Returned more than $250 million to shareholders in 2021

 

Production outlook of 2.65 million, 2.8 million and 2.6 million ounces in 2022, 2023 and 2024, respectively, to drive free cash flow growth

 

Kinross Gold Corporation (TSX: K) (NYSE: KGC) announced its results for the fourth-quarter and year ended December 31, 2021.

 

(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 24 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)

 

2021 full-year results and 2022 guidance:

 

	2021 guidance (+/- 5%)	2021 full-year results	2022 guidance (+/- 5%)
Attributable gold equivalent production1 (ounces)	2.1 million	2.07 million	2.65 million
Attributable production cost of sales1, 2 ($ per Au eq. oz.)	$830	$828	$830
Consolidated production cost of sales3 ($ per Au eq. oz.)	–	$832	$835
Attributable all-in sustaining cost1, 2 ($ per Au eq. oz.)	$1,110	$1,138	$1,130
Capital expenditures	$900 million	$939 million	$1,050 million

 

• Attributable production¹ is expected to increase 28% year-over-year to 2.65 million Au eq. oz. in 2022, and to further increase to 2.8 million Au eq. oz. in 2023 driving significant free cash flow² growth.
• Kinross expects to produce 2.6 million attributable Au eq. oz. in 2024 and an average of at least 2.5 million attributable Au eq. oz. per year over the remainder of the decade.

 

2021 Q4 highlights:

• Tasiast achieved Q4 2021 production target as throughput successfully ramped up to complete mill re-start.
• La Coipa project began commissioning on time and on budget in February 2022. Life of mine production estimates increased by 45% to 1 million Au eq. oz. extending mine life to early 2026.
• Kinross increased proven and probable mineral reserve estimates to 32.6 million Au oz.⁴, adding 2.7 million Au oz. in 2021, mainly due to additions at Udinsk and Round Mountain.
• In 2021, Kinross returned more than $250 million in capital to shareholders consisting of $151.1 million in dividends and, as part of its share buyback program, $100.2 million in the repurchase and cancellation of 17.6 million common shares.
• Kinross’ Board of Directors declared a quarterly dividend of $0.03 per common share payable on March 24, 2022 to shareholders of record at the close of business on March 9, 2022.
• On December 8, 2021, Kinross announced an agreement to acquire Great Bear Resources and its flagship Dixie project in Red Lake, Ontario, which has significant potential to become a top-tier, large scale operation.

 

2021 Q4 and year-end financial results:

• Attributable production¹ of 487,621 Au eq. oz. produced in Q4 2021, and 2,067,549 Au eq. oz. in 2021.
• Attributable production cost of sales^1,2 of $864 per Au eq. oz. in Q4 2021, and $828 per Au eq. oz. in 2021.
• Consolidated production cost of sales³ of $868 per Au eq. oz. in Q4 2021 and $832 per Au eq. oz. in 2021.
• Attributable all-in sustaining cost^1,2 of $1,312 per Au eq. oz. sold in Q4 2021, and $1,138 per Au eq. oz. sold in 2021.
• Margins⁵ of $929 per Au eq. oz. sold in Q4 2021, and $965 for 2021.
• Adjusted operating cash flow² was $356.0 million in Q4 2021, and $1,309.9 million in 2021.
• Operating cash flow⁶ of $197.3 million in Q4 2021, and $1,135.2 million in 2021.
• Free cash flow² was a net outflow of $100.7 million in Q4 2021, and a net inflow of $196.6 million in 2021.
• Reported net loss⁷ of $2.7 million in Q4 2021, and reported net earnings of $221.2 million, or $0.18 per share, in 2021.
• Adjusted net earnings^{2, 8} of $101.8 million, or $0.08 per share in Q4 2021, and $541.3 million, or $0.43 per share, in 2021.
• Cash and cash equivalents of $531.5 million, and total liquidity⁹ of $1.9 billion at December 31, 2021. The Company repaid $500 million in Senior Notes on June 1, 2021.

 

Environment, Social, Governance:

• Kinross’ ESG performance continued to rank in the top quartile of its peer group, as measured by Sustainalytics, MSCI, ISS, Vigeo, Refinitiv and S&P Global CSA’s ESG ratings.
• The Company outlined its Climate Change Strategy, with the target of reducing the intensity of its scope 1 and scope 2 emissions by 30% by 2030.
• Injury frequency rates remained in line with Kinross’ three-year averages, however, this was overshadowed by a tragic fatality at Chirano and a mill fire at Tasiast.
• Kinross continued to work to mitigate the risks associated with the ongoing COVID-19 pandemic, and provided support to bolster vaccination rates of its workforce.
• The Company established an ESG Executive Committee to help further strengthen ESG governance.

 

CEO Commentary:

1. Paul Rollinson, President and CEO, made the following comments in relation to 2021 fourth-quarter and year-end results:

 

“Despite some challenges during 2021, we produced approximately 2.1 million ounces. We expect to increase our production in 2022 and 2023 to 2.65 million and 2.8 million ounces, respectively, to drive robust free cash flow. Our long-term production profile remains strong, with expected production of 2.6 million ounces in 2024 and an annual average production estimate of at least 2.5 million ounces over the remainder of the decade.

 

“We are pleased to report that the Tasiast mill is now operating at sustained throughput levels comparable to the first half of 2021. Our development projects are also advancing well and we have started commissioning at La Coipa, where we have increased life of mine production estimates to approximately 1 million ounces and extended estimated mine life to early 2026. Kinross also successfully added to its mineral reserve estimates, which increased by 2.7 million ounces to 32.6 million gold equivalent ounces at year-end 2021.

 

“In addition, we enhanced our return of capital to shareholders by returning more than $250 million through our quarterly dividend and share buyback programs. We also finalized our agreement with the Government of Mauritania to underpin our strong partnership and announced an agreement to acquire Great Bear Resources to further strengthen our long-term growth pipeline.

 

“Safety and sustainability continue to be priorities, and we again ranked in the top quartile of our peer group as measured by a number of ESG ranking agencies in 2021. We also outlined a Climate Change Strategy, with the objective of a 30% reduction in intensity of scope 1 and scope 2 emissions by 2030.”

 

Financial results

 

Summary of financial and operating results

 

	Three months ended						Years ended
	December 31,						December 31,
(in millions of U.S. dollars, except ounces, per share amounts, and per ounce amounts)		2021			2020			2021		2020
Operating Highlights
Total gold equivalent ounces(a)
Produced(c)		491,077			627,944			2,083,016		2,383,307
Sold(c)		489,710			637,169			2,075,738		2,375,548
Attributable gold equivalent ounces(a)
Produced(c)		487,621			624,032			2,067,549		2,366,648
Sold(c)		486,547			633,149			2,060,909		2,358,927
Financial Highlights
Metal sales	$	879.5		$	1,195.1		$	3,729.4	$	4,213.4
Production cost of sales	$	425.2		$	436.5		$	1,726.1	$	1,725.7
Depreciation, depletion and amortization	$	199.3		$	234.0		$	840.9	$	842.3
Impairment charges (reversals) and asset derecognition – net	$	144.5		$	(602.6	)	$	144.5	$	(650.9	)
Operating (loss) earnings	$	(45.5	)	$	992.3		$	463.6	$	1,899.4
Net (loss) earnings attributable to common shareholders	$	(2.7	)	$	783.3		$	221.2	$	1,342.4
Basic (loss) earnings per share attributable to common shareholders	$	–		$	0.62		$	0.18	$	1.07
Diluted (loss) earnings per share attributable to common shareholders	$	–		$	0.62		$	0.17	$	1.06
Adjusted net earnings attributable to common shareholders(b)	$	101.8		$	335.1		$	541.3	$	966.8
Adjusted net earnings per share(b)	$	0.08		$	0.27		$	0.43	$	0.77
Net cash flow provided from operating activities	$	197.3		$	681.1		$	1,135.2	$	1,957.6
Adjusted operating cash flow(b)	$	356.0		$	527.6		$	1,309.9	$	1,912.7
Capital expenditures(d)	$	298.0		$	298.3		$	938.6	$	916.1
Free cash flow(b)	$	(100.7	)	$	382.8		$	196.6	$	1,041.5
Average realized gold price per ounce(e)	$	1,797		$	1,875		$	1,797	$	1,774
Consolidated production cost of sales per equivalent ounce(c) sold(f)	$	868		$	685		$	832	$	726
Attributable(a) production cost of sales per equivalent ounce(c) sold(b)	$	864		$	682		$	828	$	723
Attributable(a) production cost of sales per ounce sold on a by-product basis(b)	$	839		$	653		$	799	$	700
Attributable(a) all-in sustaining cost per ounce sold on a by-product basis(b)	$	1,299		$	991		$	1,118	$	970
Attributable(a) all-in sustaining cost per equivalent ounce(c) sold(b)	$	1,312		$	1,013		$	1,138	$	987
Attributable(a) all-in cost per ounce sold on a by-product basis(b)	$	1,681		$	1,309		$	1,458	$	1,248
Attributable(a) all-in cost per equivalent ounce(c) sold(b)	$	1,684		$	1,322		$	1,467	$	1,260

 

(a)	“Total includes 100% of Chirano production. “Attributable” includes Kinross’ share of Chirano (90%) production and costs and Manh Choh (70%) costs.
(b)	The definition and reconciliation of these non-GAAP financial measures and ratios is included on pages 19 to 24 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 2021 was 71.51:1 (2020 – 86.32:1). The ratio for Q4 2021 was 76.89:1 (Q4 2020 – 77.02:1).
(d)	“Capital expenditures” is as reported as “Additions to property, plant and equipment” on the consolidated statements of cash flows.
(e)	“Average realized gold price per ounce” is defined as gold metal sales divided by the total number of gold ounces sold.
(f)	“Consolidated production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces sold.

The following operating and financial results are based on fourth-quarter and year-end 2021 gold equivalent production:

 

Attributable production¹: Kinross produced 487,621 attributable Au eq. oz. in Q4 2021, compared with 624,032 attributable Au eq. oz. in Q4 2020. The decrease was largely due to lower production at Tasiast and Round Mountain.

 

Over the full year, Kinross produced 2,067,549 attributable Au eq. oz., in line with the Company’s revised production guidance, compared with full-year 2020 production of 2,366,648 attributable Au eq. oz. The decrease was mainly due to the temporary suspension of milling operations at Tasiast as a result of a mill fire in June 2021 and deferred mining activities at Round Mountain after wall instability was detected in Q1 2021. The decrease was slightly offset by increases in production at Fort Knox and at Bald Mountain.

 

Average realized gold price: The average realized gold price in Q4 2021 was $1,797 per ounce, compared with $1,875 per ounce in Q4 2020. For full-year 2021, the average realized gold price per ounce was $1,797, compared with $1,774 per ounce for full-year 2020.

 

Revenue: During the fourth quarter, revenue was $879.5 million, compared with $1,195.1 million during Q4 2020. Revenue was $3,729.4 million for full-year 2021, compared with $4,213.4 million for full-year 2020.

 

Attributable production cost of sales^{1, 2}: Attributable production cost of sales per Au eq. oz. sold was $864 for Q4 2021, compared with $682 in Q4 2020, mainly as a result of higher costs at Paracatu, and higher costs and an increase in sales at Fort Knox. Attributable production cost of sales per Au eq. oz. sold was $828 for full-year 2021, in line with the Company’s revised guidance, compared with $723 per Au eq. oz. for full-year 2020. The increase was mainly due to higher costs at Paracatu and Round Mountain, and an increase in sales at Fort Knox.

 

Attributable production cost of sales per Au oz. sold on a by-product basis was $839 in Q4 2021 compared with $653 in Q4 2020, based on gold sales of 473,306 ounces and silver sales of 1,018,034 ounces. Attributable production cost of sales per Au eq. oz. sold on a by-product basis was $799 for full-year 2021, compared with $700 for full-year 2020, based on 2021 gold sales of 2,000,262 ounces and silver sales of 4,341,895 ounces.

 

Consolidated production cost of sales: Consolidated production cost of sales per Au eq. oz. sold was $868 for Q4 2021, compared with $685 in Q4 2020, and was $832 for full-year 2021 versus $726 in 2020.

 

Margins⁵: Kinross’ margin per Au eq. oz. sold was $929 for Q4 2021, compared with the Q4 2020 margin of $1,190. Full-year 2021 margin per Au eq. oz. sold was $965, compared with $1,048 for full-year 2020.

 

Attributable all-in sustaining cost^1, 2: Attributable all-in sustaining cost per Au eq. oz. sold was $1,312 in Q4 2021, compared with $1,013 in Q4 2020. Full-year attributable all-in sustaining cost per Au eq. oz. sold was $1,138, and was within the Company’s 2021 revised guidance range, compared with $987 for full-year 2020.

 

In Q4 2021, attributable all-in sustaining cost per Au oz. sold on a by-product basis was $1,299, compared with $991 in Q4 2020. Attributable all-in sustaining cost per Au oz. sold on a by-product basis was $1,118 for full-year 2021, compared with $970 in 2020.

 

Operating cash flow: Adjusted operating cash flow² for Q4 2021 was $356.0 million, compared with $527.6 million for Q4 2020. Adjusted operating cash flow² for full-year 2021 was $1,309.9 million, compared with $1,912.7 million in 2020.

 

Operating cash flow was $197.3 million for Q4 2021, compared with $681.1 million for Q4 2020. Operating cash flow for full-year 2021 was $1,135.2 million, compared with $1,957.6 million for full-year 2020 mainly due to the decrease in operating earnings, higher taxes paid and unfavourable working capital movements.

 

Free cash flow²: Free cash flow was a net cash outflow of $100.7 million in Q4 2021, compared with a net cash inflow of $382.8 million for Q4 2020. For the full year, free cash flow was $196.6 million, compared with $1,041.5 million the previous year. The decrease in both periods were mainly due to lower margins, higher taxes paid and unfavourable working capital movements.

 

Earnings: Adjusted net earnings² were $101.8 million, or $0.08 per share, for Q4 2021, compared with $335.1 million, or $0.27 per share, for Q4 2020. Full-year adjusted net earnings² were $541.3 million, or $0.43 per share, compared with $966.8 million, or $0.77 per share, for full-year 2020, primarily due to the decrease in revenue and an increase in exploration expenses.

 

Reported net loss⁸ was $2.7 million for Q4 2021, compared with reported net earnings of $783.3 million, or $0.62 per share, for Q4 2020. Reported net earnings in full-year 2021 were $221.2 million, or $0.18 per share, compared with $1,342.4 million, or $1.07 per share, in 2020. The decrease in reported net earnings for both periods was mainly as a result of the temporary suspension of milling operations at Tasiast and the deferred mining activity at Round Mountain. A non-cash, after-tax write-down of $106.1 million at Bald Mountain related to a reduced estimate of recoverable ounces from the Vantage heap leach pad in the South area of the mine also contributed to the decrease in net earnings.

 

Capital expenditures: Capital expenditures were $298.0 million for Q4 2021, in line with $298.3 million for Q4 2020. Capital expenditures for full-year 2021 were $938.6 million and were within the Company’s annual guidance range, compared with $916.1 in 2020. The increase was primarily due to higher expenditures for development activities at La Coipa, the studies at Lobo-Marte and Udinsk, and an increase in capital stripping at Tasiast, partially offset by reduced capital stripping at Bald Mountain, Round Mountain and Fort Knox.

 

Balance sheet

 

As of December 31, 2021, Kinross had cash and cash equivalents of $531.5 million, compared with $1,210.9 million at December 31, 2020. The decrease was primarily due to capital expenditures, the $500.0 million repayment of senior notes, the final installment of $141.5 million paid for the Chulbatkan license, and the return of capital of $251.3 million in the form of dividends and share buybacks, partially offset by operating cash flows.

 

The Company had additional available credit¹⁰ of $1,361.2 million as of December 31, 2021 and total liquidity⁹ of approximately $1.9 billion.

 

Share buyback and dividend

 

In 2021, Kinross enhanced shareholder returns through its share buyback and quarterly dividend programs, which are underpinned by the Company’s investment grade balance sheet, free cash flow profile and expected production growth. During the past year, Kinross returned a total of $251.3 million in capital to shareholders.

 

Kinross has repurchased and cancelled 17.6 million of its common shares for $100.2 million as of December 31, 2021 through its share buyback program.

 

The Company declared a dividend of $0.03 per common share payable on March 24, 2022 to shareholders of record as of March 9, 2022, as part of its quarterly dividend program. In 2021, Kinross returned a total of $151.1 million in dividends.

 

Operating results

 

Mine-by-mine summaries for 2021 fourth-quarter and full-year operating results may be found on pages 14 and 18 of this news release. Highlights include the following:

 

Americas

 

Paracatu production for the full year increased compared with full-year 2020 largely due to higher throughput and the timing of ounces processed through the mill, which was largely offset by a decrease in grades. Full-year production cost of sales per ounce sold was higher year-over-year mainly due to increases in operating waste mined, contractor and energy costs, as well as inflationary pressures on consumables, partially offset by favourable foreign exchange movements. In Q4 2021, higher mill throughput contributed to the increase in production compared with the previous quarter, while higher operating waste mined and maintenance costs contributed to the increase in cost of sales per ounce sold.

 

Fort Knox performed well in 2021, as full-year production increased, and cost of sales per ounce sold decreased, compared with full-year 2020. Fort Knox’s positive results were largely as a result of lower-cost ounces recovered from the new Barnes Creek heap leach pad after construction was completed at the Gilmore project in early 2021. Production in Q4 2021 improved quarter-over-quarter, mainly due to timing of ounces processed at the mill, largely offset by fewer ounces recovered from the heap leach pads. Cost of sales per ounce sold was higher quarter-over-quarter primarily as a result of increases in operating waste mined and energy costs. Fort Knox also achieved first production at the Gil satellite deposits during Q4 2021.

 

At Round Mountain, full-year production was lower year-over-year as a result of deferred mining activities in the north wall of the Phase W area after wall instability was detected in Q1 2021. Production decreased quarter-over-quarter primarily due to fewer ounces recovered from the heap leach pads. Full-year cost of sales per ounce sold increased year-over-year mainly due to lower production, higher operating waste mined, and higher taxes related to production. Cost of sales per ounce sold was largely in line quarter-over-quarter.

 

The Company implemented initiatives to stabilize the wall in 2021, including dewatering and moving waste material from the pit rim. As a result of the mine optimization program, which was initiated in Q1 2021, 938 Au koz. at Phase S were converted to proven and probable mineral reserves at December 31, 2021 and additional challenges were identified in the west wall of the Phase W area which may affect Round Mountain’s annual production plans post 2024. The program is evaluating further initiatives to enhance wall stability, including shallower pit wall slope angles over a more extensive area, and alternative mine plan opportunities, such as incorporating the Phase S pushback.

 

The alternative mine plan opportunities also include modified open pit sequencing for Phase W and Phase S and the potential for underground mining for portions of Phase W and Phase X. The Company is planning to construct a drift for underground exploration at Phase X in 2022 after positive exploration results in 2021. Given the mine optimization program’s expanded parameters, results of the analysis are now expected in the second half of 2022.

 

At Bald Mountain, full-year production increased compared with 2020 mainly due to timing of ounces recovered from the heap leach pads, but was less than expected due to the carbonaceous material encountered at the Vantage heap leach pad. Full-year cost of sales per ounce sold was higher year-over-year largely due to higher operating waste mined and taxes related to production. During Q4 2021, production and cost of sales per ounce sold increased versus the prior quarter mainly due to more ounces recovered from the pads in the North area and higher fuel costs, respectively.

 

Russia

 

At Kupol and Dvoinoye, full-year production was lower than full-year 2020 mainly as a result of anticipated lower grades after mining activities were completed at Dvoinoye in November 2020 and the continued processing of related stockpiles. Quarter-over-quarter, lower grades resulted in lower production, as Kupol continued to transition to mining narrower veins. Full-year cost of sales per ounce sold increased compared with 2020 largely as a result of lower production, and decreased quarter-over-quarter mainly due to lower labour costs.

 

West Africa

 

Tasiast’s full-year and quarterly production was lower, and cost of sales per ounce sold higher, versus the comparable periods in 2020 primarily due to the mill fire in June 2021. Tasiast made excellent progress re-starting the mill in the second half of the year and completed a successful recommissioning with no material mechanical issues encountered. In Q4 2021, the site achieved its production target of 15,000 Au eq. oz. after re-starting the plant processing lower grade stockpile ore. Throughput gradually ramped up during the quarter, with the mill reaching throughput of 19,000-20,000 tonnes per day in January 2022 on a sustained basis.

 

In January 2022, the Company reached an agreement with the Government of Mauritania (“Government”) regarding two licenses located west, east and north of the main Tasiast operation. Kinross has agreed to renew exploration activities at these licenses and has committed to spend $10 million in exploration over the next three years. As part of its commitment, the Company is budgeting $5 million for exploration in 2022 at these licenses.

 

At Chirano, full-year production decreased compared with 2020 mainly due to lower grades, partially offset by higher throughput. Full-year cost of sales per ounce sold was higher mainly due to lower production and higher contractor and energy costs. Production decreased quarter-over-quarter mainly due to lower grades, and cost of sales per ounce sold increased over Q3 2021 mainly as a result of the lower production. The mine site exploration program continued to yield excellent results in 2021 and added 400 Au koz. to Chirano’s mineral resource estimates, helping extend mine life by one year to 2026, with opportunities for further mine life extensions.

 

Great Bear Resources acquisition update

 

On December 8, 2021, Kinross announced that it had entered into a definitive agreement to acquire Great Bear Resources Ltd., which includes the flagship Dixie project located in the prolific Red Lake mining district in Ontario, Canada. The Dixie project has excellent potential to become a top tier deposit that could support a large, long-life mine complex and bolster Kinross’ long-term production outlook.

 

Under the terms of the Agreement, Kinross has agreed to an upfront payment of approximately $1.4 billion (C$1.8 billion), representing C$29.00¹¹ per Great Bear common share on a fully-diluted basis. The upfront payment will be payable at the election of Great Bear shareholders in cash and Kinross common shares subject to pro-ration to a maximum cash consideration of approximately $1.1 billion (C$1.4 billion) and a maximum of approximately 80.7 million Kinross common shares. The Agreement also includes a payment of contingent consideration in the form of contingent value rights that may be exchanged for 0.1330 of a Kinross common share per Great Bear common share. The contingent consideration will be payable in connection with Kinross’ public announcement of commercial production at the Dixie project, provided that a cumulative total of at least 8.5 million gold ounces of mineral reserves and measured and indicated mineral resources are disclosed.

 

Upon completion of the transaction, Kinross expects to rapidly advance exploration activities at the LP Fault zone, the most significant discovery to date at Dixie. These activities include 200,000 metres of planned drilling in 2022, which is expected to largely focus on infill drilling and multiple other targets. Kinross plans to undertake a comprehensive exploration and development program at the Dixie project which aims to support Kinross’ vision of a quality, high-grade, open-pit mine and a longer-term, sizeable underground mine.

 

Great Bear security holders approved the Agreement on February 14, 2022, with approximately 98% of the votes cast in favour of the acquisition. The Company received final court approval on February 16, 2022, and the transaction is expected to close next week.

 

Company Guidance

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 24] of this news release.

 

This Company Guidance section references attributable production cost of sales per equivalent ounce sold and per ounce sold on a by-product basis and attributable all-in sustaining cost per equivalent ounce sold and per ounce sold on a by-product basis, all of which are non-GAAP financial ratios. The definitions of these non-GAAP financial ratios and comparable reconciliations are included on pages 19 to 24 of this news release.

 

Attributable production guidance¹

 

In 2022, Kinross expects to produce 2.65 million attributable Au eq. oz. (+/- 5%) from its operations, which is a 28% increase from the Company’s 2021 production. Kinross’ annual production is expected to further increase to 2.8 million attributable Au eq. oz. (+/- 5%) in 2023. The Company expects to produce 2.6 million attributable Au eq. oz. in 2024 and has maintained its strong production profile of estimated average production of at least 2.5 million Au eq. oz. per year over the remainder of the decade.

 

Annual attributable gold equivalent production guidance (+/- 5%)
2022	2.65 million oz.
2023	2.8 million oz.
2024	2.6 million oz.

 

In 2022, attributable production is expected to be higher in the second half of the year, which is largely driven by production from La Coipa, as it is scheduled to reach full operating capacity at mid-year, as well as higher production expected at Paracatu and Tasiast.

 

Kinross made modest adjustments to its 2022 and 2023 production mid-point guidance estimates, with 2022 expected to be impacted by the COVID-19 Omicron variant’s effect on productivity and supply chain logistics at Tasiast, and fewer ounces expected from the Vantage heap leach pad at Bald Mountain. In 2023, the Company’s production outlook is expected to be impacted by the deferral of some production at several sites, including La Coipa, Bald Mountain, Kupol and Chirano. These deferrals are expected to extend mine life and increase total life of mine production. The Phase W deferral at Round Mountain also impacted the Company’s 2023 production outlook, while the 2024 production outlook excludes the Manh Choh project.

 

The expected attributable production growth in 2022 and 2023, and Kinross’ strong long-term production profile, represents additional ounces enabled by planned life of mine extensions and projects resulting from the Company’s previous capital investments, continuous improvement programs, and an exploration strategy focused on promising prospects around existing operations.

 

Inflation impact

 

The ongoing global impacts of the COVID-19 pandemic and inflation have been factored into the Company’s 2022 attributable cost of sales and capital expenditures guidance. Potential additional inflationary impacts have been excluded from the Company’s directional forecasts on 2023 attributable cost of sales and 2023-2024 capital costs.

 

Attributable cost of sales guidance¹

 

Attributable production cost of sales is expected to be $830 per Au eq. oz. (+/- 5%) for 2022. Attributable production cost of sales per ounce is expected to be higher in the first half of the year and decrease during the second half of the year largely due to the anticipated increase in production.

 

Kinross’ attributable production cost of sales per ounce sold outlook for 2023 is expected to be lower compared with 2022, excluding impacts of inflation, mainly due to the planned growth in production.

 

The Company expects its attributable all-in sustaining cost to be $1,130 per equivalent ounce sold (+/- 5%) for 2022, which is largely in line with 2021 results.

 

2022 by-product production and cost guidance

 

Accounting basis	2022 Guidance (+/- 5%)	2021 Actual
Gold equivalent basis
Attributable production (Au eq. oz.)1	2.65 million	2.07 million
Attributable production cost of sales per Au eq. oz. 1,2	$830	$828
Consolidated production cost of sales per Au eq. oz.	$835	$832
Attributable all-in sustaining cost per Au eq. oz. 1,2	$1,130	$1,138
By-product basis
Gold ounces1	2.5 million	2.02 million
Silver ounces	11.6 million	4.3 million
Attributable production cost of sales per Au oz. 1,2	$790	$799
Attributable all-in sustaining cost per Au oz. 1,2	$1,100	$1,118

 

 

2022 regional attributable production guidance¹

Region	2022 production guidance (Au eq. oz.)	Percentage of total forecast production12
Americas	1.53 million (+/- 5%)	58%
West Africa (attributable)	770,000 (+/- 10%)	29%
Russia	350,000 (+/- 5%)	13%
TOTAL (attributable)	2.65 million (+/- 5%)	100%

 

 

2022 regional attributable cost guidance¹

Region	2022 guidance production cost of sales (per Au eq. oz. sold)	2021 production cost of sales (per Au eq. oz. sold)
Americas	$880 (+/- 5%)	$860
West Africa (consolidated)	$710 (+/-10%)	$1,008
West Africa (attributable) 1,2, 13	$700 (+/- 10%)	$991
Russia	$870 (+/- 5%)	$637
TOTAL	$835 (+/- 5%)	$832
TOTAL (attributable) 1,2	$830 (+/- 5%)	$828

 

Material assumptions used to forecast 2022 production cost of sales are as follows:

• a gold price of $1,500 per ounce;
• a silver price of $20 per ounce;
• an oil price of $70 per barrel;
• foreign exchange rates of:
  • 5.0 Brazilian reais to the U.S. dollar;
  • 1.25 Canadian dollars to the U.S. dollar;
  • 70 Russian roubles to the U.S. dollar;
  • 750 Chilean pesos to the U.S. dollar;
  • 5.50 Ghanaian cedis to the U.S. dollar;
  • 35 Mauritanian ouguiyas to the U.S. dollar; and
  • 0.85 U.S. dollar to the Euro.

 

Taking into account existing currency and oil hedges:

• a 10% change in foreign currency exchange rates would be expected to result in an approximate $20 impact on attributable production cost of sales per ounce¹⁴;
• specific to the Russian rouble, a 10% change in this exchange rate would be expected to result in an approximate $25 impact on Russian production cost of sales per ounce;
• specific to the Brazilian real, a 10% change in this exchange rate would be expected to result in an approximate $30 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 $3 impact on fuel consumption costs on attributable production cost of sales per ounce; and
• a $100 change in the price of gold would be expected to result in an approximate $5 impact on attributable production cost of sales per ounce as a result of a change in royalties.

 

Capital expenditures guidance

 

Total capital expenditures for 2022 are forecast to be approximately $1,050 million (+/- 5%) and are summarized in the table below. The capital expenditures guidance is higher than previous estimates mainly due to inflationary pressures, a pull forward of planned spending at Udinsk to de-risk the project schedule, additional stripping at La Coipa with the inclusion of Puren into the project plan, and the inclusion of approximately $50 million for ESG initiatives such as the Tasiast solar power project.

 

Kinross’ capital expenditures outlook for 2023 and 2024 is expected to be largely in line with 2022 at approximately $1 billion per year. The outlook is based on Kinross’ current baseline production guidance and includes projects such as Udinsk, La Coipa’s Puren deposit and scope changes in the portfolio, which were not included in the Company’s previous multi-year capital expenditure outlook. As Kinross continues to develop and optimize its portfolio, other projects may be incorporated into its capital expenditures, as well as inflation impacts, over the 2023-2024 timeframe. These projects include Manh Choh, which is not included in the 2023 and 2024 capital expenditures outlook.

 

Region	Forecast 2022 sustaining capital  (million)	Forecast 2022 non-sustaining capital (million)	Total forecast capital  (+/- 5%) (million)
Americas	$430	$235	$665
West Africa	$40	$170	$210
Russia	$30	$140	$170
Corporate	$5 ________	$0 ________	$5 ________
TOTAL	$505	$545	$1,050

 

2022 sustaining capital includes the following forecast spending estimates:

•	Mine development:	$170 million (Americas); $10 million (Russia); $5 million (West Africa)
•	Mobile equipment:	$65 million (Americas); $10 million (Russia); $5 million (West Africa)
•	Tailings facilities:	$65 million (Americas); $5 million (West Africa)
•	Mill facilities:	$30 million (Americas); $10 million (West Africa); $5 million (Russia)
•	Leach facilities:	$40 million (Americas)

 

2022 non-sustaining capital includes the following forecast spending estimates:

•	Development and growth projects and studies:	$135 million
•	La Coipa Restart (including Puren):	$130 million
•	Udinsk:	$120 million
•	Tasiast West Branch stripping:	$65 million
•	ESG projects:	$50 million
•	Tasiast 24k project:	$45 million

 

Other 2022 guidance

 

The 2022 forecast for exploration is approximately $130 million, all of which is expected to be expensed, and is a $10 million increase from last year’s forecast. The exploration program (greenfields and brownfields) will follow up on 2021’s exploration success, including focusing on the Kupol Synergy Zone of Influence (“KSP”), the 130 kilometre radius around Kupol based on an economic trucking distance to the mill, and starting an underground exploration drift at Round Mountain. The exploration forecast does not include activities planned at the Dixie project in Red Lake, Ontario, pending the expected closing of the Great Bear acquisition.

 

The 2022 forecast for overhead (general and administrative and business development expenses) is approximately $160 million, which is largely in line with last year’s guidance. The Company has made cost improvements over recent years, with 2022 annual overhead guidance down $45 million over the past five years.

 

Other operating costs expected to be incurred in 2022 are approximately $125 million (+/- 5%), which are principally due to care and maintenance, reclamation, and pandemic-related mitigation measures.

 

Based on an assumed gold price of $1,500 per ounce and other budget assumptions, tax expense is expected to be $50 million and taxes paid is expected to be $170 million. Adjusting the Brazilian real and Russian rouble to the respective exchange rates of 5.58 and 74.3 to the U.S. dollar in effect at December 31, 2021, tax expense would be expected to be $105 million. Tax expense is expected to increase by 24% of any profit resulting from higher gold prices. Taxes paid is expected to increase by approximately $20 million for every $100 increase in the realized gold price.

 

Depreciation, depletion and amortization is forecast to be approximately $400 per Au eq. oz. (+/- 5%).

 

Interest paid is forecast to be approximately $85 million, which includes $35 million of capitalized interest. The interest paid forecast does not include any interest payment related to the expected financing of the Great Bear acquisition.

 

Environment, Social and Governance

 

In alignment with its values and culture, Kinross continued to deliver strong ESG performance over the year, ranking in the top quartile of its peer group as measured by ESG ratings from Sustainalytics, MSCI, ISS, Vigeo, Refinitiv and S&P Global’s CSA. Kinross was recognized as one of the industry’s top 10 for ESG performance in the S&P Global Sustainability Yearbook. The Company also retained its “A” level rating by MSCI, and is on track to complete external assurance in conformance with the World Gold Council’s Responsible Gold Mining Principles.

 

The Company’s injury frequency rates remained low and were in line with its three-year averages, however, these results were overshadowed by a tragic fatality at its Chirano mine and a mill fire at Tasiast. While the latter did not result in injuries, these incidents prompted Safety Stand-Downs, and company-wide, cross-functional discussions about Kinross’ safety culture to share learnings and improve safety performance.

 

In Alaska, Kinross’ commitment to environmental stewardship was highlighted by its partnership with Trout Unlimited to support the Alaska Abandoned Mine Restoration Initiative (click here for video). The Company committed over $500,000 to support the initiative’s first project, the continued restoration of a historic mining district in which Kinross has not operated. The initiative is the first partnership of its kind in Alaska, with a major mining company and a conservation organization working alongside federal and state land-management agencies to restore the environment and mitigate the impact of historic mining. The Company met or exceeded all site level targets for permitting, water management and closure planning, and also maintained its record of zero tailings breaches for the 29^th consecutive year.

 

In recognition of the global importance of addressing climate change, Kinross outlined its Climate Change Strategy, and has set a target to achieve a 30% reduction in intensity of scope 1 and scope 2 emissions by 2030. Please see the following news release for more information: https://www.kinross.com/Kinross-announces-details-of-its-Climate-Change-Strategy.

 

In 2021, the Company published its inaugural Climate Report following the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Kinross also continues to incorporate energy efficient projects into its portfolio and embed climate change considerations into strategic business decisions, including initiating development of a solar power plant at Tasiast, studying to build a power line to connect Udinsk to the regional grid and signing a power purchase agreement for 100% renewable power at La Coipa.

 

Kinross’ global teams continued efforts to mitigate the risks associated with the ongoing COVID-19 pandemic, and provided support to bolster vaccination rates of its workforce. In February 2022, Kinross donated over $1 million to support response efforts and those affected by the tragic explosion in Apiate, Ghana as the community works to recover and rebuild.

 

Kinross established an ESG Executive Committee that will report to Senior Leadership and to the Board of Directors on a quarterly basis to help further evolve and strengthen its ESG governance and strategy. The Company also advanced its Inclusion and Diversity (“I&D”) commitment with the establishment of a Global Inclusion and Diversity Council (“GIDC”), which is made up of Kinross’ senior leaders, including the President and CEO. The GIDC was established following a commitment made to the BlackNorth Initiative and is tasked with providing input into the Company’s I&D strategy and action plan.

 

For more information on Kinross’ sustainability performance, see the Company’s 2020 Sustainability Report and its ESG Analyst Centre page. The Report follows the Global Reporting Initiative (GRI) and Sustainability Accounting Board (SASB) reporting standards and fulfills Kinross’ commitment as a participant in the UN Global Compact.

 

This release should be read in conjunction with Kinross’ 2021 year-end Financial Statements and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2021 year-end Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished with the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.

 

About Kinross Gold Corporation

 

Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Our focus is on delivering value based on the core principles of operational excellence, balance sheet strength, disciplined growth and responsible mining. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol:KGC).

 

Review of operations

 

Three months ended December 31,			Gold equivalent ounces
	Produced					Sold					Production cost of sales ($millions)							Production cost of sales/equivalent ounce sold
	2021		2020			2021		2020				2021			2020				2021		2020
Fort Knox	73,830		57,523			74,384		57,849			$	74.1		$	51.1			$	996	$	883
Round Mountain	51,549		89,422			52,723		89,709				51.8			62.2				982		693
Bald Mountain	61,036		51,487			53,559		57,087				50.1			45.4				935		795
Paracatu	138,669		148,218			145,691		150,881				116.9			91.2				802		604
Maricunga	–		414			821		2,035				0.6			1.1				731		541
Americas Total	325,084		347,064			327,178		357,561				293.5			251.0				897		702
Kupol	116,179		130,731			115,893		131,541				75.2			79.1				649		601
Russia Total	116,179		130,731			115,893		131,541				75.2			79.1				649		601
Tasiast	15,253		111,028			15,006		107,865				10.8			60.8				720		564
Chirano (100%)	34,561		39,121			31,633		40,202				45.7			45.6				1,445		1,134
West Africa Total	49,814		150,149			46,639		148,067				56.5			106.4				1,211		719
Less: Chirano non-controlling interest (10%)	(3,456	)	(3,912	)		(3,163	)	(4,020	)			(4.6	)		(4.6	)
West Africa Attributable Total	46,358		146,237			43,476		144,047				51.9			101.8			$	1,194	$	707
Attributable Total	487,621		624,032			486,547		633,149				420.6			431.9				864		682
Add: Chirano non-controlling interest (10%)	3,456		3,912			3,163		4,020				4.6			4.6
Operations Total	491,077		627,944			489,710		637,169				425.2			436.5			$	868	$	685
Years ended December 31,			Gold equivalent ounces
	Produced					Sold					Production cost of sales ($millions)							Production cost of sales/equivalent ounce sold
	2021		2020			2021		2020				2021			2020				2021		2020
Fort Knox	264,283		237,925			263,590		238,349			$	267.2		$	251.3			$	1,014	$	1,054
Round Mountain	257,005		324,277			259,941		319,228				235.9			219.6				908		688
Bald Mountain	204,890		191,282			196,066		186,549				177.5			155.9				905		836
Paracatu	550,560		542,435			549,900		541,506				412.1			358.9				749		663
Maricunga	–		3,546			2,787		8,947				2.0			3.7				718		414
Americas Total	1,276,738		1,299,465			1,272,284		1,294,579				1,094.7			989.4				860		764
Kupol	481,108		510,743			480,968		510,973				306.2			304.5				637		596
Russia Total	481,108		510,743			480,968		510,973				306.2			304.5				637		596
Tasiast	170,502		406,509			174,193		403,789				123.6			235.7				710		584
Chirano (100%)	154,668		166,590			148,293		166,207				201.6			196.1				1,359		1,180
West Africa Total	325,170		573,099			322,486		569,996				325.2			431.8				1,008		758
Less: Chirano non-controlling interest (10%)	(15,467	)	(16,659	)		(14,829	)	(16,621	)			(20.2	)		(19.6	)
West Africa Attributable Total	309,703		556,440			307,657		553,375				305.0			412.2				991		745
Attributable Total	2,067,549		2,366,648			2,060,909		2,358,927				1,705.9			1,706.1			$	828	$	723
Add: Chirano non-controlling interest (10%)	15,467		16,659			14,829		16,621				20.2			19.6
Operations Total	2,083,016		2,383,307			2,075,738		2,375,548				1,726.1			1,725.7			$	832	$	726

 

 

Consolidated balance sheets

 

(expressed in millions of U.S. dollars, except share amounts)
		As at
		December 31,				December 31,
			2021				2020
Assets
Current assets
Cash and cash equivalents		$	531.5			$	1,210.9
Restricted cash			11.4				13.7
Accounts receivable and other assets			214.5				115.8
Current income tax recoverable			10.2				29.9
Inventories			1,151.3				1,072.9
Unrealized fair value of derivative assets			30.0				6.5
			1,948.9				2,449.7
Non-current assets
Property, plant and equipment			7,617.7				7,653.5
Goodwill			158.8				158.8
Long-term investments			98.2				113.0
Investment in joint venture			7.1				18.3
Other long-term assets			590.9				537.2
Deferred tax assets			6.5				2.7
Total assets		$	10,428.1			$	10,933.2
Liabilities
Current liabilities
Accounts payable and accrued liabilities		$	492.7			$	479.2
Current income tax payable			95.0				114.5
Current portion of long-term debt and credit facilities			40.0				499.7
Current portion of provisions			90.0				63.8
Other current liabilities			23.7				49.7
Deferred payment obligation			–				141.5
			741.4				1,348.4
Non-current liabilities
Long-term debt and credit facilities			1,589.9				1,424.2
Provisions			847.9				861.1
Long-term lease liabilities			35.1				46.3
Other long-term liabilities			127.4				102.4
Deferred tax liabilities			436.8				487.8
Total liabilities		$	3,778.5			$	4,270.2
Equity
Common shareholders’ equity
Common share capital		$	4,427.7			$	4,473.7
Contributed surplus			10,664.4				10,709.0
Accumulated deficit			(8,492.4	)			(8,562.5	)
Accumulated other comprehensive income (loss)			(18.8	)			(23.7	)
Total common shareholders’ equity			6,580.9				6,596.5
Non-controlling interests			68.7				66.5
Total equity			6,649.6				6,663.0
Total liabilities and equity		$	10,428.1			$	10,933.2
Common shares
Authorized		Unlimited				Unlimited
Issued and outstanding			1,244,332,772				1,258,320,461

 

 

Consolidated statements of operations

(expressed in millions of U.S. dollars, except share and per share amounts)
		Years ended
		December 31,				December 31,
			2021				2020
Revenue
Metal sales		$	3,729.4			$	4,213.4
Cost of sales
Production cost of sales			1,726.1				1,725.7
Depreciation, depletion and amortization			840.9				842.3
Impairment charges (reversals) and asset derecognition – net			144.5				(650.9	)
Total cost of sales			2,711.5				1,917.1
Gross profit			1,017.9				2,296.3
Other operating expense			294.6				186.5
Exploration and business development			133.1				92.5
General and administrative			126.6				117.9
Operating earnings			463.6				1,899.4
Other income – net			79.2				7.4
Finance income			12.3				4.3
Finance expense			(85.7	)			(112.6	)
Earnings before tax			469.4				1,798.5
Income tax expense – net			(250.7	)			(439.8	)
Net earnings		$	218.7			$	1,358.7
Net (loss) earnings attributable to:
Non-controlling interests		$	(2.5	)		$	16.3
Common shareholders		$	221.2			$	1,342.4
Earnings per share attributable to common shareholders
Basic		$	0.18			$	1.07
Diluted		$	0.17			$	1.06
Weighted average number of common shares outstanding (millions)
Basic			1,259.1				1,257.2
Diluted			1,269.1				1,268.0

 

 

Consolidated statements of cash flows

(expressed in millions of U.S. dollars)
			Years ended
			December 31,				December 31,
				2021				2020
Net inflow (outflow) of cash related to the following activities:
Operating:
Net earnings			$	218.7			$	1,358.7
Adjustments to reconcile net earnings to net cash provided from operating activities:
Depreciation, depletion and amortization				840.9				842.3
Impairment charges (reversals) and asset derecognition – net				144.5				(650.9	)
Share-based compensation expense				10.8				13.7
Finance expense				85.7				112.6
Deferred tax (recovery) expense				(63.7	)			217.9
Foreign exchange losses and other				72.9				11.8
Reclamation expense				0.1				6.6
Changes in operating assets and liabilities:
Accounts receivable and other assets				(50.0	)			(120.9	)
Inventories				(86.7	)			(6.8	)
Accounts payable and accrued liabilities				265.4				279.0
Cash flow provided from operating activities				1,438.6				2,064.0
Income taxes paid				(303.4	)			(106.4	)
Net cash flow provided from operating activities				1,135.2				1,957.6
Investing:
Additions to property, plant and equipment				(938.6	)			(916.1	)
Interest paid capitalized to property, plant and equipment				(51.1	)			(47.9	)
Acquisitions				(141.5	)			(267.0	)
Net additions to long-term investments and other assets				(66.3	)			(5.9	)
Net proceeds from the sale of property, plant and equipment				1.3				8.4
Decrease (increase) in restricted cash – net				2.3				(23.5	)
Interest received and other – net				1.3				2.9
Net cash flow used in investing activities				(1,192.6	)			(1,249.1	)
Financing:
Proceeds from drawdown of debt				200.0				950.0
Repayment of debt				(500.0	)			(850.0	)
Interest paid				(46.9	)			(63.1	)
Payment of lease liabilities				(33.8	)			(20.7	)
Dividends paid to common shareholders				(151.1	)			(75.5	)
Dividends paid to non-controlling interest				–				(6.0	)
Repurchase and cancellation of shares				(100.2	)			–
Other – net				8.8				(2.4	)
Net cash flow used in financing activities				(623.2	)			(67.7	)
Effect of exchange rate changes on cash and cash equivalents				1.2				(5.0	)
(Decrease) increase in cash and cash equivalents				(679.4	)			635.8
Cash and cash equivalents, beginning of period				1,210.9				575.1
Cash and cash equivalents, end of period			$	531.5			$	1,210.9

 

 

 

Operating Summary
	Mine	Period	Ownership	Tonnes Ore Mined (a)	Ore Processed (Milled) (a)	Ore Processed (Heap Leach) (a)	Grade (Mill)	Grade (Heap Leach)	Recovery (b)(h)		Gold Eq Production (e)	Gold Eq Sales (e)	Production cost of sales		Production cost of sales/oz		Cap Ex (g)		DD&A
			(%)	(‘000 tonnes)	(‘000 tonnes)	(‘000 tonnes)	(g/t)	(g/t)	(%)		(ounces)	(ounces)	($ millions)		($/ounce)		($ millions)		($ millions)
Americas	Fort Knox	Q4 2021	100	9,203	2,148	8,185	0.73	0.19	82	%	73,830	74,384	$	74.1	$	996	$	31.6	$	30.9
		Q3 2021	100	8,024	2,221	6,395	0.77	0.20	82	%	71,336	71,482	$	67.7	$	947	$	37.4	$	29.7
		Q2 2021	100	9,560	1,939	7,864	0.70	0.22	81	%	63,302	62,163	$	67.7	$	1,089	$	18.7	$	26.7
		Q1 2021	100	8,174	1,751	7,396	0.57	0.20	80	%	55,815	55,561	$	57.7	$	1,038	$	25.4	$	22.5
		Q4 2020	100	8,456	2,583	7,021	0.61	0.20	80	%	57,523	57,849	$	51.1	$	883	$	46.0	$	23.2
	Round Mountain	Q4 2021	100	1,755	1,057	1,529	0.64	0.33	75	%	51,549	52,723	$	51.8	$	982	$	50.3	$	14.5
		Q3 2021	100	1,531	915	4,442	0.63	0.29	76	%	63,242	61,405	$	60.8	$	990	$	23.7	$	16.3
		Q2 2021	100	2,551	1,133	2,552	0.54	0.38	76	%	67,928	71,935	$	60.2	$	837	$	20.2	$	17.4
		Q1 2021	100	3,843	976	4,019	0.70	0.46	81	%	74,286	73,878	$	63.1	$	854	$	31.3	$	17.0
		Q4 2020	100	6,542	988	6,315	0.92	0.50	83	%	89,422	89,709	$	62.2	$	693	$	41.2	$	15.2
	Bald Mountain	Q4 2021	100	5,222	–	5,222	–	0.52	nm		61,036	53,559	$	50.1	$	935	$	17.2	$	57.2
		Q3 2021	100	5,941	–	5,941	–	0.46	nm		55,559	52,874	$	48.8	$	923	$	7.7	$	59.4
		Q2 2021	100	5,875	–	5,875	–	0.57	nm		36,887	41,383	$	41.6	$	1,005	$	5.2	$	39.1
		Q1 2021	100	2,025	–	2,025	–	0.48	nm		51,408	48,250	$	37.0	$	767	$	8.9	$	40.2
		Q4 2020	100	6,076	–	6,076	–	0.42	nm		51,487	57,087	$	45.4	$	795	$	19.3	$	44.3
	Paracatu	Q4 2021	100	13,036	15,451	–	0.35	–	77	%	138,669	145,691	$	116.9	$	802	$	49.6	$	47.7
		Q3 2021	100	14,107	15,085	–	0.37	–	76	%	134,425	133,924	$	103.7	$	774	$	30.0	$	44.5
		Q2 2021	100	12,624	14,138	–	0.37	–	76	%	150,919	143,474	$	108.7	$	758	$	27.5	$	50.7
		Q1 2021	100	12,612	15,372	–	0.38	–	75	%	126,547	126,811	$	82.8	$	653	$	20.8	$	37.7
		Q4 2020	100	12,611	12,655	–	0.51	–	77	%	148,218	150,881	$	91.2	$	604	$	61.6	$	58.2
	Maricunga	Q4 2021	100	–	–	–	–	–	nm		–	821	$	0.6	$	731	$	–	$	0.1
		Q3 2021	100	–	–	–	–	–	nm		–	655	$	0.5	$	763	$	–	$	0.3
		Q2 2021	100	–	–	–	–	–	nm		–	580	$	0.4	$	690	$	–	$	0.1
		Q1 2021	100	–	–	–	–	–	nm		–	731	$	0.5	$	684	$	–	$	0.1
		Q4 2020	100	–	–	–	–	–	nm		414	2,035	$	1.1	$	541	$	–	$	0.1
Russia	Kupol (c)(d)(f)	Q4 2021	100	333	430	–	7.74	–	95	%	116,179	115,893	$	75.2	$	649	$	8.8	$	17.1
		Q3 2021	100	316	425	–	8.29	–	96	%	120,822	121,798	$	81.8	$	672	$	5.4	$	18.3
		Q2 2021	100	319	424	–	8.43	–	95	%	121,855	121,124	$	74.5	$	615	$	5.5	$	16.9
		Q1 2021	100	312	418	–	8.71	–	94	%	122,252	122,153	$	74.7	$	612	$	6.8	$	18.2
		Q4 2020	100	293	432	–	9.24	–	95	%	130,731	131,541	$	79.1	$	601	$	15.1	$	31.0
West Africa	Tasiast	Q4 2021	100	1,061	1,068	–	1.50	–	94	%	15,253	15,006	$	10.8	$	720	$	52.5	$	13.1
		Q3 2021	100	822	–	–	–	–	0	%	3,847	4,822	$	8.3	$	1,721	$	68.1	$	21.3
		Q2 2021	100	818	1,161	–	1.67	–	95	%	62,438	70,695	$	53.2	$	753	$	70.2	$	54.2
		Q1 2021	100	843	1,504	–	1.85	–	96	%	88,964	83,670	$	51.3	$	613	$	68.6	$	48.3
		Q4 2020	100	1,206	1,470	–	2.48	–	94	%	111,028	107,865	$	60.8	$	564	$	65.0	$	46.5
	Chirano – 100%	Q4 2021	100	625	869	–	1.48	–	85	%	34,561	31,633	$	45.7	$	1,445	$	7.5	$	15.8
		Q3 2021	100	802	881	–	1.54	–	87	%	37,588	34,999	$	49.4	$	1,411	$	9.3	$	17.0
		Q2 2021	100	933	862	–	1.54	–	88	%	38,625	40,517	$	53.7	$	1,325	$	12.8	$	19.0
		Q1 2021	100	735	821	–	1.81	–	88	%	43,894	41,144	$	52.8	$	1,283	$	10.1	$	21.2
		Q4 2020	100	915	801	–	1.75	–	88	%	39,121	40,202	$	45.6	$	1,134	$	11.3	$	13.1
	Chirano – 90%	Q4 2021	90	625	869	–	1.48	–	85	%	31,105	28,470	$	41.1	$	1,445	$	6.8	$	14.2
		Q3 2021	90	802	881	–	1.54	–	87	%	33,829	31,499	$	44.5	$	1,411	$	8.4	$	15.3
		Q2 2021	90	933	862	–	1.54	–	88	%	34,762	36,465	$	48.3	$	1,325	$	11.5	$	17.1
		Q1 2021	90	735	821	–	1.81	–	88	%	39,505	37,030	$	47.5	$	1,283	$	9.1	$	19.1
		Q4 2020	90	915	801	–	1.75	–	88	%	35,209	36,182	$	41.0	$	1,134	$	10.2	$	11.8

 

(a)	Tonnes of ore mined and processed represent 100% Kinross for all periods presented.
(b)	Due to the nature of heap leach operations, recovery rates at Maricunga and Bald Mountain cannot be accurately measured on a quarterly basis. Recovery rates at Fort Knox, Round Mountain and Tasiast represent mill recovery only.
(c)	The Kupol segment includes the Kupol and Dvoinoye mines. Mining activities were completed at Dvoinoye in the fourth quarter of 2020.
(d)	Kupol silver grade and recovery were as follows: Q4 2021: 67.11 g/t, 85%; Q3 2021: 72.71 g/t, 87%; Q2 2021: 77.19 g/t, 85%; Q1 2021: 69.95 g/t, 83%; Q4 2020: 65.05 g/t, 84%.
(e)	Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent based on the ratio of the average spot market prices for the commodities for each period. The ratios for the quarters presented are as follows: Q4 2021: 76.89:1; Q3 2021: 73.45:1; Q2 2021: 68.05:1; Q1 2021: 68.33:1; Q4 2020: 77.02:1.
(f)	Dvoinoye tonnes of ore processed and grade were as follows: Q4 2021: 110,552, 6.16 g/t; Q3 2021: 111,060, 6.21 g/t; Q2 2021: 103,607, 7.33 g/t; Q1 2021: 109,559, 6.56 g/t; Q4 2020: 115,998, 9.25 g/t.
(g)	“Capital expenditures” is as reported as “Additions to property, plant and equipment” on the consolidated statements of cash flows.
(h)	“nm” means not meaningful.

 

Reconciliation of non-GAAP financial measures and ratios

 

The Company has included certain non-GAAP financial measures and ratios in this document. These measures and ratios are not defined under International Financial Reporting Standards (IFRS) and should not be considered in isolation. The Company believes that these measures and ratios, together with measures and ratios determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures and ratios is meant to provide additional information and should not be used as a substitute for performance measures and ratios prepared in accordance with IFRS. These measures and ratios 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 and ratios which determine the performance of the Company, excluding certain impacts which the Company believes are not reflective of the Company’s underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, reassessment of prior year taxes and/or taxes otherwise not related to the current period, impairment charges (reversals), gains and losses and other one-time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results. Management believes that these measures and ratios, 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 and ratios are not necessarily indicative of net earnings and earnings per share measures and ratios as determined under IFRS.

 

The following table provides a reconciliation of net (loss) earnings to adjusted net earnings for the periods presented:

 

		Adjusted Net Earnings
(expressed in millions of U.S dollars, except per share amounts)		Three months ended							Years ended
		December 31,							December 31,
			2021			2020				2021			2020
Net (loss) earnings attributable to common shareholders – as reported		$	(2.7	)	$	783.3			$	221.2		$	1,342.4
Adjusting items:
	Foreign exchange losses		3.3			8.2		#		4.7			7.3
	Foreign exchange losses on translation of tax basis and foreign exchange on deferred income taxes within income tax expense		16.7			4.6		#		24.1			101.2
	Taxes in respect of prior periods		7.3			39.7		#		86.3			51.3
	Impairment charges (reversals) and asset derecognition – net(a)		144.5			(602.6	)			144.5			(650.9	)
	COVID-19 costs(b)		10.5			23.3				34.8			64.1
	Tasiast insurance recoveries		(90.0	)		–				(90.0	)		–
	Tasiast mill fire related costs		19.3			–				60.3			–
	Round Mountain pit wall stabilization costs		7.4			–				50.1			–
	Mediation settlement provision		17.1			–				42.1			–
	Tasiast definitive agreement settlement		–			–				10.0			–
	U.S. CARES Act net benefit		–			–		#		–			(25.4	)
	Tasiast strike costs		–			–				–			8.3
	Other(c)		13.8			9.7		#		19.0			6.8
	Tax effect of the above adjustments		(45.4	)		68.9		#		(65.8	)		61.7
			104.5			(448.2	)			320.1			(375.6	)
Adjusted net earnings attributable to common shareholders		$	101.8		$	335.1			$	541.3		$	966.8
Weighted average number of common shares outstanding – Basic			1,254.6			1,258.3				1,259.1			1,257.2
Adjusted net earnings per share		$	0.08		$	0.27			$	0.43		$	0.77
Basic earnings per share attributable to common shareholders		$	–		$	0.62			$	0.18		$	1.07

 

(a)	During the year ended December 31, 2021, the Company recognized impairment and asset derecognition charges of $144.5 million at Bald Mountain, of which $95.2 million related to impairment of metal inventory and $49.3 million related to the derecognition of property, plant and equipment. The tax impacts of the impairment and derecognition charges were income tax recoveries of $25.3 million and $13.1 million, respectively. During the year ended December 31, 2020, the Company recorded non-cash reversals of impairment charges of $689.0 million related to property, plant and equipment at Tasiast, Chirano and Lobo-Marte. The tax impacts on the impairment reversals at Chirano and Lobo-Marte were expenses of $71.6 million and $4.6 million, respectively. There was no tax impact on the impairment reversal at Tasiast. In addition, the Company recorded impairment charges of $38.1 million related to certain supplies inventories.
(b)	Includes COVID-19 related labour, health and safety, donations and other support program costs.
(c)	Other includes various non-recurring impacts, such as one-time costs at sites, and recurring impacts, such as gains and losses on the sale of assets and hedges, which the Company believes are not reflective of the Company’s underlying performance for the reporting period.

 

Free cash flow is a non-GAAP measure and is defined as net cash flow provided from operating activities less capital expenditures. The Company believes that this measure, which is used internally to evaluate the Company’s underlying cash generation performance and the ability to repay creditors and return cash to shareholders, provides investors with the ability to better evaluate the Company’s underlying performance. However, the free cash flow measure is not necessarily indicative of operating earnings or net cash flow from operations as determined under IFRS.

 

The following table provides a reconciliation of free cash flow for the periods presented:

 

		Free Cash Flow
(expressed in millions of U.S dollars)		Three months ended							Years ended
		December 31,							December 31,
			2021			2020				2021			2020
Net cash flow provided from operating activities – as reported		$	197.3		$	681.1			$	1,135.2		$	1,957.6
Less: Additions to property, plant and equipment			(298.0	)		(298.3	)			(938.6	)		(916.1	)
Free cash flow		$	(100.7	)	$	382.8			$	196.6		$	1,041.5

 

Adjusted operating cash flow is a non-GAAP measure and is defined as cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company’s regular operating cash flow and excluding changes in working capital. Working capital can be volatile due to numerous factors, including the timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The Company uses adjusted operating cash flow internally as a measure of the underlying operating cash flow performance and future operating cash flow-generating capability of the Company. However, the adjusted operating cash flow measure is not necessarily indicative of net cash flow from operations as determined under IFRS.

 

The following table provides a reconciliation of adjusted operating cash flow for the periods presented:

 

		Adjusted Operating Cash Flow
(expressed in millions of U.S dollars)		Three months ended							Years ended
		December 31,							December 31,
			2021			2020				2021			2020
Net cash flow provided from operating activities – as reported		$	197.3		$	681.1			$	1,135.2		$	1,957.6
Adjusting items:
	Working capital changes:
	Accounts receivable and other assets		20.6			(47.7	)			50.0			120.9
	Inventories		68.6			33.1				86.7			6.8
	Accounts payable and other liabilities, including income taxes paid		69.5			(138.9	)			38.0			(172.6	)
			158.7			(153.5	)			174.7			(44.9	)
Adjusted operating cash flow		$	356.0		$	527.6			$	1,309.9		$	1,912.7

 

Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP ratio and is defined as attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.

 

Management uses these measures to monitor and evaluate the performance of its operating properties.

 

The following table presents a reconciliation of attributable production cost of sales per equivalent ounce sold for the periods presented:

 

		Attributable Production Cost of Sales Per Equivalent Ounce Sold
(expressed in millions of U.S. dollars, except ounces and production cost of sales per equivalent ounce)		Three months ended							Years ended
		December 31,							December 31,
			2021			2020				2021			2020
Production cost of sales – as reported		$	425.2		$	436.5			$	1,726.1		$	1,725.7
Less: portion attributable to Chirano non-controlling interest(a)			(4.6	)		(4.6	)			(20.2	)		(19.6	)
Attributable(b) production cost of sales		$	420.6		$	431.9			$	1,705.9		$	1,706.1
Gold equivalent ounces sold			489,710			637,169				2,075,738			2,375,548
Less: portion attributable to Chirano non-controlling interest(c)			(3,163	)		(4,020	)			(14,829	)		(16,621	)
Attributable(b) gold equivalent ounces sold			486,547			633,149				2,060,909			2,358,927
Attributable(b) production cost of sales per equivalent ounce sold		$	864		$	682			$	828		$	723
Consolidated production cost of sales per equivalent ounce sold(d)		$	868		$	685			$	832		$	726

See page 24 for details of the footnotes referenced within the table above.

 

Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP ratio 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 ratio provides investors with the ability to better evaluate Kinross’ production cost of sales per ounce on a comparable basis with other major gold producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-product accounting.

 

The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the periods presented:

 

		Attributable Production Cost of Sales Per Ounce Sold on a By-Product Basis
(expressed in millions of U.S. dollars, except ounces and production cost of sales per ounce)		Three months ended							Years ended
		December 31,							December 31,
			2021			2020				2021			2020
Production cost of sales – as reported		$	425.2		$	436.5			$	1,726.1		$	1,725.7
Less: portion attributable to Chirano non-controlling interest(a)			(4.6	)		(4.6	)			(20.2	)		(19.6	)
Less: attributable(b) silver revenue(e)			(23.6	)		(28.3	)			(107.9	)		(91.0	)
Attributable(b) production cost of sales net of silver by-product revenue		$	397.0		$	403.6			$	1,598.0		$	1,615.1
Gold ounces sold			476,466			622,235				2,015,068			2,324,324
Less: portion attributable to Chirano non-controlling interest(c)			(3,160	)		(4,014	)			(14,806	)		(16,589	)
Attributable(b) gold ounces sold			473,306			618,221				2,000,262			2,307,735
Attributable(b) production cost of sales per ounce sold on a by-product basis		$	839		$	653			$	799		$	700
Consolidated production cost of sales per equivalent ounce sold(d)		$	868		$	685			$	832		$	726

See page 24 for details of the footnotes referenced within the table above.

 

In November 2018, the World Gold Council (“WGC”) published updates to its guidelines for reporting all-in sustaining costs and all-in costs to address how the costs associated with leases, after a company’s adoption of IFRS 16, should be treated. The WGC is a market development organization for the gold industry and is an association whose membership comprises leading gold mining companies including Kinross. Although the WGC is not a mining industry regulatory organization, it worked closely with its member companies to develop these non-GAAP measures. Adoption of the all-in sustaining cost and all-in cost metrics is voluntary and not necessarily standard, and therefore, these measures and ratios presented by the Company may not be comparable to similar measures and ratios presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing measures and ratios reported by Kinross.

 

All-in sustaining cost includes both operating and capital costs required to sustain gold production on an ongoing basis. The value of silver sold is deducted from the total production cost of sales as it is considered residual production. Sustaining operating costs represent expenditures incurred at current operations that are considered necessary to maintain current production. Sustaining capital represents capital expenditures at existing operations comprising mine development costs and ongoing replacement of mine equipment and other capital facilities, and does not include capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.

 

All-in cost is comprised of all-in sustaining cost as well as operating expenditures incurred at locations with no current operation, or costs related to other non-sustaining activities, and capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.

 

Attributable all-in sustaining cost and all-in cost per ounce sold on a by-product basis are calculated by adjusting total production cost of sales, as reported on the interim condensed consolidated statement of operations, as follows:

 

		Attributable All-In Sustaining Cost and All-In Cost Per Ounce Sold on a By-Product Basis
(expressed in millions of U.S. dollars, except ounces and costs per ounce)		Three months ended							Years ended
		December 31,							December 31,
			2021			2020				2021			2020
Production cost of sales – as reported		$	425.2		$	436.5			$	1,726.1		$	1,725.7
Less: portion attributable to Chirano non-controlling interest(a)			(4.6	)		(4.6	)			(20.2	)		(19.6	)
Less: attributable(b) silver revenue(e)			(23.6	)		(28.3	)			(107.9	)		(91.0	)
Attributable(b) production cost of sales net of silver by-product revenue		$	397.0		$	403.6			$	1,598.0		$	1,615.1
Adjusting items on an attributable(b) basis:
	General and administrative(f)		32.0			36.1				126.6			117.9
	Other operating expense – sustaining(g)		1.6			0.7				10.6			9.6
	Reclamation and remediation – sustaining(h)		11.0			16.0				43.2			54.0
	Exploration and business development – sustaining(i)		9.2			13.2				40.0			48.3
	Additions to property, plant and equipment – sustaining(j)		154.5			136.2				386.0			373.5
	Lease payments – sustaining(k)		9.6			7.1				32.8			19.7
All-in Sustaining Cost on a by-product basis – attributable(b)		$	614.9		$	612.9			$	2,237.2		$	2,238.1
	Other operating expense – non-sustaining(g)		10.3			17.2				38.1			55.9
	Reclamation and remediation – non-sustaining(h)		0.9			1.3				3.4			5.0
	Exploration and business development – non-sustaining(i)		27.7			17.4				91.3			43.3
	Additions to property, plant and equipment – non-sustaining(j)		141.8			160.1				544.6			536.9
	Lease payments – non-sustaining(k)		0.1			0.1				1.0			1.0
All-in Cost on a by-product basis – attributable(b)		$	795.7		$	809.0			$	2,915.6		$	2,880.2
Gold ounces sold			476,466			622,235				2,015,068			2,324,324
Less: portion attributable to Chirano non-controlling interest(c)			(3,160	)		(4,014	)			(14,806	)		(16,589	)
Attributable(b) gold ounces sold			473,306			618,221				2,000,262			2,307,735
Attributable(b) all-in sustaining cost per ounce sold on a by-product basis		$	1,299		$	991			$	1,118		$	970
Attributable(b) all-in cost per ounce sold on a by-product basis		$	1,681		$	1,309			$	1,458		$	1,248
Consolidated production cost of sales per equivalent ounce sold(d)		$	868		$	685			$	832		$	726

See page 24 for details of the footnotes referenced within the table above.

 

The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP measures and ratios, the Company’s production of silver is converted into gold equivalent ounces and credited to total production.

 

Attributable all-in sustaining cost and all-in cost per equivalent ounce sold are calculated by adjusting total production cost of sales, as reported on the interim condensed consolidated statement of operations, as follows:

 

		Attributable All-In Sustaining Cost and All-In Cost Per Equivalent Ounce Sold
(expressed in millions of U.S. dollars, except ounces and costs per equivalent ounce)		Three months ended							Years ended
		December 31,							December 31,
			2021			2020				2021			2020
Production cost of sales – as reported		$	425.2		$	436.5			$	1,726.1		$	1,725.7
Less: portion attributable to Chirano non-controlling interest(a)			(4.6	)		(4.6	)			(20.2	)		(19.6	)
Attributable(b) production cost of sales		$	420.6		$	431.9			$	1,705.9		$	1,706.1
Adjusting items on an attributable(b) basis:
	General and administrative(f)		32.0			36.1				126.6			117.9
	Other operating expense – sustaining(g)		1.6			0.7				10.6			9.6
	Reclamation and remediation – sustaining(h)		11.0			16.0				43.2			54.0
	Exploration and business development – sustaining(i)		9.2			13.2				40.0			48.3
	Additions to property, plant and equipment – sustaining(j)		154.5			136.2				386.0			373.5
	Lease payments – sustaining(k)		9.6			7.1				32.8			19.7
All-in Sustaining Cost – attributable(b)		$	638.5		$	641.2			$	2,345.1		$	2,329.1
	Other operating expense – non-sustaining(g)		10.3			17.2				38.1			55.9
	Reclamation and remediation – non-sustaining(h)		0.9			1.3				3.4			5.0
	Exploration and business development – non-sustaining(i)		27.7			17.4				91.3			43.3
	Additions to property, plant and equipment – non-sustaining(j)		141.8			160.1				544.6			536.9
	Lease payments – non-sustaining(k)		0.1			0.1				1.0			1.0
All-in Cost – attributable(b)		$	819.3		$	837.3			$	3,023.5		$	2,971.2
Gold equivalent ounces sold			489,710			637,169				2,075,738			2,375,548
Less: portion attributable to Chirano non-controlling interest(c)			(3,163	)		(4,020	)			(14,829	)		(16,621	)
Attributable(b) gold equivalent ounces sold			486,547			633,149				2,060,909			2,358,927
Attributable(b) all-in sustaining cost per equivalent ounce sold		$	1,312		$	1,013			$	1,138		$	987
Attributable(b) all-in cost per equivalent ounce sold		$	1,684		$	1,322			$	1,467		$	1,260
Consolidated production cost of sales per equivalent ounce sold(d)		$	868		$	685			$	832		$	726

See page 24 for details of the footnotes referenced within the table above.

(a)	The portion attributable to Chirano non-controlling interest represents the non-controlling interest (10%) in the production cost of sales for the Chirano mine.
(b)	“Attributable” includes Kinross’ share of Chirano (90%) production and costs, and Manh Choh (70%) costs.
(c)	“Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces sold from the Chirano mine.
(d)	“Consolidated production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces sold.
(e)	“Attributable silver revenues” represents the attributable portion of metal sales realized from the production of the secondary or by-product metal (i.e. silver). Revenue from the sale of silver, which is produced as a by-product of the process used to produce gold, effectively reduces the cost of gold production.
(f)	“General and administrative” expenses is as reported on the consolidated statement of operations, net of certain restructuring expenses. General and administrative expenses are considered sustaining costs as they are required to be absorbed on a continuing basis for the effective operation and governance of the Company.
(g)	“Other operating expense – sustaining” is calculated as “Other operating expense” as reported on the consolidated statement of operations, less other operating and reclamation and remediation expenses related to non-sustaining activities as well as other items not reflective of the underlying operating performance of our business. Other operating expenses are classified as either sustaining or non-sustaining based on the type and location of the expenditure incurred. The majority of other operating expenses that are incurred at existing operations are considered costs necessary to sustain operations, and are therefore classified as sustaining. Other operating expenses incurred at locations where there is no current operation or related to other non-sustaining activities are classified as non-sustaining.
(h)	“Reclamation and remediation – sustaining” is calculated as current period accretion related to reclamation and remediation obligations plus current period amortization of the corresponding reclamation and remediation assets, and is intended to reflect the periodic cost of reclamation and remediation for currently operating mines. Reclamation and remediation costs for development projects or closed mines are excluded from this amount and classified as non-sustaining.
(i)	“Exploration and business development – sustaining” is calculated as “Exploration and business development” expenses as reported on the consolidated statement of operations, less non-sustaining exploration and business development expenses. Exploration expenses are classified as either sustaining or non-sustaining based on a determination of the type and location of the exploration expenditure. Exploration expenditures within the footprint of operating mines are considered costs required to sustain current operations and so are included in sustaining costs. Exploration expenditures focused on new ore bodies near existing mines (i.e. brownfield), new exploration projects (i.e. greenfield) or for other generative exploration activity not linked to existing mining operations are classified as non-sustaining. Business development expenses are classified as either sustaining or non-sustaining based on a determination of the type of expense and requirement for general or growth related operations.
(j)	“Additions to property, plant and equipment – sustaining” represents the majority of capital expenditures at existing operations including capitalized exploration costs, periodic capitalized stripping and underground mine development costs, ongoing replacement of mine equipment and other capital facilities and other capital expenditures and is calculated as total additions to property, plant and equipment (as reported on the consolidated statements of cash flows), less capitalized interest and non-sustaining capital. Non-sustaining capital represents capital expenditures for major projects, including major capital stripping projects at existing operations that are expected to materially benefit the operation, as well as enhancement capital for significant infrastructure improvements at existing operations. Non-sustaining capital expenditures during the year ended December 31, 2021, primarily related to major projects at Tasiast, La Coipa, Udinsk, Fort Knox and Round Mountain. Non-sustaining capital expenditures during the year ended December 31, 2020, primarily related to major projects at Tasiast, Fort Knox and Round Mountain.
(k)	“Lease payments – sustaining” represents the majority of lease payments as reported on the consolidated statements of cash flows and is made up of the principal and financing components of such cash payments, less non-sustaining lease payments. Lease payments for development projects or closed mines are classified as non-sustaining.