Kinross reports 2019 fourth-quarter and full-year results

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Overig advies 13/02/2020 06:36
Kinross reports 2019 fourth-quarter and full-year results
Meets production and cost guidance for eighth consecutive year
Tasiast delivers record annual production and costs; Paracatu achieves record annual production
Solid production with lower all-in sustaining cost per ounce and capital expenditures forecast in 2020
Toronto, Ontario – February 12, 2020 – Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the fourth-quarter and year-end December 31, 2019.
(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 21 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
2019 full-year results and 2020 guidance: 2019 guidance (+/- 5%) 2019 full-year results 2020 guidance (+/- 5%)
Gold equivalent production1 (ounces) 2.5 million 2.5 million 2.4 million
Production cost of sales1, 2 ($ per Au eq. oz.) $730 $706 $720
All-in sustaining cost1, 2 ($ per Au eq. oz.) $995 $983 $970
Capital expenditures $1,050 million $1,105 million3 $900 million 3

CEO Commentary:
J. Paul Rollinson, President and CEO, made the following comments in relation to 2019 fourth-quarter and year-end results:
“In 2019, our portfolio of mines performed strongly, as we increased production and lowered costs year-over-year and generated robust free cash flow. Our strong performance ensured we met our production, cost and capital guidance for the eighth consecutive year.
“Our three largest producers in 2019 – Paracatu, Kupol and Tasiast – accounted for 61% of our total production and delivered the lowest costs in the portfolio. Paracatu and Tasiast each had an outstanding year, posting record annual production, with Tasiast also delivering record low costs.
“In terms of 2019 financial performance, Kinross increased operating cash flow by 55% to $1.2 billion, more than tripled adjusted net earnings to $423 million, grew our margins by 28%, and improved liquidity to $2 billion while continuing to invest in our development projects.
“We also took steps to strengthen our future production profile. We approved and launched the capital efficient Tasiast 24k expansion project and completed the IFC-led project financing. We improved our development pipeline by acquiring the high-quality and highly prospective Chulbatkan project in Russia and are now proceeding with the La Coipa Restart project in Chile. In addition, we made excellent progress at our U.S. projects, commencing production at our Round Mountain Phase W and Bald Mountain Vantage Complex projects in Nevada, and advancing Fort Knox Gilmore in Alaska.
“In 2020, we expect to continue our strong performance, producing approximately 2.4 million gold equivalent ounces, with all-in sustaining costs and capital expenditures guidance lower than last year. In 2021, generating strong free cash flow will continue to be a priority, with production expected to be at or above 2019 levels and capital expenditures and all-in sustaining costs expected to decrease compared with 2020. We currently expect a further reduction in capital expenditures and all-in sustaining costs for 2022, with production expected to remain at the 2.5 million ounce level.”

1 Unless otherwise stated, production figures in this news release are based on Kinross’ 90% share of Chirano production.
2 These figures are non-GAAP financial measures and are defined and reconciled on pages 16 to 20 of this news release.
3 2020 capital expenditures guidance excludes capitalized interest of $55 million. The 2019 capital expenditures guidance and capital expenditures results includes capitalized interest of $65 million and $45 million, respectively.

2019 Q4 and full-year highlights:
? Production1: 645,344 gold equivalent ounces (Au eq. oz.) in Q4 2019 and 2,507,659 Au eq. oz. in 2019.
? Revenue: $996.2 million in Q4 2019 and $3,497.3 million in 2019.
? Production cost of sales2: $744 per Au eq. oz. in Q4 2019 and $706 per Au eq. oz. in 2019.
? All-in sustaining cost2: $1,050 per Au eq. oz. sold in Q4 2019 and $983 per Au eq. oz. sold in 2019. All-in sustaining cost per Au oz. sold on a by-product basis was $1,041 in Q4 2019 and $974 per Au oz. sold in 2019.
? Operating cash flow: $408.6 million in Q4 2019 and $1,224.9 million in 2019.
? Adjusted operating cash flow2: $387.6 million in Q4 2019 and $1,201.5 million for 2019.
? Reported net earnings4: $521.5 million, or $0.41 per share in Q4 2019, and $718.6 million, or $0.57 per share, in 2019.
? Adjusted net earnings2,3: adjusted net earnings of $156.0 million, or $0.13 per share in Q4 2019, and adjusted net earnings of $422.9 million, or $0.34 per share, in 2019.
? Margins5: attributable margins of $741 per Au eq. oz. sold in Q4 2019 and $686 per Au eq. oz. sold for 2019.
Operations highlights:
? Paracatu delivered record annual production of approximately 620,000 Au eq. oz., mainly due to benefits from an asset optimization program that improved mill efficiencies and enhanced the understanding of the orebody.
? Tasiast achieved record production and costs in 2019, as the mine continued to benefit from the Phase One expansion and the mill’s strong performance. Year-over-year production increased by 140,000 Au eq. oz., or 56%, with cost of sales per ounce decreasing by $374 per ounce sold, or 38%.
? Kupol-Dvoinoye production was 8% higher year-over-year primarily due to higher-grade ore processed from Kupol’s Northeast Extension and Moroshka deposits.
? Round Mountain performed well in full-year 2019 with the completion of the Phase W project and increases in ounces recovered from the heap leach pads and lower full-year cost of sales.
Balance sheet and liquidity:
? Cash and cash equivalents of $575.1 million, and total liquidity of $2,028.2 million at December 31, 2019. No debt maturities until September 2021.
? Completed the $300 million project financing for Tasiast with the IFC (a member of the World Bank Group), Export Development Canada and two commercial banks.
? Sold remaining shares in Lundin Gold Inc. for gross proceeds of approximately $113 million.
? Sold royalty portfolio to Maverix Metals Inc. (“Maverix”) for total consideration of approximately $74 million, which includes $25 million in cash and approximately 11.2 million Maverix common shares.
Environment, Social, Governance (ESG):
? Maintained industry-leading health and safety performance.
? Delivered strong environmental management and sustainability performance; achieved lowest energy-use and greenhouse gas emission intensities among gold industry peers.
? Published best practice approach to safe and responsible tailings management, based on an overriding commitment to safety and environmental stewardship.
? Governance standards continued to be robust: achieved 33% Board gender diversity target and welcomed two new independent Board members.

4 Net earnings/loss figures in this release represent “net (loss) earnings from continuing operations attributable to common shareholders”.
5 Attributable margin per equivalent ounce sold is a non-GAAP financial measure defined as “average realized gold price per ounce” less “attributable production cost of sales per gold equivalent ounce sold.”

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