Kinross Gold Corporation (TSX:K)(NYSE:KGC) today announced its
results for the second quarter ended June 30, 2013.
(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
eight of this release. All dollar amounts are expressed in U.S.
dollars, unless otherwise noted. The comparative figures have been
recast to exclude the results of Fruta del Norte and Crixas.)
Financial and operating highlights:
-- Production(1): 655,381 gold equivalent ounces (Au eq. oz.), compared
with 632,772 ounces in Q2 2012.
-- Revenue: $968.0 million, compared with $1,005.6 million in Q2 2012.
-- Production cost of sales(2): $737 per Au eq. oz., compared with $724 in
Q2 2012.
-- All-in sustaining cost(2): $1,072 per Au oz. sold, compared with $970 in
Q2 2012.
-- Attributable margin(3): $657 per Au eq. oz. sold, compared with $844 in
Q2 2012.
-- Adjusted operating cash flow(2): $256.7 million, or $0.22 per share,
compared with $268.0 million, or $0.24 per share, in Q2 2012.
-- Adjusted net earnings(2, 4): $119.5 million, or $0.10 per share,
compared with $156.8 million, or $0.14 per share, in Q2 2012.
-- Reported net loss(4): $2,481.9 million, or $2.17 per share, compared
with net earnings of $113.9 million, or $0.10 per share, in Q2 2012.
-- Non-cash impairment charge: The reported net loss for the quarter
included an after-tax non-cash impairment charge of $2,289.3 million,
largely as a result of lower short-term and long-term gold price
assumptions. In addition, Kinross recorded a charge of $720 million
relating to the previously announced decision to cease development of
its Fruta del Norte (FDN) project in Ecuador, which has been classified
as a discontinued operation.
-- Outlook: Kinross expects to be within its 2013 forecast guidance for
production (2.4-2.6 million attributable Au eq. oz.), production cost of
sales ($740-$790 per Au eq. oz.), and all-in sustaining cost ($1,100-
$1,200 per Au oz. sold). The Company has reduced its 2013 capital
expenditure forecast to approximately $1.45 billion from $1.6 billion.
Cost review and reduction:
-- In response to the recent drop in the gold price, the Company has
undertaken a number of additional initiatives to reduce operating costs
and capital expenditures, and maximize cash flow. Kinross has identified
additional expected savings of approximately $180 million for the
balance of 2013 and expects further savings this year as ongoing cost
reviews are completed. The Company is also targeting significant capital
spending reductions in 2014.
Development projects:
-- First ore from development activities at Dvoinoye was delivered to Kupol
in Q2 2013 and the Kupol plant upgrade has been successfully completed.
The project remains on schedule to reach targeted production in Q4 2013.
-- Due to the Company's focus on capital reduction in the current lower
gold price environment, Kinross does not now expect to make a decision
on whether to proceed with a potential Tasiast mill expansion until 2015
at the earliest, regardless of the project feasibility study (FS)
outcome. The FS remains on schedule for expected completion in Q1 2014.
-- On June 10, 2013, the Company announced that it ceased further
development at its Fruta del Norte project.
Dividend:
-- To help ensure the Company maintains its strong balance sheet and
liquidity position in the current uncertain gold price environment, the
Board of Directors has suspended the upcoming semi-annual dividend.
Future decisions regarding the dividend will be based on a number of
factors, including market conditions, balance sheet strength and
liquidity, operational performance, and the impact of cost reduction
measures.
CEO Commentary
J. Paul Rollinson, CEO, made the following comments in relation
to second-quarter 2013 results:
"In the current challenging environment, Kinross continues to
deliver strong operating results. Our operations had another
excellent quarter, and we remain on guidance for production, cost
of sales, and all-in sustaining costs. We also recorded a key
milestone in Russia with the delivery of first ore from Dvoinoye to
Kupol, and are on schedule to reach targeted production in the
fourth quarter.
"We have intensified our strategic focus on margins, cost
reduction and cash flow in response to the recent drop in gold
price, and have taken additional measures to reduce overall
spending and increase cash generation. We have identified new
reductions in capital and exploration spending for 2013, which are
expected to total approximately $180 million. Further significant
reductions are targeted in 2014. In light of these planned
reductions, and continued uncertainty regarding gold prices, we do
not expect to make a decision on whether to proceed with a Tasiast
mill expansion until 2015 at the earliest, regardless of the
results of the feasibility study expected in Q1 2014.
"Balance sheet strength and liquidity remain key priorities.
Given the current lower gold price environment and its impact on
cash flow, the Board has suspended our upcoming semi-annual
dividend, which we will continue to re-evaluate based on market
conditions and operational performance. This was a difficult
decision, but we believe it is the right decision in today's
challenging and uncertain gold price environment."
Financial results
Summary of financial and operating results
----------------------------------------------------------------------------
Three months Six months
ended ended
June 30, June 30,
--------------------------------------------------------
(dollars in
millions, except
ounces, per share
amounts, gold price
and per ounce
amounts) 2013 2012 2013 2012
----------------------------------------------------------------------------
Total gold
equivalent
ounces(a)(e) -
Produced (c) 661,636 654,243 1,317,246 1,266,081
Total gold
equivalent
ounces(a)(e) - Sold
(c) 695,541 656,447 1,347,738 1,285,952
Gold equivalent
ounces from
continuing
operations (a)(d) -
Produced (c) 661,636 639,138 1,317,246 1,235,087
Gold equivalent
ounces from
continuing
operations (a)(d) -
Sold (c) 695,541 640,836 1,347,738 1,253,188
Total attributable
gold equivalent
ounces(a)(e) -
Produced (c) 655,381 647,877 1,304,278 1,252,124
Total attributable
gold equivalent
ounces(a)(e) - Sold
(c) 689,501 650,149 1,334,753 1,271,829
Attributable gold
equivalent ounces
from continuing
operations (a)(d) -
Produced (c) 655,381 632,772 1,304,278 1,221,130
Attributable gold
equivalent ounces
from continuing
operations (a)(d) -
Sold (c) 689,501 634,538 1,334,753 1,239,065
Financial Highlights
from Continuing
Operations (d)
Metal sales $ 968.0 $ 1,005.6 $ 2,026.1 $ 2,010.7
Production cost of
sales $ 513.5 $ 464.1 $ 989.2 $ 915.8
Depreciation,
depletion and
amortization $ 210.1 $ 157.0 $ 437.8 $ 299.5
Impairment charges $ 2,433.1 $ - $ 2,433.1 $ -
Operating earnings
(loss) $ (2,283.7) $ 259.2 $ (2,031.0) $ 561.2
Net earnings (loss)
from continuing
operations
attributable to
common shareholders $ (2,481.9) $ 113.9 $ (2,319.5) $ 212.5
Basic earnings
(loss) per share
from continuing
operations
attributable to
common shareholders $ (2.17) $ 0.10 $ (2.03) $ 0.19
Diluted earnings
(loss) per share
from continuing
operations
attributable to
common shareholders $ (2.17) $ 0.10 $ (2.03) $ 0.19
Adjusted net
earnings from
continuing
operations
attributable to
common
shareholders(b) $ 119.5 $ 156.8 $ 291.9 $ 353.8
Adjusted net
earnings from
continuing
operations per
share(b) $ 0.10 $ 0.14 $ 0.26 $ 0.31
Net cash flow of
continuing
operations provided
from operating
activities $ 106.4 $ 79.1 $ 471.7 $ 461.2
Adjusted operating
cash flow from
continuing
operations(b) $ 256.7 $ 268.0 $ 670.4 $ 586.2
Adjusted operating
cash flow from
continuing
operations per
share(b) $ 0.22 $ 0.24 $ 0.59 $ 0.51
Average realized
gold price per
ounce from
continuing
operations $ 1,394 $ 1,568 $ 1,505 $ 1,605
Consolidated
production cost of
sales from
continuing
operations per
equivalent ounce(c)
sold(b) $ 738 $ 724 $ 734 $ 731
Attributable(a)
production cost of
sales from
continuing
operations per
equivalent ounce(c)
sold(b) $ 737 $ 724 $ 734 $ 731
Attributable(a)
production cost of
sales from
continuing
operations per
ounce sold on a by-
product basis(b) $ 697 $ 659 $ 686 $ 657
Attributable(a) all-
in sustaining cost
from continuing
operations per
ounce sold on a by-
product basis(b) $ 1,072 $ 970 $ 1,034 $ 1,180
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(a) Total includes 100% of Chirano production. "Attributable" includes
Kinross' share of Chirano (90%) production.
(b) The definition and reconciliation of these non-GAAP financial measures
is included on pages ten to twelve of this news release.
(c) "Gold equivalent ounces" include silver ounces produced and sold
converted to a gold equivalent based on a ratio of the average spot
market prices for the commodities for each period. The ratio for the
second quarter of 2013 was 61.14:1, compared with 54.77:1 for the
second quarter of 2012 and for the first six months of 2013 was
57.21:1, compared with 53.17:1 for the first six months of 2012.
(d) On June 10, 2013, the Company announced its decision to cease
development of FDN. On June 28, 2012, the Company disposed of its
interest in Crixas. As a result, the comparative figures have been
recast to exclude the results of FDN and Crixas.
(e) The total gold equivalent ounces and total attributable gold equivalent
ounces include Crixas up to June 28, 2012.
The following operating and financial results are based on
second-quarter 2013 attributable gold equivalent production from
continuing operations:
Production: Kinross produced 655,381 attributable gold
equivalent ounces from continuing operations in the second quarter
of 2013, a 4% increase over the second quarter of 2012, mainly due
to production increases at Fort Knox and Tasiast.
Production cost of sales: Production cost of sales per gold
equivalent ounce(2) was $737 for the second quarter of 2013,
compared with $724 for the second quarter of 2012. Production cost
of sales per gold ounce on a by-product basis was $697 in the
second quarter of 2013, compared with $659 in Q2 2012, based on Q2
2013 attributable gold sales of 647,671 ounces and attributable
silver sales of 2,557,552 ounces.
All-in sustaining cost: Attributable all-in sustaining cost per
gold ounce sold(2) was $1,072 in Q2 2013, compared with $970 in Q2
2012, mainly as a result of an increase in production cost of sales
and the timing of sustaining capital spending.
During the second quarter, the World Gold Council (WGC)
recommended adopting a standard definition of all-in costs and
all-in sustaining costs associated with producing gold. The Company
has adopted the WGC definition of all-in sustaining costs for Q2
2013 and intends to adopt the definition for all-in costs in 2014.
Prior to the second quarter, Kinross reported all-in sustaining
cost, which conformed to the WGC all-in sustaining cost definition,
except for certain differences in the definition of sustaining
versus non-sustaining capital and exploration costs. The Company's
2013 all-in sustaining cost guidance of $1,100-$1,200 per gold
ounce sold on a by-product basis remains unchanged under the new
definition.
Revenue: Revenue from metal sales was $968.0 million in the
second quarter of 2013, compared with $1,005.6 million during the
same period in 2012, a decrease of 4%, mainly due to the lower
average realized gold price for the quarter. The average realized
gold price was $1,394 per ounce in Q2 2013, a decrease of 11%,
compared with $1,568 per ounce in Q2 2012.
Margins: Kinross' margin per gold equivalent ounce sold(3) was
$657 for the second quarter of 2013, a decrease of 22% compared
with the Q2 2012 margin of $844 per gold equivalent ounce.
Operating cash flow: Adjusted operating cash flow(2) was $256.7
million for the quarter, or $0.22 per share, compared with $268.0
million, or $0.24 per share, for Q2 2012.
Cash balance: Cash and cash equivalents and short-term
investments were $1,163.1 million as at June 30, 2013, compared
with $1,982.5 million as at December 31, 2012.
Earnings: Adjusted net earnings(2, 4) were $119.5 million, or
$0.10 per share, for Q2 2013, compared with $156.8 million, or
$0.14 per share, for Q2 2012.
Reported net loss(4) was $2,481.9 million, or $2.17 per share,
for Q2 2013, compared with earnings of $113.9 million, or $0.10 per
share, in Q2 2012. Reported net loss included an after-tax non-cash
impairment charge of $2,289.3 million.
Impairment: As a result of both the decline in gold price and
the decision to defer potential construction at Tasiast, the
Company performed an impairment assessment which resulted in an
aggregate after-tax non-cash impairment charge of $2,289.3 million.
The impairment was principally attributable to lower short-term and
long-term gold price assumptions. Of that amount, $1,629.4 million
was related to impairment of the carrying value of property, plant
and equipment and $659.9 million was related to the impairment of
goodwill. Further details are outlined on page seven of this
release.
In addition to this impairment, the Company wrote off the
carrying value of its FDN asset of $720 million, which was
comprised entirely of property, plant and equipment, and recorded
an impairment related to its investment in Cerro Casale, which is
classified as an investment in associate on the Company's balance
sheet (and is therefore not included as part of the impairment
charge discussed in the paragraph above). The FDN write-off does
not affect the Company's reported net loss from continuing
operations and was the result of the previously disclosed decision
by Kinross to not proceed with further development of FDN.
Capital expenditures: Capital expenditures were $321.0 million
for Q2 2013, compared with $414.7 million for the same period last
year, a decrease due mainly to lower spending at Paracatu,
Maricunga, Kupol and La Coipa.
Cost review and reduction
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
eight of this news release.
The Company has had success in reducing both its operating costs
and capital expenditures as a result of the Way Forward strategy
launched in the second half of 2012. Kinross has made significant
progress in such areas as mine plan optimization; labour
productivity and contractor management; and supply chain
management, with reduced prices successfully negotiated for a
number of input commodities. In response to the significant decline
in gold price in recent weeks, Kinross has accelerated its Way
Forward initiatives, and has undertaken a number of additional
actions with the goal of further reducing costs and maximizing cash
flow. These measures are consistent with the Company's strategic
objective of preserving balance sheet strength and liquidity, and
aim to maintain profitability in a lower gold price environment,
while retaining the flexibility to pursue economically viable
growth and development options as market conditions improve.
Kinross has identified additional expected savings totalling
approximately $180 million for the balance of 2013 as a result of
these new initiatives. This includes approximately $150 million in
expected 2013 capital reductions at the Company's operations and
projects, due to deferrals of stripping, infrastructure
development, and equipment purchases. It also includes a $30
million reduction in the 2013 exploration budget. Priority
exploration programs in each region will continue to be advanced,
while scope reductions and spending deferrals are being implemented
for the remainder of the Company's programs, and greenfield
activities will be curtailed.
The Company has also launched a comprehensive cost review
process across the organization, based on a re-evaluation of
existing budgets and discretionary spending. Further savings in
2013 are expected to result from this cost review, and the Company
intends to provide an update following completion of the review
process. Already this year, the Company has reduced head office
staff by 7%, closed its Vancouver procurement office, and
eliminated nearly 200 full-time positions in Ecuador in connection
with its decision to cease development at Fruta del Norte.
Kinross will be identifying additional opportunities for savings
in 2014 as part of these ongoing cost reviews, and its annual
planning and budgeting process. The Company is targeting a
significant overall reduction in capital expenditures in 2014, and
intends to provide an update in its Q3 earnings announcement in
November.
Balance sheet update
As of June 30, 2013, Kinross had approximately $2,664.5 million
in liquidity, consisting of $1,163.1 million in cash and cash
equivalents, and $1,501.4 million of available credit facilities.
With the cost reduction measures discussed above, Kinross continues
to maintain balance sheet strength and liquidity as a key priority
objective.
On June 10, 2013, the Company announced that it had extended the
maturity dates of its $1.5 billion revolving credit facility and
$1.0 billion term loan to August 10, 2018 and August 10, 2017,
respectively. The term loan has no mandatory amortization payments.
With these extensions having been completed, Kinross has no debt
maturities prior to 2016, and only regular principal amortization
payments on the remaining $170 million balance of the Kupol term
loan.
Operating results
Mine-by-mine summaries for second-quarter operating results may
be found on pages 13 and 17 of this news release. Highlights
include the following:
North America: Performance was strong in the second quarter, and
the region remains on track to meet both production and production
cost of sales guidance for the year. Regional production was higher
compared with Q1 2013 due mainly to improved mill throughput at
Fort Knox. Kettle River-Buckhorn and Fort Knox continued to achieve
strong mill grades and recoveries during the quarter. Compared to
Q2 2012, regional production was higher as a result of better mill
grades at Fort Knox and Kettle River-Buckhorn.
Russia: The region is on target to meet both production and
production cost of sales guidance for the year. Second quarter
production at Kupol was largely in line with Q1 2013, but was lower
compared with Q2 2012 as a result of expected lower grades. Mill
throughput was reduced during the quarter as a result of the
planned shutdown from June 24 to July 6 to complete the mill
expansion. Mill recoveries remained strong.
South America: The region remains on target to meet both
production and production cost of sales guidance for the year.
Paracatu's production was in line with the previous quarter, as
improved mill grade offset a slight decline in throughput.
Maricunga's decrease in production compared with Q1 2013 and Q2
2012 was the result of anticipated lower grades from transitional
ore as the bottom of the current phase is mined. La Coipa's
production increased relative to Q2 2012 as a result of stronger
grades, but relative to Q1 2013 experienced a slight drop, due to
lower mill throughput and an unfavorable change in the gold/silver
ratio. The Company expects to suspend mining of the existing ore
body at La Coipa in the fourth quarter of 2013.
West Africa: Performance continued to be strong during the
second quarter, and the region is on target to meet both production
and production cost of sales guidance for the year. For the second
consecutive quarter, Tasiast achieved its highest quarterly
production level since being acquired by Kinross. The production
increase was due mainly to expected higher grades entering the
mill, along with improved performance from the dump leach.
Chirano's production decreased slightly compared to Q1 2013 and Q2
2012 as a result of expected lower grades.
Project update and new developments
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
eight of this news release.
Dvoinoye
During the second quarter, first ore (20,000 tons) from
development activities at Dvoinoye was delivered to Kupol, and the
Kupol plant upgrade was successfully completed during the first
week of the third quarter.
Underground development continued well ahead of schedule in the
quarter, with 3,237 metres completed year-to-date. The mine is
expected to start first stoping operations in Q3, and is expected
to reach targeted production in Q4. Overall infrastructure
construction progress is at 73% and the project remains on schedule
and on budget.
The Dvoinoye subsoil license expires in accordance with its
terms on September 30, 2013. As previously disclosed, the Company
has filed an ordinary course application with the appropriate
authority to renew the license for a term sufficient to cover the
presently anticipated life of mine. The Company is awaiting
completion of the approval process, which is expected shortly.
Tasiast expansion project
Due to the Company's increased focus on capital reduction and
cash conservation in the current lower gold price environment,
Kinross does not now expect to make a decision on whether to
proceed with a Tasiast mill expansion until 2015 at the earliest,
regardless of the outcome of the feasibility study on a 38,000
tonne per day (tpd) mill. This study remains on schedule for
completion in the first quarter of 2014.
This decision is expected to reduce 2013 forecast capital
expenditures by approximately $85 million, due to deferrals in
stripping, equipment purchases, and infrastructure development, and
a commensurate downsizing of the Tasiast project team. Further cost
reductions resulting from these and other measures are expected in
2014.
Construction of other basic site infrastructure at Tasiast is
proceeding on schedule, including the 20 MW power plant, reverse
osmosis plant, sewage treatment plant, and maintenance facilities,
with all construction expected to be completed by the end of the
third quarter.
Fruta del Norte
On June 10, 2013, the Company announced that it would cease
development of its Fruta del Norte (FDN) project in Ecuador, as a
result of the inability to reach an agreement with the Government
of Ecuador on exploitation and investment protection agreements for
the project. Kinross has concluded that it is not in the interests
of the Company and its shareholders to invest further in developing
FDN. Kinross is currently in discussions with the Government of
Ecuador regarding transition alternatives respecting FDN.
Exploration update
Total exploration expenditures for the second quarter of 2013
were $32.9 million, including $30.9 million for expensed
exploration and $2.0 million for capitalized exploration.
Kinross was active on 28 mine site, near-mine and greenfield
initiatives in the second quarter of 2013, with drilling across all
projects totalling approximately 91,208 metres. Highlights of the
second quarter exploration program include:
Tasiast
A total of 34,511 metres were drilled in Q2. Work continued on
delineation of mineralization in quartz veins located along the
Footwall Zone adjacent to the west side of the Piment central pit.
The vein hosting structural corridor has been intersected in 15
drill holes (four of which were drilled in 2013) and appears to be
developed over 500 strike metres. A further 10 holes are planned to
follow-up positive intercepts.
Drilling resumed in the Tasiast Sud area testing targets located
between five and ten kilometres south of West Branch. Exploration
work followed up previous encouraging drill results below surface
geochemical anomalies. Assay results are pending for most of the
drilling completed in the quarter; however, encouraging results
were returned at the C613 and Tamaya zones.
La Coipa
Encouraging drill results were returned from the Catalina
target, where oxide mineralization has been identified 800 metres
southeast of La Coipa Phase 7. Further drilling is underway to
assess the size and grade potential of this target.
Moroshka
At Moroshka, located four kilometres southeast of Kupol, most of
the work focussed on delineating mineralization at the Main Vein
and nearby targets. Confirmatory drilling at the Main Vein has been
largely completed, with encouraging results. New drilling to the
north and west of the Main Vein is testing for extensions of the
existing vein and for parallel veins.
Dividend
Over the past year, Kinross has identified balance sheet
strength and liquidity as key priority objectives. Consequently,
the Company has undertaken a number of measures which are outlined
in this release in order to reduce operating and capital costs in
the current lower gold price environment.
To help ensure the Company maintains its strong balance sheet
and liquidity position in this environment, the Board of Directors
has suspended the upcoming semi-annual dividend. Future decisions
regarding the dividend will be based on a number of factors,
including market conditions, balance sheet strength and liquidity,
operational performance, and the impact of ongoing cost reduction
measures. The dividend suspension will provide the Company with
additional liquidity of approximately $90 million for the remainder
of 2013.
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
eight of this news release.
As previously announced on February 13, 2013, Kinross expects to
produce approximately 2.4-2.6 million gold equivalent ounces for
the year. The Company remains on track to meet its global
production guidance, as well as its regional production
guidance.
Kinross expects to meet its company-wide production cost of
sales per gold equivalent ounce guidance of $740-$790 and its
all-in sustaining cost guidance of $1,100-$1,200 per gold ounce
sold on a by-product basis in 2013. The Company also expects to
meet its regional production cost of sales guidance.
The Company is reducing its 2013 capital expenditure forecast to
approximately $1.45 billion from $1.6 billion, mainly due to
deferrals of stripping, infrastructure development, and equipment
purchases at its projects and operations, and the cessation of
development at FDN. Kinross is also reducing its total exploration
expenditure forecast to $130 million from $160 million, mainly as a
result of scope reductions, spending deferrals and reduced
greenfield activity.
Impairment
At the end of Q2 2013, the Company identified both the recent
and continued decline in metal prices, and the deferral of
potential construction at Tasiast as indicators of potential
impairment. As required by IFRS upon the identification of an
indicator of impairment, the Company performed an impairment
assessment using updated assumptions and estimates, including lower
short-term and long-term metal prices. The forecast production
output and capital expenditures included in the life of mine plans
for all assets other than Tasiast remained unchanged from our 2012
year-end impairment assessment. The Tasiast valuation was based on
a 38,000 tonne per day mill scenario, adjusted for the deferral in
potential construction and production. The long-term gold price
used in the Q2 impairment assessment was $1,300 per ounce, compared
with $1,500 per ounce used in the year-end 2012 assessment.
As a result, the Company recorded after-tax non-cash impairment
charges of $2,289.3 million, including an impairment to the
carrying value of property, plant and equipment of $1,334.7 million
at Tasiast. The impairment charges were principally due to the
reduction in estimated short-term and long-term metal prices. The
Tasiast impairment charge was also impacted by the deferral of
potential construction and production.
As a result of the impairment assessment, the Company also
recognized an impairment charge of $219.0 million related to its
investment in Cerro Casale, which was recorded in other income
(expense).
In addition, the Company wrote off the carrying value of its FDN
asset of $720 million, which was comprised entirely of property,
plant and equipment. FDN has been reclassified as a discontinued
operation and its write-off does not affect the Company's reported
net loss from continuing operations.
Conference call details
In connection with the release, Kinross will hold a conference
call and audio webcast on Thursday, August 1, 2013 at 8 a.m. ET to
discuss the results, followed by a question-and-answer session. To
access the call, please dial:
Canada & US toll-free - 1-800-319-4610
Outside of Canada & US - 1-604-638-5340
Replay (available up to 14 days after the call):
Canada & US toll-free - 1-800-319-6413; Passcode - 3310
followed by #.
Outside of Canada & US - 1-604-638-9010; Passcode - 3310
followed by #.
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' 2013
second quarter Financial Statements and Management's Discussion and
Analysis report at www.kinross.com. Kinross' unaudited 2013 second
quarter 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 gold mining company with mines and
projects in Brazil, Canada, Chile, Ghana, Mauritania, Russia and
the United States, employing approximately 9,000 people worldwide.
Kinross maintains listings on the Toronto Stock Exchange (symbol:K)
and the New York Stock Exchange (symbol:KGC).
(1) Unless otherwise stated, production figures in this news
release are based on Kinross' 90% share of Chirano production.
Prior year production figures have been adjusted to exclude Crixas
due to its sale in Q2 2012.
(2) These figures are non-GAAP financial measures and are
defined and reconciled on pages 10 to 12 of this news release.
(3) Attributable margin per ounce sold is a non-GAAP measure
defined as "average realized gold price per ounce" less
"attributable production cost of sales per gold equivalent ounce
sold".
(4) "Net earnings (loss) figures in this release represent "net
earnings (loss) from continuing operations attributable to common
shareholders".
(5) 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.
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 harbour" 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
those under the headings "Financial and operating highlights", "CEO
Commentary", "Cost review and reduction", Project update and new
developments" and "Outlook" and include, without limitation,
statements with respect to: our guidance for production, production
costs of sales, all-in sustaining cost and capital expenditures,
expected savings pursuant to our cost review and reduction
initiatives, including the continuation of the Way Forward,
modifications to projects and operations and our exploration
budget, including the Tasiast expansion project and our
expectations regarding timelines for continued development, as well
as references to other possible events, the future price of gold
and silver, the estimation of mineral reserves and mineral
resources, the realization of mineral reserve and mineral resource
estimates, the timing and amount of estimated future production,
costs of production, capital expenditures, costs and timing of the
development of projects and new deposits, success of exploration,
development and mining activities, permitting timelines, currency
fluctuations, requirements for additional capital, government
regulation of mining operations, environmental risks, unanticipated
reclamation expenses, title disputes or claims and limitations on
insurance coverage.
The words "aims", "anticipates", "plans", "expects",
"indicator", "intend", "scheduled", "estimates", "forecasts",
"focus", "priority", "goal", "guidance", "initiative", "objective",
"on track", "opportunity", "outlook", "potential", "projected",
"pursue", "strategy", "study", "targets", or "believes", or
variations of or similar such words and phrases or statements that
certain actions, events or results "may", "could", "would", or
"should", "might", or "way forward", "will be taken", "will occur"
or "will be achieved" and similar 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 most recently filed
Annual Information Form and our full-year 2012 Management's
Discussion and Analysis as well as:
(1) there being no significant disruptions affecting the
operations of the Company or any entity in which it now or
hereafter directly or indirectly holds an investment, whether due
to labour disruptions, supply disruptions, power disruptions,
damage to equipment or otherwise; (2) permitting, development,
operations and expansion at Paracatu (including, without
limitation, land acquisitions and permitting for the construction
and operation of the new tailings facility) being consistent with
our current expectations; (3) the cessation by the Company of
further investment and development of the Fruta del Norte deposit
and La Zarza mining concession ("FDN") being consistent with
Kinross' current expectations including, without limitation, as to
the reasonable cooperation of the Government of Ecuador in ensuring
an orderly transition with respect to FDN (including, without
limitation, any related transactions) that respects the interests
of both parties; continuing recognition of the Company's other
remaining mining concessions and other assets, rights, titles and
interests in Ecuador; the implementation of Ecuador's mining and
investment laws (and prospective amendment to these laws) and
related regulations and policies; and compliance with, and the
implementation and enforcement of, the Canada-Ecuador Agreement for
the Promotion and Reciprocal Protection of Investments; (4)
political and legal developments in any jurisdiction in which the
Company, or any entity in which it now or hereafter directly or
indirectly holds an investment, operates being consistent with its
current expectations including, without limitation, the transition
period as we reduce our level of activity in Ecuador and any
potential amendments to the Brazilian Mining Code being consistent
with Kinross' current expectations;
(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, and
entities in which it now or hereafter directly or indirectly holds
an investment, 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) and any entity in which it now or hereafter directly or
indirectly holds an investment;
(10) labour and materials costs increasing on a basis consistent
with Kinross' current expectations; (11) the development of,
operations at and production from the Dvoinoye deposit being
consistent with Kinross' expectations including but not limited to
commencement of full production in the second half of 2013 and
processing of Dvoinoye ore at the Kupol mill; (12) the viability of
the Tasiast and Chirano mines (including but not limited to, at
Tasiast, the impact of ore tonnage and grade variability
reconciliation analysis) as well as permitting, development and
expansion (including but not limited to, at Tasiast, expansion
optimization initiatives leading to changes in processing approach
and maintenance, the timing of completion and results of the
Tasiast feasibility study and, as required, conversion of adjacent
exploration licences to mining licences) of the Tasiast and Chirano
mines being consistent with Kinross' current expectations;
(13) 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; (14) goodwill and/or asset impairment potential; and
(15) access to capital markets, including but not limited to
maintaining an investment grade debt rating and, as required,
securing partial project financing for the Dvoinoye and the Tasiast
expansion projects, being consistent with the Company's current
expectations.
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: our ability to
successfully cease further investment in and development of FDN
and, in cooperation with the Government of Ecuador, successfully
complete an orderly transition with respect to FDN that is
respectful of the interests of both parties and does not impose on
the Company (and/or any of its directors, officers or employees)
any unreasonable obligations or liabilities; litigation commenced,
or other claims or actions brought, against the Company (and/or any
of its directors, officers or employees) in respect of the
cessation by the Company of further investment in and development
of FDN, or any of the Company's prior or continuing activities on
or in respect thereof or otherwise in Ecuador; fluctuations in the
currency markets; fluctuations in the spot and forward price of
gold or certain other commodities (such as diesel 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 interest rates or gold or silver lease rates
that could impact the mark-to-market value of outstanding
derivative instruments and ongoing payments/receipts under any
interest rate swaps and variable rate debt 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,
royalty, 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,
Ecuador, Mauritania, Ghana, or other countries in which Kinross, or
entities in which it now or hereafter directly or indirectly holds
an interest, do 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 against the Company including, but not limited to,
securities class actions in Canada and/or the United States; 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 rating; 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 these cautionary statements
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 Factors" section of our
most recently filed Annual Information Form and full-year 2012 and
Q1 2013 Management Discussion and Analysis. 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.
Key Sensitivities
Approximately 60%-70% of the Company's costs are denominated in
US dollars.
A 10% change in foreign exchange could result in an approximate
$9 impact in production cost of sales per ounce(5).
A $10 per barrel change in the price of oil could result in an
approximate $2 impact on production cost of sales per ounce.
The impact on royalties of a $100 change in the gold price could
result in an approximate $3 impact on cost of sales per ounce.
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in
this news release, 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 material mineral
properties (other than exploration activities) contained in this
news release has been prepared under the supervision of and
verified by Mr. John Sims, an officer of the Company who is a
"qualified person" within the meaning of National Instrument 43-101
("NI-43-101"). The technical information about the Company's
exploration activities contained in this news release has been
prepared under the supervision of and verified by Dr. Glenton
Masterman, an officer of the Company who is a "qualified person"
within the meaning of NI 43-101.
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, 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) from continuing operations to adjusted net earnings from
continuing operations for the periods presented:
----------------------------------------------------------------------------
GAAP to Adjusted Earnings
from Continuing
Operations Reconciliation
--------------------------------------------
(in millions, except share and Three months Six months
per share amounts) ended ended
June 30, June 30,
--------------------------------------------
2013 2012 2013 2012
--------------------------------------------
Net earnings (loss) from
continuing operations
attributable to common
shareholders - as reported $(2,481.9) $ 113.9 $(2,319.5) $ 212.5
--------------------------------------------
Adjusting items:
Foreign exchange losses 17.7 16.2 21.3 10.6
Non-hedge derivatives gains -
net of tax (0.1) (3.4) (0.1) (13.5)
(Gains) losses on sale of other
assets - net of tax 0.2 0.3 (0.4) 0.3
Foreign exchange loss on
translation of tax basis and
foreign exchange on deferred
income taxes within income tax
expense 35.5 9.6 32.9 12.1
Change in deferred income tax
due to a change in statutory
corporate income tax rate - - - 110.3
Taxes in respect of prior years (3.8) - 0.2 1.3
Impairment charges - net of tax 2,324.4 - 2,324.4 -
Impairment of investments 227.5 20.2 233.1 20.2
--------------------------------------------
2,601.4 42.9 2,611.4 141.3
--------------------------------------------
Net earnings from continuing
operations attributable to
common shareholders - Adjusted $ 119.5 $ 156.8 $ 291.9 $ 353.8
--------------------------------------------
Weighted average number of
common shares outstanding -
Basic 1,141.7 1,138.1 1,141.2 1,138.5
--------------------------------------------
Net earnings from continuing
operations per share - Adjusted $ 0.10 $ 0.14 $ 0.26 $ 0.31
--------------------------------------------
----------------------------------------------------------------------------
The Company makes reference to a non-GAAP measure for adjusted
operating cash flow and adjusted operating cash flow per share.
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, adjusted operating cash flow and adjusted
operating cash flow per share measures are not necessarily
indicative of net cash flow from operations as determined under
IFRS.
The following table provides a reconciliation of adjusted
operating cash flow from continuing operations for the periods
presented:
----------------------------------------------------------------------------
GAAP to Adjusted Operating
Cash Flow from Continuing Operations
--------------------------------------------
(in millions, except share and Three months Six months
per share amounts) ended ended
June 30, June 30,
--------------------------------------------
2013 2012 2013 2012
--------------------------------------------
Net cash flow of continuing
operations provided from
operating activities - as
reported $ 106.4 $ 79.1 $ 471.7 $ 461.2
--------------------------------------------
Adjusting items:
Close out and early settlement
of derivative instruments - (20.3) - (48.7)
Working capital changes:
Accounts receivable and other
assets 103.2 54.1 74.1 82.8
Inventories 7.8 51.0 42.7 49.8
Accounts payable and other
liabilities, including taxes 39.3 104.1 81.9 41.1
--------------------------------------------
150.3 188.9 198.7 125.0
--------------------------------------------
Adjusted operating cash flow
from continuing operations $ 256.7 $ 268.0 $ 670.4 $ 586.2
--------------------------------------------
Weighted average number of
common shares outstanding -
Basic 1,141.7 1,138.1 1,141.2 1,138.5
--------------------------------------------
Adjusted operating cash flow
from continuing operations per
share $ 0.22 $ 0.24 $ 0.59 $ 0.51
--------------------------------------------
----------------------------------------------------------------------------
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.
----------------------------------------------------------------------------
Consolidated and Attributable
Production Cost of Sales from
Continuing Operations Per
Equivalent Ounce Sold
--------------------------------------------
(in millions, except ounces and
production cost of sales per Three months Six months
equivalent ounce) ended ended
June 30, June 30,
--------------------------------------------
2013 2012 2013 2012
--------------------------------------------
Production cost of sales from
continuing operations - as
reported(1) $ 513.5 $ 464.1 $ 989.2 $ 915.8
Less: portion attributable to
Chirano non-controlling
interest (5.0) (4.9) (10.1) (10.3)
--------------------------------------------
Attributable production cost of
sales from continuing
operations $ 508.5 $ 459.2 $ 979.1 $ 905.5
--------------------------------------------
Gold equivalent ounces sold from
continuing operations 695,541 640,836 1,347,738 1,253,188
Less: portion attributable to
Chirano non-controlling
interest (6,040) (6,298) (12,985) (14,123)
--------------------------------------------
Attributable gold equivalent
ounces sold from continuing
operations 689,501 634,538 1,334,753 1,239,065
--------------------------------------------
Consolidated production cost of
sales from continuing
operations per equivalent ounce
sold $ 738 $ 724 $ 734 $ 731
Attributable production cost of
sales from continuing
operations per equivalent ounce
sold $ 737 $ 724 $ 734 $ 731
----------------------------------------------------------------------------
(1) "Production cost of sales" is equivalent to "Total cost of sales" per
the condensed consolidated interim financial statements less
depreciation, depletion and amortization and impairment charges.
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
from Continuing Operations
Per Ounce Sold on a By-Product Basis
--------------------------------------------
(in millions, except ounces and
production cost of sales per Three months Six months
ounce) ended ended
June 30, June 30,
--------------------------------------------
2013 2012 2013 2012
--------------------------------------------
Production cost of sales from
continuing operations - as
reported(1) $ 513.5 $ 464.1 $ 989.2 $ 915.8
Less: portion attributable to
Chirano non-controlling
interest (5.0) (4.9) (10.1) (10.3)
Less: attributable silver
revenues from continuing
operations (57.0) (71.0) (118.9) (154.7)
--------------------------------------------
Attributable production cost of
sales from continuing
operations net of silver by-
product revenue $ 451.5 $ 388.2 $ 860.2 $ 750.8
--------------------------------------------
Gold ounces sold from continuing
operations 653,696 595,654 1,267,379 1,156,807
Less: portion attributable to
Chirano non-controlling
interest (6,025) (6,285) (12,941) (14,085)
--------------------------------------------
Attributable gold ounces sold
from continuing operations 647,671 589,369 1,254,438 1,142,722
--------------------------------------------
Attributable production cost of
sales from continuing
operations per ounce sold on a
by-product basis $ 697 $ 659 $ 686 $ 657
--------------------------------------------
----------------------------------------------------------------------------
(1) "Production cost of sales" is equivalent to "Total cost of sales" per
the interim condensed consolidated financial statements less
depreciation, depletion and amortization and impairment charges.
In June 2013, the World Gold Council ("WGC") published its
guidelines for reporting all-in sustaining costs. 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 this non-GAAP measure. Adoption of this all-in
sustaining cost metric is voluntary and not necessarily standard,
and therefore, this measure presented by the Company may not be
comparable to similar measures presented by other issuers. The
Company believes that the all-in sustaining cost measure
complements existing measures reported by Kinross in order to
reflect the total current period cost of producing gold from
operations.
Starting from the second quarter of 2013, the Company conformed
its previously reported definition of all-in sustaining costs to
that published by the WGC with the principal changes being the
characterization of certain exploration costs and additions to
property, plant and equipment as either sustaining or
non-sustaining, and the inclusion of reclamation and remediation
expenses for current operations. The comparative periods have been
restated accordingly. The Company believes that this change will
enable investors to better understand the total current period
costs associated with producing gold in comparison with other gold
mining companies.
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.
----------------------------------------------------------------------------
Attributable All-in Sustaining
Cost from Continuing
Operations Per Ounce Sold on a
By-Product Basis
--------------------------------------------
Three months Six months
ended ended
June 30, June 30,
--------------------------------------------
(in millions, except ounces and
production cost of sales per
ounce) 2013 2012 2013 2012
--------------------------------------------
Production cost of sales from
continuing operations - as
reported(1) $ 513.5 $ 464.1 $ 989.2 $ 915.8
Less: portion attributable to
Chirano non-controlling
interest (5.0) (4.9) (10.1) (10.3)
Less: attributable silver sales
from continuing operations (57.0) (71.0) (118.9) (154.7)
--------------------------------------------
Attributable production cost of
sales from continuing
operations net of silver by-
product revenue $ 451.5 $ 388.2 $ 860.2 $ 750.8
--------------------------------------------
Adjusting items on an
attributable basis:
General and administrative 42.4 44.0 81.9 83.7
Exploration and business
development - sustaining 24.9 34.1 49.2 68.9
Other operating expense -
sustaining (2.1) 5.8 11.3 15.2
Additions to property, plant
and equipment - sustaining 127.2 86.1 229.3 405.0
Reclamation and remediation
costs related to current
operations 15.0 13.6 29.9 24.3
Inventory impairment charge 35.1 - 35.1 -
--------------------------------------------
All-in Sustaining Cost -
attributable $ 694.0 $ 571.8 $ 1,296.9 $ 1,347.9
--------------------------------------------
Gold ounces sold from continuing
operations 653,696 595,654 1,267,379 1,156,807
Less: portion attributable to
Chirano non-controlling
interest (6,025) (6,285) (12,941) (14,085)
--------------------------------------------
Attributable gold ounces sold
from continuing operations 647,671 589,369 1,254,438 1,142,722
--------------------------------------------
Attributable all-in sustaining
cost from continuing operations
per ounce sold on a by-product
basis $ 1,072 $ 970 $ 1,034 $ 1,180
----------------------------------------------------------------------------
(1) "Production cost of sales" is equivalent to "Total cost of sales" per
the interim financial statements less depreciation, depletion and
amortization and impairment charges.
Review of Operations
------------------------------------------------------------------------
------------------------------------------------------------------------
Three months ended June
30, Gold equivalent ounces
------------------------------------------------
Produced Sold
------------------------------------------------
2013 2012 2013 2012
------------------------------------------------
Fort Knox 102,740 71,952 98,998 71,978
Round Mountain 41,016 53,147 43,035 52,433
Kettle River - Buckhorn 45,044 35,985 46,015 40,354
------------------------------------------------
North America Total 188,800 161,084 188,048 164,765
Kupol 121,728 149,214 164,627 156,716
------------------------------------------------
Russia Total 121,728 149,214 164,627 156,716
Paracatu 120,247 118,419 118,243 118,389
La Coipa 48,237 36,113 46,574 30,325
Maricunga 49,032 60,841 55,163 61,367
------------------------------------------------
South America Total 217,516 215,373 219,980 210,081
Tasiast 71,047 49,807 62,489 46,296
Chirano (100%) 62,545 63,660 60,397 62,978
------------------------------------------------
West Africa Total 133,592 113,467 122,886 109,274
------------------------------------------------
Continuing operations 661,636 639,138 695,541 640,836
Discontinued
operations(2) - 15,105 - 15,611
------------------------------------------------
Operations Total 661,636 654,243 695,541 656,447
Less Chirano non-
controlling interest
(10%) (6,255) (6,366) (6,040) (6,298)
------------------------------------------------
Attributable -
Continuing operations 655,381 632,772 689,501 634,538
------------------------------------------------
Attributable Total 655,381 647,877 689,501 650,149
------------------------------------------------------------------------
------------------------------------------------------------------------
Review of Operations
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended June
30,
Production Production
cost of sales cost of sales
(1)($millions) (1)/oz
----------------------------------------------------
2013 2012 2013 2012
----------------------------------------------------
Fort Knox $ 56.9 $ 54.5 $ 575 $ 757
Round Mountain 35.0 34.7 813 662
Kettle River - Buckhorn 22.8 20.5 495 508
----------------------------------------------------
North America Total 114.7 109.7 610 666
Kupol 84.9 73.2 516 467
----------------------------------------------------
Russia Total 84.9 73.2 516 467
Paracatu 101.9 108.2 862 914
La Coipa 36.0 34.9 773 1,151
Maricunga 59.3 44.5 1,075 725
----------------------------------------------------
South America Total 197.2 187.6 896 893
Tasiast 66.6 44.5 1,066 961
Chirano (100%) 50.1 49.1 830 780
----------------------------------------------------
West Africa Total 116.7 93.6 950 857
----------------------------------------------------
Continuing operations 513.5 464.1 738 724
Discontinued
operations(2) - 13.6 - 871
----------------------------------------------------
Operations Total $ 513.5 $ 477.7 $ 738 $ 728
Less Chirano non-
controlling interest
(10%) (5.0) (4.9)
----------------------------------------------------
Attributable -
Continuing operations $ 508.5 $ 459.2 $ 737 $ 724
----------------------------------------------------
Attributable Total $ 508.5 $ 472.8 $ 737 $ 727
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) "Production cost of sales" is equivalent to "Total cost of sales" per
the interim condensed consolidated financial statements less depreciation,
depletion and amortization and impairment charges.
(2) On June 28, 2012, the Company completed the sale of its 50% interest in
the Crixas gold mine.
Six months ended June
30, Gold equivalent ounces
------------------------------------------------
Produced Sold
------------------------------------------------
2013 2012 2013 2012
------------------------------------------------
Fort Knox 195,992 133,668 217,032 132,343
Round Mountain 80,437 97,905 81,831 95,984
Kettle River - Buckhorn 84,914 78,603 85,688 79,675
------------------------------------------------
North America Total 361,343 310,176 384,551 308,002
Kupol 246,226 276,184 248,426 283,451
------------------------------------------------
Russia Total 246,226 276,184 248,426 283,451
Paracatu 240,138 223,037 240,271 228,916
La Coipa 101,966 73,853 103,816 74,037
Maricunga 104,094 124,830 109,954 130,430
------------------------------------------------
South America Total 446,198 421,720 454,041 433,383
Tasiast 133,804 87,441 130,870 87,123
Chirano (100%) 129,675 139,566 129,850 141,229
------------------------------------------------
West Africa Total 263,479 227,007 260,720 228,352
------------------------------------------------
Continuing operations 1,317,246 1,235,087 1,347,738 1,253,188
Discontinued
operations(2) - 30,994 - 32,764
------------------------------------------------
Operations Total 1,317,246 1,266,081 1,347,738 1,285,952
Less Chirano non-
controlling interest
(10%) (12,968) (13,957) (12,985) (14,123)
------------------------------------------------
Attributable -
Continuing operations 1,304,278 1,221,130 1,334,753 1,239,065
------------------------------------------------
Attributable Total 1,304,278 1,252,124 1,334,753 1,271,829
------------------------------------------------------------------------
------------------------------------------------------------------------
Production Production
Six months ended June cost of sales cost of sales
30, (1)($millions) (1)/oz
----------------------------------------------------
2013 2012 2013 2012
----------------------------------------------------
Fort Knox $ 122.8 $ 106.5 $ 566 $ 805
Round Mountain 66.2 71.9 809 749
Kettle River - Buckhorn 43.1 39.5 503 496
----------------------------------------------------
North America Total 232.1 217.9 604 707
Kupol 130.8 134.4 527 474
----------------------------------------------------
Russia Total 130.8 134.4 527 474
Paracatu 203.3 213.6 846 933
La Coipa 76.3 78.5 735 1,060
Maricunga 119.1 88.2 1,083 676
----------------------------------------------------
South America Total 398.7 380.3 878 878
Tasiast 126.8 80.4 969 923
Chirano (100%) 100.8 102.8 776 728
----------------------------------------------------
West Africa Total 227.6 183.2 873 802
----------------------------------------------------
Continuing operations 989.2 915.8 734 731
Discontinued
operations(2) - 27.4 - 836
----------------------------------------------------
Operations Total $ 989.2 $ 943.2 $ 734 $ 733
Less Chirano non-
controlling interest
(10%) (10.1) (10.3)
----------------------------------------------------
Attributable -
Continuing operations $ 979.1 $ 905.5 $ 734 $ 731
----------------------------------------------------
Attributable Total $ 979.1 $ 932.9 $ 734 $ 734
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) "Production cost of sales" is equivalent to "Total cost of sales" per
the interim condensed consolidated financial statements less depreciation,
depletion and amortization and impairment charges.
(2) On June 28, 2012, the Company completed the sale of its 50% interest in
the Crixas gold mine.
Consolidated balance sheets
(unaudited, expressed in millions of
United States dollars, except share
amounts)
----------------------------------------------------------------------------
As at
---------------------------------------------------
June 30, December 31, January 1,
2013 2012 2012
---------------------------------------------------
Assets
Current assets
Cash and cash
equivalents $ 1,163.1 $ 1,632.7 $ 1,724.8
Restricted cash 58.8 58.1 56.1
Short-term
investments - 349.8 1.3
Accounts receivable
and other assets 324.7 280.9 304.7
Inventories 1,281.1 1,254.9 961.7
Unrealized fair
value of derivative
assets 2.6 15.0 2.8
---------------------------------------------------
2,830.3 3,591.4 3,051.4
---------------------------------------------------
Non-current assets
Property, plant and
equipment 6,744.0 8,968.1 8,855.0
Goodwill 476.8 1,136.7 3,382.3
Long-term
investments 26.3 49.1 79.3
Investments in
associate and joint
ventures 319.2 536.1 654.9
Unrealized fair
value of derivative
assets 0.8 9.6 1.1
Deferred charges and
other long-term
assets 541.5 545.5 403.1
Deferred tax assets 108.9 46.1 21.8
---------------------------------------------------
Total assets $ 11,047.8 $ 14,882.6 $ 16,448.9
---------------------------------------------------
Liabilities
Current liabilities
Accounts payable and
accrued liabilities $ 577.3 $ 636.2 $ 562.0
Current tax payable 54.4 93.2 67.6
Current portion of
long-term debt 60.0 516.2 31.9
Current portion of
provisions 34.2 42.0 37.6
Current portion of
unrealized fair
value of derivative
liabilities 41.9 22.0 66.7
---------------------------------------------------
767.8 1,309.6 765.8
---------------------------------------------------
Non-current liabilities
Long-term debt 2,087.2 2,116.4 1,599.4
Provisions 727.5 720.4 584.0
Unrealized fair value
of derivative
liabilities 26.3 10.5 32.7
Other long-term
liabilities 139.0 125.6 132.4
Deferred tax
liabilities 536.9 674.4 863.9
---------------------------------------------------
Total liabilities 4,284.7 4,956.9 3,978.2
---------------------------------------------------
Equity
Common shareholders'
equity
Common share capital
and common share
purchase warrants $ 14,716.3 $ 14,692.5 $ 14,656.6
Contributed surplus 87.3 89.9 81.4
Accumulated deficit (8,070.9) (4,937.1) (2,249.9)
Accumulated other
comprehensive
income (loss) (46.2) 4.9 (97.7)
---------------------------------------------------
Total common
shareholders' equity 6,686.5 9,850.2 12,390.4
---------------------------------------------------
Non-controlling
interest 76.6 75.5 80.3
---------------------------------------------------
Total equity 6,763.1 9,925.7 12,470.7
---------------------------------------------------
Commitments and
contingencies
---------------------------------------------------
Total liabilities and
equity $ 11,047.8 $ 14,882.6 $ 16,448.9
---------------------------------------------------
Common shares
Authorized Unlimited Unlimited Unlimited
Issued and outstanding 1,142,155,053 1,140,132,123 1,137,732,344
Consolidated statements of operations
(unaudited, expressed in millions of United States
dollars, except per share and share amounts)
----------------------------------------------------------------------------
Three months Six months
ended ended
--------------------------------------------
June 30, June 30, June 30, June 30,
2013 2012 2013 2012
--------------------------------------------
Revenue
Metal sales $ 968.0 $ 1,005.6 $ 2,026.1 $ 2,010.7
Cost of sales
Production cost of sales 513.5 464.1 989.2 915.8
Depreciation, depletion and
amortization 210.1 157.0 437.8 299.5
Impairment charges 2,433.1 - 2,433.1 -
--------------------------------------------
Total cost of sales 3,156.7 621.1 3,860.1 1,215.3
--------------------------------------------
Gross profit (loss) (2,188.7) 384.5 (1,834.0) 795.4
--------------------------------------------
Other operating expense 9.4 10.7 33.4 22.2
Exploration and business
development 43.2 70.6 81.7 128.3
General and administrative 42.4 44.0 81.9 83.7
--------------------------------------------
Operating earnings (loss) (2,283.7) 259.2 (2,031.0) 561.2
--------------------------------------------
Other income (expense) - net (243.3) (31.2) (251.7) (20.6)
Equity in losses of associate
and joint venture (2.2) (1.5) (3.1) (1.5)
Finance income 2.3 1.1 4.3 2.1
Finance expense (9.1) (9.0) (17.7) (18.8)
--------------------------------------------
Earnings (loss) before taxes (2,536.0) 218.6 (2,299.2) 522.4
Income tax recovery (expense) -
net 53.6 (104.5) (19.2) (318.5)
--------------------------------------------
Earnings (loss) from continuing
operations after tax (2,482.4) 114.1 (2,318.4) 203.9
Earnings (loss) from
discontinued operations after
tax (721.1) 39.7 (723.0) 46.8
--------------------------------------------
Net earnings (loss) $(3,203.5) $ 153.8 $(3,041.4) $ 250.7
--------------------------------------------
Net earnings (loss) from
continuing operations
attributable to:
Non-controlling interest $ (0.5) $ 0.2 $ 1.1 $ (8.6)
--------------------------------------------
Common shareholders $(2,481.9) $ 113.9 $(2,319.5) $ 212.5
--------------------------------------------
Net earnings (loss) attributable
to:
--------------------------------------------
Non-controlling interest $ (0.5) $ 0.2 $ 1.1 $ (8.6)
--------------------------------------------
Common shareholders $(3,203.0) $ 153.6 $(3,042.5) $ 259.3
--------------------------------------------
Earnings (loss) per share from
continuing operations
attributable to common
shareholders
Basic $ (2.17) $ 0.10 $ (2.03) $ 0.19
Diluted $ (2.17) $ 0.10 $ (2.03) $ 0.19
Earnings (loss) per share
attributable to common
shareholders
Basic $ (2.81) $ 0.13 $ (2.67) $ 0.23
Diluted $ (2.81) $ 0.13 $ (2.67) $ 0.23
Weighted average number of
common shares outstanding
(millions)
Basic 1,141.7 1,138.1 1,141.2 1,138.5
Diluted 1,141.7 1,144.3 1,141.2 1,144.4
----------------------------------------------------------------------------
Consolidated statements of cash flows
(unaudited, expressed in
millions of United States
dollars)
----------------------------------------------------------------------------
Three months Six months
ended ended
--------------------------------------------
June 30, June 30, June 30, June 30,
2013 2012 2013 2012
--------------------------------------------
Net inflow (outflow) of cash
related to the following
activities:
Operating:
Net earnings (loss) from
continuing operations $(2,482.4) $ 114.1 $(2,318.4) $ 203.9
Adjustments to reconcile net
earnings from continuing
operations to net cash provided
from (used in) operating
activities:
Depreciation, depletion and
amortization 210.1 157.0 437.8 299.5
Losses (gains) on sale of other
assets - net 0.2 0.5 (0.6) 0.5
Impairment charges 2,433.1 - 2,433.1 -
Impairment of investments 227.5 20.2 233.1 20.2
Equity in losses of associate
and joint venture 2.2 1.5 3.1 1.5
Non-hedge derivative gains -
net (0.1) (3.4) (0.1) (13.5)
Settlement of derivative
instruments - 20.3 0.2 48.7
Share-based compensation
expense 9.4 9.4 18.1 18.9
Accretion expense 5.1 5.3 10.5 10.7
Deferred tax (recovery) expense (164.1) (14.1) (184.9) 83.3
Foreign exchange (gains) losses
and other 15.7 (22.5) 38.5 (38.8)
Changes in operating assets and
liabilities:
Accounts receivable and other
assets (103.2) (54.1) (74.1) (82.8)
Inventories (7.8) (51.0) (42.7) (49.8)
Accounts payable and accrued
liabilities 59.6 26.9 92.6 148.4
--------------------------------------------
Cash flow provided from
operating activities 205.3 210.1 646.2 650.7
--------------------------------------------
Income taxes paid (98.9) (131.0) (174.5) (189.5)
--------------------------------------------
Net cash flow of continuing
operations provided from
operating activities 106.4 79.1 471.7 461.2
--------------------------------------------
Net cash flow of discontinued
operations used in operating
activities (2.5) (0.7) (9.7) (2.8)
--------------------------------------------
Investing:
Additions to property, plant
and equipment (321.0) (414.7) (630.5) (920.3)
Net proceeds from (additions to)
long-term investments and other
assets (18.8) 26.0 (43.3) 13.5
Net proceeds from the sale of
property, plant and equipment 0.1 0.2 1.4 0.2
Disposals of short-term
investments - - 349.8 1.1
Increase (decrease) in
restricted cash (0.9) 0.4 (0.9) 1.3
Interest received 2.1 1.2 4.2 2.1
Other - 0.4 - 0.1
--------------------------------------------
Net cash flow of continuing
operations used in investing
activities (338.5) (386.5) (319.3) (902.0)
--------------------------------------------
Net cash flow of discontinued
operations provided from (used)
in investing activities (6.0) 204.0 (14.3) 180.3
--------------------------------------------
Financing:
Issuance of common shares on
exercise of options and
warrants 1.4 1.6 3.0 3.5
Proceeds from issuance of debt - 168.9 - 296.3
Repayment of debt (6.3) (170.7) (493.3) (322.5)
Interest paid (1.2) (1.6) (2.7) (4.8)
Dividends paid to common
shareholders - - (91.3) (91.1)
Other (1.7) (0.1) (1.7) (0.8)
--------------------------------------------
Net cash flow of continuing
operations used in financing
activities (7.8) (1.9) (586.0) (119.4)
--------------------------------------------
Net cash flow of discontinued
operations used in financing
activities - - - -
--------------------------------------------
Effect of exchange rate changes
on cash and cash equivalents of
continuing operations (9.3) (7.0) (12.0) (4.4)
--------------------------------------------
Decrease in cash and cash
equivalents (257.7) (113.0) (469.6) (387.1)
Cash and cash equivalents,
beginning of period 1,420.8 1,450.7 1,632.7 1,724.8
--------------------------------------------
Cash and cash equivalents, end
of period $ 1,163.1 $ 1,337.7 $ 1,163.1 $ 1,337.7
--------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------
Operating Summary
----------------------------------------------------------------------
Ore
Tonnes Ore Processed
Ore Processed (Heap
Mined (Milled) Leach)
Mine Period Ownership (1) (1) (1)
----------------------------------------------------------------------
('000 ('000 ('000
(%) tonnes) tonnes) tonnes)
----------------------------------------------------------------------
North Fort Knox
America Q2 2013 100 5,048 3,231 10,261
---------------------------------------------
Q1 2013 100 7,361 2,894 536
Q4 2012 100 7,805 3,273 6,530
Q3 2012 100 7,998 3,238 12,873
Q2 2012 100 5,115 3,452 9,632
----------------------------------------------------------
Round
Mountain Q2 2013 50 4,070 868 4,098
---------------------------------------------
Q1 2013 50 6,474 936 6,468
Q4 2012 50 3,820 867 3,864
Q3 2012 50 5,376 1,026 5,118
Q2 2012 50 5,186 922 3,752
----------------------------------------------------------
Kettle River Q2 2013 100 96 106 -
---------------------------------------------
Q1 2013 100 91 121 -
Q4 2012 100 101 87 -
Q3 2012 100 81 95 -
Q2 2012 100 93 111 -
----------------------------------------------------------------------
Russia Kupol(4)(5) Q2 2013 100 318 306 -
---------------------------------------------
Q1 2013 100 338 328 -
Q4 2012 100 337 329 -
Q3 2012 100 302 332 -
Q2 2012 100 320 329 -
----------------------------------------------------------------------
South Paracatu
America Q2 2013 100 13,836 13,451 -
---------------------------------------------
Q1 2013 100 13,971 14,068 -
Q4 2012 100 15,791 13,692 -
Q3 2012 100 13,336 13,386 -
Q2 2012 100 12,544 12,988 -
----------------------------------------------------------
La Coipa (3) Q2 2013 100 584 1,331 -
---------------------------------------------
Q1 2013 100 990 1,400 -
Q4 2012 100 1,298 1,421 -
Q3 2012 100 896 1,297 -
Q2 2012 100 585 1,256 -
----------------------------------------------------------
Maricunga Q2 2013 100 3,807 - 3,659
---------------------------------------------
Q1 2013 100 4,452 - 3,861
Q4 2012 100 5,704 - 3,937
Q3 2012 100 5,326 - 3,755
Q2 2012 100 3,808 - 3,487
----------------------------------------------------------------------
West Africa Tasiast Q2 2013 100 5,314 652 3,838
---------------------------------------------
Q1 2013 100 6,164 639 4,154
Q4 2012 100 9,522 659 3,681
Q3 2012 100 6,637 643 1,887
Q2 2012 100 5,636 656 4,477
----------------------------------------------------------
Chirano -
100% Q2 2013 90 826 854 -
---------------------------------------------
Q1 2013 90 1,005 816 -
Q4 2012 90 1,311 879 -
Q3 2012 90 1,252 846 -
Q2 2012 90 1,016 802 -
----------------------------------------------------------
Chirano(6) Q2 2013 90 826 854 -
---------------------------------------------
Q1 2013 90 1,005 816 -
Q4 2012 90 1,311 879 -
Q3 2012 90 1,252 846 -
Q2 2012 90 1,016 802 -
----------------------------------------------------------------------
--------------------------------------------------------------------
Operating Summary
--------------------------------------------------------------------
Gold Gold
Grade Eq Eq
Grade (Heap Recovery Production Sales
Mine (Mill) Leach) (2) (7) (7)
--------------------------------------------------------------------
(g/t) (g/t) (%) (ounces) (ounces)
--------------------------------------------------------------------
North Fort Knox
America 0.80 0.30 84% 102,740 98,998
-------------------------------------------
0.88 0.25 84% 93,252 118,034
1.03 0.30 84% 119,582 100,923
0.76 0.30 84% 106,698 100,172
0.51 0.33 85% 71,952 71,978
--------------------------------------------------------
Round
Mountain 0.56 0.34 68% 41,016 43,035
-------------------------------------------
0.64 0.38 75% 39,421 38,796
0.68 0.40 70% 41,220 41,371
0.72 0.44 71% 53,205 53,237
0.82 0.43 74% 53,147 52,433
--------------------------------------------------------
Kettle River 13.09 - 94% 45,044 46,015
-------------------------------------------
13.21 - 92% 39,870 39,673
13.96 - 93% 33,548 33,242
15.23 - 94% 43,942 44,049
11.52 - 92% 35,985 40,354
--------------------------------------------------------------------
Russia Kupol(4)(5) 11.16 - 94% 121,728 164,627
-------------------------------------------
10.57 - 93% 124,498 83,799
11.89 - 93% 146,535 130,759
12.34 - 94% 155,533 164,025
12.23 - 93% 149,214 156,716
--------------------------------------------------------------------
South Paracatu
America 0.37 - 75% 120,247 118,243
-------------------------------------------
0.37 - 75% 119,891 122,028
0.39 - 75% 132,114 137,534
0.38 - 70% 111,558 104,937
0.38 - 74% 118,419 118,389
--------------------------------------------------------
La Coipa (3) 0.93 - 88% 48,237 46,574
-------------------------------------------
0.97 - 84% 53,729 57,242
1.07 - 86% 63,429 58,935
0.65 - 79% 41,585 42,240
0.72 - 77% 36,113 30,325
--------------------------------------------------------
Maricunga - 0.53 nm 49,032 55,163
-------------------------------------------
- 0.57 nm 55,062 54,791
- 0.59 nm 64,568 61,046
- 0.64 nm 46,971 45,818
- 0.65 nm 60,841 61,367
--------------------------------------------------------------------
West Africa Tasiast 2.03 0.29 92% 71,047 62,489
-------------------------------------------
1.87 0.35 91% 62,757 68,381
1.31 0.59 91% 46,051 44,400
1.55 0.51 92% 51,842 48,045
1.74 0.47 86% 49,807 46,296
--------------------------------------------------------
Chirano -
100% 2.50 - 94% 62,545 60,397
-------------------------------------------
2.73 - 93% 67,130 69,453
3.27 - 94% 86,070 87,724
2.67 - 93% 67,599 69,698
2.70 - 92% 63,660 62,978
--------------------------------------------------------
Chirano(6) 2.50 - 94% 56,290 54,357
-------------------------------------------
2.73 - 93% 60,417 62,508
3.27 - 94% 77,463 78,952
2.67 - 93% 60,839 62,728
2.70 - 92% 57,294 56,680
--------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Summary
----------------------------------------------------------------------------
Production Production
costs of cost of
sales sales Cap
Mine (8) (8) /oz Ex DD&A
----------------------------------------------------------------------------
($ millions) ($/ounce) ($ millions) ($ millions)
----------------------------------------------------------------------------
North Fort Knox
America $ 56.9 $ 575 $ 27.9 $ 25.3
---------------------------------------------------
65.9 558 49.4 27.2
49.8 493 37.8 20.7
64.9 648 13.7 25.7
54.5 757 38.4 11.3
----------------------------------------------------------------
Round
Mountain 35.0 813 13.5 9.3
---------------------------------------------------
31.2 804 10.0 4.9
32.6 788 18.8 5.4
32.2 605 14.4 6.6
34.7 662 19.3 8.4
----------------------------------------------------------------
Kettle River 22.8 495 1.1 18.8
---------------------------------------------------
20.3 512 1.2 16.4
15.4 463 4.7 15.1
20.7 470 1.0 21.7
20.5 508 3.2 18.2
----------------------------------------------------------------------------
Russia Kupol(4)(5) 84.9 516 20.7 27.9
---------------------------------------------------
45.9 548 29.0 14.9
62.0 474 21.5 24.6
76.5 466 59.0 30.1
73.2 467 43.5 29.4
----------------------------------------------------------------------------
South Paracatu
America 101.9 862 25.7 26.3
---------------------------------------------------
101.4 831 14.4 26.1
109.8 798 61.7 31.5
92.0 877 81.0 20.0
108.2 914 67.2 19.2
----------------------------------------------------------------
La Coipa (3) 36.0 773 2.2 29.5
---------------------------------------------------
40.3 704 1.5 36.8
43.2 733 8.4 26.8
45.9 1,087 25.9 12.2
34.9 1,151 21.9 6.2
----------------------------------------------------------------
Maricunga 59.3 1,075 10.2 11.0
---------------------------------------------------
59.8 1,091 16.3 32.3
56.6 927 0.5 5.4
40.0 873 33.9 4.9
44.5 725 50.7 5.5
----------------------------------------------------------------------------
West Africa Tasiast 66.6 1,066 186.2 28.4
---------------------------------------------------
60.2 880 155.6 33.3
47.1 1,061 291.6 23.1
32.2 670 190.4 18.6
44.5 961 124.3 19.9
----------------------------------------------------------------
Chirano -
100% 50.1 830 27.2 31.7
---------------------------------------------------
50.7 730 28.1 33.8
61.2 698 41.3 45.1
51.3 736 15.9 39.5
49.1 780 20.6 36.9
----------------------------------------------------------------
Chirano(6) 45.1 830 24.5 28.5
---------------------------------------------------
45.6 730 25.3 30.4
55.1 698 37.2 40.6
46.2 736 14.3 35.6
44.2 780 18.5 33.2
----------------------------------------------------------------------------
(1) Ore processed is to 100%, production and costs are to Kinross' account.
(2) Due to the nature of heap leach operations, recovery rates at Maricunga
cannot be accurately measured on a quarterly basis. Recovery rates at
Fort Knox, Round Mountain and Tasiast represent mill recovery only.
(3) La Coipa silver grade and recovery were as follows: Q2 (2013) 32.45
g/t, 61%; Q1 (2013) 35.61 g/t, 58%; Q4 (2012) 49.45 g/t, 50%; Q3 (2012)
55.58 g/t, 45%
(4) The Kupol segment includes the Kupol and Dvoinoye mines.
(5) Kupol silver grade and recovery were as follows: Q2 (2013) 139.03 g/t,
83%; Q1 (2013) 128.44 g/t, 85%; Q4 (2012) 155.53 g/t, 85%; Q3 (2012)
163.68 g/t, 85%
(6) Includes Kinross' share of Chirano at 90%.
(7) 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: Q2 2013: 61.14:1, Q1 2013: 54.19:1,
Q4 2012: 52.55:1, Q3 2012: 55.44:1.
(8) "Production cost of sales" is equivalent to "Total cost of sales" per
the interim financial statements less depreciation, depletion and
amortization and impairment charges.
Contacts: Kinross Gold Corporation - Media Contact Steve
Mitchell Vice-President, Corporate Communications
416-365-2726steve.mitchell@kinross.com Kinross Gold Corporation -
Investor Relations Contact Tom Elliott Vice-President, Investor
Relations 416-365-3390tom.elliott@kinross.com www.kinross.com
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