TORONTO, ON--(Marketwired - February 15, 2017) - Kinross Gold Corporation (TSX: K) (NYSE: KGC) today announced its results for the fourth-quarter and year-end December 31, 2016.

2016 fourth-quarter highlights:

Production1: 746,291 gold equivalent ounces (Au eq. oz.), compared with 623,716 Au eq. oz. in Q4 2015.
Revenue: $902.8 million, compared with $706.2 million in Q4 2015.
Production cost of sales2: $712 per Au eq. oz., compared with $688 in Q4 2015.
All-in sustaining cost2: $1,012 per Au eq. oz. sold, compared with $991 in Q4 2015. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $1,010 in Q4 2016, compared with $988 in Q4 2015.
Adjusted operating cash flow2: $211.6 million, compared with $203.8 million in Q4 2015.
Operating cash flow: $302.6 million, compared with $182.2 million in Q4 2015.
Adjusted net loss2,3: $50.9 million, or $0.04 per share, compared with an adjusted loss of $68.8 million, or $0.06 per share, in Q4 2015.
Reported net loss3: $116.5 million, or $0.09 per share, compared with a reported loss of $841.9 million, or $0.73 per share, for Q4 2015.
2016 full-year highlights:

Production1: record 2,789,150 Au eq. oz., compared with 2,594,652 Au eq. oz. for full-year 2015.
Revenue: $3,472.0 million, compared with $3,052.2 million for full-year 2015.
Production cost of sales2: $712 per Au eq. oz., compared with $696 for full-year 2015.
All-in sustaining cost2: $984 per Au eq. oz. sold, compared with $975 for full-year 2015. All-in sustaining cost per Au oz. sold on a by-product basis was $975 for full-year 2016, compared with $971 per Au oz. sold for full-year 2015.
Adjusted operating cash flow2: $926.7 million, compared with $786.6 million for full-year 2015.
Operating cash flow: $1,099.2 million, compared with $831.6 million for full-year 2015.
Adjusted net earnings (loss)2,3: earnings of $93.0 million, or $0.08 per share, compared with an adjusted net loss of $91.0 million, or $0.08 per share, for full-year 2015.
Reported net loss3: $104.0 million, or $0.08 per share, compared with a reported loss of $984.5 million, or $0.86 per share, for full-year 2015.
Capital expenditures: $633.8 million, compared with $610.0 million for full-year 2015.
Balance sheet: The Company ended the year with cash and cash equivalents of $827.0 million, total liquidity of approximately $2.3 billion, and no debt maturities until 2020.
2017 outlook:

2017 Outlook: Kinross expects to produce 2.5 - 2.7 million Au eq. oz. at a production cost of sales per Au eq. oz. of $660 - $720 and an all-in sustaining cost per Au eq. oz. of $925 - $1,025. Total capital expenditures are forecast to be approximately $900 million (+/- 5%), which includes sustaining capital of $420 million, in-line with previous levels, and non-sustaining capital of approximately $455 million to advance development projects, including Tasiast.
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 14 to 18 of this news release.
3 Net earnings/loss figures in this release represent "net earnings (loss) from continuing operations attributable to common shareholders".

CEO Commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to 2016 fourth-quarter and year-end results:

"Kinross ended 2016 on a strong note, establishing a new record of almost 2.8 million Au eq. oz. for full-year gold production, and meeting our annual guidance on production, costs, and capital expenditures for the fifth straight year. We generated operating cash flow of $1.1 billion for the full year, a 32% increase over the previous year, and improved our adjusted net earnings by more than $180 million.

"We are forecasting another year of solid production in 2017, with costs expected to be consistent with 2016 levels. We are making excellent progress advancing our development projects at Tasiast and Bald Mountain, and continue to advance attractive organic development opportunities at other sites. With cash and cash equivalents of $827 million at year-end, and total liquidity of approximately $2.3 billion, we have the balance sheet strength and financial flexibility to fund these organic opportunities and secure strong, steady production and cash flow in the years ahead.

"With an impressive operational track record, one of the strongest balance sheets in the industry, and exciting organic development opportunities, we believe Kinross continues to offer compelling relative value for shareholders."

​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) 2016 2015 2016 2015
Operating Highlights
Total gold equivalent ounces(a)
Produced(c) 752,501 629,528 2,810,345 2,620,262
Sold(c) 743,427 638,040 2,778,902 2,634,867

Attributable gold equivalent ounces(a)
Produced(c) 746,291 623,716 2,789,150 2,594,652
Sold(c) 738,087 632,411 2,758,306 2,608,870

Financial Highlights
Metal sales $ 902.8 $ 706.2 $ 3,472.0 $ 3,052.2
Production cost of sales $ 529.4 $ 439.4 $ 1,983.8 $ 1,834.8
Depreciation, depletion and amortization $ 237.8 $ 235.0 $ 855.0 $ 897.7
Impairment charges $ - $ 674.5 $ 139.6 $ 699.0
Operating earnings (loss) $ (35.6 ) $ (717.3 ) $ 46.3 $ (742.9 )
Net loss attributable to common shareholders $ (116.5 ) $ (841.9 ) $ (104.0 ) $ (984.5 )
Basic loss per share attributable to common shareholders $ (0.09 ) $ (0.73 ) $ (0.08 ) $ (0.86 )
Diluted loss per share attributable to common shareholders $ (0.09 ) $ (0.73 ) $ (0.08 ) $ (0.86 )
Adjusted net earnings (loss) attributable to common shareholders(b) $ (50.9 ) $ (68.8 ) $ 93.0 $ (91.0 )
Adjusted net earnings (loss) per share(b) $ (0.04 ) $ (0.06 ) $ 0.08 $ (0.08 )
Net cash flow provided from operating activities $ 302.6 $ 182.2 $ 1,099.2 $ 831.6
Adjusted operating cash flow(b) $ 211.6 $ 203.8 $ 926.7 $ 786.6
Average realized gold price per ounce $ 1,217 $ 1,108 $ 1,249 $ 1,159
Consolidated production cost of sales per equivalent ounce(c)sold(b) $ 712 $ 689 $ 714 $ 696
Attributable(a) production cost of sales per equivalent ounce(c)sold(b) $ 712 $ 688 $ 712 $ 696
Attributable(a) production cost of sales per ounce sold on a by-product basis(b) $ 701 $ 676 $ 696 $ 684
Attributable(a) all-in sustaining cost per ounce sold on a by-product basis(b) $ 1,010 $ 988 $ 975 $ 971
Attributable(a) all-in sustaining cost per equivalent ounce(c)sold(b) $ 1,012 $ 991 $ 984 $ 975
Attributable(a) all-in cost per ounce sold on a by-product basis(b) $ 1,192 $ 1,055 $ 1,073 $ 1,047
Attributable(a) all-in cost per equivalent ounce(c)sold(b) $1,189 $1,055 $1,079 $1,049

(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 onpage 14 to 18 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 fourth quarter of 2016 was 70.88:1, compared with 74.78:1 for the fourth quarter of 2015; year to date 2016 was 72.95:1 compared with 73.92:1 for 2015.

The following operating and financial results are based on fourth-quarter and year-end 2016 gold equivalent production. Production and cost measures are on an attributable basis:

Production: Kinross produced 746,291 attributable Au eq. oz. in the fourth quarter of 2016, an increase compared with the fourth quarter of 2015, mainly due to the acquisition of Bald Mountain and the remaining 50% of Round Mountain that the Company did not already own.

Kinross produced 2,789,150 attributable Au eq. oz. for full-year 2016, which was within the Company's 2016 guidance range. This compares with 2,594,652 ounces for full-year 2015. The 7% year-over-year increase was primarily due to the acquisition described above.

Production cost of sales: Production cost of sales per Au eq. oz.2 was $712 for the fourth quarter of 2016, compared with $688 for the fourth quarter of 2015, largely due to a higher per ounce cost at Round Mountain and Paracatu, and higher cost ounces from Bald Mountain. Production cost of sales per Au oz. on a by-product basis2 was $701 in Q4 2016, compared with $676 in Q4 2015, based on Q4 2016 attributable gold sales of 718,343 ounces and attributable silver sales of 1,399,445 ounces.

Production cost of sales per Au eq. oz. was $712 for full-year 2016, which was within the Company's 2016 guidance range. This compares with production cost of sales of $696 per Au eq. oz. for full-year 2015. The full-year increase was mainly due to higher costs per ounce at Fort Knox and Chirano, and higher cost ounces from Bald Mountain. Production cost of sales per Au oz. on a by-product basis was $696 for full-year 2016, compared with $684 for full-year 2015, based on 2016 full-year attributable1 gold sales of 2,677,367 ounces and attributable silver sales of 5,909,364 ounces.

All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold2 was $1,012 in Q4 2016, compared with $991 in Q4 2015, mainly due to higher production cost of sales. All-in sustaining cost per Au oz. sold on a by-product basis2 was $1,010 in Q4 2016, compared with $988 in Q4 2015.

All-in sustaining cost per Au eq. oz. sold was $984 for full-year 2016, compared with $975 for full-year 2015, which was within the Company's 2016 guidance range. The year-over-year increase was mainly due to higher production cost of sales and higher capital expenditures. All-in sustaining cost per Au oz. sold on a by-product basis was $975 for full-year 2016, compared with $971 for full-year 2015.

Revenue: Revenue from metal sales was $902.8 million in the fourth quarter of 2016, compared with $706.2 million during the same period in 2015, due to higher gold sales and a higher average realized gold price.

Revenue was $3,472.0 million for full-year 2016, compared with $3,052.2 million for full-year 2015, due to higher gold sales and a higher average realized gold price.

Average realized gold price: The average realized gold price in Q4 2016 increased to $1,217 per ounce, compared with $1,108 per ounce in Q4 2015. The average realized gold price per ounce increased to $1,249 for full-year 2016, compared with $1,159 per ounce for full-year 2015.

Margins: Kinross' attributable margin per Au eq. oz. sold4 was $505 per Au eq. oz. for the fourth quarter of 2016, compared with the Q4 2015 margin of $420 per Au eq. oz. Full-year margin per Au eq. oz. was $537, compared with $463 for full-year 2015.

Operating cash flow: Adjusted operating cash flow2 was $211.6 million for the fourth quarter of 2016, compared with $203.8 million for Q4 2015. Adjusted operating cash flow for full-year 2016 was $926.7 million, compared with $786.6 million for full-year 2015.

Net operating cash flow was $302.6 million for the fourth quarter of 2016, compared with $182.2 million for Q4 2015. Operating cash flow for full-year 2016 was $1,099.2 million, compared with $831.6 million for full-year 2015.

Earnings/loss: Adjusted net loss2,3 was $50.9 million, or $0.04 per share, for Q4 2016, compared with an adjusted net loss of $68.8 million, or $0.06 per share, for Q4 2015. Full-year 2016 adjusted net earnings were $93.0 million, or $0.08 per share, compared with an adjusted net loss of $91.0 million, or $0.08 per share, for full-year 2015.

Reported net loss3 was $116.5 million, or $0.09 per share, for Q4 2016, compared with a loss of $841.9 million, or $0.73 per share, in Q4 2015. Full-year 2016 reported net loss was $104.0 million, or $0.08 per share, compared with a loss of $984.5 million, or $0.86 per share, for full-year 2015. The reported loss has significantly decreased due to lower impairment charges.

Capital expenditures: Capital expenditures increased to $226.5 million for Q4 2016, compared with $160.7 million for the same period last year, due mainly to increased spending at Tasiast and Bald Mountain.

Capital expenditures for full-year 2016 were $633.8 million, an increase compared with $610.0 million for 2015, primarily due to increased spending resulting from the Tasiast Phase One development and the acquisition of Bald Mountain and 50% of Round Mountain. Capital expenditures were below the Company's original guidance of $755 million, mainly due to deferred spending at Tasiast.

4 Attributable margin per equivalent 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."

Balance sheet

As of December 31, 2016, Kinross had cash and cash equivalents of $827.0 million, compared with $1,043.9 million on December 31, 2015. The decrease was mainly a result of net cash used in the Nevada asset acquisition, capital expenditures, and debt repayment, partially offset by operating cash flow and net proceeds received from the equity issuance in 2016.

The Company has available credit of $1,430.4 million as of year-end 2016, for total liquidity of $2,257.4 million.

Kinross repaid $250 million in senior notes in September 2016, and has no debt maturities until 2020. With a strong balance sheet and excellent liquidity, the Company is well-positioned to fund its pipeline of organic development opportunities.

Operating results
Mine-by-mine summaries for 2016 fourth-quarter and full-year operating results may be found on pages nine and 13 of this news release. Highlights include the following:

Americas

The Americas region, which represented 60% of Kinross' production in 2016, performed well and met its production guidance range for the year. The 22% year-over-year increase in regional production was mainly a result of the acquisition of Bald Mountain and the 50% of Round Mountain the Company did not already own.

At Fort Knox, full-year production increased slightly compared with 2015 mainly as a result of record production from the heap leach, partially offset by lower mill grades. At Round Mountain, full-year production increased mainly as a result of the acquisition noted above, and higher grades and recoveries from the mill. Bald Mountain's production increased progressively over the year as a result of higher grades and an increased amount of ore placed on the leach pads. Kettle River-Buckhorn continued to perform well, despite nearing the end of its mine life, which is expected in Q1 2017. The mine increased its full-year production compared with 2015 mainly as a result of higher grades and mill recoveries, as successful drilling results allowed the operation to extend mine life. At Paracatu, full-year production was higher compared with 2015 mainly as a result of gold recovered from the Santo Antonio tailings reprocessing initiative, which produced approximately 74,200 Au eq. oz. in 2016, partially offset by lower mill recoveries. At Maricunga, production was lower year-over-year due to the suspension of mining operations in the third quarter of 2016.

In the fourth quarter, regional production was higher compared with Q3 2016 mainly as a result of increased production at Paracatu and Bald Mountain. Paracatu's increased production quarter-over-quarter is mainly due to a return to a full quarter of operations following the temporary curtailment of production in Q3 due to lack of rainfall.

The region ended the year within its production cost of sales per ounce guidance range for 2016. Fort Knox's full-year cost of sales per ounce was higher compared with the previous year mainly due to a higher percentage of operating waste mined. Kettle River-Buckhorn cost of sales per ounce for 2016 decreased compared with 2015 primarily due to lower labour and contractor costs. Paracatu cost of sales per ounce decreased versus 2015 mainly due to favourable foreign exchange movements net of currency hedges. Maricunga cost of sales per ounce decreased compared with 2015 as a result of higher than expected ounces recovered. During the quarter, cost of sales per ounce for the region was lower compared with the previous quarter, mainly as a result of decreases at Maricunga and Kettle River.

Russia

The region outperformed both its production and cost guidance ranges for the year, with production higher than the top end of its guidance and production cost of sales per ounce $19 below the low end of its guidance.

The combined full-year production at Kupol and Dvoinoye was lower compared with 2015 mainly as a result of lower grades at Dvoinoye, which were anticipated, and were partially offset by higher mill throughput. During the fourth quarter, production increased compared with Q3 2016 largely due to higher grades.

Full-year cost of sales per ounce was lower compared with the previous year mainly as a result of a decrease in labour and fuel costs due to favourable foreign exchange movements and lower maintenance costs. Cost of sales per ounce in Q4 2016 was lower compared with the previous quarter mainly due to higher grades.

The filter cake plant at Kupol is currently in commissioning, with construction now completed. The plant allows for tailings storage of the current mineral reserve estimate, and flexibility to permit additional storage for potential mine life extensions.

West Africa

The region performed well during the year, coming within its production guidance range despite temporary mining stoppages at Tasiast and the transition to the Paboase underground deposit at Chirano.

Tasiast full-year production was lower compared with 2015 mainly due to the temporary six-week suspension of mining. At Chirano, full-year production was lower compared with 2015 mainly due to lower grades as the site transitioned to mining the Paboase deposit. Both mines performed well in Q4 2016, with Tasiast substantially increasing production compared with Q3 2016 mainly due to higher grades and full quarterly production. Chirano production in Q4 2016 was up slightly compared with the previous quarter, as the site continued to mine higher grades and larger volumes at Paboase compared with the first half of 2016.

Full-year cost of sales per ounce at Tasiast was higher compared with the previous year mainly as a result of lower grades. Full-year cost of sales per ounce at Chirano was higher compared with 2015 mainly due to an increase in costs for power and lower grades. During the fourth quarter, Tasiast cost of sales was lower compared with Q3 2016 mainly as a result of higher grades. At Chirano, cost of sales per ounce in Q4 2016 decreased versus Q3 2016 mainly as a result of lower power costs and higher grades.

In late January, Tasiast was certified in full compliance under the International Cyanide Management Code, a voluntary code that focuses on the safe manufacture, transportation, storage, use and decommissioning of cyanide and associated facilities used for the production of gold. The Code was developed by the international mining industry under the guidance of the United Nations Environment Program with the goal of ensuring the responsible management of cyanide used in gold mining by protecting human health and the environment. Kinross was one of the original signatory companies, and all of the Company's operations around the world are now certified under the Code.

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 19 of this news release.

In 2017, Kinross expects to produce 2.5 - 2.7 million Au eq. oz. from its operations, which is consistent with the Company's average production over the past five years.

The forecast decrease compared with full-year 2016 production is mainly a result of the suspension of mining activities at Maricunga, the anticipated lower grades at the Russia operations due to mine sequencing, and the expected closure of Kettle River-Buckhorn in Q1 2017, partially offset by significantly higher forecast production at Bald Mountain, and expected increases from the West Africa region. Production guidance once again takes into consideration the potential for a temporary curtailment of mill operations at Paracatu due to the possibility of seasonal rainfall shortages in south central Brazil.

Production in the second half of 2017 is expected to be higher compared with the first half of the year, mainly due to the seasonal impact of the heap leaches at Fort Knox and Round Mountain, and the significantly higher production expected at Bald Mountain in Q4 2017 due to mine sequencing and a lag from the heap leach.

Production cost of sales per Au eq. oz. is expected to be in the range of $660 - $720 for 2017, the mid-point of which is lower compared with full-year 2016 production cost of sales of $712 per Au eq. oz. Lower production in the first half of 2017 is expected to result in higher production costs compared with the second half of 2017.

The Company has forecast an all-in sustaining cost of $925 - $1,025 per ounce sold on both a gold equivalent and by-product basis for 2017. The mid-point of the all-in sustaining cost guidance range is lower compared with 2016 all-in sustaining cost of sales of $984 per Au eq. oz.

The table below summarizes the 2017 forecasts for production and average production cost of sales on a gold equivalent and a by-product accounting basis:



Accounting basis
2017 (forecast)
Gold equivalent basis
Production (Au eq. oz.) 2.5 - 2.7 million
Average production cost of sales per Au eq. oz. $660 - $720
All-in sustaining cost per Au eq. oz. $925 - $1,025
By-product basis
Gold ounces 2.4 - 2.6 million
Silver ounces 4.9 - 5.3 million
Average production cost of sales per Au oz. $650 - $710
The following table provides a summary of the 2017 production and production cost of sales forecast by region:


Region Forecast 2017 production
(Au eq. oz.) Percentage of total forecast production5 Forecast 2017 production cost of sales
($ per Au eq. oz.)
Americas 1.52- 1.63 million 61% $680 - $750
West Africa (attributable)* 420,000 - 470,000 17% $740 - $820
Russia 560,000 - 600,000 22% $520 - $570
Total 2.5 - 2.7 million 100% $660 - $720
*Based on Kinross' 90% share of Chirano
Material assumptions used to forecast 2017 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 $60 per barrel,
foreign exchange rates of:
3.25 Brazilian real to the U.S. dollar,
1.25 Canadian dollars to the U.S. dollar,
60 Russian rubles to the U.S. dollar,
630 Chilean pesos to the U.S. dollar,
4.00 Ghanaian cedi to the U.S. dollar,
330 Mauritanian ouguiya to the U.S. dollar, and
1.10 U.S. dollars to the Euro.
5 The percentages are calculated based on the mid-point of regional 2017 forecast production.

Taking into account existing currency and oil hedges:

a 10% change in foreign currency exchange rates would be expected to result in an approximate $15 impact on production cost of sales per ounce;
specific to the Russian ruble, a 10% change in the exchange rate would be expected to result in an approximate $16 impact on Russian production cost of sales per ounce;
specific to the Brazilian real, a 10% change in the exchange rate would be expected to result in an approximate $32 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 $2 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.
Total capital expenditures for 2017 are forecast to be approximately $900 million (including capitalized interest of approximately $25 million) and are summarized in the table below:


Region
Forecast 2017
sustaining capital
(million) Forecast 2017
non-sustaining capital
(million) Total forecast capital
(million)
Americas $295 $65 $360
West Africa $80 $375 $455
Russia $40 $15 $55
Corporate $5 $0 $5
Total $420 $455 $875
Capitalized interest $25
TOTAL $900
Sustaining capital includes the following forecast spending estimates:

Mine development: $75 million (Americas); $30 million (Russia)
Mobile equipment: $70 million (Americas); $20 million (West Africa); $10 million (Russia)
Tailings facilities: $65 million (Americas); $15 million (West Africa)
Leach facilities: $50 million (Americas)
Mill facilities: $30 million (Americas); $10 million (West Africa)
Non-sustaining capital includes the following forecast spending estimates:

Tasiast Project: $215 million
Development projects and other: $125 million
Tasiast West Branch stripping: $115 million
The 2017 forecast for exploration is approximately $70 million, none of which is expected to be capitalized, with 2017 overhead (general and administrative and business development expenses) forecast to be approximately $165 million, both of which are consistent with last year's guidance. Other operating costs expected to be incurred in 2017 are approximately $60 million, which includes approximately $30 million of care and maintenance costs in Chile.

Based on our assumed gold price and other inputs, net income tax expense is expected to be $90 million and taxes paid are expected to be $150 million, with both increasing at 26% of any profit resulting from higher gold prices. Depreciation, depletion and amortization is forecast to be approximately $350 per Au eq. oz.