Significantly increased cash flow and reduced all-in sustaining cost per ounce year-over-year
On track to meet production and cost guidance
TORONTO, May 08, 2018 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX:K) (NYSE:KGC) today announced its results for the first-quarter ended March 31, 2018.
(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 18 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
2018 first-quarter highlights:
•Production1: 653,937 gold equivalent ounces (Au eq. oz.), compared with 671,956 Au eq. oz. in Q1 2017.
•Revenue: $897.2 million, compared with $796.1 million in Q1 2017.
•Production cost of sales2: $658 per Au eq. oz., compared with $701 in Q1 2017.
•All-in sustaining cost2: $846 per Au eq. oz. sold, compared with $953 in Q1 2017. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $835 in Q1 2018, compared with $945 in Q1 2017.
•Operating cash flow: $293.5 million, compared with $207.8 million in Q1 2017.
•Adjusted operating cash flow2: $363.7 million, compared with $250.9 million in Q1 2017.
•Reported net earnings3: net earnings of $106.1 million, or $0.09 per share, compared with net earnings of $134.6 million, or $0.11 per share, in Q1 2017.
•Adjusted net earnings2,3: adjusted net earnings of $125.2 million, or $0.10 per share, compared with adjusted net earnings of $23.4 million, or $0.02 per share, in Q1 2017.
Organic projects and development opportunities:
•The Tasiast Phase One expansion is near completion, on schedule and on budget, and expected to achieve 12,000 t/d throughput by the end of June 2018. The Company is assessing the Government of Mauritania’s request to enter into mutually beneficial discussions respecting all of Kinross’ activities in Mauritania with a view to improving economic benefits to the country, including the potential impact on the Phase Two expansion.
•Construction of the Round Mountain Phase W project is progressing according to schedule, with engineering 90% complete and initial low-grade ore expected in mid-2019.
•At the Bald Mountain Vantage Complex engineering is now 90% complete with commissioning of the heap leach pad and processing facilities expected to commence in Q1 2019.
•In Russia, the Moroshka project located near Kupol remains on schedule and on budget, with mining of high grade ore expected to begin in the second half of the year.
•The Fort Knox Gilmore project feasibility study in Alaska is on schedule for completion in June 2018.
•At the La Coipa Restart project, the Company expects to initiate a feasibility study at mid-year.
Outlook unchanged: Kinross expects to produce 2.5 million Au eq. oz. (+/- 5%) at a production cost of sales per Au eq. oz. of $730 (+/- 5%) and all-in sustaining cost of $975 (+/- 5%) per ounce sold on both a gold equivalent and by-product basis for 2018. Total capital expenditures are forecast to be approximately $1,075 million (+/- 5%).
Balance sheet strength: As of March 31, 2018, Kinross had cash and cash equivalents of $997.9 million and available credit of $1,566.5 million, for total liquidity of approximately $2.6 billion, and no debt maturities until 2021. S&P Global Ratings upgraded Kinross’ credit rating to investment grade during the quarter, noting the Company’s long track record of maintaining low leverage.
J. Paul Rollinson, President and CEO, made the following comments in relation to 2018 first-quarter results:
“We are pleased with the strong operational start to 2018, as our portfolio of mines performed well, achieving solid production and significantly lower all-in sustaining costs compared with last quarter and Q1 2017. We generated strong cash flow and ended the quarter with approximately $1 billion of cash on the balance sheet, relatively unchanged from year-end 2017.
“Our portfolio of development projects is progressing well. The Tasiast Phase One expansion is now near completion, on budget and on schedule to reach its 12,000 t/d throughput capacity by the end of June. The Company is assessing the Government of Mauritania’s request to enter into mutually beneficial discussions respecting all of Kinross’ activities in Mauritania with a view to improving economic benefits to the country, including the potential impact on the Phase Two expansion.
“Our Nevada projects at Round Mountain and Bald Mountain are continuing to proceed on schedule. In June, we expect to announce the feasibility study results for the Fort Knox Gilmore project, an opportunity to potentially extend mine life at one of our best performing operations. In Chile, we expect to commence a feasibility study for the La Coipa Restart project at mid-year. Finally, we also expect to begin mining high grade ore at the Moroshka satellite deposit near Kupol in the second half of 2018.
“We continue to maintain our robust liquidity position, and with our strong commitment to deliver consistent results, we are firmly on track to meet our annual production and cost guidance and are on plan with the development projects that will shape our future.”
Summary of financial and operating results
Three months ended
(in millions, except ounces, per share amounts, and per ounce amounts) 2018 2017
Total gold equivalent ounces(a)
Produced(c) 659,955 677,781
Sold(c) 674,661 652,516
Attributable gold equivalent ounces(a)
Produced(c) 653,937 671,956
Sold(c) 668,217 645,946
Metal sales $ 897.2 $ 796.1
Production cost of sales $ 444.6 $ 458.8
Depreciation, depletion and amortization $ 193.1 $ 217.5
Operating earnings $ 177.9 $ 48.6
Net earnings attributable to common shareholders $ 106.1 $ 134.6
Basic earnings per share attributable to common shareholders $ 0.09 $ 0.11
Diluted earnings per share attributable to common shareholders $ 0.08 $ 0.11
Adjusted net earnings attributable to common shareholders(b) $ 125.2 $ 23.4
Adjusted net earnings per share(b) $ 0.10 $ 0.02
Net cash flow provided from operating activities $ 293.5 $ 207.8
Adjusted operating cash flow(b) $ 363.7 $ 250.9
Average realized gold price per ounce(d) $ 1,330 $ 1,220
Consolidated production cost of sales per equivalent ounce(c) sold(b) $ 659 $ 703
Attributable(a) production cost of sales per equivalent ounce(c) sold(b) $ 658 $ 701
Attributable(a) production cost of sales per ounce sold on a by-product basis(b) $ 644 $ 686
Attributable(a) all-in sustaining cost per ounce sold on a by-product basis(b) $ 835 $ 945
Attributable(a) all-in sustaining cost per equivalent ounce(c) sold(b) $ 846 $ 953
Attributable(a) all-in cost per ounce sold on a by-product basis(b) $ 1,124 $ 1,101
Attributable(a) all-in cost per equivalent ounce(c) sold(b) $ 1,128 $ 1,104
(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 page 13 to 17 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 first quarter of 2018 was 79.25:1 (first quarter of 2017 - 69.99:1).
(d) The definition of this non-GAAP financial measure is included on page 17 of this news release.
The following operating and financial results are based on first quarter 2018 gold equivalent production. Production and cost measures are on an attributable basis:
Production: Kinross produced 653,937 attributable Au eq. oz. in the first quarter of 2018, compared with 671,956 Au eq. oz. in the first quarter of 2017.
see and read more on