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Kinross reports 2022 second-quarter results

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Kinross reports 2022 second-quarter results

 

 

 

 

 

Kinross Gold Corporation (TSX: K) (NYSE: KGC) announced its results for the second-quarter ended June 30, 2022.

 

This news release contains forward-looking information about expected future events and financial and operating performance of the Company. Please refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 33 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.

 

Results from the Company’s Russian and Ghanaian assets have been excluded from its Q2 2022 continuing results, along with comparative figures, due to the classification of these assets as discontinued as at June 30, 2022.

 

Q2 2022 highlights from continuing operations:

  • Gold equivalent production of 453,978 Au eq. oz. produced.
  • Production cost of sales1 of $1,027 per Au eq. oz. sold and all-in sustaining cost2 of $1,341 per Au eq. oz. sold.
  • Margins3 of $845 per Au eq. oz. sold.
  • Adjusted operating cash flow2 of $251.9 million, operating cash flow4 of $257.1 million and free cash flow2 of $107.7 million.
  • Reported net loss5 of $9.3 million, or $0.01 per share, with adjusted net earnings2, 6 of $37.4 million, or $0.03 per share2.
  • Cash and cash equivalents of $719.1 million, and total liquidity7 of approximately $2.1 billion at June 30, 2022.
  • Kinross’ Board of Directors declared a quarterly dividend of $0.03 per common share payable on September 1, 2022 to shareholders of record at the close of business on August 18, 2022.

 

Company guidance:

  • Kinross is on track to significantly increase production in the second half of the year, primarily driven by stronger production at Paracatu, Tasiast and La Coipa. The Company expects to be at the low end of its 2022 production guidance range mainly due to temporary delays in the mill ramp-up at La Coipa.
  • Kinross expects to maintain a substantial production profile with estimated average production of two million Au eq. oz. per year over the remainder of the decade.
  • The Company expects its 2022 production cost of sales to be approximately $900 per Au eq. oz. sold and all-in sustaining cost to be approximately $1,240 per Au eq. oz. sold2, mainly due to the impact of the temporary delay in La Coipa’s mill ramp-up and inflationary pressures across the portfolio. Consolidated production cost of sales was $8328 per Au eq. oz. sold and attributable all-in sustaining cost of sales was $1,1382, 8 per Au eq. oz. sold for the year ended December 31, 2021. The Company continues to expect costs to decrease during the second half of the year largely due to the anticipated increase in production. Kinross is on track to meet its 2022 capital expenditures guidance of $850 million (+/- 5%).

 

Development projects:

  • Kinross is proceeding with development of the 70%-owned Manh Choh project in Alaska, which is expected to increase the Company’s production profile by approximately 640,000 attributable Au eq. oz. over the life of mine at lower costs.
  • The world-class Great Bear project in Red Lake, Ontario continues to make excellent progress, with drilling results from the first half of the year continuing to confirm Kinross’ vision of developing a large, long-life mining complex. The Company plans to declare an initial mineral resource estimate as part of its 2022 year-end results.
  • The Tasiast 24k project remains on plan to reach 24,000 tonnes per day throughput in mid-2023.

 

Russia and Ghana divestments:

  • On June 15, 2022, Kinross announced the completion of the sale of 100% of its Russian assets to the Highland Gold Mining group of companies for $340 million in cash. The Company received $300 million in U.S. denominated cash on closing with a deferred payment of $40 million due on the one-year anniversary of closing.
  • On April 25, 2022, Kinross announced the sale of its 90% interest in the Chirano mine in Ghana to Asante Gold Corporation for total consideration of $225 million in cash. The sale is expected to close in August 2022.

 

CEO Commentary:

  1. Paul Rollinson, President and CEO, made the following comments in relation to 2022 second-quarter results:

 

“Kinross had higher production compared with the first quarter and we continue to expect stronger production and lower costs in the second half of the year to generate an increase in free cash flow. Paracatu and Tasiast are on track to increase production at lower costs for the rest of the year, with the La Coipa mill expected to continue ramping up, contributing to our higher production.

 

“With the completion of the sale of our Russian assets and pending sale of Chirano, approximately 70% of our production is now based out of the Americas. The new re-balanced portfolio is bolstered by our robust development projects, which all advanced well over the quarter. At the world-class Great Bear project in Red Lake, Ontario, drilling results continue to show the significant potential of a deposit that can host a large, long-life mining complex. At Manh Choh in Alaska, we completed a feasibility study ahead of schedule, and are proceeding with a project that we expect will add approximately 640,000 lower-cost gold ounces to our production profile over its life of mine in one of the world’s best mining jurisdictions.

 

“Looking ahead, we believe we have significant value upside. We are in excellent financial position, have strong liquidity of $2.1 billion, and continue to prioritize and strengthen our investment-grade balance sheet while returning capital to our shareholders. Our high-quality portfolio has a competitive reserve life, with production expected to increase to 2.3 million gold ounces next year, and average two million gold ounces per year over the remainder of the decade.”

 

Summary of financial and operating results

 

  Three months ended
June 30,
Six months ended
June 30,
(unaudited, in millions of U.S. dollars, except ounces, per share amounts, and per ounce amounts) 2022 2021 2022 2021
 Operating Highlights        
 Total gold equivalent ounces(a),(g)        
 Produced(c) 560,852 541,954 1,070,093 1,105,120
 Sold(c) 512,431 551,871 1,007,906 1,104,069
         
 Total gold equivalent ounces from continuing operations(h)        
 Produced(c) 453,978 381,474 832,399 778,494
 Sold(c) 439,078 390,230 812,806 779,131
         
 Attributable gold equivalent ounces(a),(g)        
 Produced(c) 557,491 538,091 1,063,239 1,096,868
 Sold(c) 508,731 547,819 1,000,625 1,095,903
         
 Financial Highlights from Continuing Operations(h)        
 Metal sales $ 821.5 $ 707.9 $ 1,522.4 $ 1,402.3
 Production cost of sales $ 450.8 $ 331.8 $ 813.9 $ 624.2
 Depreciation, depletion and amortization $ 180.5 $ 189.6 $ 347.0 $ 357.1
 Operating earnings $ 64.0 $ 87.5 $ 166.5 $ 233.5
 Net (loss) earnings from continuing operations attributable to common shareholders $ (9.3) $ 30.1 $ 72.0 $ 109.2
 Basic (loss) earnings per share from continuing operations attributable to common shareholders $ (0.01) $ 0.02 $ 0.06 $ 0.09
 Diluted (loss) earnings per share from continuing operations attributable to common shareholders $ (0.01) $ 0.02 $ 0.06 $ 0.09
 Adjusted net earnings from continuing operations attributable to common shareholders(b) $ 37.4 $ 66.5 $ 106.2 $ 172.2
 Adjusted net earnings from continuing operations per share(b) $ 0.03 $ 0.05 $ 0.08 $ 0.14
 Net cash flow of continuing operations provided from operating activities $ 257.1 $ 277 $ 355.00 $ 406.80
 Adjusted operating cash flow from continuing operations(b) $ 251.9 $ 250 $ 501.0 $ 530.4
 Capital expenditures from continuing operations(d) $ 149.4 $ 180.7 $ 250.1 $ 362.2
 Free cash flow from continuing operations(b) $ 107.7 $ 96.3 $ 104.9 $ 44.6
 Average realized gold price per ounce from continuing operations(e) $ 1,872 $ 1,814 $ 1,874 $ 1,800
 Production cost of sales from continuing operations per equivalent ounce(c) sold(f) $ 1,027 $ 850 $ 1,001 $ 801
 Production cost of sales from continuing operations per ounce sold on a by-product basis(b) $ 1,018 $ 840 $ 994 $ 791
 All-in sustaining cost from continuing operations per ounce sold on a by-product basis(b) $ 1,335 $ 1,143 $ 1,285 $ 1,078
 All-in sustaining cost from continuing operations per equivalent ounce(c) sold(b) $ 1,341 $ 1,150 $ 1,290 $ 1,085
 Attributable all-in cost(a) from continuing operations per ounce sold on a by-product basis(b) $ 1,596 $ 1,509 $ 1,536 $ 1,463
 Attributable all-in cost(a) from continuing operations per equivalent ounce(c) sold(b) $ 1,599 $ 1,512 $ 1,539 $ 1,467
 

(a) “Total gold equivalent ounces” includes 100% of Chirano production. “Attributable gold equivalent ounces” includes Kinross’ share of Chirano (90%) production. “Attributable all-in cost” includes Kinross’ share of Manh Choh (70%) costs.

(b) The definition and reconciliation of these non-GAAP financial measures and ratios is included in Section 11. Non-GAAP financial measures and ratios have no standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other issuers.
(c) “Gold equivalent ounces” include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market prices for the commodities for each period. The ratio for the second quarter of 2022 was 82.76:1 (second quarter of 2021 – 68.05:1). The ratio for the first six months of 2022 was 80.36:1 (first six months of 2021 – 68.19:1).
(d) “Capital expenditures from continuing operations” is as reported as “Additions to property, plant and equipment” on the interim condensed consolidated statements of cash flows.
(e) “Average realized gold price per ounce from continuing operations” is defined as gold metal sales from continuing operations divided by total gold ounces sold from continuing operations.
(f) “Production cost of sales from continuing operations per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces sold from continuing operations.
(g) Total gold equivalent ounces produced and sold and attributable gold equivalent ounces produced and sold include results from the Kupol and Dvoinoye mines up to their disposal, and from the Chirano mine up to June 30, 2022.
(h) On June 15, 2022, the Company announced that it had completed the sale of its Russian operations, which includes the Kupol and Dvoinoye mines and the Udinsk project. In the second quarter of 2022, the Company announced its plan to sell the Chirano mine in Ghana. Results for the three and six months ended June 30, 2022 and 2021 are from continuing operations and exclude results from the Company’s Chirano and Russian operations due to the classification of these operations as discontinued as at June 30, 2022.
 

 

The following operating and financial results are based on second-quarter gold equivalent production and exclude Russian and Ghanaian operations except where noted:

 

Production: Kinross produced 453,978 Au eq. oz. in Q2 2022 from continuing operations, a 19% increase compared with 381,474 Au eq. oz. in Q2 2021. The year-over-year increase was largely due to Tasiast, which had higher grades and throughput.

 

Average realized gold price: The average realized gold price from continuing operations in Q2 2022 was $1,872 per ounce, compared with $1,814 per ounce in Q2 2021.

 

Revenue: During the second quarter, revenue from continuing operations increased to $821.5 million, compared with $707.9 million during Q2 2021.

 

Production cost of sales: Production cost of sales from continuing operations per Au eq. oz. sold increased to $1,027 for the quarter, compared with $850 in Q2 2021, mainly as a result of inflationary cost pressures across the portfolio and an increase in waste stripping. The Company expects cost of sales per ounce sold to decrease in the second half of the year due to stronger production, notably at Tasiast, Paracatu and La Coipa, Kinross’ lowest cost mines.

 

Production cost of sales from continuing operations per Au oz. sold2 on a by-product basis was $1,018 in Q2 2022, compared with $840 in Q2 2021, based on gold sales of 434,086 ounces and silver sales of 413,175 ounces.

 

Margins3: Kinross’ margin from continuing operations per Au eq. oz. sold was $845 for Q2 2022, compared with the Q2 2021 margin of $964.

 

All-in sustaining cost2: All-in sustaining cost from continuing operations per Au eq. oz. sold was $1,341 in Q2 2022, compared with $1,150 in Q2 2021.

In Q2 2022, all-in sustaining cost from continuing operations per Au oz. sold on a by-product basis from continuing operations was $1,335, compared with $1,143 in Q2 2021.

 

Operating cash flow: Adjusted operating cash flow from continuing operations2 increased to $251.9 million in Q2 2022, compared with $250.0 million for Q2 2021.

 

Operating cash flow from continuing operations4 was $257.1 million for Q2 2022, compared with $277.0 million for Q2 2021.

 

Free cash flow2: Free cash flow from continuing operations increased 12% to $107.7 million in Q2 2022 compared with $96.3 million for Q2 2021. The increase in free cash outflow was mainly due to lower capital expenditures during the quarter.

 

Earnings: Adjusted net earnings from continuing operations2,6 were $37.4 million, or $0.03 per share, for Q2 2022, compared with $66.5 million, or $0.05 per share, for Q2 2021.

 

Reported net loss5 from continuing operations was $9.3 million, or $0.01 per share for Q2 2022, compared with reported net earnings of $30.1 million, or $0.02 per share, for Q2 2021. The net loss was mainly due to a decrease in operating earnings and an increase in income tax expense.

 

Capital expenditures: Capital expenditures from continuing operations decreased to $149.4 million for Q2 2022, compared with $180.7 million for Q2 2021. The decrease was primarily due to mine sequencing at Round Mountain and Tasiast involving an increase in operating waste mined and a decrease in capital stripping. These decreases were partially offset by increased expenditures for development activities at La Coipa and an increase in capital stripping at Bald Mountain.

 

Balance sheet

 

As of June 30, 2022, Kinross had cash and cash equivalents of $719.1 million, compared with $531.5 million at December 31, 2021. The increase was primarily due to cash received on completion of the sale of the Company’s Russian assets.

 

During the quarter, the Company repaid $120.0 million of debt, including $100.0 million of the outstanding balance on its revolving credit facility. In July 2022, Kinross repaid an additional $100.0 million of the drawn amount from its revolving credit facility. Kinross will prioritize paying down debt to continue strengthening its investment-grade balance sheet.

 

As of June 30, 2022, the Company had additional available credit9 of approximately $1.4 billion and total liquidity7 of approximately $2.1 billion.

 

Operating results

Mine-by-mine summaries for 2022 second-quarter operating results may be found on pages 14 and 18 of this news release. Highlights include the following:

 

At Tasiast, production was largely in line with the previous quarter’s record performance. In June, mill throughput averaged approximately 21,000 tonnes per day, with the site averaging similar rates in July 2022. Mill throughput, grades and recoveries are all expected to improve over the second half of the year, driving an increase in production. Tasiast is on track to produce more than 600,000 Au eq. oz. for full-year 2022. Cost of sales per ounce sold was higher compared with Q1 2022 and Q2 2021 mainly due to higher operating waste mined and inflationary pressures on consumables. Cost of sales per ounce sold is expected to decrease in the second half of the year with the anticipated increase in production.

 

At Paracatu, production was higher over the previous quarter primarily due to stronger mill throughput and grades. Production was lower compared with the same period last year mainly due to the expected lower grades from planned stockpile mining and the timing of ounces processed through the mill. The site mine plan consists of mining higher grade ore in the second half of the year to drive an increase in production. Paracatu achieved grades of approximately 0.45 g/t in July 2022, with planned grades for the second half of the year 30% higher than the first half. Cost of sales per ounce sold during the quarter decreased compared with Q1 2022 mainly due to the increase in gold ounces sold, and was higher year-over-year as a result of inflationary pressure on consumables, labour and maintenance, as well as unfavourable foreign exchange movements.

 

At Fort Knox, production increased compared with Q1 2022 and Q2 2021 as a result of higher mill grades and mill throughput, and more ounces recovered from the heap leach pads. Cost of sales per ounce sold was lower compared with the previous quarter primarily as a result of more gold ounces sold, and was higher compared with Q2 2021 mainly due to inflationary pressure on consumables.

 

At Round Mountain, production increased quarter-over-quarter mainly due to more ounces recovered from the heap leach pads, and decreased year-over-year primarily due to fewer ounces recovered from the heap leach pads. Cost of sales per ounce sold increased compared with Q1 2022 and Q2 2021 mainly due to inflationary effects on mining costs, with fewer gold ounces sold and higher operating waste mined also contributing to the increase year-over-year.

 

The Company continues to advance the Round Mountain mine optimization program, which is on schedule to be completed later this year. The program is optimizing the mine plan sequence for Phase W, which is expected to be divided into four parts. Mining for the first two parts is ongoing and is expected to continue over the next two to three years as part of the open-pit mining plan. Phase S mining is now expected to start early next year as part of the optimized mining sequence, with permits now in hand. Longer-term mine plan scenarios post-2024 are analyzing optimized stripping requirements for the third and fourth parts of Phase W mining. Underground mining potential is also being evaluated for the deeper portions of Phase W and Phase X. Plans for the development of an exploration drift at Phase X continue to advance well, with construction expected to begin in Q4 2022.

 

At Bald Mountain, production increased over Q1 2022 and Q2 2021 mainly due to an increase in ounces recovered from the heap leach pads, with higher grades contributing to the increase year-over-year. Cost of sales per ounce sold increased compared with Q1 2022 mainly due to inflationary pressure and was lower compared with Q2 2021 mainly due to a decrease in operating waste mined.

 

At La Coipa, the mine produced 7,414 Au eq. oz. during the quarter at a cost of sales of $789 per Au eq. oz. sold. Production during the quarter was lower than expected due to temporary delays in the mill ramp-up, primarily due to issues with the pumps and global supply chain challenges affecting availability of spare parts. The Company expects the mill ramp-up to increase during the second half of the year and significantly increase production. Mining activity at La Coipa advanced on plan during the quarter, with ore stockpiled and available for processing for the expected increase in mill ramp-up. La Coipa now expects to reach full mill capacity in Q4 2022 and does not expect the mill ramp-up delays to impact its life of mine production estimates. Kinross continues to study opportunities to further extend mine life by incorporating adjacent pits into the mine plan.

 

Development projects

 

Tasiast

 

At the Tasiast 24k project, the process plant continues to regularly reach throughput of 21,000 tonnes per day (t/d) and averaged 21,000 t/d during June 2022. The second phase of the project is continuing to progress on schedule to reach throughput of 24,000 t/d by mid-2023, with engineering now substantially complete and construction of the third leach tank 90% complete. Purchase orders have been placed for all major procurement packages, and the contracting process is ramping up and proceeding well.

 

The 34 MW Tasiast solar power plant project is continuing to advance and is expected to be completed in the second half of 2023. Engineering for the project has commenced and the procurement process is well underway, with key contracts awarded. Initial site activities are expected to start in Q4 2022. The solar project is expected to provide approximately 20% of the site’s power and reduce GHG emissions by approximately 530 Kt over the life of mine, which could save approximately 180 million litres of fuel over the same period.

 

Great Bear

 

The Company continues to make excellent progress at the world-class Great Bear project in Red Lake, Ontario and expects to declare an initial mineral resource as part of its 2022 year-end results.

 

Drilling results continue to support the view of a high-grade deposit that underpins a large, long-life mining complex. Results have also confirmed gold mineralization with good widths and high grades, including high-grade mineralization at depths of more than 500 metres. These results support the view that the LP Fault zone, the largest discovery to date at the project, can support a sizeable, long-life, open-pit mine. The Company has received additional assay results since its last update on June 28, 2022, with a selection of the new results from targets at the LP Fault zone highlighted in the table below (see Appendix A for full results).

 

To date, Kinross has drilled approximately 100,000 metres and is on track to complete 200,000 metres of exploration and infill drilling in 2022 at the LP Fault zone. The 35,000-metre grade control drilling program has now been completed, confirming the Company’s view of the high-grade core in the LP Fault zone. The program has improved Kinross’ understanding of the continuity and distribution of the high grade intercepts in the LP Fault zone.

 

Baseline environmental surveys and local community socio-economic studies required for the permitting process are progressing well and all key work packages have been awarded for scoping-level engineering work. Kinross continues to advance its comprehensive local community outreach and engagement program, with a focus on the Wabauskang and Lac Seul First Nations, on whose traditional territories the project is located. The Company is on schedule to commence a Great Bear pre-feasibility study in 2023.

 

Hole ID   From (m) To
(m)
Width (m) True Width (m) Au
(g/t)
Target
BR-559   234.8 251.0 16.3 14.0 0.58 Auro
BR-559 and 294.5 299.1 4.7 3.7 0.49
BR-559 and 325.8 348.9 23.2 21.5 1.97
BR-559 and 364.6 367.5 2.9 2.6 121.57
BR-559 and 413.2 416.6 3.4 2.8 1.22
BR-559 and 451.2 455.3 4.1 3.4 1.47
BR-573   556.8 565.6 8.8 8.3 12.17 Yauro
BR-573 and 600.6 620.7 20.1 17.7 0.57
BR-573 and 700.0 703.2 3.2 3.0 1.12
BR-586   629.8 651.5 21.7 18.4 0.56 Yauro
BR-586 and 667.5 745.8 78.3 72.0 2.30
BR-586 including 669.9 677.5 7.6 7.2 9.38
BR-586 and including 692.8 700.3 7.5 6.8 8.97
BR-586 and 770.6 774.8 4.2 3.9 0.69
BR-586 and 795.8 816.0 20.3 18.0 5.81
BR-586 including 798.0 800.4 2.4 2.0 41.86
BR-586 and 828.1 838.5 10.4 8.6 0.84
BR-602   129.0 132.6 3.6 3.5 4.99 Yauro
BR-602 including 129.8 130.6 0.8 0.8 20.50
BR-602 and 150.0 157.0 7.0 6.1 0.38
BR-602 and 168.0 221.8 53.8 51.6 0.42
BR-602 and 239.2 291.9 52.7 45.8 0.56
BR-602 and 352.4 353.4 1.0 0.8 14.90
BR-605   99.0 119.0 20.0 17.0 0.89 Yauro
BR-605 and 146.0 194.0 48.0 40.8 3.83
BR-605 including 150.0 155.5 5.5 4.6 8.00
BR-605 and including 188.0 193.0 5.0 4.5 12.17
BR-605 and 244.0 260.5 16.5 15.5 4.34
BR-605 including 258.5 259.5 1.0 0.9 51.20
BR-605 and 272.0 309.5 37.5 32.6 1.46
BR-605 including 285.2 287.2 2.0 1.6 12.33
BR-605 and 322.9 354.0 31.1 29.2 0.44
BR-605 and 389.0 400.9 11.9 11.3 0.31
BR-605 and 416.4 432.0 15.6 13.8 0.39
BR-605 and 443.3 460.5 17.2 16.0 0.50
BR-605 and 486.0 523.8 37.8 31.4 0.36
BR-608   260.2 281.0 20.8 16.8 6.46 Yauro
BR-608 including 268.9 280.5 11.6 10.7 11.46
BR-608 and 334.1 362.0 27.9 23.2 0.58
BR-608 and 383.0 385.5 2.5 2.0 3.42

 

Results are preliminary in nature and are subject to on-going QA/QC.

 

See Appendix B for a LP Fault zone long section.

 

View an interactive 3D model of the Great Bear project here:
https://vrify.com/decks/11758?auth=af709cc9-5f96-4165-8a1d-0b29e33ef12a

 

Manh Choh

 

The Company announced that it is proceeding with development of the 70%-owned Manh Choh project in Alaska with the completion of the project feasibility study (FS) ahead of schedule. The project is expected to increase Kinross’ production profile in Alaska by a total of approximately 640,000 attributable Au eq. oz. over the life of mine at lower costs. Including Manh Choh, the Company expects to produce an average of approximately 400,000 attributable Au eq. oz. per year from 2024 to 2027 from its Alaskan assets.

 

The early works program has begun at the project, with camp refurbishments and preparation for construction activities now underway. The Company is also continuing its comprehensive community programs and prioritizing local economic benefits as it develops the project. Permitting activities are advancing well, with major permit applications submitted in December 2021 and regulatory reviews well underway. Production is expected to commence in the second half of 2024 with a mine plan that consists of two small, open pits that will be mined concurrently over 4.5 years.

 

The FS outlines the plan to batch process high-grade Manh Choh ore at the Fort Knox mill, with grades expected to be approximately 8 g/t, or 10 times the current average mill grade at Fort Knox. The FS plan expects to lower Fort Knox’s average life of mine all-in sustaining cost and increase cash flow. By utilizing existing infrastructure, the FS plan unlocks the project’s value and avoids the construction of a mill or tailings facilities to reduce environmental disturbance at the project site.

 

Kinross Alaska estimates – 100% Fort Knox and Gil + 70% Manh Choh10
Timeline Operational metric Combined estimate
(current mine plan + 70% of Manh Choh)
2024 – 2027
(Mining)
Average annual production (Au oz.)  400,000
Average production cost of sales (per Au eq. oz.) $950
Average all-in sustaining costs11 (per Au eq. oz.) $1,100
Average grade processed (g/t)  0.45
Strip ratio  0.51
Average processing cost (per tonne) $3.50
Average mining cost (per tonne) $3.50
Average annual tonnes mined (tonnes) 55 million

 

Manh Choh feasibility study highlights10
Manh Choh 70% Basis
Operational metric Incremental Manh Choh estimate12
Life of mine production (million Au eq. oz.)  0.64
Life of mine ore processed (million tonnes)  2.8
Average gold equivalent grade processed (g/t)  8.06
Strip ratio  11.6
Initial capital costs13 (million) (2022-2024) $150
Average production cost of sales14 (per Au eq. oz.) $720
Average all-in sustaining costs11, 14 (per Au eq. oz.) $900
Internal rate of return14, 15 (IRR)  23%
Net present value14, 16 (NPV) (million) $90
Cash flow (million) $135

 

The project is expected to generate an IRR15 of 23% and NPV16 of $90 million based on a gold price of $1,500 per ounce, and an IRR15 of 40% and NPV16 of $195 million based on a gold price of $1,800 per ounce.

 

  Manh Choh project gold price sensitivity estimates (incremental)
Average gold price
Financial Metric $1,400/oz. $1,500/oz. $1,600/oz. $1,700/oz. $1,800/oz.
IRR15 15% 23% 30% 35% 40%
NPV16 $45 million $90 million $135 million $165 million $195 million
           

 

As a result of an updated resource model, approximately 698 Au koz. at 7.88 g/t were added to Kinross’ probable mineral reserve estimates. Approximately 1,203 Ag koz. at 13.58 g/t were also added to the Company’s probable mineral reserves17. The Company now expects the average gold equivalent grade processed from Manh Choh to be 8.06 g/t, compared with previous estimates of approximately 6.0 g/t. See Appendix C for details.

 

The higher grades are expected to offset some recent inflationary pressures, which are reflected in the project’s capital expenditures and operating cost estimates. Initial capital expenditures are expected to be $190 million, with total capital expenditures of approximately $255 million, both on a 100% basis. On a 70% basis, and factoring in an administration credit to Kinross as part of the Manh Choh joint venture agreement, total capital expenditures are expected to be approximately $190 million.

 

Forecast Manh Choh initial capital costs (2022 – 2024) Attributable Basis
70% Manh Choh; 100% Fort Knox
($ millions)
Absolute
Basis
100% Manh Choh;
100% Fort Knox
($ millions)
Manh Choh Mine Access Road & Other Earthworks 40 60
Fort Knox Mill Modifications 35 35
Manh Choh Mine Camp, Infrastructure & Facilities 20 25
Indirect Costs 25 30
Contingency 30 40
Total Initial Capital 150 190
Highway ore transport 20 30
Pre-production Capitalized Stripping 10 15
Pre-production G&A and Admin Fee 10 20
TOTAL PRE-PRODUCTION CAPITAL 190 255

 

The project has strong support from the Native Village of Tetlin, on whose land the project is located, with an extension of the community support agreement signed earlier this year. Manh Choh is expected to generate 400 to 600 new jobs, support the more than 700 existing jobs at Fort Knox, and build on Kinross’ commitment to environmental stewardship and strong history of responsible mining in Alaska. Since 2010, Kinross has generated more than $3.5 billion in economic benefits to the state through procurement, taxes, wages, community programs and donations, providing meaningful livelihoods for employees and opportunities for local suppliers. The project is also expected to lower the GHG emissions intensity for Kinross Alaska’s operations, supporting the Company’s GHG reduction goals.

 

  Manh Choh project oil sensitivity estimates (incremental)
Oil price
 
Financial Metric $60/bbl $70/bbl $80/bbl $90/bbl $100/bbl
IRR14 24% 23% 22% 21% 20%
NPV15 $95 million $90 million $85 million $80 million $75 million

 

Lobo-Marte

 

Following the completion of a feasibility study for the Lobo-Marte project in Chile in November 2021, the Company continues to believe in the project’s long-term development potential as a large, low-cost mine. As previously disclosed, project timing would be dependent on the conclusion of mining at La Coipa, which is located approximately 50 kilometres northwest of Lobo-Marte. Other factors that may impact a go-forward decision include the gold price, economic returns, permitting, and other priorities in the Company’s portfolio and potential opportunities in the region.

 

Round Mountain Gold Hill exploration

 

At the Gold Hill exploration project in Nevada, which is located approximately seven kilometres northeast of Round Mountain, exploration drilling has extended the main and Alexandria veins over 300 metres and 200 metres down dip. New geophysical data confirms multiple deposit-scale trends along strike at Gold Hill and results shows significant strike continuity and the open, un-tested nature of the trend.

 

Curlew Basin exploration

 

At the Curlew exploration project in Washington State, which is located approximately 35 kilometres north of the Company’s Kettle River mill by paved road, drilling from underground has improved the understanding of mineralized vein orientations. In addition to results from the Stealth and Galaxie targets at Curlew, the Lower Portal drill results have shown excellent growth potential to the project’s resource growth. Curlew encompasses a 6.5-square-kilometre area and Kinross is on schedule to declare a total mineral inventory of 1 million Au oz. by year-end 2022 at the project.

 

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 33 of this news release. This Company Guidance section references all-in sustaining cost per equivalent ounce sold, which is a non-GAAP ratio with no standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other issuers. The definition of this non-GAAP ratio and comparable reconciliation is included on pages 19 to 24 of this news release.

 

The Company’s Russian and Ghanaian assets have been excluded from its guidance due to the classification of these assets as discontinued as at June 30, 2022.

 

As Kinross’ share of Chirano (90%) is excluded from guidance, all guidance figures are no longer on an attributable basis, but on a total basis.

 

Production guidance

 

The Company expects to be at the low end of its +/- 5% range for its 2022 production guidance of 2.15 million Au eq. oz. The Company continues to expect significantly higher production in the second half of the year, which is largely driven by increased production at Paracatu, Tasiast and La Coipa. While Kinross continues to expect significantly higher production at La Coipa as it increases mill ramp-up in the second half of the year, production during the second quarter was lower than expected due to a temporary delay in the mill ramp-up.

 

The Company expects production to increase to 2.3 million Au eq. oz. (+/- 5%) in 2023, and 2024 production to be 2.1 million Au eq. oz. (+/- 5%). The 2024 production guidance does not include expected production from the Manh Choh project.

Kinross expects to maintain a substantial production profile with estimated average production of two million Au eq. oz. per year over the remainder of the decade.

 

Annual gold equivalent production guidance
(+/- 5%)
2022 2.15 million oz.
2023 2.3 million oz.
2024 2.1 million oz.

 

Cost guidance18

 

The Company expects its 2022 production cost of sales to be approximately $900 per Au eq. oz. sold and all-in sustaining cost to be approximately $1,240 per Au eq. oz. sold2 mainly due to inflationary pressures across the portfolio and the impact of the temporary delay in La Coipa’s mill ramp-up. Consolidated production cost of sales was $83219 per Au eq. oz. sold and attributable all-in sustaining cost of sales was $1,1382 per Au eq. oz. sold for the year ended December 31, 2021. Kinross’ previous 2022 guidance for cost of sales per Au eq. sold and all-in sustaining costs per Au eq. sold was $830 and $1,150 (+/- 5%), respectively.

 

The Company continues to expect costs to decrease during the second half of the year largely due to the anticipated increase in production.

 

  2022 Guidance18 2021 Actual
Production cost of sales per Au eq. oz. ~$900 $832
All-in sustaining cost per Au eq. oz. 2 ~$1,240 $1,138

 

Capital expenditures guidance

 

Kinross expects to meet its 2022 capital expenditures guidance of $850 million (+/- 5%). The Company has maintained its capital expenditures outlook for 2023 and 2024 of approximately $750 million per year, excluding inflationary impacts and based on Kinross’ current production guidance. The 2023 to 2024 capital expenditures guidance does not include the Manh Choh and Great Bear projects.

 

Completed divestment of Russian assets

 

On June 15, 2022, Kinross announced that it had completed the sale of 100% of its Russian assets to the Highland Gold Mining group of companies for total consideration of $340 million in cash. Kinross received $300 million in U.S. denominated cash in its corporate account at closing and will receive a deferred payment of $40 million on the one-year anniversary of closing.

 

As disclosed on April 5, 2022, the previously agreed total consideration for the transaction was $680 million, which included a payment of $100 million upon closing, with the remaining $580 million scheduled to be received in annual payments from 2023 through to 2027. The transaction consideration was adjusted by the parties following a review by the Russian Sub-commission on the Control of Foreign Investments, which approved this transaction for a purchase price not exceeding $340 million. With the approval and completion of the sale, Kinross has divested all of its interests in Russia and has no further obligations or liabilities in the country.

 

Update on divestment of Ghanaian assets

 

On April 25, 2022, Kinross announced the sale of its 90% interest in the Chirano mine in Ghana to Asante Gold Corporation for total consideration of $225 million in cash and shares. The sale is now expected to close in August 2022.

 

Environment, Social and Governance (ESG) update

 

Kinross published its second annual Climate Report, providing comprehensive climate-related disclosures and the Company’s GHG emissions data for 2021. The Report outlines the Company’s progress towards meeting the goals of the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement. Click here to access the Climate Report: https://www.kinross.com/2021-Climate-Report

 

Kinross has committed to being a net-zero GHG emissions company by 2050. In early 2022, the Company also delivered its multi-faceted Climate Change Strategy, which outlines a comprehensive GHG reduction plan. As part of the strategy, Kinross has set an interim target to achieve a 30% reduction in intensity per ounce produced of Scope 1 and Scope 2 emissions by 2030 over its 2021 baseline of 970 kg of CO2e per Au eq. oz. produced.

 

Kinross has been reporting on climate-related data since 2005, and began reporting in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in 2020 with its inaugural Climate Report. The Climate Report follows the recommended TCFD framework, providing investors and broader stakeholders with timely information about Kinross’ global efforts to address climate change and manage climate-related risks to its business.

 

In the important area of health and safety, a tragic employee fatality occurred at the Tasiast mine on July 19, 2022. An investigation has commenced, in cooperation with authorities, to determine the root cause of the incident and to avoid such tragic incidents in the future. The Company will continue to prioritize safety and is undertaking steps to enhance its risk management and safety systems at Tasiast and across its global operations.

 

About Kinross Gold Corporation

 

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

 

 

Review of operations

Three months ended June 30, (unaudited)                              
Gold equivalent ounces             
  Produced    Sold   Production cost of sales ($millions)   Production cost of sales/equivalent ounce sold
  2022 2021   2022 2021   2022 2021   2022 2021
 
Fort Knox 77,184 63,302   77,698 62,163   $ 92.6 $ 67.7   $ 1,192 $ 1,089
Round Mountain 56,709 67,928   51,455 71,935   74.8 60.2   1,454 837
Bald Mountain 54,108 36,887   54,472 41,383   54.5 41.6   1,001 1,005
Paracatu 129,423 150,919   133,472 143,474   129.6 108.7   971 758
La Coipa 7,414   7,099   5.6   789
Maricunga   818 580   0.4 0.4   489 690
Americas Total 324,838 319,036   325,014 319,535   357.5 278.6   1,100 872
                       
Tasiast 129,140 62,438   114,064 70,695   93.3 53.2   818 753
West Africa Total 129,140 62,438   114,064 70,695   93.3 53.2   818 753
                       
Continuing Operations Total 453,978 381,474   439,078 390,230   450.8 331.8   1,027 850
                       
Discontinued Operations                      
Kupol 73,265 121,855   36,358 121,124   18.4 74.5   $ 506 $ 615
Chirano (100%) 33,609 38,625   36,995 40,517   59.3 53.7   1,603 1,325
  106,874 160,480   73,353 161,641   77.7 128.2      
                       
   

 

                   
 
Six months ended June 30, (unaudited)                      
Gold equivalent ounces            
  Produced   Sold   Production cost of sales ($millions)   Production cost of sales/equivalent ounce sold
  2022 2021   2022 2021   2022 2021   2022 2021
                       
Fort Knox 131,987 119,117   130,511 117,724   $ 160.0 $ 125.4   $ 1,226 $ 1,065
Round Mountain 102,028 142,214   98,414 145,813   127.1 123.3   1,291 846
Bald Mountain 90,179 88,295   95,489 89,633   94.8 78.6   993 877
Paracatu 237,432 277,466   235,358 270,285   236.2 191.5   1,004 709
La Coipa 7,938   7,099   5.6   789
Maricunga   1,676 1,311   1.1 0.9   656 686
Americas Total 569,564 627,092   568,547 624,766   624.8 519.7   1,099 832
                       
Tasiast 262,835 151,402   244,259 154,365   189.1 104.5   774 677
West Africa Total 262,835 151,402   244,259 154,365   189.1 104.5   774 677
                       
Continuing Operations Total 832,399 778,494   812,806 779,131   813.9 624.2   $ 1,001 $ 801
                     
Discontinued Operations                      
Kupol 169,156 244,107   122,295 243,277   83.8 149.2   685 613
Chirano (100%) 68,538 82,519   72,805 81,661   106.9 106.5   1,468 1,304
  237,694 326,626   195,100 324,938   190.7 255.7      
                       

 

Interim condensed consolidated balance sheets

 

             
(unaudited, expressed in millions of U.S. dollars, except share amounts)            
             
    As at    
    June 30,   December 31,    
    2022   2021    
             
Assets            
Current assets            
Cash and cash equivalents   $ 719.1   $ 531.5    
Restricted cash   7.0   11.4    
Accounts receivable and other assets   158.4   214.5    
Current income tax recoverable   6.3   10.2    
Inventories   1,053.8   1,151.3    
Unrealized fair value of derivative assets   48.1   30.0    
Assets held for sale   396.0      
    2,388.7   1,948.9    
Non-current assets            
Property, plant and equipment   7,870.5   7,617.7    
Goodwill     158.8    
Long-term investments   85.1   98.2    
Other long-term assets   586.4   598.0    
Deferred tax assets   0.1   6.5    
Total assets   $ 10,930.8   $ 10,428.1    
             
Liabilities            
Current liabilities            
Accounts payable and accrued liabilities   $ 468.2   $ 492.7    
Current income tax payable   25.9   95.0    
Current portion of long-term debt and credit facilities   40.0   40.0    
Current portion of provisions   80.9   90.0    
Other current liabilities   28.1   23.7    
Liabilities held for sale   153.1      
    796.2   741.4    
Non-current liabilities            
Long-term debt and credit facilities   2,570.2   1,589.9    
Provisions   719.5   847.9    
Long-term lease liabilities   30.6   35.1    
Other long-term liabilities   129.9   127.4    
Deferred tax liabilities   358.2   436.8    
Total liabilities   $ 4,604.6   $ 3,778.5    
             
Equity            
Common shareholders’ equity            
Common share capital   $ 4,732.5   $ 4,427.7    
Contributed surplus   10,681.6   10,664.4    
Accumulated deficit   (9,134.4)   (8,492.4)    
Accumulated other comprehensive income (loss)   (24.1)   (18.8)    
Total common shareholders’ equity   6,255.6   6,580.9    
Non-controlling interests   70.6   68.7    
Total equity   6,326.2   6,649.6    
Total liabilities and equity   $ 10,930.8   $ 10,428.1    
             
Common shares            
Authorized   Unlimited   Unlimited    
Issued and outstanding   1,299,985,558   1,244,332,772    
             

 

Interim condensed consolidated statements of operations

                   
(unaudited, expressed in millions of U.S. dollars, except share and per share amounts)              
    Three months ended   Six months ended  
    June 30, June 30,   June 30,   June 30,  
    2022 2021   2022   2021  
Revenue                  
Metal sales   $ 821.5   $ 707.9   $ 1,522.4   $ 1,402.3  
                   
Cost of sales                  
Production cost of sales   450.8   331.8   813.9   624.2  
Depreciation, depletion and amortization   180.5   189.6   347.0   357.1  
Total cost of sales   631.3   521.4   1,160.9   981.3  
Gross profit   190.2   186.5   361.5   421.0  
Other operating expense   56.3   49.8   71.5   89.4  
Exploration and business development   39.9   20.7   63.3   39.0  
General and administrative   30.0   28.5   60.2   59.1  
Operating earnings   64.0   87.5   166.5   233.5  
Other income (expense) – net   0.7   (15.9)   (6.0)   (12.0)  
Finance income   2.0   1.4   4.2   2.9  
Finance expense   (23.5)   (19.1)   (44.7)   (37.5)  
Earnings from continuing operations before tax   43.2   53.9   120.0   186.9  
Income tax expense – net   (52.7)   (24.3)   (48.2)   (78.2)  
(Loss) earnings from continuing operations after tax   (9.5)   29.6   71.8   108.7  
(Loss) earnings from discontinued operations after tax   (30.3)   88.8   (635.5)   158.9  
Net (loss) earnings   $ (39.8)   $ 118.4   $ (563.7)   $ 267.6  
Net (loss) earnings from continuing operations attributable to:                  
Non-controlling interests   $ (0.2)   $ (0.5)   $ (0.2)   $ (0.5)  
Common shareholders   $ (9.3)   $ 30.1   $ 72.0   $ 109.2  
Net earnings (loss) from discontinued operations attributable to:                  
Non-controlling interests   $ 0.7   $ (0.4)   $ 0.6   $ (0.7)  
Common shareholders   $ (31.0)   $ 89.2   $ (636.1)   $ 159.6  
Net earnings (loss) attributable to:                  
Non-controlling interests   $ 0.5   $ (0.9)   $ 0.4   $ (1.2)  
Common shareholders   $ (40.3)   $ 119.3   $ (564.1)   $ 268.8  
(Loss) earnings per share from continuing operations attributable to common shareholders              
Basic   $ (0.01)   $ 0.02   $ 0.06   $ 0.09  
Diluted   $ (0.01)   $ 0.02   $ 0.06   $ 0.09  
(Loss) earnings per share from discontinued operations attributable to common shareholders   $ (0.02)   $ 0.07   $ (0.50)   $ 0.13  
Basic   $ (0.02)   $ 0.07   $ (0.50)   $ 0.13  
Diluted                  
(Loss) earnings per share attributable to common shareholders                  
Basic   $ (0.03)   $ 0.09   $ (0.44)   $ 0.21  
Diluted   $ (0.03)   $ 0.09   $ (0.44)   $ 0.21  

 

Interim condensed consolidated statements of cash flows

 

(unaudited, expressed in millions of U.S. dollars)                  
    Three months ended   Six months ended  
    June 30,  June 30,   June 30,  June 30,  
    2022 2021   2022 2021  
Net inflow (outflow) of cash related to the following activities:                  
Operating:                  
(Loss) earnings from continuing operations after tax   $ (9.5)   $ 29.6   $ 71.8   $ 108.7  
Adjustments to reconcile net (loss) earnings from continuing operations to net cash provided from operating activities:      
Depreciation, depletion and amortization   180.5   189.6   347.0   357.1  
Share-based compensation expense   3.0   2.2   6.0   6.0  
Finance expense   23.5   19.1   44.7   37.5  
Deferred tax expense (recovery)   14.8   (6.8)   (2.1)   (3.7)  
Foreign exchange losses and other   5.9   16.3   9.7   24.8  
Reclamation expense   33.7     23.9    
Changes in operating assets and liabilities:                  
Accounts receivable and other assets   14.3   6.4   62.6   9.3  
Inventories   (63.1)   (27.4)   (152.4)   (59.6)  
Accounts payable and accrued liabilities   78.9   74.2   51.1   48.7  
Cash flow provided from operating activities   282.0   303.2   462.3   528.8  
Income taxes paid   (24.9)   (26.2)   (107.3)   (122.0)  
Net cash flow of continuing operations provided from operating activities 257.1   277.0   355.0   406.8  
Net cash flow of discontinued operations (used in) provided from operating activities   (49.2)   111.2   49.2   261.2  
Investing:                  
Additions to property, plant and equipment   (149.4)   (180.7)   (250.1)   (362.2)  
Interest paid capitalized to property, plant and equipment   (5.6)   (7.4)   (16.2)   (30.2)  
Acquisitions net of cash acquired       (1,027.5)    
Net additions to long-term investments and other assets   (20.2)   (14.7)   (34.1)   (16.5)  
Decrease (increase) in restricted cash – net   0.6   (0.7)   (1.1)   (0.5)  
Interest received and other – net   3.6   0.4   4.7   1.0  
Net cash flow of continuing operations used in investing activities   (171.0)   (203.1)   (1,324.3)   (408.4)  
Net cash flow of discontinued operations provided from (used in) investing activities   269.9   (23.7)   252.9   (187.2)  
Financing:                  
Proceeds from drawdown of debt       1,097.6    
Repayment of debt   (120.0   (500.0)   (120.0)   (500.0)  
Interest paid   (0.9)   (3.3)   (25.6)   (26.9)  
Payment of lease liabilities   (5.7)   (8.0)   (11.1)   (15.6)  
Dividends paid to common shareholders   (39.0)   (37.9)   (77.9)   (75.7)  
Other – net   2.9   4.3   8.8   8.9  
Net cash flow of continuing operations (used in) provided from financing activities   (162.7)   (544.9)   871.8   (609.3)  
Net cash flow of discontinued operations used in financing activities        
Effect of exchange rate changes on cash and cash equivalents of continuing operations   (0.4)   0.3   (0.4)    
Effect of exchange rate changes on cash and cash equivalents of discontinued operations   5.7   2.7   1.9   1.6  
Increase (decrease) in cash and cash equivalents   149.4   (380.5)   206.1   (535.3)  
Cash and cash equivalents, beginning of period   454.2   1,056.1   531.5   1,210.9  
Cash and cash equivalents of assets held for sale, beginning of period 134.0        
Reclassified to assets held for sale   (18.5)     (18.5)    
Cash and cash equivalents, end of period   $ 719.1   $ 675.6   $ 719.1   $ 675.6  

 

 

Operating Summary                            
  Mine Period Ownership Tonnes Ore
Mined
Ore
Processed
(Milled)
Ore
Processed
(Heap
Leach)
Grade
(Mill)
Grade
(Heap
Leach)
Recovery
(a)(d)
Gold Eq
Production
(b)
Gold Eq
Sales (b)
Production
cost of
sales
Production
cost of
sales/oz (c)
Total Cap
Ex (e)
DD&A
      (%) (‘000 tonnes) (‘000 tonnes) (‘000 tonnes) (g/t) (g/t) (%) (ounces) (ounces) ($ millions) ($/ounce) ($ millions) ($ millions)
Americas Fort Knox Q2 2022 100 14,591 2,260 12,785 0.72 0.19 81 % 77,184 77,698 $ 92.6 $ 1,192 $ 13.1 $ 26.1
Q1 2022 100 13,743 1,852 13,010 0.66 0.17 80 % 54,803 52,813 $ 67.4 $ 1,276 $ 2.9 $ 20.9
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
Round Mountain Q2 2022 100 6,702 945 6,515 0.67 0.32 78 % 56,709 51,455 $ 74.8 $ 1,454 $ 20.6 $ 11.7
Q1 2022 100 3,767 929 3,208 0.80 0.36 79 % 45,319 46,959 $ 52.3 $ 1,114 $ 16.0 $ 12.1
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
Bald Mountain Q2 2022 100 4,945 4,945 0.60 nm   54,108 54,472 $ 54.5 $ 1,001 $ 16.2 $ 38.4
Q1 2022 100 3,870 3,870 0.63 nm 36,071 41,017 $ 40.3 $ 983 $ 5.8 $ 35.1
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
Paracatu Q2 2022 100 11,011 15,133 0.35 75 % 129,423 133,472 $ 129.6 $ 971 $ 31.2 $ 46.0
Q1 2022 100 6,165 13,645 0.33 75 % 108,009 101,886 $ 106.6 $ 1,046 $ 16.0 $ 39.6
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
West Africa Tasiast Q2 2022 100 3,053 1,680 2.51 89 % 129,140 114,064 $ 93.3 $ 818 $ 24.3 $ 56.4
Q1 2022 100 3,462 1,524 2.54 94 % 133,695 130,195 $ 95.8 $ 736 $ 19.4 $ 57.1
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

 

(a) Due to the nature of heap leach operations, recovery rates at Bald Mountain cannot be accurately measured on a quarterly basis. Recovery rates at Fort Knox, Round Mountain and Tasiast represent mill recovery only.
(b) Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent based on the ratio of the average spot market prices for the commodities for each period. The ratios for the quarters presented are as follows: Q2 2022: 82.76:1; Q1 2022: 78.19:1; Q4 2021: 76.89:1; Q3 2021: 73.45:1; Q2 2021: 68.05:1.
(c) “Production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces sold.
(d) “nm” means not meaningful
(e) “Capital expenditures” is as reported as “Additions to property, plant and equipment” on the interim condensed consolidated statements of cash flows.

 

 

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 financial measures and ratios, together with financial 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 financial measures and ratios is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These financial measures and ratios are not necessarily standard and therefore may not be comparable to other issuers.

 

All the non-GAAP financial measures and ratios in this document are from continuing operations and exclude results from the Company’s Chirano and Russian operations due to the classification of these operations as discontinued. The comparative information has been recast to exclude Chirano and Russia. As a result of the exclusion of Chirano, the following non-GAAP financial measures and ratios are no longer on an attributable basis, but on a total basis: production cost of sales from continuing operations per ounce sold on a by-product basis and all-in-sustaining cost from continuing operations per equivalent ounce sold and per ounce sold on a by-product basis.

 

Adjusted net earnings from continuing operations attributable to common shareholders and adjusted net earnings from continuing operations per share are non-GAAP financial 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 from continuing operations and adjusted net earnings from continuing operations per share measures and ratios are not necessarily indicative of net earnings from continuing operations and earnings per share measures and ratios as determined under IFRS.

 

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

 

             
(unaudited, expressed in millions of U.S dollars, 
except per share amounts)
Three months ended   Six months ended
June 30,   June 30,
      2022     2021       2022     2021  
             
Net (loss) earnings from continuing operations attributable to common shareholders – as reported $ (9.3 ) $ 30.1     $ 72.0   $ 109.2  
Adjusting items:          
  Foreign exchange losses   1.7     12.5   #   5.8     7.1  
  Foreign exchange losses (gains) on translation of tax basis and foreign exchange on deferred income taxes within income tax expense   4.2     (11.8 ) #   (11.5 )   (5.5 )
  Taxes in respect of prior periods   5.1     4.0   #   10.8     12.6  
  Reclamation expense   33.7           23.9     10.0  
  COVID-19 costs(a)       3.4           9.0  
  Round Mountain pit wall stabilization costs       23.1           26.6  
  Tasiast mill fire related costs       12.1           12.1  
  Other(b)   1.0     (1.2 ) #   4.5     0.9  
  Tax effects of the above adjustments   1.0     (5.7 ) #   0.7     (9.8 )
      46.7     36.4       34.2     63.0  
Adjusted net earnings from continuing operations attributable to common shareholders $ 37.4   $ 66.5     $ 106.2   $ 172.2  
Weighted average number of common shares outstanding – Basic   1,299.2     1,261.3       1,282.0     1,260.2  
Adjusted net earnings from continuing operations per share $ 0.03   $ 0.05     $ 0.08   $ 0.14  
Basic (loss) earnings from continuing operations per share attributable to common shareholders $ (0.01 ) $ 0.02     $ 0.06   $ 0.09  
             

(a) Includes COVID-19 related labour, health and safety, donations and other support program costs. For the second quarter and first six months ended June 30, 2022, adjusted net earnings has not been adjusted for COVID-19 related costs of $1.1 million and $6.8 million, respectively, incurred at operating sites.  
(b) Other includes various impacts, such as one-time costs at sites, and 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 from continuing operations is a non-GAAP financial measure and is defined as net cash flow of continuing operations provided from operating activities less additions to property, plant and equipment. 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 from continuing operations measure is not necessarily indicative of operating earnings or net cash flow of continuing operations provided from operating activities as determined under IFRS.

 

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

 

             
(unaudited, expressed in millions of U.S dollars) Three months ended   Six months ended
June 30,   June 30,
      2022     2021       2022     2021  
             
Net cash flow of continuing operations provided from operating activities – as reported $ 257.1   $ 277.0     $ 355.0   $ 406.8  
             
Less: Additions to property, plant and equipment   (149.4 )   (180.7 )     (250.1 )   (362.2 )
             
Free cash flow from continuing operations $ 107.7   $ 96.3     $ 104.9   $ 44.6  
             

 

Adjusted operating cash flow from continuing operations is a non-GAAP financial measure and is defined as net cash flow of continuing operations provided from operating activities 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. The Company uses adjusted operating cash flow from continuing operations 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 from continuing operations measure is not necessarily indicative of net cash flow of continuing operations provided from operating activities as determined under IFRS.

 

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

 

             
(unaudited, expressed in millions of U.S dollars) Three months ended   Six months ended
June 30,   June 30,
      2022     2021       2022     2021  
             
Net cash flow of continuing operations provided from operating activities – as reported $ 257.1   $ 277.0     $ 355.0   $ 406.8  
             
Adjusting items:          
  Working capital changes:          
  Accounts receivable and other assets   (14.3 )   (6.4 )     (62.6 )   (9.3 )
  Inventories   63.1     27.4       152.4     59.6  
  Accounts payable and other liabilities, including income taxes paid   (54.0 )   (48.0 )     56.2     73.3  
      (5.2 )   (27.0 )     146.0     123.6  
Adjusted operating cash flow from continuing operations $ 251.9   $ 250.0     $ 501.0   $ 530.4  
             

 

Production cost of sales from continuing operations 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 production cost of sales from continuing operations per ounce sold on a by-product basis for the periods presented:

 

     
(unaudited, expressed in millions of U.S. dollars,
except ounces and production cost of sales per ounce)
Three months ended   Six months ended
June 30,   June 30,
      2022     2021       2022     2021  
             
Production cost of sales from continuing operations – as reported $ 450.8   $ 331.8     $ 813.9   $ 624.2  
Less: silver revenue(a)   (9.0 )   (7.1 )     (13.4 )   (13.6 )
Production cost of sales from continuing operations net of silver by-product revenue $ 441.8   $ 324.7     $ 800.5   $ 610.6  
             
Gold ounces sold from continuing operations   434,086     386,336       805,421     771,593  
Total gold equivalent ounces sold from continuing operations   439,078     390,230       812,806     779,131  
Production cost of sales from continuing operations per ounce sold on a by-product basis $ 1,018   $ 840     $ 994   $ 791  
Production cost of sales from continuing operations per equivalent ounce sold(b) $ 1,027   $ 850     $ 1,001   $ 801  
             

See page 23 for details of the footnotes referenced within the table above.

 

All-in sustaining cost and attributable all-in cost from continuing operations per ounce sold on a by-product basis are non-GAAP financial measures and ratios, as applicable, calculated based on guidance published by the World Gold Council (“WGC”). 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 metrics. 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.

 

All-in sustaining cost and attributable all-in cost from continuing operations per ounce sold on a by-product basis are calculated by adjusting production cost of sales from continuing operations, as reported on the interim condensed consolidated statements of operations, as follows:

 

             
(unaudited, expressed in millions of U.S. dollars,
except ounces and costs per ounce)
Three months ended   Six months ended
June 30,   June 30,
      2022     2021       2022     2021  
             
Production cost of sales from continuing operations – as reported $ 450.8   $ 331.8     $ 813.9   $ 624.2  
Less: silver revenue from continuing operations(a)   (9.0 )   (7.1 )     (13.4 )   (13.6 )
Production cost of sales from continuing operations net of silver by-product revenue $ 441.8   $ 324.7     $ 800.5   $ 610.6  
Adjusting items:          
  General and administrative(d)   30.0     28.5       60.2     59.1  
  Other operating expense – sustaining(e)   6.2     3.0       11.8     5.3  
  Reclamation and remediation – sustaining(f)   10.0     9.0       17.8     19.0  
  Exploration and business development – sustaining(g)   8.6     7.1       15.5     14.6  
  Additions to property, plant and equipment – sustaining(h)   77.6     61.4       118.7     107.8  
  Lease payments – sustaining(i)   5.5     7.9       10.7     15.4  
All-in Sustaining Cost on a by-product basis $ 579.7   $ 441.6     $ 1,035.2   $ 831.8  
Adjusting items on an attributable(c) basis:          
  Other operating expense – non-sustaining(e)   8.9     9.5       21.1     19.2  
  Reclamation and remediation – non-sustaining(f)   2.1     0.8       3.3     1.7  
  Exploration and business development – non-sustaining(g)   31.1     13.1       47.6     23.9  
  Additions to property, plant and equipment – non-sustaining(h)   70.9     118.0       129.6     252.3  
  Lease payments – non-sustaining(i)   0.2     0.1       0.4     0.2  
All-in Cost on a by-product basis – attributable(c) $ 692.9   $ 583.1     $ 1,237.2   $ 1,129.1  
Gold ounces sold from continuing operations   434,086     386,336       805,421     771,593  
All-in sustaining cost from continuing operations per ounce sold on a by-product basis $ 1,335   $ 1,143     $ 1,285   $ 1,078  
Attributable(c) all-in cost from continuing operations per ounce sold on a by-product basis $ 1,596   $ 1,509     $ 1,536   $ 1,463  
Production cost of sales from continuing operations per equivalent ounce sold(b) $ 1,027   $ 850     $ 1,001   $ 801  
             

See page 23 for details of the footnotes referenced within the table above.

 

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

 

All-in sustaining cost and attributable all-in cost from continuing operations per equivalent ounce sold are calculated by adjusting production cost of sales from continuing operations, as reported on the interim condensed consolidated statements of operations, as follows:

 

             
(unaudited, expressed in millions of U.S. dollars,
except ounces and costs per equivalent ounce)
Three months ended   Six months ended
June 30,   June 30,
      2022     2021       2022     2021  
             
Production cost of sales from continuing operations – as reported $ 450.8   $ 331.8     $ 813.9   $ 624.2  
Adjusting items:          
  General and administrative(d)   30.0     28.5       60.2     59.1  
  Other operating expense – sustaining(e)   6.2     3.0       11.8     5.3  
  Reclamation and remediation – sustaining(f)   10.0     9.0       17.8     19.0  
  Exploration and business development – sustaining(g)   8.6     7.1       15.5     14.6  
  Additions to property, plant and equipment – sustaining(h)   77.6     61.4       118.7     107.8  
  Lease payments – sustaining(i)   5.5     7.9       10.7     15.4  
All-in Sustaining Cost $ 588.7   $ 448.7     $ 1,048.6   $ 845.4  
Adjusting items on an attributable(c) basis:          
  Other operating expense – non-sustaining(e)   8.9     9.5       21.1     19.2  
  Reclamation and remediation – non-sustaining(f)   2.1     0.8       3.3     1.7  
  Exploration and business development – non-sustaining(g)   31.1     13.1       47.6     23.9  
  Additions to property, plant and equipment – non-sustaining(h)   70.9     118.0       129.6     252.3  
  Lease payments – non-sustaining(i)   0.2     0.1       0.4     0.2  
All-in Cost – attributable(c) $ 701.9   $ 590.2     $ 1,250.6   $ 1,142.7  
Gold equivalent ounces sold from continuing operations   439,078     390,230       812,806     779,131  
All-in sustaining cost from continuing operations per equivalent ounce sold $ 1,341   $ 1,150     $ 1,290   $ 1,085  
Attributable(c) all-in cost from continuing operations per equivalent ounce sold $ 1,599   $ 1,512     $ 1,539   $ 1,467  
Production cost of sales from continuing operations per equivalent ounce sold(b) $ 1,027   $ 850     $ 1,001   $ 801  
             

See page 23 for details of the footnotes referenced within the table above.

 

Attributable All-In Sustaining Cost and All-In Cost per Equivalent Ounce Sold – Years Ended December 31, 2021 and 2020

 

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 years ended December 31, 2021 and 2020 consolidated statements of operations, as follows:

 

       
(expressed in millions of U.S. dollars,
except ounces and costs per equivalent ounce)
   
Years ended December 31,
      2021     2020  
       
Production cost of sales – as reported $ 1,726.1   $ 1,725.7  
Less: portion attributable to Chirano non-controlling interest(j)   (20.2 )   (19.6 )
Attributable(k) production cost of sales $ 1,705.9   $ 1,706.1  
Adjusting items on an attributable(k) basis:    
  General and administrative(m)   126.6     117.9  
  Other operating expense – sustaining(n)   10.6     9.6  
  Reclamation and remediation – sustaining(o)   43.2     54.0  
  Exploration and business development – sustaining(p)   40.0     48.3  
  Additions to property, plant and equipment – sustaining(q)   386.0     373.5  
  Lease payments – sustaining(r)   32.8     19.7  
All-in Sustaining Cost – attributable(k) $ 2,345.1   $ 2,329.1  
  Other operating expense – non-sustaining(n)   38.1     55.9  
  Reclamation and remediation – non-sustaining(o)   3.4     5.0  
  Exploration and business development – non-sustaining(p)   91.3     43.3  
  Additions to property, plant and equipment – non-sustaining(q)   544.6     536.9  
  Lease payments – non-sustaining(r)   1.0     1.0  
All-in Cost – attributable(k) $ 3,023.5   $ 2,971.2  
Gold equivalent ounces sold   2,075,738     2,375,548  
Less: portion attributable to Chirano non-controlling interest(l)   (14,829 )   (16,621 )
Attributable(k) gold equivalent ounces sold   2,060,909     2,358,927  
Attributable(k) all-in sustaining cost per equivalent ounce sold $ 1,138   $ 987  
Attributable(k) all-in cost per equivalent ounce sold $ 1,467   $ 1,260  
Consolidated production cost of sales per equivalent ounce sold(s) $ 832   $ 726  
       

(a)   “Silver revenue” represents the 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.
(b)   “Production cost of sales from continuing operations per equivalent ounce sold” is defined as production cost of sales from continuing operations divided by total gold equivalent ounces sold from continuing operations.
(c)   “Attributable” includes Kinross’ share of Manh Choh (70%) costs. As Manh Choh is a non-operating site, the attributable costs are non-sustaining costs and as such only impact the all-in-cost measures.
(d)   “General and administrative” expenses is as reported on the interim condensed consolidated statements 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.
(e)   “Other operating expense – sustaining” is calculated as “Other operating expense” as reported on the interim condensed consolidated statements 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.
(f)   “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.
(g)   “Exploration and business development – sustaining” is calculated as “Exploration and business development” expenses as reported on the interim condensed consolidated statements 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.
(h)   “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 interim condensed consolidated statements of cash flows), less 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 three and six months ended June 30, 2022, primarily related to major projects at La Coipa and Tasiast. Non-sustaining capital expenditures during the three and six months ended June 30, 2021, primarily related to major projects at Tasiast, Round Mountain, Fort Knox and La Coipa.
(i)   “Lease payments – sustaining” represents the majority of lease payments as reported on the interim condensed 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.
(j)   The portion attributable to Chirano non-controlling interest represents the non-controlling interest (10%) in the production cost of sales for the Chirano mine for the years ended December 31, 2021 and 2020.
(k)   “Attributable” includes Kinross’ share of Chirano (90%) production and costs, and Manh Choh (70%) costs for the years ended December 31, 2021 and 2020.
(l)   “Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces sold from the Chirano mine for the years ended December 31, 2021 and 2020.
(m)   “General and administrative” expenses is as reported on the consolidated statements of operations for the years ended December 31, 2021 and 2020, 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.
(n)   “Other operating expense – sustaining” is calculated as “Other operating expense” as reported on the consolidated statements of operations for the years ended December 31, 2021 and 2020, 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.
(o)   “Reclamation and remediation – sustaining” is calculated as accretion related to reclamation and remediation obligations plus amortization of the corresponding reclamation and remediation assets for the years ended December 31, 2021 and 2020, 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.
(p)   “Exploration and business development – sustaining” is calculated as “Exploration and business development” expenses as reported on the consolidated statements of operations for the years ended December 31, 2021 and 2020, 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.
(q)   “Additions to property, plant and equipment – sustaining” represents the majority of capital expenditures at existing operations for the years ended December 31, 2021 and 2020, 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 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.
(r)   “Lease payments – sustaining” represents the majority of lease payments as reported on the consolidated statements of cash flows for the years ended December 31, 2021 and 2020, 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.
(s)   “Consolidated production cost of sales per equivalent ounce sold” is defined as production cost of sales, as reported on the consolidated statements of operations for the years ended December 31, 2021 and 2020, divided by total gold equivalent ounces sold.

 

APPENDIX A

 

Recent LP Fault zone assay results

 

Hole ID   From
(m)
To
(m)
Width
(m)
True
Width

(m)
Au
(g/t)
Target
BR-519   327.3 349.5 22.2 18.2 1.68 Yauro
BR-519 including 332.7 335.9 3.2 2.9 7.05  
BR-519 and 374.3 394.5 20.2 18.6 2.09  
BR-519 including 392.2 393.7 1.5 1.3 22.72  
BR-536   373.5 397.0 23.5 19.3 1.10 Yauro
BR-536 and 408.0 466.3 58.3 52.5 0.61  
BR-538   603.0 607.4 4.4 4.2 0.75 Yauro
BR-538 and 676.0 691.9 15.9 14.3 2.31  
BR-538 including 676.0 679.8 3.8 3.0 8.35  
BR-538 and 711.5 756.0 44.5 38.7 0.39  
BR-538 and 821.2 824.3 3.1 2.6 0.65  
BR-542   340.3 344.3 3.9 3.5 13.90 Yauro
BR-542 including 342.5 344.3 1.8 1.6 31.05  
BR-542 and 355.5 363.8 8.3 7.3 2.38  
BR-542 and 378.0 393.0 15.0 13.8 0.98  
BR-542 and 404.8 434.5 29.7 27.9 0.38  
BR-543   477.0 484.3 7.3 6.7 3.79 Yauro
BR-543 including 482.2 483.9 1.7 1.3 10.86  
BR-543 and 497.6 501.5 3.9 3.3 0.56  
BR-543 and 526.5 536.1 9.6 8.0 0.97  
BR-555   39.2 48.5 9.3 8.2 0.60 Yuma
BR-555 and 253.0 298.5 45.5 37.8 1.53  
BR-555 including 277.5 281.0 3.6 3.3 6.42  
BR-555 and including 286.3 287.5 1.3 1.1 14.40  
BR-555 and 314.2 318.5 4.3 4.0 0.36  
BR-555 and 377.0 382.6 5.6 4.9 0.79  
BR-556   544.1 591.0 46.9 39.9 1.33 Yuma
BR-556 including 579.0 582.0 3.0 2.7 15.07  
BR-556 and 604.1 610.5 6.4 5.4 1.39  
BR-556 and 625.0 670.5 45.5 43.2 0.58  
BR-556 and 711.0 714.0 3.0 2.7 0.37  
BR-557   739.4 825.0 85.6 75.3 0.75 Auro
BR-557 and 913.2 922.4 9.2 7.7 0.37  
BR-558   644.2 680.0 35.8 31.9 0.48 Auro
BR-558 and 795.7 798.7 3.0 2.7 0.51  
BR-559   234.8 251.0 16.3 14.0 0.58 Auro
BR-559 and 294.5 299.1 4.7 3.7 0.49  
BR-559 and 325.8 348.9 23.2 21.5 1.97  
BR-559 and 364.6 367.5 2.9 2.6 121.57  
BR-559 and 413.2 416.6 3.4 2.8 1.22  
BR-559 and 451.2 455.3 4.1 3.4 1.47  
BR-568   8.1 12.0 3.9 3.5 0.97 Viggo
BR-568 and 31.2 45.0 13.8 11.6 0.86  
BR-569   69.7 91.4 21.7 20.8 1.80 Viggo
BR-573   556.8 565.6 8.8 8.3 12.17 Yauro
BR-573 and 600.6 620.7 20.1 17.7 0.57  
BR-573 and 700.0 703.2 3.2 3.0 1.12  
BR-574   635.8 653.0 17.3 16.2 0.31 Yauro
BR-574 and 713.6 752.5 38.9 31.9 0.75  
BR-574 including 750.6 752.5 1.9 1.6 11.63  
BR-575   469.3 470.5 1.2 1.0 7.30 Yuma
BR-575 and 497.7 512.0 14.4 12.2 0.39  
BR-575 and 582.8 602.2 19.5 17.5 0.35  
BR-575 and 640.0 661.7 21.8 17.4 0.44  
BR-581   682.5 733.3 50.8 48.8 1.43 Yauro
BR-581 including 716.8 717.9 1.1 1.1 17.07  
BR-581 and 852.0 862.5 10.5 8.9 0.38  
BR-582   669.0 675.5 6.5 5.3 0.41 Yauro
BR-582 and 701.8 733.5 31.8 28.6 0.50  
BR-583   720.5 726.0 5.5 5.3 1.03 Yauro
BR-583 and 772.5 795.4 22.9 21.8 0.77  
BR-583 and 825.7 832.0 6.3 5.9 0.40  
BR-583 and 918.9 926.3 7.4 6.3 0.45  
BR-584   695.0 702.0 7.0 6.3 0.75 Yauro
BR-584 and 724.0 731.5 7.5 6.5 1.53  
BR-584 and 751.0 769.3 18.3 15.7 0.73  
BR-584 and 788.8 791.8 3.0 2.9 5.63  
BR-584 including 788.8 789.8 1.0 0.9 15.70  
BR-585   779.8 785.8 6.0 5.5 0.59 Yauro
BR-585 and 1097.7 1138.5 40.8 35.9 0.36  
BR-586   629.8 651.5 21.7 18.4 0.56 Yauro
BR-586 and 667.5 745.8 78.3 72.0 2.30  
BR-586 including 669.9 677.5 7.6 7.2 9.38  
BR-586 and including 692.8 700.3 7.5 6.8 8.97  
BR-586 and 770.6 774.8 4.2 3.9 0.69  
BR-586 and 795.8 816.0 20.3 18.0 5.81  
BR-586 including 798.0 800.4 2.4 2.0 41.86  
BR-586 and 828.1 838.5 10.4 8.6 0.84  
BR-591   390.0 420.3 30.3 25.8 1.41 Yuma
BR-591 including 390.0 391.5 1.5 1.2 15.70  
BR-591 and 596.5 606.8 10.3 9.7 1.72  
BR-591 and 636.7 656.0 19.3 17.4 1.32  
BR-591 including 649.5 651.5 2.0 1.9 8.58  
BR-591 and 705.8 720.0 14.2 12.5 0.85  
BR-592   200.2 212.0 11.8 10.7 1.81 Yuma
BR-592 and 223.5 245.5 22.0 18.7 1.06  
BR-592 and 375.5 400.9 25.5 23.2 0.92  
BR-592 and 438.7 452.4 13.7 12.7 0.53  
BR-592 and 495.1 504.0 8.9 7.7 0.50  
BR-592 and 536.3 546.0 9.7 8.8 0.40  
BR-593   182.0 208.5 26.6 22.6 1.32 Yuma
BR-593 and 375.7 385.4 9.7 8.2 0.37  
BR-593 and 400.1 405.0 4.9 4.3 0.56  
BR-593 and 426.8 446.1 19.3 18.1 0.54  
BR-594   58.0 72.7 14.7 14.1 2.42 Yuma
BR-594 including 58.0 60.9 2.9 2.7 8.91  
BR-594 and 240.0 246.6 6.6 5.7 0.30  
BR-594 and 259.7 277.5 17.8 17.1 1.31  
BR-594 and 320.9 331.0 10.1 9.3 0.41  
BR-594 and 344.0 362.5 18.5 15.4 0.31  
BR-595   556.2 560.4 4.2 3.6 0.57 Yuma
BR-595 and 607.2 674.8 67.6 60.8 0.35  
BR-600   47.4 50.0 2.6 2.5 0.43 Yuma
BR-602   129.0 132.6 3.6 3.5 4.99 Yauro
BR-602 including 129.8 130.6 0.8 0.8 20.50  
BR-602 and 150.0 157.0 7.0 6.1 0.38  
BR-602 and 168.0 221.8 53.8 51.6 0.42  
BR-602 and 239.2 291.9 52.7 45.8 0.56  
BR-602 and 352.4 353.4 1.0 0.8 14.90  
BR-603   70.8 115.5 44.7 38.4 1.01 Yauro
BR-603 including 71.8 76.0 4.2 3.7 5.06  
BR-603 and 162.5 198.5 36.0 31.0 0.78  
BR-603 and 217.3 225.0 7.7 6.9 0.36  
BR-604   36.0 44.5 8.5 7.0 6.42 Yauro
BR-604 including 40.0 43.5 3.5 3.3 14.74  
BR-604 and 82.5 155.7 73.2 70.2 0.56  
BR-605   99.0 119.0 20.0 17.0 0.89 Yauro
BR-605 and 146.0 194.0 48.0 40.8 3.83  
BR-605 including 150.0 155.5 5.5 4.6 8.00  
BR-605 and including 188.0 193.0 5.0 4.5 12.17  
BR-605 and 244.0 260.5 16.5 15.5 4.34  
BR-605 including 258.5 259.5 1.0 0.9 51.20  
BR-605 and 272.0 309.5 37.5 32.6 1.46  
BR-605 including 285.2 287.2 2.0 1.6 12.33  
BR-605 and 322.9 354.0 31.1 29.2 0.44  
BR-605 and 389.0 400.9 11.9 11.3 0.31  
BR-605 and 416.4 432.0 15.6 13.8 0.39  
BR-605 and 443.3 460.5 17.2 16.0 0.50  
BR-605 and 486.0 523.8 37.8 31.4 0.36  
BR-607   84.5 87.5 3.0 2.9 0.46 Yauro
BR-607 and 223.8 242.0 18.3 17.3 0.62  
BR-607 and 256.5 265.0 8.5 6.8 0.54  
BR-607 and 288.5 291.5 3.0 2.8 0.31  
BR-607 and 315.0 330.6 15.6 13.3 0.44  
BR-607 and 341.7 353.0 11.3 9.6 0.34  
BR-608   260.2 281.0 20.8 16.8 6.46 Yauro
BR-608 including 268.9 280.5 11.6 10.7 11.46  
BR-608 and 334.1 362.0 27.9 23.2 0.58  
BR-608 and 383.0 385.5 2.5 2.0 3.42  
BR-609  no significant intersections
BR-610   413.0 417.2 4.1 3.7 1.20 Auro
BR-610 and 464.0 479.0 15.0 12.9 0.31  
BR-610 and 522.1 525.6 3.5 3.2 1.78  
BR-620   340.7 349.7 9.0 7.3 0.50 Auro
BR-620 and 390.0 403.1 13.1 10.7 0.71  
BR-620 and 424.8 464.8 40.0 33.2 0.72  
BR-620 and 559.7 566.2 6.5 6.2 0.31  
BR-620 and 570 574.5 4.5 4.0 0.41  
BR-630   147.4 174.5 27.1 23.3 1.42 Viggo
BR-630 including 148.5 149.5 1.0 0.9 22.70  
BR-631   45 55.8 10.8 9.5 1.32 Viggo
BR-634 no significant intersections
BR-635   109.3 125.2 15.9 14.6 0.65 Viggo
BR-635 and 138.55 153.9 15.4 13.2 0.55  
BR-636   65 68 3.0 2.4 0.37 Viggo

Results are preliminary in nature and are subject to on-going QA/QC.

 

APPENDIX B

 

LP Fault zone long section

 

https://www.globenewswire.com/NewsRoom/AttachmentNg/bfbd606f-32a8-42f0-899f-cfc20738300a

 

Composites generated from drill intersections received since June 28, 2022 news release, includes assays from 41 fully assayed drill holes at the LP Fault. Composites are generated using 0.3 g/t minimum grade, maximum internal dilution of 3.0 m, and allows short high grade intervals greater than 8 GXM to be retained. Results are preliminary in nature and are subject to on-going QA/QC. For full list of significant, composited assay results, see Appendix A. 

 

APPENDIX C

 

Updated Manh Choh Mineral Reserve and Resource estimates17

 

Manh Choh Proven and Probable Mineral Reserves – Gold
(Closing Balance June 30, 2022; 70% Basis)
  Tonnes
(kt)
Grade
(Au g/t)
Ounces
(Au koz)
Proven
Probable 2,755 7.88 698
Total 2,755 7.88 698

 

 

Manh Choh Measured and Indicated Mineral Resources – Gold
(Closing Balance June 30, 2022; 70% Basis)
  Tonnes
(kt)
Grade
(Au g/t)
Ounces
(Au koz)
Measured
Indicated 480 2.42 37
Total 480 2.42 37

 

 

Manh Choh Inferred Mineral Resources – Gold
(Closing Balance June 30, 2022; 70% Basis)
  Tonnes
(kt)
Grade
(Au g/t)
Ounces
(Au koz)
Inferred 14 3.80 2

 

 

Manh Choh Proven and Probable Mineral Reserves – Silver
(Closing Balance June 30, 2022; 70% Basis)
  Tonnes
(kt)
Grade
(Ag g/t)
Ounces
(Ag koz)
Proven
Probable 2,755 13.58 1,203
Total 2,755 13.58 1,203

 

 

Manh Choh Measured and Indicated Mineral Resources – Silver
(Closing Balance June 30, 2022; 70% Basis)
  Tonnes
(kt)
Grade
(Ag g/t)
Ounces
(Ag koz)
Measured
Indicated 480 9.37 144
Total 480 9.37 144

 

 

Manh Choh Inferred Mineral Resources – Silver
(Closing Balance June 30, 2022; 70% Basis)
  Tonnes
(kt)
Grade
(Ag g/t)
Ounces
(Ag koz)
Inferred 14 9.15 4

 

Mineral Reserve and Resource Statements notes

(1) Manh Choh’s mineral reserves are estimated using appropriate cut-off grades based on an assumed gold price of $1,300 per ounce and a silver price of $17.00 per ounce. Mineral reserves are estimated using appropriate process recoveries, operating costs and mine plans that are unique to each property. Mineral reserve estimates are reported in contained units. Mineral resources are reported exclusive of mineral reserves.

(2) Manh Choh’s mineral resources are estimated using appropriate cut-off grades based on a gold price of $1,600 per ounce and a silver price of $22.00 per ounce. Foreign exchange rates for estimating mineral resources were the same as for mineral reserves.

(3) Manh Choh’s mineral reserve and mineral resource estimates as at June 30, 2022 are classified in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) “CIM Definition Standards – For Mineral Resources and Mineral Reserves” adopted by the CIM Council (as amended, the “CIM Definition Standards”) in accordance with the requirements of National Instrument 43-101 “Standards of Disclosure for Mineral Projects” (“NI 43-101”). Mineral reserve and mineral resource estimates reflect the Company’s reasonable expectation that all necessary permits and approvals will be obtained and maintained.

(4) Cautionary note to U.S. investors concerning estimates of mineral reserves and mineral resources. These estimates have been prepared in accordance with the requirements of Canadian securities laws, which differ from the requirements of United States’ securities laws. The terms “mineral reserve”, “proven mineral reserve”,  “probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are Canadian mining terms as defined in accordance with NI 43-101 and the CIM Definition Standards. These definitions differ materially from the definitions in the United States Securities and Exchange Commission (“SEC”) SEC Industry Guide 7 under the United States Securities Act of 1933, as amended. Under SEC Industry Guide 7, a “final” or “bankable” feasibility study is required to report mineral reserves, the three-year historical average price is used in any mineral reserve or cash flow analysis to designate mineral reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in NI 43-101 and recognized by Canadian securities laws but are not defined terms under SEC Industry Guide 7. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be upgraded to SEC Industry Guide 7 mineral reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever by upgraded to a higher category. Under Canadian securities laws, estimates of “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies, except in rare cases. U.S. investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable.

The SEC has adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the Securities Exchange Act of 1934 (“Exchange Act”). These amendments became effective February 25, 2019 (“SEC S-K 1300”) and, commencing for registrants with their first fiscal year beginning on or after January 1, 2021, SEC S-K 1300 replaces the historical property disclosure requirements included in SEC Industry Guide 7. As a foreign private issuer that files its annual report on Form 40-F with the SEC pursuant to the multi-jurisdictional disclosure system, the Company is not required to provide disclosure on its mineral properties under SEC S-K 1300 and will continue to provide disclosure under NI 43-101 and the CIM Definition Standards. If the Company ceases to be a foreign private issuer or loses its eligibility to file its annual report on Form 40-F pursuant to the multi-jurisdictional disclosure system, then the Company will be subject to SEC S-K 1300 which differs from the requirements of NI 43-101 and the CIM Definition Standards. SEC S-K 1300 includes the adoption of terms describing mineral reserves and mineral resources that are “substantially similar” to the corresponding terms under the CIM Definition Standards. As a result of the adoption of SEC S-K 1300, the SEC now recognizes estimates of “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources”. In addition, the SEC has amended its definitions of “proven mineral reserves” and “probable mineral reserves” to be “substantially similar” to the corresponding CIM Definitions. U.S. investors are cautioned that while the above terms are “substantially similar” to CIM Definitions, there are differences in the definitions under SEC S-K 1300 and the CIM Definition Standards. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report as “proven mineral reserves”, “probable mineral reserves”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under NI 43-101 would be the same had the Company prepared the reserve or resource estimates under the standards adopted under SEC S-K 1300. U.S. investors are also cautioned that while the SEC recognizes “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under SEC S-K 1300, investors should not assume that any part or all of the mineralization in these categories will ever be converted into a higher category of mineral resources or into mineral reserves. Mineralization described using these terms has a greater amount of uncertainty as to its existence and feasibility than mineralization that has been characterized as reserves. Accordingly, investors are cautioned not to assume that any measured mineral resources, indicated mineral resources, or inferred mineral resources that the Company reports are or will be economically or legally mineable. Further, “inferred mineral resources” have a greater amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Therefore, U.S. investors are also cautioned not to assume that all or any part of the “inferred mineral resources” exist. Under Canadian securities laws, estimates of “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies, except in rare cases.

For the above reasons, the mineral reserve and mineral resource estimates and related information in this presentation may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

(5) The Company’s mineral resource and mineral reserve estimates were prepared under the supervision of and verified by Mr. John Sims, who is a qualified person as defined by NI 43-101. Mr. Sims was an officer of Kinross until December 31, 2020. Mr. Sims remains the Company’s qualified person as an external consultant.

(6) The Company’s normal data verification procedures have been used in collecting, compiling, interpreting and processing the data used to estimate mineral reserves and mineral resources. Independent data verification has not been performed.

(7) Mineral resources that are not mineral reserves do not have to demonstrate economic viability. Mineral resources are subject to infill drilling, permitting, mine planning, mining dilution and recovery losses, among other things, to be converted into mineral reserves. Due to the uncertainty associated with inferred mineral resources, it cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to indicated or measured mineral resources, including as a result of continued exploration.

(8) Rounding of values to the 000s may result in apparent discrepancies.

(9) Mineral resources are reported exclusive of mineral reserves.

 

Posted July 28, 2022

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