | 16.3 | 15.3 | 57.0 | 48.7 | ||||||||||||
Reclamation and remediation - non-sustaining(6) | 1.7 | 1.9 | 6.9 | 7.5 | ||||||||||||
Exploration - non-sustaining(7) | 14.5 | 19.9 | 46.7 | 55.4 | ||||||||||||
Additions to property, plant and equipment - non-sustaining(8) | 159.8 | 170.0 | 637.9 | 665.0 | ||||||||||||
Lease payments - non-sustaining(9) | 0.4 | - | 1.6 | - | ||||||||||||
All-in Cost on a by-product basis - attributable(2) | $ | 872.1 | $ | 803.0 | $ | 3,125.2 | $ | 3,133.0 | ||||||||
Gold ounces sold | 657,179 | 628,842 | 2,458,839 | 2,480,529 | ||||||||||||
Less: portion attributable to Chirano non-controlling interest(10) | (4,717 | ) | (4,912 | ) | (20,161 | ) | (22,460 | ) | ||||||||
Attributable(2) gold ounces sold | 652,462 | 623,930 | 2,438,678 | 2,458,069 | ||||||||||||
Attributable(2) all-in sustaining cost per ounce sold on a by-product basis | $ | 1,041 | $ | 955 | $ | 974 | $ | 959 | ||||||||
Attributable(2) all-in cost per ounce sold on a by-product basis | $ | 1,337 | $ | 1,287 | $ | 1,282 | $ | 1,275 | ||||||||
The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP measures, the Company’s production of silver is converted into gold equivalent ounces and credited to total production.
Attributable all-in sustaining cost and all-in cost per equivalent ounce sold are calculated by adjusting total production cost of sales, as reported on the consolidated statement of operations, as follows:
p. 19 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Attributable All-In Sustaining Cost and All-In Cost Per Equivalent Ounce Sold | ||||||||||||||||
(in millions, except ounces and costs per equivalent ounce) | Three months ended | Years ended | ||||||||||||||
December 31, | December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Production cost of sales - as reported | $ | 500.5 | $ | 476.4 | $ | 1,778.9 | $ | 1,860.5 | ||||||||
Less: portion attributable to Chirano non-controlling interest(1) | (4.9 | ) | (4.0 | ) | (19.0 | ) | (17.3 | ) | ||||||||
Attributable(2) production cost of sales | $ | 495.6 | $ | 472.4 | $ | 1,759.9 | $ | 1,843.2 | ||||||||
Adjusting items on an attributable(2) basis: | ||||||||||||||||
General and administrative(4) | 31.3 | 32.8 | 123.6 | 133.0 | ||||||||||||
Other operating expense - sustaining(5) | 8.3 | (20.2 | ) | 24.7 | 6.2 | |||||||||||
Reclamation and remediation - sustaining(6) | 13.0 | 11.6 | 48.2 | 52.2 | ||||||||||||
Exploration and business development - sustaining(7) | 15.4 | 12.3 | 66.0 | 53.2 | ||||||||||||
Additions to property, plant and equipment - sustaining(8) | 132.7 | 102.2 | 415.1 | 335.0 | ||||||||||||
Lease payments - sustaining(9) | 3.5 | - | 12.7 | - | ||||||||||||
All-in Sustaining Cost - attributable(2) | $ | 699.8 | $ | 611.1 | $ | 2,450.2 | $ | 2,422.8 | ||||||||
Other operating expense - non-sustaining(5) | 16.3 | 15.3 | 57.0 | 48.7 | ||||||||||||
Reclamation and remediation - non-sustaining(6) | 1.7 | 1.9 | 6.9 | 7.5 | ||||||||||||
Exploration - non-sustaining(7) | 14.5 | 19.9 | 46.7 | 55.4 | ||||||||||||
Additions to property, plant and equipment - non-sustaining(8) | 159.8 | 170.0 | 637.9 | 665.0 | ||||||||||||
Lease payments - non-sustaining(9) | 0.4 | - | 1.6 | - | ||||||||||||
All-in Cost - attributable(2) | $ | 892.5 | $ | 818.2 | $ | 3,200.3 | $ | 3,199.4 | ||||||||
Gold equivalent ounces sold | 670,917 | 641,101 | 2,512,758 | 2,532,912 | ||||||||||||
Less: portion attributable to Chirano non-controlling interest(10) | (4,718 | ) | (4,918 | ) | (20,186 | ) | (22,493 | ) | ||||||||
Attributable(2) gold equivalent ounces sold | 666,199 | 636,183 | 2,492,572 | 2,510,419 | ||||||||||||
Attributable(2) all-in sustaining cost per equivalent ounce sold | $ | 1,050 | $ | 961 | $ | 983 | $ | 965 | ||||||||
Attributable(2) all-in cost per equivalent ounce sold | $ | 1,340 | $ | 1,286 | $ | 1,284 | $ | 1,274 | ||||||||
(1) | The portion attributable to Chirano non-controlling interest represents the non-controlling interest (10%) in the production cost of sales for the Chirano mine. | |
(2) | “Attributable” includes Kinross' share of Chirano (90%) production. | |
(3) | “Attributable silver revenue” represents the attributable portion of metal sales realized from the production of the secondary or by-product metal (i.e. silver). Revenue from the sale of silver, which is produced as a by-product of the process used to produce gold, effectively reduces the cost of gold production. | |
(4) | “General and administrative” expenses is as reported on the consolidated statement of operations, net of certain restructuring expenses. General and administrative expenses are considered sustaining costs as they are required to be absorbed on a continuing basis for the effective operation and governance of the Company. | |
(5) | “Other operating expense – sustaining” is calculated as “Other operating expense” as reported on the consolidated statement of operations, less other operating and reclamation and remediation expenses related to non-sustaining activities as well as other items not reflective of the underlying operating performance of our business. Other operating expenses are classified as either sustaining or non-sustaining based on the type and location of the expenditure incurred. The majority of other operating expenses that are incurred at existing operations are considered costs necessary to sustain operations, and are therefore classified as sustaining. Other operating expenses incurred at locations where there is no current operation or related to other non-sustaining activities are classified as non-sustaining. | |
(6) | “Reclamation and remediation - sustaining” is calculated as current period accretion related to reclamation and remediation obligations plus current period amortization of the corresponding reclamation and remediation assets, and is intended to reflect the periodic cost of reclamation and remediation for currently operating mines. Reclamation and remediation costs for development projects or closed mines are excluded from this amount and classified as non-sustaining. | |
(7) | “Exploration and business development – sustaining” is calculated as “Exploration and business development” expenses as reported on the consolidated statement of operations, less non-sustaining exploration expenses. Exploration expenses are classified as either sustaining or non-sustaining based on a determination of the type and location of the exploration expenditure. Exploration expenditures within the footprint of operating mines are considered costs required to sustain current operations and so are included in sustaining costs. Exploration expenditures focused on new ore bodies near existing mines (i.e. brownfield), new exploration projects (i.e. greenfield) or for other generative exploration activity not linked to existing mining operations are classified as non-sustaining. Business development expenses are considered sustaining costs as they are required for general operations. | |
(8) | “Additions to property, plant and equipment – sustaining” represents the majority of capital expenditures at existing operations including capitalized exploration costs, periodic capitalized stripping and underground mine development costs, ongoing replacement of mine equipment and other capital facilities and other capital expenditures and is calculated as total additions to property, plant and equipment (as reported on the consolidated statements of cash flows), less capitalized interest and non-sustaining capital. Non-sustaining capital represents capital expenditures for major projects, including major capital stripping projects at existing operations that are expected to materially benefit the operation, as well as enhancement capital for significant infrastructure improvements at existing operations. Non-sustaining capital expenditures during the year ended December 31, 2019, primarily relate to major projects at Tasiast, Round Mountain, Bald Mountain, and Fort Knox. Non-sustaining capital expenditures during the year ended December 31, 2018, primarily related to major projects at Tasiast, Round Mountain, and Bald Mountain. | |
(9) | “Lease payments – sustaining” represents the majority of lease payments as reported on the consolidated statements of cash flows and is made up of the principal and financing components of such cash payments, less non-sustaining lease payments. Lease payments for development projects or closed mines are classified as non-sustaining. | |
(10) | “Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces sold from the Chirano mine. | |
(11) | “Average realized gold price per ounce” is a non-GAAP financial measure and is defined as gold metal sales divided by the total number of gold ounces sold. This measure is intended to enable Management to better understand the price realized in each reporting period. The realized price measure does not have any standardized definition under IFRS and should not be considered a substitute for measure of performance prepared in accordance with IFRS. |
p. 20 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Cautionary statement on forward-looking information
All statements, other than statements of historical fact, contained or incorporated by reference in this news release including, but not limited to, any information as to the future financial or operating performance of Kinross, constitute “forward-looking information” or “forward-looking statements” within the meaning of certain securities laws, including the provisions of the Securities Act (Ontario) and the provisions for “safe harbor” under the United States Private Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this news release. Forward-looking statements contained in this news release, include, but are not limited to, those under the headings (or headings that include) “2019 full year results and 2020 guidance”, “CEO Commentary”, “Tasiast Project Financing” and “2020 Outlook” as well as statements with respect to our guidance for production, production costs of sales, all-in sustaining cost and capital expenditures; the schedules and budgets for the Company’s development projects; mine life; and continuous improvement initiatives, as well as references to other possible events, the future price of gold and silver, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, estimates and the realization of such estimates (such as mineral or gold reserves and resources or mine life), success of exploration, development and mining, currency fluctuations, capital requirements, project studies, mine life extensions, government regulation permit applications and conversions, restarting suspended or disrupted operations; environmental risks and proceedings; and pending litigation. The words “anticipate”, “continue”, “estimates”, “expects”, “forecast”, “guidance”, “on budget”, “on schedule”, “outlook”, “progress”, or variations of or similar such words and phrases or statements that certain actions, events or results may, could, should or will be achieved, received or taken, or will occur or result and similar such expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The estimates, models and assumptions of Kinross referenced, contained or incorporated by reference in this news release, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein and in our Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2019, and the Annual Information Form dated March 29, 2019 as well as: (1) there being no significant disruptions affecting the operations of the Company, whether due to extreme weather events (including, without limitation, excessive or lack of rainfall, in particular, the potential for further production curtailments at Paracatu resulting from insufficient rainfall and the operational challenges at Fort Knox and Bald Mountain resulting from excessive rainfall, which can impact costs and/or production) and other or related natural disasters, labour disruptions (including but not limited to workforce reductions), supply disruptions, power disruptions, damage to equipment, pit wall slides (in particular that the effects of the pit wall slides at Fort Knox and Round Mountain are consistent with the Company’s expectations) or otherwise; (2) permitting, development, operations and production from the Company’s operations and development projects being consistent with Kinross’ current expectations including, without limitation: the maintenance of existing permits and approvals and the timely receipt of all permits and authorizations necessary for the operation of the Tasiast Phase One expansion, and the development and operation of the 24k Project; operation of the SAG mill at Tasiast; land acquisitions and permitting for the construction and operation of the new tailings facility, water and power supply and continued operation of the tailings reprocessing facility at Paracatu; and the parliamentary ratification of the Chirano mining permit in a manner consistent with the Company’s expectations; (3) political and legal developments in any jurisdiction in which the Company operates being consistent with its current expectations including, without limitation, the impact of any political tensions and uncertainty in the Russian Federation and Ukraine or any related sanctions and any other similar restrictions or penalties imposed, or actions taken, by any government, including but not limited to amendments to the mining laws, and potential power rationing and tailings facility regulations in Brazil, potential amendments to water laws and/or other water use restrictions and regulatory actions in Chile, new dam safety regulations, and potential amendments to minerals and mining laws and energy levies laws, and the enforcement of labour laws in Ghana, new regulations relating to work permits, potential amendments to customs and mining laws (including but not limited to amendments to the VAT) and the pending implementation of revisions to the tax code in Mauritania, and satisfactory resolution of the discussions with the Mauritanian government regarding the Company’s activities in Mauritania including those related to Tasiast Sud, VAT and fuel duty exonerations and the sharing of economic benefits from the operation, the European Union’s General Data Protection Regulation or similar legislation in other jurisdictions and potential amendments to and enforcement of tax laws in Russia (including, but not limited to, the interpretation, implementation, application and enforcement of any such laws and amendments thereto), and the impact of any trade tariffs being consistent with Kinross’ current expectations; (4) the completion of studies, including optimization studies, scoping studies and prefeasibility and feasibility studies, on the timelines currently expected and the results of those studies being consistent with Kinross’ current expectations, including the completion of the La Coipa feasibility study and the Lobo-Marte pre-feasibility study; (5) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately consistent with current levels; (6) certain price assumptions for gold and silver; (7) prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; (8) production and cost of sales forecasts for the Company meeting expectations; (9) the accuracy of the current mineral reserve and mineral resource estimates of the Company (including but not limited to ore tonnage and ore grade estimates), mine plans for the Company’s mining operations, and the Company’s internal models; (10) labour and materials costs increasing on a basis consistent with Kinross’ current expectations; (11) the terms and conditions of the legal and fiscal stability agreements for the Tasiast and Chirano operations being interpreted and applied in a manner consistent with their intent and Kinross’ expectations and without material amendment or formal dispute (including without limitation the application of tax, customs and duties exemptions and royalties); (12) goodwill and/or asset impairment potential; (13) the regulatory and legislative regime regarding mining, electricity production and transmission (including rules related to power tariffs) in Brazil being consistent with Kinross’ current expectations; (14) access to capital markets, including but not limited to maintaining our current credit ratings consistent with the Company’s current expectations; (15) that the Brazilian power plants will operate in a manner consistent with our current expectations; (16) that drawdown of funds under the Tasiast project financing will proceed in a manner consistent with our current expectations; (17) potential direct or indirect operational impacts resulting from infectious diseases or pandemics; and (18) litigation and regulatory proceedings and the potential ramifications thereof being concluded in a manner consistent with the Company’s expectations (including without limitation the ongoing litigation in Chile relating to the alleged damage of wetlands and the scope of any remediation plan or other environmental obligations arising therefrom, the ongoing litigation with the Russian tax authorities regarding dividend withholding tax and the ongoing Sunnyside litigation regarding potential CERCLA liability). Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: sanctions (any other similar restrictions or penalties) now or subsequently imposed, other actions taken, by, against, in respect of or otherwise impacting any jurisdiction in which the Company is domiciled or operates (including but not limited to the Russian Federation, Canada, the European Union and the United States), or any government or citizens of, persons or companies domiciled in, or the Company’s business, operations or other activities in, any such jurisdiction; fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as fuel and electricity); changes in the discount rates applied to calculate the present value of net future cash flows based on country-specific real weighted average cost of capital; changes in the market valuations of peer group gold producers and the Company, and the resulting impact on market price to net asset value multiples; changes in various market variables, such as interest rates, foreign exchange rates, gold or silver prices and lease rates, or global fuel prices, that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under any financial obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation (including but not limited to income tax, advance income tax, stamp tax, withholding tax, capital tax, tariffs, value-added or sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, production royalties, excise tax, customs/import or export taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with any related fine, penalty, surcharge, or interest imposed in connection with such taxes), controls, policies and regulations; the security of personnel and assets; political or economic developments in Canada, the United States,
p. 21 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5 |
Chile, Brazil, Russia, Mauritania, Ghana, or other countries in which Kinross does business or may carry on business; business opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical difficulties in connection with mining or development activities; employee relations; litigation or other claims against, or regulatory investigations and/or any enforcement actions, administrative orders or sanctions in respect of the Company (and/or its directors, officers, or employees) including, but not limited to, securities class action litigation in Canada and/or the United States, environmental litigation or regulatory proceedings or any investigations, enforcement actions and/or sanctions under any applicable anti-corruption, international sanctions and/or anti-money laundering laws and regulations in Canada, the United States or any other applicable jurisdiction; the speculative nature of gold exploration and development including, but not limited to, the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves; adverse changes in our credit ratings; and contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards associated with the business of gold exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance, or the inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can directly or indirectly affect, and could cause, Kinross’ actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Kinross, including but not limited to resulting in an impairment charge on goodwill and/or assets. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management’s expectations and plans relating to the future. All of the forward-looking statements made in this news release are qualified by this cautionary statement and those made in our other filings with the securities regulators of Canada and the United States including, but not limited to, the cautionary statements made in the “Risk Analysis” section of our MD&A for the year ended December 31, 2019 and the Annual Information Form dated March 29, 2019. These factors are not intended to represent a complete list of the factors that could affect Kinross. Kinross disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in this presentation, we mean Kinross Gold Corporation and/or one or more or all of its subsidiaries, as may be applicable.
The technical information about the Company’s mineral properties contained in this presentation has been prepared under the supervision of Mr. John Sims, an officer of the Company who is a “qualified person” within the meaning of National Instrument 43-101.
Source: Kinross Gold Corporation
p. 22 Kinross reports 2019 fourth-quarter and full-year results | www.kinross.com |
Exhibit 99.2
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5
For more information, please see Kinross’
2019 year-end and results news release at www.kinross.com |
NEWS RELEASE
Kinross provides update on development projects and full-year 2019 exploration results
Company adds 7.7 million gold ounces to estimated measured and indicated resources
Mineral reserve addition of 828 koz. at Paracatu; Kupol and Chirano extend mine life by one year
Company to proceed with La Coipa Restart project in Chile
Toronto, Ontario – February 12, 2020 – Kinross Gold Corporation (TSX:K; NYSE: KGC) today provided updates on its development projects, exploration program and its estimated mineral reserves and resources.
(This news release contains forward-looking information about expected financial and operating performance of the Company. All mineral reserves and mineral resources, as well as mine life disclosures, are estimates. All dollar amounts are expressed in U.S. dollars, unless otherwise noted)
Development projects:
· | Tasiast 24k: Proceeding on schedule and on budget to increase throughput to 21,000 t/d by year-end 2021 and 24,000 t/d by mid-2023. |
· | Chulbatkan: Completed acquisition of a high-quality and prospective project, and commenced a substantial exploration drilling program with the goal of adding to the current 3.9 million Au oz. indicated resource base by year-end. |
· | La Coipa Restart: Proceeding with the project that is expected to generate an internal rate of return1 (IRR) of 28% and net present value1, 2 (NPV) of $118 million based on a $1,200/oz. gold price and $17/oz. silver price. |
· | Fort Knox Gilmore: Proceeding on schedule and on budget, with stacking on the new heap leach pad expected to commence in Q4 2020. |
Exploration and Mineral Reserves and Resources3 update:
· | Company added 7.7 million ounces to measured and indicated mineral resources in 2019, a 28% year-over-year increase, mainly due to the acquisition of Chulbatkan, and additions of 1.2 million Au oz. at Lobo-Marte, 1.1 million Au oz. at Paracatu, 568 Au koz. at Bald Mountain and 553 Au koz. at Round Mountain. |
· | Paracatu added 828 Au koz. to mineral reserve estimates, more than offsetting depletion in 2019. |
· | Mineral reserve additions at Chirano, which more than offset depletion, and at Kupol, extended mine life by one year to 2022 and 2024, respectively. |
· | In 2020, Kinross is prioritizing exploration drilling at several operations, including Kupol, Chulbatkan and Chirano, as the Company continues to focus on opportunities for mineral resource and reserve additions. |
CEO commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to Kinross’ development projects:
“We achieved key project and exploration milestones in 2019 to strengthen our portfolio and future production profile. Significant additions to mineral reserve and resource estimates at Paracatu improved the mine’s long-term production outlook and offset depletion, while the mineral reserve additions from our exploration programs at Kupol and Chirano extended mine life at both operations by one year. The Tasiast 24k project is proceeding on plan, while at the same time, the mine continues to achieve record operational results due to the Phase One expansion. The Fort Knox Gilmore project is on schedule to start stacking on the new heap leach pad in Q4 2020.
“We are excited about our newly acquired high-quality Chulbatkan project, which we expect to be a substantial open pit, heap leach mine. The project has a strong base case and good upside potential, and we have a substantial drilling program planned for 2020 with the goal of adding to its resource estimates by year-end. We are also proceeding with the La Coipa Restart project, which has strong economics, adds to our production profile, and provides the option to continue studying opportunities in the area.”
1 After tax and incremental to estimated reclamation costs, of which the majority will be deferred to the end of the project. Corporate income tax expense is not expected to be payable at $1,200/oz. gold price in Chile as a result of the use of existing tax losses and the Company expects to recover approximately $20 million existing VAT credits through the project’s life.
2 Based on a 5% discount rate.
3 See also Kinross’ Annual Mineral Reserve and Mineral Resource Statement, estimated as at December 31, 2019, and explanatory notes starting at page 16.
www.kinross.com
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5
|
Development projects
Tasiast 24k project
The 24k project continues to advance well and remains on budget and on schedule to increase throughput capacity to 21,000 t/d by the end of 2021 and then to 24,000 t/d by mid-2023.
Stripping continues on plan, detailed engineering is largely complete, and procurement and contracting activities are well underway. The construction team has mobilized to site and initial debottlenecking work in the processing plant has commenced, along with construction activities related to the installation of a power plant.
The Company signed the $300 million project financing for Tasiast with the IFC (a member of the World Bank Group), Export Development Canada, and two commercial banks on December 16, 2019. The first funding draw from the loan, which is non-recourse to Kinross, is expected later in Q1 2020.
Chulbatkan
On January 16, 2020, the Company completed the acquisition of the high-quality Chulbatkan project in Russia. Chulbatkan has upside potential and is expected to be a substantial, open pit gold mine with low costs. The project currently has a large, near-surface, relatively high grade estimated mineral resource. The deposit is heap leachable and has potential for additional high-grade structures. Mineralization is open along strike and at depth, and is highly continuous.
The Company’s initial mineral resource estimate does not include results from the confirmatory drilling program, which includes one hole that has encountered a potential high-grade structure within the existing mineral resource. Infill drilling and studies are planned this year to update the high-grade portion of the known resource with the goal of defining and further extending the resource base at year-end 2020.
Kinross has also commenced a $10 million exploration drilling program within the under-explored, highly prospective 120 sq. km license area, which has numerous untested potential targets and several structural environments analogous to the Chulbatkan deposit. Multiple downstream placer gold occurrences also indicate additional hard rock source mineralization may be found within the license area. As well, numerous surface rock samples with grades greater than 1 g/t have been collected outside of the defined resource area.
Company to proceed with La Coipa Restart project
The Company is proceeding with the La Coipa Restart project in Chile based on a feasibility study (FS) that contemplates leveraging existing infrastructure to mine the Phase 7 deposit.
The open pit project is expected to produce a total of approximately 690 Au eq. koz. from 2022 to 2024 at a cost of sales of $575 per Au eq. oz. Initial capital costs are expected to be approximately $225 million, with pre-stripping scheduled to begin in late 2020. Approximately $45 million of the initial capital costs are expected to be spent in 2020, with the remainder spent in 2021.
Production is expected to start in Q1 2022, strengthening Kinross’ portfolio and production profile and allowing the Company to maintain optionality to continue studying potential upside opportunities in the area.
La Coipa project feasibility study highlights4 | |
Life of mine production (thousand Au eq. oz.) | 690 |
Life of mine ore processed (million tonnes) | 10.9 |
Average grade processed (Au eq. g/t) | 2.9 |
Strip ratio (2020 - 2024) | 5.0 |
Strip ratio (2022 - 2024) | 2.8 |
Average production cost of sales (per Au eq. oz.) | $575 |
Average all-in sustaining costs5 (per Au eq. oz.) | $670 |
Average recovery rate Au | 75% |
Average recovery rate Ag | 60% |
Average processing cost (per tonne) | $21.10 |
Average mining cost (per tonne mined) (2022 - 2024) | $2.66* |
Life of mine average G&A costs (per tonne processed) | $6.47 |
Initial capital costs (million) (2020 - 2021) | $225 |
Sustaining capital (million) (2022 - 2024) | $25** |
4 Based on a $1,200 per ounce gold price and $17 per ounce silver price assumptions and $65/bbl oil price assumption and 725 Chilean peso to the U.S. dollar.
5 Throughout this news release, forecast site-level all-in sustaining cost excludes corporate overhead costs. This is a non-GAAP measure and is not defined under IFRS. Refer to “Reconciliation of non-GAAP financial measures” section in the Company’s MD&A as at December 31, 2019 and for the year then ended.
*excludes 2020 - 2021 pre-stripping costs which are included in initial capital costs
**excludes sustaining capitalized stripping
p. 2 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5
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The project is expected to generate an IRR1 of 28% and NPV1, 2 of $118 million based on a $1,200/oz. gold price and $17/oz. silver price, and an IRR1 of 42% and NPV1, 2 of $194 million based on a $1,500/oz. gold price and $17.50/oz. silver price.
La Coipa gold and silver price sensitivity estimates
| ||||
$1,200/oz. Au $17/oz. Ag |
$1,400/oz. Au $18/oz. Ag |
$1,600/oz. Au $19/oz. Ag |
$1,800/oz. Au $20/oz. Ag
| |
IRR1 | 28% | 39% | 50% | 59% |
NPV1, 2 | $118 million | $177 million | $233 million | $290 million |
The project plan includes refurbishing the existing process plant, camp and other infrastructure, as well as the mine fleet from the Maricunga operation that has recently been placed on care and maintenance. All major permits required to proceed with La Coipa Phase 7 are in place.
La Coipa initial capital costs (2020 – 2021) | ($ millions) |
Direct plant refurbishments | 60 |
Mining fleet and infrastructure | 20 |
EPCM, indirects, operational readiness, and other | 50 |
Contingency | 40 |
Pre-stripping | 55 |
Total | 225 |
The Puren6 deposit, which was included as part of the initial pre-feasibility study, was not incorporated into the project FS as a joint venture agreement has not been finalized. The Company will continue to explore opportunities to incorporate adjacent deposits with existing mineral reserves and resources, particularly Puren, Coipa Norte and Can Can, into the La Coipa mine plan with the goal of extending mine life. This includes conducting further technical studies, assessing permitting requirements, and continuing commercial discussions.
See Appendix A (Figure 1) for La Coipa cross section.
6 Kinross has a 65% interest in Puren.
p. 3 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5
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La Coipa Mineral Reserve and Resource estimates3 – Gold | |||
Tonnage (Mt) |
Grade (Au g/t) |
Ounces (Au koz.) | |
Proven and Probable Reserves | |||
Phase 7 | 10.9 | 1.5 | 539 |
Puren | 3.9 | 1.8 | 229 |
Total |
14.8 |
1.6 |
768* |
Measured and Indicated Resources | |||
Phase 7 | 2.4 | 1.6 | 124 |
Catalina | 3.6 | 2.9 | 328 |
Coipa Norte | 5.2 | 1.3 | 211 |
Can Can | 2.2 | 2.1 | 142 |
Puren | 1.6 | 1.4 | 73 |
Other | 1.1 | 2.1 | 77 |
Total |
16.0 |
1.9 |
955* |
Inferred Resources | 2.1 | 1.5 | 101 |
*Totals may not fully add up due to rounding.
La Coipa Mineral Reserve and Resource estimates3 – Silver | |||
Tonnage (Mt) |
Grade (Ag g/t) |
Ounces (Ag koz.) | |
Proven and Probable Reserves | |||
Phase 7 | 10.9 | 96.3 | 33,748 |
Puren | 3.9 | 31.1 | 3,857 |
Total |
14.8 |
79.2 |
37,605* |
Measured and Indicated Resources | |||
Phase 7 | 2.4 | 64.7 | 4,945 |
Catalina | 3.6 | 68.7 | 7,885 |
Coipa Norte | 5.2 | 33.5 | 5,586 |
Can Can | 2.2 | 39.3 | 2,721 |
Puren | 1.6 | 96.7 | 4,904 |
Other | 1.1 | 26.3 | 960 |
Total |
16.0 |
52.5 |
27,002* |
Inferred Resources | 2.1 | 43.1 | 2,890 |
*Totals may not fully add up due to rounding.
The pre-feasibility study (PFS) at Lobo-Marte is proceeding as planned and is scheduled to be completed mid-year. The PFS is based on the concept of commencing Lobo-Marte production after the conclusion of mining at Phase 7 and other potential opportunities at adjacent La Coipa deposits.
Fort Knox Gilmore
The Fort Knox Gilmore project continues to progress on schedule and on budget, with initial Gilmore ore encountered in Q4 2019 and stacked on the existing Walter Creek heap leach pad. Stripping advanced as planned during the quarter and is expected to continue throughout 2020. Completion of the new Barnes Creek heap leach pad, where 95% of Gilmore ore is expected to be stacked, and related pumping and piping infrastructure, remains on target for completion in Q4 2020. Procurement for all planned 2020 activities is largely complete and the project is ready to recommence construction activities in the spring.
p. 4 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5
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Paracatu asset optimization program
The Paracatu asset optimization program that commenced in 2018 was completed in late 2019 with the successful implementation of a comprehensive grade control program. The results of the program include better characterization of the orebody, an improved ability to predict and react to ore variability, and improvements in throughput and recovery. In addition, as a result of a focus on continuous improvement programs, the site is benefiting from improved mining and processing costs and increased overall productivity. Lastly, site water management activities, the addition of renewable power sources with the acquisition of two hydroelectric power plants in 2018, and the continued successful tailings reprocessing project, have further contributed to improved site performance. A newly updated resource model has resulted in the addition of approximately 828 Au koz. to estimated mineral reserves, more than offsetting 2019 depletion of 705 Au koz. Measured and indicated resources also increased by approximately 1.1 million Au oz., or 35%, compared with 2018.
The Company intends to file a new Paracatu Technical Report in March 2020 that incorporates the above mentioned new information.
Paracatu Mineral Reserve and Mineral Resource estimates3 | ||||
2018 (Au koz) |
Depletion (Au koz) |
Engineering (Au koz) |
2019* (Au koz) | |
Proven and Probable Reserves | 7,938 | (705) | 828 | 8,060 |
Measured and Indicated Resources | 3,013 | 0 | 1,061 | 4,073 |
Inferred Resources | 350 | 0 | 18 | 368 |
* Totals may not fully add up due to rounding
2019 Mineral Reserves and Mineral Resources update
(See also the Company’s detailed Annual Mineral Reserve and Mineral Resource Statement estimated as at December 31, 2019 and explanatory notes starting at page 19.)
In preparing the Company’s 2019 year-end mineral reserve and mineral resource estimates as of December 31, 2019, Kinross has maintained its conservative gold price assumptions of $1,200 per ounce for mineral reserves and $1,400 per ounce for mineral resources. Kinross continued to focus on estimated higher margin, lower cost ounces, and maintained its fully-loaded costing methodology.
Proven and Probable Mineral Reserves3
Kinross’ total proven and probable gold reserve estimate was 24.3 million Au oz. at year-end 2019 compared with 25.5 million Au oz. at year-end 2018. The net year-over-year decrease was mainly due to depletion and was largely offset by additions at Paracatu, Kupol and Chirano.
At Paracatu, approximately 828 Au koz. was added to estimated mineral reserves and more than offset depletion of 705 Au koz. The reserve addition was primarily as a result of an enhanced understanding of the orebody and engineering changes to the mine plan, as drilling data from the past two years was incorporated into the resource model.
p. 5 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5
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The 327 Au koz. mineral reserve addition at Kupol largely offset depletion of 344 Au koz. and added one year of mine life to 2024. At Chirano, the 320 Au koz. mineral reserve addition from exploration more than offset depletion of 207 Au koz. and added one year of mine life to 2022.
Measured and Indicated Mineral Resources3
Kinross’ total estimated measured and indicated mineral resources at year-end 2019 increased by 7.7 million Au oz., or 28%, to 35.5 million Au oz. compared with 27.8 million Au oz. at year-end 2018. The increase was mainly due to the acquisition of the high-quality Chulbatkan deposit in Russia, which added 3.9 million Au oz. in estimated indicated resources. Exploration and engineering changes also added to estimated measured and indicated mineral resources and include net additions of:
· | 1.2 million Au oz. at Lobo-Marte |
· | 1.1 million Au oz. at Paracatu |
· | 568 Au koz. at Bald Mountain |
· | 553 Au koz. at Round Mountain |
Inferred Mineral Resources3
Kinross’ total estimated inferred gold resources at year-end 2019 were approximately 5.9 million Au oz., compared with 6.5 million ounces at year-end 2018. The net decrease was primarily a result of a conversion of estimated inferred ounces to indicated resources at Round Mountain, partially offset by exploration additions at Chirano and gains at Lobo-Marte due to engineering changes.
Kinross Gold Mineral Reserve and Mineral Resource estimates3 | ||||||
2018 (Au koz) |
Acquisitions (Au koz) |
Depletion (Au koz) |
Exploration (Au koz) |
Engineering (Au koz) |
2019* (Au koz) | |
Proven and Probable Reserves | 25,521 | 0 | (2,511) | 658 | 661 | 24,327 |
Measured and Indicated Resources | 27,781 | 3,908 | (152) | 2,709 | 1,265 | 35,508 |
Inferred Resources | 6,540 | 79 | (67) | (488) | (199) | 5,866 |
*Totals may not fully add up due to rounding.
Exploration update
The Company’s exploration efforts continued to focus within the footprint of existing mines during 2019. A total of more than 280,000 metres of drilling was completed, of which more than 50% was drilled in Russia. Exploration success in 2019 has resulted in one-year mine life extensions at Kupol to 2024 and Chirano to 2022.
Exploration efforts added approximately 658 Au koz. in estimated mineral reserves, before depletion, in 2019, and 2,709 Au koz. in measured and indicated mineral resources. Most of the mineral reserve additions were at Kupol and Chirano, while the mineral resource additions were at Bald Mountain, Fort Knox, Round Mountain, Kettle River, Chirano and Kupol. 2019 exploration highlights include:
· | Kupol-Dvoinoye: A total of 327 Au koz. was added to estimated mineral reserves to largely offset depletion and 122 Au koz. from exploration was added to estimated measured and indicated resources at Kupol, as drilling that tested the depth and north extensions of the Kupol main vein system yielded strong results. Drill intercepts continue to confirm high-grade narrow-vein mineralization extending northwards and at depths below the Kupol mine workings. As a result of continued exploration success at Kupol and engineering optimization work at Dvoinoye, scheduled mill production at Kupol has been extended by another one year to 2024. During 2019, extensive regional exploration work within the large land package around Kupol and Dvoinoye identified targets for drill testing for 2020. |
p. 6 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5
|
· | Chirano: Drilling continued to confirm the depth extensions at Akwaaba, Paboase and Tano. The high-grade portions of Obra beneath the mined out pit was extended, allowing for testing for underground mineability. Engineering studies at Suraw identified portions of the orebody for potential underground mining. During 2019, a total of 320 Au koz. was added to estimated mineral reserves, 159 Au koz. to measured and indicated resources and 118 Au koz. to inferred resources. The additions to mineral reserves increased mine life to 2022 and the Company continues to focus on upgrading mineral resources to mineral reserves to further extend mine life. |
· | Bald Mountain: A total of 568 Au koz. was added to measured and indicated resources, primarily from the Top, Winrock and Redbird drilling programs. During 2019, a number of targets were tested of which three produced solid intercepts, including structurally controlled mineralization with intercepts up to 30.5 metres @ 1.18 g/t Au at 256 metres depth at the ZZ Top target. |
For 2020, the brownfields exploration program will follow up on the mineralized targets identified in 2019 with infill drilling and geologic modelling, with the goal of converting the mineralization to estimated measured, indicated and inferred mineral resources.
· | Kupol-Dvoinoye: Kinross expects to spend up to $22 million in 2020, with a focus on upgrading mineral resources to reserves and exploring targets within the “Kupol Synergy Zone of Influence.” The Kupol Synergy Zone of Influence project (KSP) is targeting exploration in an area that covers a radius of approximately 130 km around the Kupol plant that would potentially be economic to mine given the close proximity to the existing mill. These targets are expected to be tested to delineate mineralized geometry and to better understand mineralization. |
· | Chirano: The Company is increasing exploration spending at Chirano to $10 million in 2020, compared with $8 million in 2019, to drill depth extensions at Akwaaba, Suraw and Tano. The program also includes the continued exploration of the high-grade extensions at the Obra pit, with the goal of establishing underground mining. The north extensions of Mamnao are being explored with the goal of extending the open pit mine life, which was re-started in 2019. |
· | Bald Mountain: Kinross expects to spend $7 million at Bald Mountain in 2020. The focus at Bald is shifting from the near-mine infill drilling program to drill testing the generative targets that were identified in 2019. The aim is to explore for both intrusive-related and sediment-hosted type deposits that can deliver near-surface higher grade and/or large tonnage mineral resources similar to the size and grade of the Top or Vantage deposits. |
· | Round Mountain: A large portion of the $6 million exploration budget allocated for Round Mountain in 2020 will focus on drilling the Phase X deposit, targeting high grade mineralization along the northwest trend. The trend is interpreted as a continuation of Phase W mineralization. Exploration will also continue in the South Caldera Rim area for low-grade bulk tonnage volcanic hosted mineralization. |
· | Fort Knox: Kinross will continue to explore the western extension of Gilmore in 2020 with the aim of adding to estimated mineral resources. The East Wall, and brownfield targets around the Fort Knox site, including Gil-Sourdough and the Fairbanks district targets, will also be explored and tested in 2020. |
A more detailed summary of the 2019 highlights is presented below. Additional details may be found in the Appendices.
“Appendix A” provides illustrations and captions, and “Appendix B” provides drilling results and drill hole location data corresponding to the values below.
p. 7 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street, 17th Floor Toronto, ON Canada M5J 2V5
|
Appendix A: https://www.kinross.com/files/doc_downloads/2020/02/Appendix-A-Q4-YE-Exploration-Figures.pdf
Appendix B: https://www.kinross.com/files/doc_downloads/2020/02/Appendix-B-Q4-YE-Exploration-Drill-Results.xlsx
Kupol - Dvoinoye
Exploration during 2019 at Kupol successfully added 327 Au koz. and 4.1 Ag Moz. to estimated mineral reserves to largely offset depletion, and 122 Au koz. and 1.5 Ag Moz. to measured and indicated mineral resources. The reserve additions were mainly from the NE Extension and North Extension where higher grades and wider thickness were encountered following sublevel development. With the additional mineral reserves, Kupol has replaced a full year of depletion thereby extending the mine life one year to 2024. See Appendix A (Figure 2) for a long section of Kupol.
A total of approximately 90,100 metres was drilled at Kupol, of which approximately 50% was to test the NE Extension, Big Bend deeps and hanging wall mineralization. The drilling at the Southeast Extensions also increased mineral resources. Drilling at the Kupol Deeps and hanging wall identified additional inferred mineral resources that will be drilled in 2020 with the goal of converting to estimated measured and indicated mineral resources or reserves. Drilling at Moroshka added to mineral reserves from the north and bottom south of the deposit. Sublevel development also encountered higher than expected grades from grade control drill holes.
During the early part of 2019, work in the Kupol East Wedge area was discontinued due to lower grade results. Further work at Star North indicates a promising target, and will be explored further in 2020.
Kupol Regional Exploration
One of the main exploration objectives within the Kupol main vein deposit is to extend mine life to potentially bridge the gap in production between Kupol and the Chulbatkan project. The exploration group embarked on an extensive regional exploration program called the KSP, which is targeting the 130 km radius around the Kupol mill. Grassroots exploration has commenced in some of the identified target areas within the KSP and is planned to continue through 2020 to identify key areas that will be drilled.
Kupol Mining Licence and Kupol West Property significant down-hole drill intercepts
Hole ID | From | To |
Interval (m) |
Au (g/t) |
Ag (g/t) |
KP19-1572 | 503.9 | 506.5 | 2.6 | 37.9 | 305.7 |
KW19-503 | 349.4 | 359.4 | 10.0 | 7.0 | 45.9 |
KW19-491 | 461.2 | 465.2 | 4.0 | 5.5 | 72.3 |
KW19-519 | 247.6 | 250.7 | 3.1 | 6.6 | 81.8 |
KP19-1560 | 373.3 | 375.4 | 2.1 | 7.5 | 47.2 |
KW19-519 | 195.4 | 198.0 | 2.6 | 5.3 | 96.2 |
KP19-1598 | 29.1 | 37.3 | 8.2 | 1.5 | 56.1 |
Dvoinoye
At Dvoinoye, a total of approximately 72,000 metres of drilling was completed during 2019. Most of the drilling was carried out at Zone 37 West, Mine Dacite and the Pauk-September South trend. Results from the Mine Dacite area and the Pauk-September trend were encouraging, and further drilling is expected to continue in 2020.
p. 8 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Dvoinoye significant down-hole drill intercepts
Hole ID | From | To |
Interval (m) |
True Width (m) |
Au (g/t) |
Ag (g/t)
| ||
VO19-024 | 315.1 | 318.9 | 3.8 | 2.0 | 22.7 | 309.6 | ||
SP19-010 | 37.2 | 37.5 | 0.3 | 0.3 | 119.5 | 1611.6 | ||
VO19-037 | 340.4 | 342.6 | 2.2 | 1.0 | 29.4 | 64.0 | ||
PK19-015 | 271.9 | 287.5 | 15.6 | 15.6 | 1.5 | 1.1 | ||
VO19-026 | 355.0 | 364.0 | 9.0 | 4.5 | 4.2 | 20.6 | ||
VO19-028 | 350.2 | 352.8 | 2.6 | 1.3 | 14.4 | 47.4 | ||
VO19-022 | 343.4 | 350.6 | 7.2 | 3.5 | 4.9 | 7.9 | ||
VO19-056 | 306.4 | 307.3 | 0.9 | 0.9 | 17.7 | 15.3 | ||
VO19-034 | 327.9 | 331.5 | 3.6 | 1.5 | 7.9 | 48.6 | ||
VO19-034 | 357.9 | 358.5 | 0.6 | 0.3 | 33.1 | 36.7 | ||
Kinross is expected to spend approximately $22 million in Russia exploration in 2020. For full drill results and explanatory notes, see Appendix B.
Kupol Mineral Reserve and Mineral Resource estimates3 – Gold | ||||
2018 (Au koz) |
Depletion (Au koz) |
Exploration & Engineering (Au koz) |
2019* (Au koz) | |
Proven and Probable Reserves | 1,370 | (344) | 327 | 1,353 |
Measured and Indicated Resources | 354 | (9) | 151 | 496 |
Inferred Resources | 458 | (3) | 34 | 489 |
*Totals may not fully add up due to rounding.
Kupol Mineral Reserve and Mineral Resource estimates3 – Silver | ||||
2018 (Ag koz) |
Depletion (Ag koz) |
Exploration & Engineering (Ag koz) |
2019* (Ag koz) | |
Proven and Probable Reserves | 15,102 | (3,353) | 4,089 | 15,838 |
Measured and Indicated Resources | 4,923 | (108) | 1,845 | 6,661 |
Inferred Resources | 5,770 | (53) | 898 | 6,615 |
*Totals may not fully add up due to rounding.
p. 9 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Chirano
In 2019, exploration activities continued to demonstrate the strong potential of the known lode horizon and other promising west splay structures, and enhanced the prospectivity of the under-explored Bibiani style of mineralization to the north and east. The additions to mineral reserves at Chirano in 2019 increased mine life to 2022.
Approximately 34,000 metres were drilled at Paboase, Akwaaba, Tano, Obra and Mamnao North in 2019. A total of 320 Au koz. were added to mineral reserves, with a large portion of the addition obtained from Akwaaba. The other areas that added to mineral reserves were Paboase, Akoti, Suraw and Tano. See Appendix A for long section of Chirano (Figure 3), and illustrations of Akwaaba and Obra pits (Figures 4 and 5).
In addition, 159 Au koz. were added to measured and indicated resources and 118 Au koz. to inferred resources. These ounces were added mostly from Obra, where drilling under the mined-out pit in 2019 returned high grade zones with good widths. The Company will continue to explore this area in 2020, both along strike and down dip.
Chirano Mineral Reserve and Mineral Resource estimates3 | ||||
2018 (Au koz) |
Depletion (Au koz) |
Exploration & Engineering (Au koz) |
2019* (Au koz) | |
Proven and Probable Reserves | 415 | (207) | 320 | 528 |
Measured and Indicated Resources | 765 | 0 | 159 | 924 |
Inferred Resources | 325 | 0 | 118 | 443 |
* Totals may not fully add up due to rounding
Drilling continued at Mamnao North on the main mineralized lode trending north and to the west of the main lode. A moderate width higher-grade western splay shoot intersected one of the holes returning 24.8 metres @ 1.63 g/t Au, (True width), including 13.9 metres @ 2.15g/t Au. This structure bends westward and coincides with local networks of shears, which dilates and pinches. Due to these results, drill testing over a strike length of 250 metres is planned for 2020. For full drill results and explanatory notes, see Appendix B.
The 2020 exploration budget at Chirano was increased to $10.0 million to explore the potential to further extend mine life.
Chirano significant down-hole drill intercepts
Hole ID | From | To |
Interval (m) |
True Width (m) |
Au (g/t) |
CHDD2712UG | 198.0 | 231.7 | 33.7 | 25.4 | 3.5 |
including | 198 | 206 | 8.0 | 6.0 | 5.7 |
CHDD2713UG | 221 | 237.95 | 16.95 | 11.8 | 7.1 |
CHDD2793UG | 278.9 | 312.3 | 33.4 | 23.0 | 3.5 |
including | 295.8 | 306.15 | 10.35 | 7.12 | 6.8 |
CHRC2751D | 598.0 | 648.7 | 50.7 | 36.0 | 5.4 |
including | 631.0 | 642.4 | 11.4 | 8.1 | 8.8 |
CHRC2759D | 543.4 | 602.9 | 59.5 | 51.5 | 1.6 |
including | 598.5 | 602.85 | 4.4 | 3.8 | 4.3 |
CHRC2773D | 491.0 | 539.0 | 48.0 | 45.0 | 1.8 |
CHDD2705UG | 208.7 | 235.4 | 26.7 | 18.3 | 4.7 |
including | 222.0 | 234.3 | 12.3 | 8.4 | 9.1 |
CHDD2724UG | 197.0 | 217.0 | 20.0 | 15.5 | 6.6 |
including | 198.0 | 208.5 | 10.5 | 8.1 | 9.1 |
p. 10 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Bald Mountain
Exploration at Bald Mountain focused on two primary initiatives in 2019: generative exploration work and near-mine resource additions. A total of approximately 50,000 metres was drilled in 2019. Near-mine exploration target areas included the Redbird, Top, Winrock, Duke, Galaxy and Gator resource areas through which a total of 568 Au koz. was added to estimated mineral resources. See Appendix A for map of Bald Mountain (Figure 6).
During 2019 there was an increased focus on generative exploration for which a total of 13 target areas were tested and significant field work was completed on 11 additional pipeline targets. Three of the drill target areas produced encouraging intercepts. The ZZ Top target continued to define structural controlled mineralization with intercepts up to 30.5 metres @ 1.18 g/t Au at 256 metres depth. This target is deep and mineralization is constrained to a small structural volume. A target north of the Galaxy resource provided the most encouraging results, with mineralization up to 59.4 metres @ 1.08 g/t Au and 13.7 metres @ 1.17 g/t Au along an open trend. This is a northeast steep structure controlling mineralized dike and breccia. For full drill results and explanatory notes, see Appendix B.
Bald Mountain significant down-hole drill intercepts
Hole ID | From | To |
Interval (m) |
Au (g/t) |
WRD19-018 | 157.6 | 167.2 | 9.7 | 15.8 |
WP19-026 | 102.1 | 161.5 | 59.4 | 1.1 |
WR19-013 | 150.9 | 163.1 | 12.2 | 2.6 |
WR19-014 | 149.4 | 160.0 | 10.7 | 3.4 |
WR19-014 | 164.6 | 184.4 | 19.8 | 1.8 |
RBD19-018 | 100.3 | 121.6 | 21.3 | 2.3 |
RBD19-017 | 114.0 | 153.6 | 39.6 | 0.7 |
ZZ19-006 | 117.3 | 143.3 | 25.9 | 0.9 |
Including | 121.9 | 123.4 | 1.5 | 3.0 |
Including | 131.1 | 135.6 | 4.6 | 1.6 |
Bald Mountain Mineral Reserve and Mineral Resource estimates3 | ||||
2018 (Au koz) |
Depletion (Au koz) |
Exploration & Engineering (Au koz) |
2019* (Au koz) | |
Proven and Probable Reserves | 1,347 | (173) | 102 | 1,277 |
Measured and Indicated Resources | 3,294 | 0 | 568 | 3,862 |
Inferred Resources | 845 | 0 | (37) | 808 |
*Totals may not fully add up due to rounding.
p. 11 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Fort Knox
Exploration continued to focus on mineralization extensions of the Fort Knox ore body. A total of 7,300 metres of drilling was completed during 2019, mainly focusing on the western crest of the pit. The results were encouraging and resulted in the addition of 229 Au koz. in measured and indicated resources. During 2019, a ground gravity survey was completed from Fort Knox to Gil-Sourdough to understand the geological settings of the area for future exploration work. Kinross plans to continue to conduct exploration and resource conversion drilling at Fort Knox, Gil-Sourdough, and the Fairbanks District in 2020. For full drill results and explanatory notes, see Appendix B.
Fort Knox significant down-hole drill intercepts
Hole ID | From | To |
Interval (m) |
Au (g/t) | ||
FFC19-1792 | 264.1 | 281.9 | 17.8 | 2.2 | ||
FFC19-1786 | 291.1 | 297.2 | 6.1 | 5.6 | ||
FFC19-1787 | 399.3 | 403.9 | 4.6 | 6.3 | ||
FFC19-1785 | 268.2 | 269.7 | 1.5 | 11.5 | ||
FFC19-1786 | 304.8 | 312.4 | 7.6 | 2.0 | ||
FFC19-1788 | 411.5 | 420.6 | 9.1 | 1.4 | ||
FFC19-1789 | 149.4 | 152.4 | 3 | 4.1 | ||
FFC19-1789 | 242.3 | 246.9 | 4.6 | 2.7 | ||
Fort Knox Mineral Reserve and Mineral Resource estimates3 | ||||
2018 (Au koz) |
Depletion (Au koz) |
Exploration & Engineering (Au koz) |
2019* (Au koz) | |
Proven and Probable Reserves | 3,036 | (258) | 23 | 2,801 |
Measured and Indicated Resources | 1,797 | 0 | 229 | 2,026 |
Inferred Resources | 808 | (46) | 11 | 774 |
*Totals may not fully add up due to rounding.
Curlew Basin Project (Kettle River)
During 2018, drilling at the Curlew Basin Project was re-focused to targets within and around the Curlew district and Kettle area due to increased mine rehabilitation requirements in the Curlew Basin. The 2019 program, therefore, focused on the Curlew district and generative targets. A total of 7,800 metres of drilling was completed during 2019 and the holes within Curlew generally had gold grades above 3 g/t Au in significant veining or brecciation. The Company is investigating underground drilling to further explore the targets to capture and model the high-grade vein sets in the deposit. In 2019, 162 Au koz. was added to estimated measured and indicated resources. For full drill results and explanatory notes, see Appendix B.
Curlew Basin Project significant down-hole drill intercepts
Hole ID | From | To |
Interval (m) |
True Width (m) |
Au (g/t) | |
1036 | 561.4 | 566.3 | 4.9 | 4.6 | 4.5 | |
1042 | 9.4 | 11.6 | 2.1 | 2.0 | 4.4 | |
1042 | 101.8 | 103.8 | 2.0 | 1.6 | 8.3 | |
including | 101.8 | 102.5 | 0.7 | 0.6 | 10.3 | |
1046 | 163.4 | 167.1 | 3.7 | 2.6 | 10.8 | |
including | 165.5 | 166.0 | 0.5 | 0.4 | 27.4 | |
RP1902 | 233.4 | 238.6 | 5.2 | 4.4 | 17.5 | |
including | 236.1 | 238.0 | 1.9 | 1.6 | 43.4 | |
RP1902 | 248.3 | 250.7 | 2.3 | 1.5 | 9.9 | |
including | 249.4 | 250.7 | 1.3 | 0.8 | 26.7 | |
p. 12 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Kettle River Mineral Reserve and Mineral Resource estimates3 | ||||
2018 (Au koz) |
Depletion (Au koz) |
Exploration & Engineering (Au koz) |
2019* (Au koz) | |
Proven and Probable Reserves | 0 | 0 | 0 | 0 |
Measured and Indicated Resources | 0 | 0 | 162 | 162 |
Inferred Resources | 0 | 0 | 86 | 85 |
*Totals may not fully add up due to rounding.
Round Mountain
Round Mountain completed a total of 14,000 metres of drilling at Phase S (south pit layback), Phase X (northwest continuation of Phase W mineralization) and within the South Caldera Rim. The conversion of 565 Au koz. of inferred mineral resources to measured and indicated resources was the result of the 2019 drilling program at Phase S, in the southeast part of the Round Mountain pit. Exploration is expected to continue to explore the extensions in Phase X in 2020 and for a Round Mountain-type mineralization within the South Caldera Rim. For full drill results and explanatory notes, see Appendix B.
Round Mountain significant down-hole drill intercepts
Hole ID | From | To |
Interval (m) |
Au (g/t) | ||
D-1045 | 207.3 | 208.8 | 1.5 | 245.0 | ||
D-1029 | 175.3 | 219.5 | 44.2 | 8.4 | ||
EH-11030 | 157.0 | 221.0 | 64.0 | 2.1 | ||
EH-11031 | 153.9 | 208.8 | 54.9 | 2.4 | ||
EH-11030 | 175.3 | 193.5 | 18.3 | 4.5 | ||
D-1046 | 679.7 | 731.5 | 51.8 | 1.4 | ||
including | 679.7 | 681.2 | 1.5 | 16.5 | ||
including | 688.8 | 694.9 | 6.1 | 4.0 | ||
D-1028A | 193.5 | 248.4 | 54.9 | 1.1 | ||
D-1030 | 146.3 | 190.5 | 44.2 | 1.23 | ||
p. 13 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Round Mountain Mineral Reserve and Mineral Resource estimates3 | ||||
2018 (Au koz) |
Depletion (Au koz) |
Exploration & Engineering (Au koz) |
2019* (Au koz) | |
Proven and Probable Reserves | 2,668 | (264) | 17 | 2,421 |
Measured and Indicated Resources | 2,281 | (10) | 565 | 2,834 |
Inferred Resources | 2,058 | (6) | (981) | 1,072 |
*Totals may not fully add up due to rounding.
Greenfield exploration update
In 2019, Kinross focused its greenfields exploration program on targets in Nevada, the Abitibi region in Quebec and Ontario, Manitoba, areas of Eastern Russia, and northern Finland’s greenstone belts. The Company drilled approximately 21,100 metres on eight greenfields projects, six of which are in North America.
Key components of Kinross’ focused greenfields exploration strategy include pursuing opportunities and high margin deposits through strategic investments and partnerships with high quality junior exploration companies. Kinross also focuses on fostering relationships with management teams that have a successful track record of discovery and keeping a solid pipeline of quality targets that demonstrate scope and scale for significant discovery.
In North America, Kinross explored projects in both joint venture (JV) and 100%-owned Kinross claims. Kinross and its JV partners undertook geochemical sampling, ground and airborne geophysical surveys and drilling programs. Indications of mineralization and prospective targets were generated at several projects, and first and second phase drilling programs were undertaken in 2019. The Company and its JV partners have also identified new opportunities in Nevada, Ontario, Manitoba, and Finland, and are assessing potential drilling programs at these projects for 2020.
In Canada, exploration focused on the Van Horne property in Ontario and the Laguna property in Manitoba, both of which are under joint venture agreements. Kinross is the operator of both projects and plans to continue exploration work in 2020 after encouraging results in 2019.
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, February 13, 2020 at 8 a.m. ET to discuss the results, followed by a question-and-answer session. To access the call, please dial:
Canada & US toll-free – (877) 201-0168;
Conference ID: 1756358
Outside of Canada & US – +1 (647) 788-4901; Conference ID: 1756358
Replay (available up to 14 days after the call):
Canada & US toll-free – (800) 585-8367;
Conference ID: 1756358
Outside of Canada & US – +1 (416) 621-4642; Conference ID: 1756358
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 our website at www.kinross.com.
This release should be read in conjunction with Kinross’ Q4/2019 year-end results news release, 2019 year-end Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2019 year-end Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished with the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.
p. 14 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
About Kinross Gold Corporation
Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Our focus is on delivering value based on the core principles of operational excellence, balance sheet strength, disciplined growth and responsible mining. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol: KGC).
Media Contact
Louie Diaz
Senior Director, Corporate Communications
phone: 416-369-6469
Investor Relations Contact
Tom Elliott
Senior Vice-President, Investor Relations and Corporate Development
phone: 416-365-3390
p. 15 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
2019 Annual Mineral Reserve and Resource Statement
Proven and Probable Mineral Reserves
MINERAL RESERVE AND MINERAL RESOURCE STATEMENT | GOLD | |
PROVEN AND PROBABLE MINERAL RESERVES (1,3,4,5,6,8) | ||
Kinross Gold Corporation's Share at December 31, 2019 |
Location |
Kinross
Interest |
Proven | Probable | Proven and Probable | ||||||||
Tonnes | Grade | Ounces | Tonnes | Grade | Ounces | Tonnes | Grade | Ounces | ||||
(%) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | |||
NORTH AMERICA | ||||||||||||
Bald Mountain | USA | 100.0% | 0 | 0.0 | 0 | 63,999 | 0.6 | 1,277 | 63,999 | 0.6 | 1,277 | |
Fort Knox | USA | 100.0% | 43,982 | 0.4 | 541 | 211,828 | 0.3 | 2,260 | 255,810 | 0.3 | 2,801 | |
Round Mountain | USA | 100.0% | 11,101 | 0.4 | 159 | 89,737 | 0.8 | 2,262 | 100,838 | 0.7 | 2,421 | |
SUBTOTAL | 55,083 | 0.4 | 700 | 365,564 | 0.5 | 5,799 | 420,647 | 0.5 | 6,499 | |||
SOUTH AMERICA | ||||||||||||
La Coipa | 8 | Chile | 100.0% | 368 | 0.5 | 5 | 14,398 | 1.6 | 763 | 14,766 | 1.6 | 768 |
Paracatu | Brazil | 100.0% | 549,669 | 0.4 | 7,705 | 28,354 | 0.4 | 355 | 578,023 | 0.4 | 8,060 | |
SUBTOTAL | 550,037 | 0.4 | 7,710 | 42,752 | 0.8 | 1,118 | 592,789 | 0.5 | 8,828 | |||
AFRICA | ||||||||||||
Chirano | Ghana | 90.0% | 1,550 | 1.2 | 58 | 5,878 | 2.5 | 470 | 7,428 | 2.2 | 528 | |
Tasiast | Mauritania | 100.0% | 46,561 | 1.4 | 2,103 | 69,280 | 2.1 | 4,680 | 115,841 | 1.8 | 6,783 | |
SUBTOTAL | 48,111 | 1.4 | 2,161 | 75,158 | 2.1 | 5,150 | 123,269 | 1.8 | 7,311 | |||
RUSSIA | ||||||||||||
Dvoinoye | Russia | 100.0% | 1,574 | 5.0 | 252 | 250 | 10.4 | 84 | 1,824 | 5.7 | 336 | |
Kupol | Russia | 100.0% | 772 | 8.3 | 207 | 4,279 | 8.3 | 1,146 | 5,051 | 8.3 | 1,353 | |
SUBTOTAL | 2,346 | 6.1 | 459 | 4,529 | 8.4 | 1,230 | 6,875 | 7.6 | 1,689 | |||
TOTAL GOLD | 655,577 | 0.5 | 11,030 | 488,003 | 0.8 | 13,297 | 1,143,580 | 0.7 | 24,327 |
MINERAL RESERVE AND MINERAL RESOURCE STATEMENT | SILVER | |
PROVEN AND PROBABLE MINERAL RESERVES (1,3,4,5,6,8) | ||
Kinross Gold Corporation's Share at December 31, 2019 |
Location |
Kinross
Interest |
Proven | Probable | Proven and Probable | ||||||||
Tonnes | Grade | Ounces | Tonnes | Grade | Ounces | Tonnes | Grade | Ounces | ||||
(%) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | |||
NORTH AMERICA | ||||||||||||
Round Mountain | USA | 100.0% | 0 | 0.0 | 0 | 8,171 | 6.2 | 1,622 | 8,171 | 6.2 | 1,622 | |
SUBTOTAL | 0 | 0.0 | 0 | 8,171 | 6.2 | 1,622 | 8,171 | 6.2 | 1,622 | |||
SOUTH AMERICA | ||||||||||||
La Coipa | 8 | Chile | 100.0% | 368 | 55.8 | 659 | 14,398 | 79.8 | 36,946 | 14,766 | 79.2 | 37,605 |
SUBTOTAL | 368 | 55.8 | 659 | 14,398 | 79.8 | 36,946 | 14,766 | 79.2 | 37,605 | |||
RUSSIA | ||||||||||||
Dvoinoye | Russia | 100.0% | 1,574 | 9.1 | 460 | 250 | 15.9 | 128 | 1,824 | 10.0 | 588 | |
Kupol | Russia | 100.0% | 772 | 82.6 | 2,049 | 4,279 | 100.2 | 13,789 | 5,051 | 97.5 | 15,838 | |
SUBTOTAL | 2,346 | 33.3 | 2,509 | 4,529 | 95.6 | 13,917 | 6,875 | 74.3 | 16,426 | |||
TOTAL SILVER | 2,714 | 36.3 | 3,168 | 27,098 | 60.2 | 52,485 | 29,812 | 58.1 | 55,653 |
p. 16 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Measured and Indicated Mineral Resources
MINERAL RESERVE AND MINERAL RESOURCE STATEMENT | GOLD | |
MEASURED AND INDICATED MINERAL RESOURCES (2,3,4,5,6,7,8,9) | ||
Kinross Gold Corporation's Share at December 31, 2019 |
Location |
Kinross
Interest |
Measured | Indicated | Measured and Indicated | ||||||||
Tonnes | Grade | Ounces | Tonnes | Grade | Ounces | Tonnes | Grade | Ounces | ||||
(%) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | |||
NORTH AMERICA | ||||||||||||
Bald Mountain | USA | 100.0% | 8,556 | 0.8 | 232 | 189,548 | 0.6 | 3,630 | 198,104 | 0.6 | 3,862 | |
Fort Knox | USA | 100.0% | 6,670 | 0.4 | 80 | 170,063 | 0.4 | 1,946 | 176,733 | 0.4 | 2,026 | |
Kettle River | USA | 100.0% | 0 | 0.0 | 0 | 575 | 8.8 | 162 | 575 | 8.8 | 162 | |
Round Mountain | USA | 100.0% | 0 | 0.0 | 0 | 119,470 | 0.7 | 2,834 | 119,470 | 0.7 | 2,834 | |
SUBTOTAL | 15,226 | 0.6 | 312 | 479,656 | 0.6 | 8,572 | 494,882 | 0.6 | 8,884 | |||
SOUTH AMERICA | ||||||||||||
La Coipa | 8 | Chile | 100.0% | 2,611 | 2.2 | 186 | 13,388 | 1.8 | 769 | 15,999 | 1.9 | 955 |
Lobo Marte | Chile | 100.0% | 0 | 0.0 | 0 | 222,509 | 1.1 | 8,190 | 222,509 | 1.1 | 8,190 | |
Maricunga | Chile | 100.0% | 35,908 | 0.8 | 937 | 209,097 | 0.7 | 4,492 | 245,005 | 0.7 | 5,429 | |
Paracatu | Brazil | 100.0% | 181,341 | 0.3 | 2,001 | 163,562 | 0.4 | 2,072 | 344,903 | 0.4 | 4,073 | |
SUBTOTAL | 219,860 | 0.4 | 3,124 | 608,556 | 0.8 | 15,523 | 828,416 | 0.7 | 18,647 | |||
AFRICA | ||||||||||||
Chirano | Ghana | 90.0% | 4,850 | 2.0 | 306 | 8,197 | 2.3 | 618 | 13,047 | 2.2 | 924 | |
Tasiast | Mauritania | 100.0% | 4,465 | 0.7 | 104 | 64,854 | 1.2 | 2,530 | 69,319 | 1.2 | 2,634 | |
SUBTOTAL | 9,315 | 1.4 | 410 | 73,051 | 1.3 | 3,148 | 82,366 | 1.3 | 3,558 | |||
RUSSIA | ||||||||||||
Chulbatkan | 9 | Russia | 100.0% | 0 | 0.0 | 0 | 87,039 | 1.4 | 3,908 | 87,039 | 1.4 | 3,908 |
Dvoinoye | Russia | 100.0% | 5 | 5.9 | 1 | 34 | 12.7 | 14 | 39 | 11.8 | 15 | |
Kupol | Russia | 100.0% | 260 | 9.7 | 82 | 1,685 | 7.6 | 414 | 1,945 | 7.9 | 496 | |
SUBTOTAL | 265 | 9.7 | 83 | 88,758 | 1.5 | 4,336 | 89,023 | 1.5 | 4,419 | |||
TOTAL GOLD | 244,666 | 0.5 | 3,929 | 1,250,021 | 0.8 | 31,579 | 1,494,687 | 0.7 | 35,508 |
MINERAL RESERVE AND MINERAL RESOURCE STATEMENT | SILVER | |
MEASURED AND INDICATED MINERAL RESOURCES (2,3,4,5,6,7,8) | ||
Kinross Gold Corporation's Share at December 31, 2019 |
Location |
Kinross
Interest |
Measured | Indicated | Measured and Indicated | ||||||||
Tonnes | Grade | Ounces | Tonnes | Grade | Ounces | Tonnes | Grade | Ounces | ||||
(%) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | (kt) | (g/t) | (koz) | |||
NORTH AMERICA | ||||||||||||
Round Mountain | USA | 100.0% | 0 | 0.0 | 0 | 4,513 | 7.8 | 1,135 | 4,513 | 7.8 | 1,135 | |
SUBTOTAL | 0 | 0.0 | 0 | 4,513 | 7.8 | 1,135 | 4,513 | 7.8 | 1,135 | |||
SOUTH AMERICA | ||||||||||||
La Coipa | 8 | Chile | 100.0% | 2,611 | 37.8 | 3,174 | 13,388 | 55.4 | 23,828 | 15,999 | 52.5 | 27,002 |
SUBTOTAL | 2,611 | 37.8 | 3,174 | 13,388 | 55.4 | 23,828 | 15,999 | 52.5 | 27,002 | |||
RUSSIA | ||||||||||||
Dvoinoye | Russia | 100.0% | 5 | 7.0 | 1 | 34 | 11.7 | 13 | 39 | 11.0 | 14 | |
Kupol | Russia | 100.0% | 260 | 135.6 | 1,135 | 1,685 | 102.0 | 5,526 | 1,945 | 106.5 | 6,661 | |
SUBTOTAL | 265 | 133.1 | 1,136 | 1,719 | 100.2 | 5,539 | 1,984 | 104.6 | 6,675 | |||
TOTAL SILVER | 2,876 | 46.6 | 4,310 | 19,620 | 48.4 | 30,502 | 22,496 | 48.1 | 34,812 |
p. 17 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Inferred Mineral Resources
MINERAL RESERVE AND MINERAL RESOURCE STATEMENT | GOLD | |
INFERRED MINERAL RESOURCES (2,3,4,5,6,7,8,9) | ||
Kinross Gold Corporation's Share at December 31, 2019 |
Location |
Kinross Interest |
Inferred | ||||
Tonnes | Grade | Ounces | ||||
(%) | (kt) | (g/t) | (koz) | |||
NORTH AMERICA | ||||||
Bald Mountain | USA | 100.0% | 47,936 | 0.5 | 808 | |
Fort Knox | USA | 100.0% | 86,054 | 0.3 | 774 | |
Kettle River | USA | 100.0% | 310 | 8.6 | 85 | |
Round Mountain | USA | 100.0% | 54,217 | 0.6 | 1,072 | |
SUBTOTAL | 188,517 | 0.5 | 2,739 | |||
SOUTH AMERICA | ||||||
La Coipa | 8 | Chile | 100.0% | 2,084 | 1.5 | 101 |
Lobo Marte | Chile | 100.0% | 9,637 | 0.7 | 207 | |
Maricunga | Chile | 100.0% | 53,133 | 0.6 | 1,044 | |
Paracatu | Brazil | 100.0% | 47,267 | 0.2 | 368 | |
SUBTOTAL | 112,121 | 0.5 | 1,720 | |||
AFRICA | ||||||
Chirano | Ghana | 90.0% | 6,165 | 2.2 | 443 | |
Tasiast | Mauritania | 100.0% | 5,478 | 2.0 | 353 | |
SUBTOTAL | 11,643 | 2.1 | 796 | |||
RUSSIA | ||||||
Chulbatkan | 9 | Russia | 100.0% | 2,517 | 1.0 | 79 |
Dvoinoye | Russia | 100.0% | 49 | 26.8 | 43 | |
Kupol | Russia | 100.0% | 1,520 | 10.0 | 489 | |
SUBTOTAL | 4,086 | 4.6 | 611 | |||
TOTAL GOLD | 316,367 | 0.6 | 5,866 |
MINERAL RESERVE AND MINERAL RESOURCE STATEMENT | SILVER | |
INFERRED MINERAL RESOURCES (2,3,4,5,6,7,8) | ||
Kinross Gold Corporation's Share at December 31, 2019 |
Location |
Kinross
Interest |
Inferred | ||||
Tonnes | Grade | Ounces | ||||
(%) | (kt) | (g/t) | (koz) | |||
NORTH AMERICA | ||||||
Round Mountain | USA | 100.0% | 755 | 2.9 | 71 | |
SUBTOTAL | 755 | 2.9 | 71 | |||
SOUTH AMERICA | ||||||
La Coipa | 8 | Chile | 100.0% | 2,084 | 43.1 | 2,890 |
SUBTOTAL | 2,084 | 43.1 | 2,890 | |||
RUSSIA | ||||||
Dvoinoye | Russia | 100.0% | 49 | 23.0 | 37 | |
Kupol | Russia | 100.0% | 1,520 | 135.4 | 6,615 | |
SUBTOTAL | 1,569 | 131.8 | 6,652 | |||
TOTAL SILVER | 4,408 | 67.8 | 9,613 |
p. 18 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Mineral Reserve and Mineral Resource Statement Notes
(1) Unless otherwise noted, the Company’s mineral reserves are estimated using appropriate cut-off grades based on an assumed gold price of $1,200 per ounce and a silver price of $17.00 per ounce. Mineral reserves are estimated using appropriate process recoveries, operating costs and mine plans that are unique to each property and include estimated allowances for dilution and mining recovery. Mineral reserve estimates are reported in contained units and are estimated based on the following foreign exchange rates:
Russian Rouble to $US 60
Chilean Peso to $US 650
Brazilian Real to $US 3.50
Ghanaian Cedi to $US 5.00
Mauritanian Ouguiya to $US 35
(2) Unless otherwise noted, the Company’s mineral resources are estimated using appropriate cut-off grades based on a gold price of $1,400 per ounce and a silver price of $20.00 per ounce. Foreign exchange rates for estimating mineral resources were the same as for mineral reserves.
(3) The Company’s mineral reserve and mineral resource estimates as at December 31, 2019 are classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) “CIM Definition Standards - For Mineral Resources and Mineral Reserves" adopted by the CIM Council (as amended, the “CIM Definition Standards”) in accordance with the requirements of National Instrument 43-101 “Standards of Disclosure for Mineral Projects" (“NI 43-101”). Mineral reserve and mineral resource estimates reflect the Company's reasonable expectation that all necessary permits and approvals will be obtained and maintained.
(4) Cautionary note to U.S. Investors concerning estimates of mineral reserves and mineral resources. These estimates have been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of United States’ securities laws. The terms “mineral reserve”, “proven mineral reserve and “probable mineral reserve” are Canadian mining terms as defined in accordance with NI 43-101 and the CIM Definition Standards. The CIM Definition Standards differ from the definitions in the United States Securities and Exchange Commission (“SEC”) Guide 7 (“SEC Guide 7”) under the United States Securities Act of 1933, as amended. Under SEC Guide 7, a “final” or “bankable” feasibility study is required to report mineral reserves, the three-year historical average price is used in any mineral reserve or cash flow analysis to designate mineral reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in NI 43-101 and recognized by Canadian securities laws but are not defined terms under SEC Guide 7 or recognized under U.S. securities laws. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be upgraded to mineral reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever by upgraded to a higher category. Under Canadian securities laws, estimates of “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies, except in rare cases. U.S. investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Accordingly, these mineral reserve and mineral resource estimates and related information may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal laws and the rules and regulations thereunder, including SEC Guide 7.
(5) The Company's mineral resource and mineral reserve estimates were prepared under the supervision of and verified by Mr. John Sims, an officer of Kinross, who is a qualified person as defined by NI 43-101.
(6) The Company’s normal data verification procedures have been used in collecting, compiling, interpreting and processing the data used to estimate mineral reserves and mineral resources. Independent data verification has not been performed.
(7) Mineral resources that are not mineral reserves do not have to demonstrate economic viability. Mineral resources are subject to infill drilling, permitting, mine planning, mining dilution and recovery losses, among other things, to be converted into mineral reserves. Due to the uncertainty associated with inferred mineral resources, it cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to indicated or measured mineral resources, including as a result of continued exploration.
(8) Includes mineral resources from the Puren deposit in which the Company holds a 65% interest.
(9) Chulbatkan was acquired by Kinross effective January 16, 2020.
p. 19 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Mineral Reserve and Mineral Resource Definitions
A ‘Mineral Resource’ is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve.
A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.
A ‘Mineral Reserve’ is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified. The reference point at which Mineral Reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported. The public disclosure of a Mineral Reserve must be demonstrated by a Pre-Feasibility Study or Feasibility Study.
A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve.
A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies a high degree of confidence in the Modifying Factors.
p. 20 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Cautionary statement on forward-looking information
All statements, other than statements of historical fact, contained or incorporated by reference in this news release including, but not limited to, any information as to the future financial or operating performance of Kinross, constitute “forward-looking information” or “forward-looking statements” within the meaning of certain securities laws, including the provisions of the Securities Act (Ontario) and the provisions for “safe harbor” under the United States Private Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this news release. Forward-looking statements contained in this news release, include, but are not limited to, those under the headings (or headings that include) “Development Projects”, “CEO Commentary”, “Exploration and Mineral Reserves and Resources update” and “2019 Mineral Reserves and Resources update”, “Exploration update” as well as statements with respect to our guidance for production, production costs of sales, all-in sustaining cost and capital expenditures; the schedules and budgets for the Company’s development projects; mine life; and continuous improvement initiatives, as well as references to other possible events, the future price of gold and silver, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, estimates and the realization of such estimates (such as mineral or gold reserves and resources or mine life), success of exploration, development and mining, currency fluctuations, capital requirements, project studies, mine life extensions, government regulation permit applications and conversions, restarting suspended or disrupted operations; environmental risks and proceedings; and resolution of pending litigation. The words “advance”, “continue”, “encouraging”, “estimates”, “expects”, “explore”, “forecast”, “focus”, “goal”, “intend”, “objective”, “on budget”, “on schedule”, “on target”, “on track”, “opportunity”, “plan”, “potential”, “prioritize”, “promising”, “prospective”, “schedule”, “target”, “upside” or variations of or similar such words and phrases or statements that certain actions, events or results may, could, should or will be achieved, received or taken, or will occur or result and similar such expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The estimates, models and assumptions of Kinross referenced, contained or incorporated by reference in this news release, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein and in our Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2019, and the Annual Information Form dated March 29, 2019 as well as: (1) there being no significant disruptions affecting the operations of the Company, whether due to extreme weather events (including, without limitation, excessive or lack of rainfall, in particular, the potential for further production curtailments at Paracatu resulting from insufficient rainfall and the operational challenges at Fort Knox and Bald Mountain resulting from excessive rainfall, which can impact costs and/or production) and other or related natural disasters, labour disruptions (including but not limited to workforce reductions), supply disruptions, power disruptions, damage to equipment, pit wall slides (in particular that the effects of the pit wall slides at Fort Knox and Round Mountain are consistent with the Company’s expectations) or otherwise; (2) permitting, development, operations and production from the Company’s operations and development projects being consistent with Kinross’ current expectations including, without limitation: the maintenance of existing permits and approvals and the timely receipt of all permits and authorizations necessary for the operation of the Tasiast Phase One expansion, and the development and operation of the 24k Project; operation of the SAG mill at Tasiast; land acquisitions and permitting for the construction and operation of the new tailings facility, water and power supply and continued operation of the tailings reprocessing facility at Paracatu; and the parliamentary ratification of the Chirano mining permit in a manner consistent with the Company’s expectations; (3) political and legal developments in any jurisdiction in which the Company operates being consistent with its current expectations including, without limitation, the impact of any political tensions and uncertainty in the Russian Federation and Ukraine or any related sanctions and any other similar restrictions or penalties imposed, or actions taken, by any government, including but not limited to amendments to the mining laws, and potential power rationing and tailings facility regulations in Brazil, potential amendments to water laws and/or other water use restrictions and regulatory actions in Chile, new dam safety regulations, and potential amendments to minerals and mining laws and energy levies laws, and the enforcement of labour laws in Ghana, new regulations relating to work permits, potential amendments to customs and mining laws (including but not limited to amendments to the VAT) and the pending implementation of revisions to the tax code in Mauritania, and satisfactory resolution of the discussions with the Mauritanian government regarding the Company’s activities in Mauritania including those related to Tasiast Sud, VAT and fuel duty exonerations and the sharing of economic benefits from the operation, the European Union’s General Data Protection Regulation or similar legislation in other jurisdictions and potential amendments to and enforcement of tax laws in Russia (including, but not limited to, the interpretation, implementation, application and enforcement of any such laws and amendments thereto), and the impact of any trade tariffs being consistent with Kinross’ current expectations; (4) the completion of studies, including optimization studies, scoping studies and prefeasibility and feasibility studies, on the timelines currently expected and the results of those studies being consistent with Kinross’ current expectations, including the completion of the La Coipa feasibility study and the Lobo-Marte pre-feasibility study; (5) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately consistent with current levels; (6) certain price assumptions for gold and silver; (7) prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; (8) production and cost of sales forecasts for the Company meeting expectations; (9) the accuracy of the current mineral reserve and mineral resource estimates of the Company (including but not limited to ore tonnage and ore grade estimates), mine plans for the Company’s mining operations, and the Company’s internal models; (10) labour and materials costs increasing on a basis consistent with Kinross’ current expectations; (11) the terms and conditions of the legal and fiscal stability agreements for the Tasiast and Chirano operations being interpreted and applied in a manner consistent with their intent and Kinross’ expectations and without material amendment or formal dispute (including without limitation the application of tax, customs and duties exemptions and royalties); (12) goodwill and/or asset impairment potential; (13) the regulatory and legislative regime regarding mining, electricity production and transmission (including rules related to power tariffs) in Brazil being consistent with Kinross’ current expectations; (14) access to capital markets, including but not limited to maintaining our current credit ratings consistent with the Company’s current expectations; (15) that the Brazilian power plants will operate in a manner consistent with our current expectations; (16) that drawdown of funds under the Tasiast project financing will proceed in a manner consistent with our current expectations; (17) potential direct or indirect operational impacts resulting from infectious diseases or pandemics; and (18) litigation and regulatory proceedings and the potential ramifications thereof being concluded in a manner consistent with the Company’s expectations (including without limitation the ongoing litigation in Chile relating to the alleged damage of wetlands and the scope of any remediation plan or other environmental obligations arising therefrom ,the ongoing litigation with the Russian tax authorities regarding dividend withholding tax and the ongoing Sunnyside litigation regarding potential CERCLA liability). Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: sanctions (any other similar restrictions or penalties) now or subsequently imposed, other actions taken, by, against, in respect of or otherwise impacting any jurisdiction in which the Company is domiciled or operates (including but not limited to the Russian Federation, Canada, the European Union and the United States), or any government or citizens of, persons or companies domiciled in, or the Company’s business, operations or other activities in, any such jurisdiction; fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as fuel and electricity); changes in the discount rates applied to calculate the present value of net future cash flows based on country-specific real weighted average cost of capital; changes in the market valuations of peer group gold producers and the Company, and the resulting impact on market price to net asset value multiples; changes in various market variables, such as interest rates, foreign exchange rates, gold or silver prices and lease rates, or global fuel prices, that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under any financial obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation (including but not limited to income tax, advance income tax, stamp tax, withholding tax, capital tax, tariffs, value-added or sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, production royalties, excise tax, customs/import or export taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with any related fine, penalty, surcharge, or interest imposed in connection with such taxes), controls, policies and regulations; the security of personnel and assets; political or economic developments in Canada, the United States, Chile, Brazil, Russia, Mauritania, Ghana, or other countries in which Kinross does business or may carry on business; business opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical difficulties in connection with mining or development activities; employee relations; litigation or other claims against, or regulatory investigations and/or any enforcement actions, administrative orders or sanctions in respect of the Company (and/or its directors, officers, or employees) including, but not limited to, securities class action litigation in Canada and/or the United States, environmental litigation or regulatory proceedings or any investigations, enforcement actions and/or sanctions under any applicable anti-corruption, international sanctions and/or anti-money laundering laws and regulations in Canada, the United States or any other applicable jurisdiction; the speculative nature of gold exploration and development including, but not limited to, the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves; adverse changes in our credit ratings; and contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards associated with the business of gold exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance, or the inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can directly or indirectly affect, and could cause, Kinross’ actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Kinross, including but not limited to resulting in an impairment charge on goodwill and/or assets. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management’s expectations and plans relating to the future. All of the forward-looking statements made in this news release are qualified by this cautionary statement and those made in our other filings with the securities regulators of Canada and the United States including, but not limited to, the cautionary statements made in the “Risk Analysis” section of our MD&A for the year ended December 31, 2019 and the Annual Information Form dated March 29, 2019. These factors are not intended to represent a complete list of the factors that could affect Kinross. Kinross disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.
p. 21 Kinross provides update on development projects and full-year 2019 exploration results
Kinross Gold Corporation
25 York Street 17th Floor Toronto, ON, Canada M5J 2V5 |
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in this presentation, we mean Kinross Gold Corporation and/or one or more or all of its subsidiaries, as may be applicable.
The technical information about the Company’s mineral properties contained in this presentation has been prepared under the supervision of Mr. John Sims, an officer of the Company who is a “qualified person” within the meaning of National Instrument 43-101.
Source Code: Kinross Gold Corporation
p. 22 Kinross provides update on development projects and full-year 2019 exploration results
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