Kinross Reports 2012 Second Quarter Results
TORONTO, ONTARIO -- (Marketwire) -- 08/08/12 -- Kinross Gold Corporation (TSX: K)(NYSE: KGC) today announced its results for the second quarter ended June 30, 2012.
(This news release contains forward-looking information that is subject to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page nine of this news release. All dollar amounts in this news release are expressed in U.S. dollars, unless otherwise noted. The comparative figures have been recast to exclude Crixas due to its disposal.)
Financial and operating highlights:
-- Production(1): 632,772 gold equivalent ounces, compared with 660,807
ounces in Q2 2011.
-- Revenue: $1,006.7 million, compared with $963.6 million in Q2 2011.
-- Production cost of sales(2): $725 per gold equivalent ounce, compared
with $569 in Q2 2011.
-- Attributable margin(3): $843 per ounce sold, compared with $879 in Q2
2011.
-- Adjusted operating cash flow(4): $270.5 million, compared with $404.8
million in Q2 2011. Adjusted operating cash flow per share was $0.24,
compared with $0.36 in Q2 2011.
-- Adjusted net earnings(4, 5): $156.0 million, compared with $222.6
million in Q2 2011. Adjusted net earnings per share were $0.14, compared
with $0.20 in Q2 2011.
-- Reported net earnings(5): $115.8 million, or $0.10 per share, compared
with $244.3 million, or $0.22 per share, for Q2 2011.
-- Outlook: As a result of Kinross' disposition of its 50% interest in
Crixas, the Company now expects to produce approximately 2.5-2.6 million
gold equivalent ounces in 2012 from its continuing operations, compared
with its previous forecast of 2.6-2.8 million gold equivalent ounces.
The Company remains on track to meet its 2012 production forecast
excluding the adjustment for Crixas. Cost of sales for 2012 are now
forecast to be $690-$725 per ounce, compared with the previous
forecast of $670-$715, due to higher forecast production cost of sales
per ounce in West Africa and South America.
-- Dividend: The Board of Directors declared a dividend of $0.08 per share
payable on September 28, 2012 to shareholders of record at the close of
business on September 21, 2012.
Other developments:
-- The Board of Directors has appointed J. Paul Rollinson, formerly
Executive Vice-President, Corporate Development, as Chief Executive
Officer of Kinross, replacing Tye W. Burt.
-- Kinross continues to advance its capital and project optimization
process. At Tasiast, the Company has elected to undertake a pre-
feasibility study (PFS) for construction of a mid-sized CIL mill in the
30,000 tonne per day range, for purposes of comparison with a 60,000
tonne per day mill option. Construction of the Dvoinoye project
progressed well through the second quarter. Dvoinoye remains on schedule
to deliver first ore to the upgraded Kupol mill in the second half of
2013.
-- The Company is launching a comprehensive cost reduction initiative with
a focus on reducing operating, capital and other costs across the
organization.
-- Kinross divested its 50% interest in the Crixas mine in the second
quarter, consistent with its strategy of portfolio optimization and
focusing resources on core operations and priority projects.
(1) Unless otherwise stated, production figures in this news release are
based on Kinross' 90% share of Chirano production, and do not include
production from Crixas due to its disposal.
(2) "Production cost of sales per gold equivalent ounce" is a non-GAAP
measure defined as production cost of sales per the financial statements
divided by the attributable number of gold equivalent ounces sold, both
reduced to reflect a 90% ownership interest in Chirano sales. Production
cost of sales is equivalent to total cost of sales (per the financial
statements), less depreciation, depletion, amortization, and impairment
charges.
(3) "Attributable margin per ounce sold" is a non-GAAP measure and defined
as "average realized gold price per ounce" less "attributable production
cost of sales per gold equivalent ounce sold".
(4) Reconciliation of non-GAAP measures are provided on page eleven of this
news release.
(5) "Net earnings" figures in this release represent "net earnings from
continuing operations attributed to common shareholders."
CEO Commentary
J. Paul Rollinson, CEO, made the following comments in relation to second quarter 2012 results:
"I am honoured to have been asked to lead Kinross during this challenging time in our industry. Kinross has an enviable foundation, with a skilled and committed team across the organization, a high quality asset portfolio, and a strong financial base.
"I've been given the mandate from the Board to ensure that we deliver on the capital and project optimization process we announced earlier this year. This means striking the right balance between the objective of growing the business and generating free cash flow. It also means taking the time to get our growth projects right in terms of scale, sequencing, timing, and capital, in order to deliver the best return from every dollar we invest while maintaining our financial strength and liquidity.
"In addition, given rising costs, I believe we need to get back to the fundamentals of our business. To that end, I am launching a company-wide cost reduction initiative aimed at improving capital efficiency, reducing costs, and increasing margins. This may require tough decisions in a number of areas to ensure that we maximize free cash flow and shareholder returns."
Financial results
Summary of financial and operating results
Three months
ended Six months ended
June 30, June 30,
----------------------------------------
(dollars in millions, except per
share and per ounce amounts) 2012 2011 2012 2011
----------------------------------------------------------------------------
Total gold equivalent ounces(a)(e)
- Produced (c) 654,243 696,631 1,266,081 1,397,110
Total gold equivalent ounces(a)(e)
- Sold (c) 656,447 704,447 1,285,952 1,423,024
Gold equivalent ounces from
continuing operations (a)(d) -
Produced (c) 639,138 681,193 1,235,087 1,366,859
Gold equivalent ounces from
continuing operations (a)(d) -
Sold (c) 640,836 688,282 1,253,188 1,393,240
Total attributable gold equivalent
ounces(a)(e) - Produced (c) 647,877 676,245 1,252,124 1,319,102
Total attributable gold equivalent
ounces(a)(e) - Sold (c) 650,149 685,823 1,271,829 1,346,611
Attributable gold equivalent
ounces from continuing operations
(a)(d) - Produced (c) 632,772 660,807 1,221,130 1,288,851
Attributable gold equivalent
ounces from continuing operations
(a)(d) - Sold (c) 634,538 669,658 1,239,065 1,316,827
Financial Highlights from
Continuing Operations (d)
Metal sales $1,006.7 $ 963.6 $ 2,014.8 $ 1,881.7
Production cost of sales $ 464.9 $ 389.0 $ 917.5 $ 760.5
Depreciation, depletion and
amortization $ 157.0 $ 146.3 $ 299.7 $ 297.0
Operating earnings $ 258.8 $ 352.8 $ 561.7 $ 677.9
Net earnings from continuing
operations attributed to common
shareholders $ 115.8 $ 244.3 $ 215.4 $ 490.5
Basic earnings per share from
continuing operations
attributable to common
shareholders $ 0.10 $ 0.22 $ 0.19 $ 0.43
Diluted earnings per share from
continuing operations
attributable to common
shareholders $ 0.10 $ 0.21 $ 0.19 $ 0.43
Adjusted net earnings from
continuing operations attributed
to common shareholders(b) $ 156.0 $ 222.6 $ 352.3 $ 394.2
Adjusted net earnings from
continuing operations per
share(b) $ 0.14 $ 0.20 $ 0.31 $ 0.35
Net cash flow of continuing
operations provided from
operating activities $ 77.4 $ 346.6 $ 453.9 $ 687.2
Adjusted operating cash flow from
continuing operations(b) $ 270.5 $ 404.8 $ 591.2 $ 795.5
Adjusted operating cash flow from
continuing operations per
share(b) $ 0.24 $ 0.36 $ 0.52 $ 0.70
Average realized gold price per
ounce from continuing operations $ 1,568 $ 1,448 $ 1,605 $ 1,386
Consolidated production cost of
sales from continuing operations
per equivalent ounce(c) sold(b) $ 725 $ 565 $ 732 $ 546
Attributable(a) production cost of
sales from continuing operations
per equivalent ounce(c) sold(b) $ 725 $ 569 $ 732 $ 555
Attributable(a) production cost of
sales from continuing operations
per ounce sold on a by-product
basis(b) $ 658 $ 504 $ 655 $ 485
(a) Total includes 100% of Kupol and Chirano production. "Attributable"
includes Kinross' share of Kupol (75% up to April 27, 2011, 100%
thereafter) and Chirano (90%) production.
(b) "Adjusted net earnings from continuing operations attributed to common
shareholders", "Adjusted net earnings from continuing operations per
share", "Adjusted operating cash flow from continuing operations",
"Adjusted operating cash flow from continuing operations per share",
"Consolidated production cost of sales from continuing operations per
equivalent ounce sold", "Attributable production cost of sales from
continuing operations per equivalent ounce sold", and "Attributable
production cost of sales from continuing operations per ounce sold on a
by-product basis" are non-GAAP measures. The definition and
reconciliation of these non-GAAP financial measures is included on page
11 of this news release.
(c) "Gold equivalent ounces" include silver ounces produced and sold
converted to a gold equivalent based on a ratio of the average spot
market prices for the commodities for each period. The ratio for the
second quarter of 2012 was 54.77:1, compared with 39.67:1 for the second
quarter of 2011 and for the first six months of 2012 was 53.17:1,
compared with 41.47:1 for the first six months of 2011.
(d) The comparative figures have been recast to exclude Crixas results due
to its disposal.
(e) The total gold equivalent ounces and total attributable gold equivalent
ounces include Crixas.
The following operating and financial results are based on Q2 2012 attributable gold equivalent production from continuing operations, and do not include Crixas production:
Kinross produced 632,772 attributable gold equivalent ounces from continuing operations in the second quarter of 2012, a 4% decrease over the second quarter of 2011, mainly due to an anticipated decline in grade at Kupol and Kettle River-Buckhorn, and the expected increase in processing of lower-grade stockpile ore at La Coipa. Production increased by 8% in Q2 2012 compared with Q1 2012. Based on the full-year mining plan for 2012, Kinross expects an increase in production during the second half in North America and South America, and remains on track to be within its full-year 2012 production forecast range (excluding the adjustment in guidance due to the disposition of its interest in Crixas).
Production cost of sales per gold equivalent ounce(2) was $725 compared with $569 for the second quarter of 2011, mainly due to increased processing of lower grade ore, as well as higher costs for energy, labour, and consumables. On a quarter-over-quarter basis, compared with Q1 2012, production cost of sales were reduced by $15 per gold equivalent ounce, due primarily to increased production. Production cost of sales per gold ounce on a by-product basis was $658 in the second quarter of 2012, compared with $504 in Q2 2011, based on Q2 2012 attributable gold sales of 589,369 ounces and attributable silver sales of 2,473,973 ounces.
Revenue from metal sales was $1,006.7 million in the second quarter of 2012, compared with $963.6 million during the same period in 2011, an increase of 4%, due to a higher average realized gold price. The average realized gold price was $1,568 per ounce in Q2 2012, compared with $1,448 per ounce for Q2 2011.
Kinross' margin per gold equivalent ounce sold(3) was $843 for the second quarter of 2012, a decrease of 4% compared with Q2 2011, due primarily to higher production cost of sales per ounce for the quarter.
Adjusted operating cash flow(4) was $270.5 million for the quarter, or $0.24 per share, compared with $404.8 million, or $0.36 per share, for Q2 2011. Cash and cash equivalents were $1,340.3 million as at June 30, 2012 compared with $1,766.0 million as at December 31, 2011.
Adjusted net earnings(4, 5) were $156.0 million, or $0.14 per share, for Q2 2012, compared with $222.6 million, or $0.20 per share, for Q2 2011.
Reported net earnings(5) were $115.8 million, or $0.10 per share, for Q2 2012, compared with reported net earnings of $244.3 million, or $0.22 per share, for Q2 2011. Reported net earnings were lower mainly due to lower production and increases in production cost of sales, which were partially offset by a higher realized gold price.
Capital expenditures were $431.2 million for Q2 2012, compared with $408.8 million for the same period last year, an increase due mainly to project-related expenditures at Tasiast, and capital mine development at Fort Knox and Round Mountain.
Operating results
Mine-by-mine summaries for second quarter 2012 operating results may be found on pages 14 and 18 of this news release. Highlights include the following:
North America: As per plan, Q2 production for North America was higher than Q1 2012, and production is expected to increase in the second half, mainly due to accelerated heap leach processing and improved mill processing grades at Fort Knox. For the full-year 2012, production for the region is expected to be at the high end of the regional guidance range.
The quarter-over-quarter production increase for both Fort Knox and Round Mountain was the result of improved heap leach performance, while Kettle River-Buckhorn's decrease in production relative to Q1 2012 was due to an anticipated decline in grades. The year-over-year production increase at Round Mountain was a result of improved leach performance, while the production decrease at Fort Knox and Kettle River-Buckhorn was mainly a result of lower grades. Costs improved for the region compared to last quarter mainly due to higher production, while costs were higher compared with the same period last year, largely as a result of higher input costs and lower grades.
Russia: Production at Kupol was lower year-over-year, mainly due to an expected reduction in gold and silver grades. With record mill throughput for the quarter and improved gold grades, Q2 2012 production improved considerably compared with Q1 2012. All performance metrics remain strong at Kupol, and production is expected to be at the high end of the regional guidance range for full-year 2012.
West Africa: Regional results for the quarter were negatively impacted by lower than expected production and higher costs per ounce at Tasiast. Performance at Tasiast in Q2 was impacted by several factors, including lower than expected mill gold grades in the Piment orebody (as discussed below), lower than expected dump leach production, and the previously-disclosed illegal work stoppage in June, which resulted in four days of lost production.
The Company is undertaking further analysis to better understand the variability in gold grade that has been encountered in the banded iron formation-type ore currently being mined in the Piment pits. It is expected that mill grades in the second half of 2012 will be lower than previously expected, and that Tasiast production for the second half will be lower than planned. The Company does not expect that similar grade variability will be encountered in the greenschist-style mineralization in the West Branch orebody, given the type of mineralization at West Branch, its much higher degree of grade continuity, and geologic knowledge of the deposit based on extensive infill drilling data.
Production at Tasiast in the second quarter also continued to be impacted by the presence of near-surface, high-clay felsite material in the West Branch orebody, which affected gold production from the leach pads. The felsite material is now being stockpiled, to be blended and milled at a later date, and the leach pads are percolating as expected. Dump leach production in the second half is expected to be lower than planned, due to inefficiencies in the existing water pipeline, which are reducing the amount of make-up solution available for leaching. An additional interim water pipeline drawing water from existing boreholes has been constructed and commissioned, and repairs will be made to the existing pipelines, which will progressively improve water availability through the second half of the year.
As a result of lower than expected production at Tasiast in the first half, and a reduction in forecast production for Tasiast in the second half, the Company has reduced its regional production guidance range and increased its cost of sales range for West Africa for the full-year 2012 (see Outlook section of this news release).
Chirano's production for the quarter was lower than Q1 2012 as a result of lower plant throughput, which was due to crusher and mill maintenance issues, and periodic electric power outages.
South America: Second quarter results were lower year-over-year, mainly due to anticipated lower gold grades at Maricunga and lower silver grades at La Coipa, as well as a less favourable gold to silver ratio, impacting equivalent gold production. Production at Paracatu increased year-over-year due to higher mill throughput. However, grades and recoveries were lower, contributing to higher unit costs.
Production at Paracatu is expected to increase in the second half of the year due to higher anticipated grades and expected improvements in recovery and operating efficiency. La Coipa production is also expected to improve in the second half of the year, as the operation shifts from processing mostly stockpile material to processing ore from the Can Can and Ladera Farellon pits.
Regional production costs were higher compared with the same period last year, mainly as a result of declining grades, higher energy costs, higher labour costs, and less favourable currency hedges in Brazil. Full-year production and cost guidance for the South America region has been adjusted to reflect the sale of Crixas (see Outlook section of this news release).
Project update and new developments
The forward-looking information contained in this section of the release is subject to the risks and assumptions contained in the Cautionary Statement on Forward-Looking Information on page nine of this news release.
Capital and project optimization process
Kinross continues to advance its capital and project optimization process announced on January 16, 2012. Key findings to date include the identification of smaller-scale processing options for the Tasiast expansion and Lobo-Marte project, as discussed below. In addition, the Company is launching a cost reduction initiative, with the objective of reducing capital and operating costs across all operations and development projects.
Tasiast expansion project
As previously disclosed, Kinross has undertaken a review of project development alternatives to those included in the original Tasiast scoping study, with the objective of improving overall project economics and reducing capital cost and project execution risk.
The Company has studied numerous processing options at Tasiast, including the four options mentioned in the March 31, 2012 Tasiast technical report and variations on these, with the aim of identifying the optimum processing approach for the Tasiast orebody.
Based on this analysis, Kinross has elected to undertake a PFS for construction of a mid-sized, expandable CIL mill in the 30,000 tonne per day range, for purposes of comparison with a 60,000 tonne per day mill option. The PFS is expected to be completed in the first quarter of 2013. In parallel, ongoing evaluation regarding mine planning and phasing options for a 60,000 tonne per day option will continue. Heap leach testing is expected to be completed in the fourth quarter of 2012, and the results will be evaluated as part of the overall processing strategy, including a potential expansion of current dump leach production.
The case for a mid-sized, expandable CIL mill is based on the impact of industry-wide pressures on capital costs, and a better understanding of the Tasiast orebody and associated mine plan. Notwithstanding lower production in the initial years of operation, a staged approach to the Tasiast expansion could reduce initial capital costs and project execution risk, while delivering a rate of return comparable to constructing a larger initial mill.
If the Company ultimately selects a processing option or combination of options other than the current 60,000 tonne per day mill base case, including a substantially revised 60,000 tonne per day mill option, the Company will determine at that time whether an impairment test is required with respect to the carrying value of the Tasiast cash generating unit (CGU). In accordance with IFRS, the Company would be required, as of the end of the quarterly reporting period in which such a selection is made, to conduct an impairment analysis of the Tasiast CGU if the economics of the selected processing option or combination of options appears to have an adverse effect on the recoverability of the carrying value of the CGU. An impairment analysis would otherwise only be done as of the end of the fiscal year assuming an absence of other relevant indications of impairment prior to that time.
An update on Exploration activity at Tasiast is included in the "Exploration update" below.
Kinross has received approval from the Mauritanian government for the Phase 2 project Environmental Impact Assessment (EIA), which covers all proposed mining and processing activities that are expected to occur within the mine site boundary under various scenarios.
Dvoinoye
Construction of the Dvoinoye project progressed well through the second quarter and, as previously disclosed, is scheduled to deliver first ore to the upgraded Kupol mill in the second half of 2013. Underground development is 37% complete and progressing slightly ahead of plan with 1,400 metres completed during the quarter. Total underground development has passed 3,700 metres since development began in 2011.
Construction of surface infrastructure and facilities has continued as planned and is 22% complete. Expansion of the temporary camp to 400 beds was completed successfully and now accommodates all construction, underground and exploration personnel. The 365-bed permanent camp foundations are near completion and construction of the facility has begun.
Construction of the all-season road between Dvoinoye and Kupol has progressed well, with 51 kilometres of the total 84 kilometres now complete. The design and procurement of a single river bridge crossing is currently underway and installation is scheduled after the forthcoming winter period. All necessary permits for the current scope of underground development and construction activities are in place.
Fruta del Norte
Negotiations with the Ecuadorean government on an enhanced economic package at Fruta del Norte are progressing, with the objective of reaching balanced agreements on exploitation and investment protection for the project. Continued spending on development at FDN will depend on successfully concluding such agreements.
In July, Ecuador's Ministry of Environment approved the Environmental Impact Assessment for construction and operation of the underground mine at FDN. The Ministry review of the EIA for the processing plant is continuing.
Lobo-Marte
Kinross has completed a review to identify possible project optimization options at Lobo-Marte. Given industry-wide pressure on capital costs, the Company is considering smaller project options to those envisaged in the project pre-feasibility study, with the aim of reducing initial capital requirements and project execution risk. The Company is limiting capital spending at Lobo-Marte to further project study and permitting. Project permitting continues and is expected to be completed in Q4 2012.
Other projects
Construction of the Paracatu fourth ball mill continues to advance on schedule and the project remains on target to be operational in the third quarter of 2012.
The Maricunga SART (Sulphidization, Acidification, Recycling and Thickening) plant was completed on schedule in the second quarter and commissioning is proceeding.
Exploration update
Total exploration expenditures for the second quarter of 2012 were $66.2 million, including $54.2 million for expensed exploration and $12.0 million for capitalized exploration. Exploration expenditures for the same period in 2011 totaled $47.8 million.
Kinross was active on more than 25 mine site, near-mine and greenfields initiatives in the second quarter of 2012, with drilling across all projects totalling 212,870 metres. Total year-to-date drilling is 372,752 metres. Highlights of the second quarter exploration program include:
-- Tasiast: In the second quarter, exploration drilling at Tasiast focused
on step-out and district drilling. One core and eight reverse
circulation (RC) rigs were in operation throughout the quarter, drilling
a total of 1,062 holes for 112,472 metres. Near the mine, approximately
7,059 metres were drilled, testing for extensions of mineralization
below the West Branch-Piment pit and Prolongation pit. Assay results
from deep drilling have returned encouraging intercepts at Prolongation
and West Branch South.
Outside of the eight-kilometre mine corridor, 42 core holes and 986 RC
holes were completed at various district targets totalling approximately
104,809 metres. The majority of this work was directed at targets within
the Aoueouat area, 10 kilometres north of the Tasiast processing
facility. Drilling was completed on 400 metre spaced sections along the
Tasiast shear zone resulting in the identification of five new target
areas. Preliminary results are encouraging with gold mineralization
encountered above the base of oxidation on most drill fences.
-- La Coipa: Seventy-eight holes were drilled at La Coipa for a total of
28,150 metres during the second quarter. The majority of the work was
completed on the CMLC Joint Venture property (75% Kinross) where
drilling continued to delineate the zone of oxide mineralization at
Pompeya. Initial step-out drilling in the vicinity of Pompeya returned
highly encouraging results of a similar mineralization style 250 metres
southeast of the main deposit.
Drilling in the district tested the Catalina target and returned
encouraging oxide mineralization 750 metres southeast of Pompeya. Infill
drilling at Pompeya is expected to be completed by the end of August.
The rigs will be deployed to follow-up step-out results towards the end
of Q3 and into Q4.
Recent transactions
On June 28, 2012, Kinross completed the previously announced purchase and sale agreement to sell its 50% interest in the Crixas (Serra Grande) gold mine in Brazil to an affiliate of AngloGold Ashanti Ltd. for gross cash proceeds of $220 million.
Board of Directors update
George F. Michals, 76, has retired from the Kinross Board of Directors. Mr. Michals served on the Kinross Board since 2003. Kinross thanks him for his distinguished service and many contributions to the Company.
J. Paul Rollinson, the newly appointed CEO of Kinross, has been appointed to the Board of Directors, replacing Tye W. Burt, the former CEO.
Outlook
The forward-looking information contained in this section is subject to the risk factors and assumptions contained in the Cautionary Statement on Forward-Looking Information located on page nine of this news release.
Due to the disposition of Kinross' 50% interest in Crixas on June 28, 2012, the Company's share of Crixas' full-year forecast, including production of approximately 70,000 gold equivalent ounces, has been removed from the consolidated 2012 production forecast. As a result, Kinross now expects to produce approximately 2.5-2.6 million gold equivalent ounces in 2012 from its continuing operations, compared with its previous 2012 production forecast of 2.6-2.8 million gold equivalent ounces. The Company remains on track to be within its full-year 2012 production forecast range, excluding the adjustment in guidance due to the disposition of its interest in Crixas.
On a regional basis, the Company has also revised its production forecast from continuing operations as summarized in the table below. Forecast increases in production in North America and Russia are expected to offset a forecast reduction in West Africa, while South America's forecast production has been adjusted to reflect the sale of Crixas.
The Company has revised its forecast full-year production cost of sales, which are now expected to be $690 - 725 per gold equivalent ounce from continuing operations compared with the previous forecast of $670 - 715, as a result of higher expected production cost of sales per ounce in West Africa and South America.
The table below summarizes revisions to production and cost of sales guidance on a regional and consolidated basis.
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Revised cost
Revised of
production sales
forecast Previous forecast
Previous from cost from
production continuing of sales continuing
forecast operations forecast operations
(gold (gold ($ per gold ($ per gold
equivalent equivalent equivalent equivalent
Region oz) oz) oz) oz)
----------------------------------------------------------------------------
930,000- 890,000-
South America 1,030,000 930,000 780-850 830-870
620,000- 640,000-
North America 660,000 660,000 620-660 Unchanged
500,000- 430,000-
West Africa 560,000 460,000 740-800 780-820
(attributable)
525,000- 535,000-
Russia 565,000 565,000 470-495 Unchanged
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2.6-2.8 2.5-2.6
Total Kinross million million 670-715 690-725
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Material assumptions used for the updated production cost of sales forecast are the same as previously disclosed assumptions for the gold and oil price. The silver price assumption has changed to $27 per ounce for the second half of 2012, compared with the previous assumption of $30 per ounce. Assumptions for foreign exchange rates have remained the same, except for the Brazilian real, Ghanaian cedi and the Euro, which are as follows for the second half of 2012:
-- 2.00 Brazilian reais to the U.S. dollar, compared with 1.75 Brazilian
reais to the U.S. dollar
-- 1.90 Ghanaian cedi to the U.S. dollar, compared with 1.60 Ghanaian cedi
to the U.S. dollar
-- 1.25 U.S. dollar to the Euro, compared with 1.35 U.S. dollar to the
Euro.
The Company has revised its by-product production guidance from continuing operations for 2012 as follows:
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Revised by-product
Previous by-product production forecast
production forecast from continuing
(ounces) operations (ounces)
----------------------------------------------------------------------------
Gold 2.5-2.6 million 2.35-2.45 million
Silver 7.5-8.0 million 9.0-9.5 million
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Kinross has lowered its 2012 by-product cost per ounce sold for continuing operations to $605-655 from the previously disclosed $620-665, mainly due to higher silver production from continuing operations in 2012.
The Company's depreciation, depletion and amortization is forecast to be approximately $235 per gold equivalent ounce, compared with the previously-stated guidance of $200 per gold equivalent ounce.
Conference call details
In connection with this news release, Kinross will hold a conference call and audio webcast on Thursday, August 9, 2012 at 8 a.m. EDT to discuss the results, followed by a question-and-answer session. To access the call, please dial:
Canada & US toll-free - 1-800-319-4610
Outside of Canada & US - 1-604-638-5340
Replay (available up to 14 days after the call):
Canada & US toll-free - 1-800-319-6413; Passcode - 3310 followed by #.
Outside of Canada & US - 1-604-638-9010; Passcode - 3310 followed by #.
You may also access the conference call on a listen-only basis via webcast at our website www.kinross.com. The audio webcast will be archived on our website at www.kinross.com.
This release should be read in conjunction with Kinross' unaudited second quarter 2012 Financial Statements and Management's Discussion and Analysis report at www.kinross.com.
Kinross' unaudited second quarter 2012 financial statements have been filed with Canadian securities regulators (available at www.sedar.com) and furnished with the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.
About Kinross Gold Corporation
Kinross is a Canadian-based gold mining company with mines and projects in Brazil, Canada, Chile, Ecuador, Ghana, Mauritania, Russia and the United States, employing approximately 8,000 people worldwide. Kinross maintains listings on the Toronto Stock Exchange (symbol: K) and the New York Stock Exchange (symbol: KGC).
Cautionary statement on forward-looking information
All statements, other than statements of historical fact, contained or incorporated by reference in this news release, but not limited to, any information as to the future financial or operating performance of Kinross, constitute "forward-looking information" or "forward-looking statements" within the meaning of certain securities laws, including the provisions of the Securities Act (Ontario) and the provisions for "safe harbour" under the United States Private Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this news release. Forward-looking statements include, without limitation, statements with respect to: possible events, the future price of gold and silver, the estimation of mineral reserves and mineral resources, the realization of mineral reserve and mineral resource estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, success of exploration, development and mining activities, permitting timelines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. The words "aim", "plans", "pursue", "expects" or "does not expect", "is expected", "scheduled", "timeline" or "timetable", "estimates", "forecasts", "suggests", "guidance", "objective", "opportunity", "outlook", "potential", "prospects", "seek", "strategy", "targets", "models", "anticipates", or "does not anticipate", or "believes", or variations of or similar such words and phrases or statements that certain actions, events or results "may", "could", "would", or "should", "might", or "will be taken", "occur" or "be achieved" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies.
The estimates, models and assumptions of Kinross referenced, contained or incorporated by reference in this news release, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein and in our most recently filed Annual Information Form and our most recently filed Management's Discussion and Analysis as well as: (1) there being no significant disruptions affecting the operations of the Company or any entity in which it now or hereafter directly or indirectly holds an investment, whether due to labour disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; (2) permitting, development, operations, expansion and acquisitions at Paracatu (including, without limitation, land acquisitions and permitting for the construction and operation of the new tailings facility) being consistent with our current expectations; (3) the viability, permitting and development of the Fruta del Norte deposit, and its continuing ownership by the Company, being consistent with Kinross' current expectations; (4) political and legal developments in any jurisdiction in which the Company, or any entity in which it now or hereafter directly or indirectly holds an investment, operates being consistent with its current expectations including, without limitation, the implementation of Ecuador's new mining and investment laws and related regulations and policies, and negotiation of an exploitation contract and an investment protection contract with the government, being consistent with Kinross' current expectations; (5) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately consistent with current levels; (6) certain price assumptions for gold and silver; (7) prices for natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; (8) production and cost of sales forecasts for the Company, and entities in which it now or hereafter directly or indirectly holds an investment, meeting expectations; (9) the accuracy of the current mineral reserve and mineral resource estimates of the Company (including but not limited to ore tonnage and ore grade estimates) and any entity in which it now or hereafter directly or indirectly holds an investment;
(10) labour and materials costs increasing on a basis consistent with Kinross' current expectations; (11) the development of the Dvoinoye deposit being consistent with Kinross' expectations; (12) the viability of the Tasiast and Chirano mines (including but not limited to, at Tasiast, the impact of ore tonnage and grade variability reconciliation analysis) as well as permitting, development and expansion (including but not limited to, at Tasiast, expansion optimization initiatives leading to changes in processing approach and maintenance and, as required, conversion of exploration licences to mining licences) of the Tasiast and Chirano mines being consistent with Kinross' current expectations; (13) the terms and conditions of the legal and fiscal stability agreements for the Tasiast and Chirano operations being interpreted and applied in a manner consistent with their intent and Kinross' expectations; (14) goodwill and/or asset impairment potential and (15) access to capital markets, including but not limited to maintaining an investment grade debt rating and securing partial project financing for the Dvoinoye, Fruta del Norte and the Tasiast expansion projects, being consistent with the Company's current expectations.
Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as diesel fuel and electricity); increases in the discount rates applied to present value net future cash flows based on country-specific real weighted average cost of capital; declines in the market valuations of peer group gold producers and the Company, and the resulting impact on market price to net asset value multiples; changes in interest rates or gold or silver lease rates that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under any interest rate swaps and variable rate debt obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation (including but not limited to income tax, advance income tax, stamp tax, withholding tax, capital tax, tariffs, value-added or sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, royalty, excise tax, customs/import or export taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with any related fine, penalty, surcharge, or interest imposed in connection with such taxes), controls, policies and regulations; the security of personnel and assets; political or economic developments in Canada, the United States, Chile, Brazil, Russia, Ecuador, Mauritania, Ghana, or other countries in which Kinross, or entities in which it now or hereafter directly or indirectly holds an interest, do business or may carry on business; business opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical difficulties in connection with mining or development activities; employee relations; commencement of litigation against the Company including, but not limited to, securities class action in Canada and/or the U.S.; the speculative nature of gold exploration and development including, but not limited to, the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves; adverse changes in our credit rating; and contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards associated with the business of gold exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance, or the inability to obtain insurance, to cover these risks).
Many of these uncertainties and contingencies can directly or indirectly affect, and could cause, Kinross' actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Kinross, including but not limited to resulting in an impairment charge on goodwill and/or assets. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing information about management's expectations and plans relating to the future. All of the forward-looking statements made in this news release are qualified by these cautionary statements and those made in our other filings with the securities regulators of Canada and the United States including, but not limited to, the cautionary statements made in the "Risk Factors" section of our most recently filed Annual Information Form and Management Discussion and Analysis. These factors are not intended to represent a complete list of the factors that could affect Kinross. Kinross disclaims any intention or obligation to update or revise any forward- looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.
Key Sensitivities
Approximately 60%-70% of the Company's costs are denominated in US dollars.
A 10% change in foreign exchange could result in an approximate $5 impact in production cost of sales per ounce.(6 )
A $10 per barrel change in the price of oil could result in an approximate $2 impact on production cost of sales per ounce.
The impact on royalties of a $100 change in the gold price could result in an approximate $4 impact on cost of sales per ounce.
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in this news release, we mean Kinross Gold Corporation and/or one or more or all of its subsidiaries, as may be applicable.
The technical information about the Company's material mineral properties (other than exploration activities) contained in this news release has been prepared under the supervision of Mr. Jim Fowler, an officer of the Company who is a "qualified person" within the meaning of National Instrument 43-101.The technical information about the Company's drilling and exploration activities contained in this news release has been prepared under the supervision of Dr. Glen Masterman, an officer with the Company who is a "qualified person" within the meaning of National Instrument 43-101.
(6) Refers to all of the currencies in the countries where the Company has mining operations, fluctuating simultaneously by 10% in the same direction, either appreciating or depreciating, taking into consideration the impact of hedging and the weighting of each currency within our consolidated cost structure.
Reconciliation of non-GAAP financial measures
The Company has included certain non-GAAP financial measures in this document. These measures are not defined under IFRS and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other issuers.
Adjusted net earnings attributed to common shareholders and adjusted net earnings per share are non-GAAP measures 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, 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, which are used internally to assess performance and in planning and forecasting future operating results, provide investors with the ability to better evaluate underlying performance, particularly since the excluded items are typically not included in public guidance. However, adjusted net earnings and adjusted net earnings per share measures are not necessarily indicative of net earnings and earnings per share measures as determined under IFRS.
The following table provides a reconciliation of net earnings from continuing operations to adjusted net earnings from continuing operations for the periods presented:
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GAAP to Adjusted Earnings from Continuing
Operations Reconciliation
------------------------------------------
(in US$ millions) Three months ended Six months ended
June 30 June 30
--------------------- ---------------------
2012 2011 2012 2011
--------------------- ---------------------
Net earnings from continuing
operations attributed to common
shareholders - as reported $ 115.8 $ 244.3 $ 215.4 $ 490.5
--------------------- ---------------------
Adjusting items:
Foreign exchange (gains)
losses 13.5 (7.4) 6.2 (21.9)
Non-hedge derivatives gains -
net of tax (3.4) (7.6) (13.5) (48.6)
(Gains) losses on
acquisition/disposition of
assets and investments - net
of tax 0.3 (0.4) 0.3 (31.2)
FX (gain) loss on translation
of tax basis and FX on
deferred income taxes within
income tax expense 9.6 (10.6) 12.1 (1.6)
Change in deferred tax due to
a change in Ghanaian
corporate income tax rate - - 110.3 -
Taxes in respect of prior
years - - 1.3 -
Impairment of investments 20.2 - 20.2 -
Inventory fair value
adjustment - net of tax - 4.3 - 7.0
--------------------- ---------------------
40.2 (21.7) 136.9 (96.3)
--------------------- ---------------------
Net earnings from continuing
operations attributed to common
shareholders - Adjusted $ 156.0 $ 222.6 $ 352.3 $ 394.2
--------------------- ---------------------
--------------------- ---------------------
Weighted average number of
common shares outstanding -
Basic 1,138.1 1,135.8 1,138.5 1,134.9
--------------------- ---------------------
--------------------- ---------------------
Net earnings from continuing
operations per share - Adjusted $ 0.14 $ 0.20 $ 0.31 $ 0.35
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The Company makes reference to a non-GAAP measure for adjusted operating cash flow and adjusted operating cash flow per share. Adjusted operating cash flow is defined as cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company's regular operating cash flow, and excluding changes in working capital. Working capital can be volatile due to numerous factors, including the timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The Company uses adjusted operating cash flow internally as a measure of the underlying operating cash flow performance and future operating cash flow-generating capability of the Company. However, adjusted operating cash flow and adjusted operating cash flow per share measures are not necessarily indicative of net cash flow from operations as determined under IFRS.
The following table provides a reconciliation of adjusted operating cash flow from continuing operations for the periods presented:
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GAAP to Adjusted Operating Cash Flow
from Continuing Operations
-----------------------------------------
(in US$ millions) Three months ended Six months ended
June 30 June 30
------------------- --------------------
2012 2011 2012 2011
------------------- --------------------
Net cash flow of continuing
operations provided from
operating activities - as
reported $ 77.4 $ 346.6 $ 453.9 687.2
------------------- --------------------
Adjusting items:
Close out and early settlement of
derivative instruments (20.3) - (48.7) -
Working capital changes:
Accounts receivable and other
assets 53.0 131.8 85.4 167.9
Inventories 50.2 (11.7) 48.6 2.5
Accounts payable and other
liabilities, including taxes 110.2 (61.9) 52.0 (62.1)
------------------- --------------------
193.1 58.2 137.3 108.3
------------------- --------------------
Adjusted operating cash flow from
continuing operations $ 270.5 $ 404.8 $ 591.2 795.5
------------------- --------------------
------------------- --------------------
Weighted average number of common
shares outstanding - Basic 1,138.1 1,135.8 1,138.5 1,134.9
------------------- --------------------
Adjusted operating cash flow from
continuing operations per share $ 0.24 $ 0.36 $ 0.52 0.70
------------------- --------------------
------------------- --------------------
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Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of sales as per the consolidated financial statements divided by the total number of gold equivalent ounces sold. This measure converts the Company's non-gold production into gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company's non-gold production into gold equivalent ounces and credits it to total production.
Management uses these measures to monitor and evaluate the performance of its operating properties.
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Consolidated and Attributable Cost of Sales from
Continuing Operations Per Equivalent Ounce Sold
---------------------------------------------------
(in US$ millions) Three months ended Six months ended
June 30 June 30
----------------------- ---------------------------
2012 2011 2012 2011
----------------------- ---------------------------
Production cost of sales
from continuing
operations $ 464.9 $ 389.0 $ 917.5 $ 760.5
Less: portion
attributable to Kupol
non-controlling
interest(1) - (4.1) - (21.0)
Less: portion
attributable to Chirano
non-controlling
interest (4.9) (3.7) (10.3) (8.6)
----------------------- ---------------------------
Attributable production
cost of sales from
continuing operations $ 460.0 $ 381.2 $ 907.2 $ 730.9
----------------------- ---------------------------
----------------------- ---------------------------
Gold equivalent ounces
sold from continuing
operations 640,836 688,282 1,253,188 1,393,240
Less: portion
attributable to Kupol
non-controlling
interest(1) - (12,968) - (63,803)
Less: portion
attributable to Chirano
non-controlling
interest (6,298) (5,656) (14,123) (12,610)
----------------------- ---------------------------
Attributable gold
equivalent ounces sold 634,538 669,658 1,239,065 1,316,827
----------------------- ---------------------------
----------------------- ---------------------------
Consolidated production
cost of sales from
continuing operations
per equivalent ounce
sold $ 725 $ 565 $ 732 $ 546
Attributable production
cost of sales from
continuing operations
per equivalent ounce
sold $ 725 $ 569 $ 732 $ 555
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(1) On April 27, 2011, Kinross acquired the remaining 25% of CMGC, and
thereby obtained 100% ownership of Kupol. As such, the results up to
April 27, 2011 reflect 75% and results thereafter reflect 100%.
Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP measure 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 measure provides investors with the ability to better evaluate Kinross' production cost of sales per ounce on a comparable basis with other major gold producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-product accounting.
The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the periods presented:
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Attributable Cost of Sales from Continuing
Operations Per Ounce Sold on a By-Product Basis
-------------------------------------------------
(in US$ millions) Three months ended Six months ended
June 30 June 30
----------------------- -------------------------
2012 2011 2012 2011
----------------------- -------------------------
Production cost of sales
from continuing
operations(1) $ 464.9 $ 389.0 $ 917.5 $ 760.5
Less: portion attributable
to Kupol non-controlling
interest(2) - (4.1) - (21.0)
Less: portion attributable
to Chirano non-
controlling interest (4.9) (3.7) (10.3) (8.6)
Less: attributable silver
sales (72.0) (83.4) (158.2) (165.4)
----------------------- -------------------------
Attributable production
cost of sales from
continuing operations net
of silver by-product
revenue $ 388.0 $ 297.8 $ 749.0 $ 565.5
----------------------- -------------------------
----------------------- -------------------------
Gold ounces sold 595,654 605,729 1,156,807 1,226,923
Less: portion attributable
to Kupol non-controlling
interest(2) - (9,349) - (49,299)
Less: portion attributable
to Chirano non-
controlling interest (6,285) (5,625) (14,085) (12,552)
----------------------- -------------------------
Attributable gold ounces
sold 589,369 590,755 1,142,722 1,165,072
----------------------- -------------------------
Attributable production
cost of sales from
continuing operations per
ounce sold on a by-
product basis $ 658 $ 504 $ 655 $ 485
----------------------- -------------------------
----------------------- -------------------------
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(1) "Production cost of sales" is equivalent to "Total cost of sales" per
the consolidated financial statements less depreciation, depletion and
amortization and impairment charges.
(2) On April 27, 2011, Kinross acquired the remaining 25% of CMGC, and
thereby obtained 100% ownership of Kupol. As such, the results up to
April 27, 2011 reflect 75% and results thereafter reflect 100%.
Review of Operations
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Three months ended June 30, Gold equivalent ounces
-----------------------------------------
Produced Sold
-------------------- ---------------------
2012 2011 2012 2011
-------------------- ---------------------
Fort Knox 71,952 77,727 71,978 77,269
Round Mountain 53,147 47,151 52,433 46,941
Kettle River - Buckhorn 35,985 46,237 40,354 45,442
-------------------- ---------------------
North America Total 161,084 171,115 164,765 169,652
Kupol (100%) 149,214 184,066 156,716 199,773
-------------------- ---------------------
Russia Total 149,214 184,066 156,716 199,773
Paracatu 118,419 99,893 118,389 95,773
La Coipa 36,113 50,867 30,325 56,906
Maricunga 60,841 70,105 61,367 63,407
-------------------- ---------------------
South America Total 215,373 220,865 210,081 216,086
Tasiast 49,807 47,249 46,296 46,213
Chirano (100%) 63,660 57,898 62,978 56,558
-------------------- ---------------------
West Africa Total 113,467 105,147 109,274 102,771
-------------------- ---------------------
Continuing operations 639,138 681,193 640,836 688,282
Discontinued operations (3) 15,105 15,438 15,611 16,165
-------------------- ---------------------
Operations Total 654,243 696,631 656,447 704,447
Less Kupol non-controlling
interest (25%)(2) - (14,596) - (12,968)
Less Chirano non-controlling
interest (10%) (6,366) (5,790) (6,298) (5,656)
-------------------- ---------------------
Attributable - Continuing
operations 632,772 660,807 634,538 669,658
-------------------- ---------------------
Attributable Total 647,877 676,245 650,149 685,823
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Three months ended June 30,
Production cost of Production cost of
sales(1) ($millions) sales(1)/oz
---------------------- -------------------
2012 2011 2012 2011
---------------------- -------------------
Fort Knox $ 54.5 $ 52.4 $ 757 $ 678
Round Mountain 34.7 34.7 662 739
Kettle River - Buckhorn 20.5 18.3 508 403
---------------------- -------------------
North America Total 109.7 105.4 666 621
Kupol (100%) 73.2 69.1 467 346
---------------------- -------------------
Russia Total 73.2 69.1 467 346
Paracatu 108.2 77.1 914 805
La Coipa 35.7 40.5 1,177 712
Maricunga 44.5 26.2 725 413
---------------------- -------------------
South America Total 188.4 143.8 897 665
Tasiast 44.5 33.6 961 727
Chirano (100%) 49.1 37.1 780 656
---------------------- -------------------
West Africa Total 93.6 70.7 857 688
---------------------- -------------------
Continuing operations 464.9 389.0 725 565
Discontinued operations (3) 13.6 13.6 871 841
---------------------- -------------------
Operations Total $ 478.5 402.6 $ 729 572
Less Kupol non-controlling
interest (25%)(2) - (4.1)
Less Chirano non-controlling
interest (10%) (4.9) (3.7)
---------------------- -------------------
Attributable - Continuing
operations $ 460.0 $ 381.2 $ 725 $ 569
---------------------- -------------------
---------------------- -------------------
Attributable Total $ 473.6 $ 394.8 $ 728 $ 576
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(1) "Production cost of sales" is equivalent to "Total cost of sales" per
the consolidated financial statements less depreciation, depletion and
amortization and impairment charges.
(2) On April 27, 2011, Kinross acquired the remaining 25% of CMGC, and
thereby obtained 100% ownership of Kupol. As such, the results up to
April 27, 2011 reflect 75% and results thereafter reflect 100%.
(3) On June 28, 2012, the Company completed the sale of its 50% interest in
the Crixas gold mine.
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Six months ended June 30, Gold equivalent ounces
-------------------------------------------
Produced Sold
--------------------- ---------------------
2012 2011 2012 2011
--------------------- ---------------------
Fort Knox 133,668 142,774 132,343 141,935
Round Mountain 97,905 89,272 95,984 88,496
Kettle River - Buckhorn 78,603 92,089 79,675 93,071
--------------------- ---------------------
North America Total 310,176 324,135 308,002 323,502
Kupol (100%) 276,184 389,741 283,451 403,111
--------------------- ---------------------
Russia Total 276,184 389,741 283,451 403,111
Paracatu 223,037 200,320 228,916 203,730
La Coipa 73,853 105,313 74,037 119,837
Maricunga 124,830 128,845 130,430 119,250
--------------------- ---------------------
South America Total 421,720 434,478 433,383 442,817
Tasiast 87,441 98,570 87,123 97,706
Chirano (100%) 139,566 119,935 141,229 126,104
--------------------- ---------------------
West Africa Total 227,007 218,505 228,352 223,810
--------------------- ---------------------
Continuing operations 1,235,087 1,366,859 1,253,188 1,393,240
Discontinued operations(3) 30,994 30,251 32,764 29,784
--------------------- ---------------------
Operations Total 1,266,081 1,397,110 1,285,952 1,423,024
Less Kupol non-controlling
interest (25%)(2) - (66,015) - (63,803)
Less Chirano non-controlling
interest (10%) (13,957) (11,993) (14,123) (12,610)
--------------------- ---------------------
Attributable - Continuing
operations 1,221,130 1,288,851 1,239,065 1,316,827
--------------------- ---------------------
--------------------- ---------------------
Attributable Total 1,252,124 1,319,102 1,271,829 1,346,611
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- -
Six months ended June 30,
Production cost of Production cost of
sales(1) ($millions) sales(1)/oz
---------------------- --------------------
2012 2011 2012 2011
---------------------- --------------------
Fort Knox $ 106.5 $ 93.0 $ 805 $ 655
Round Mountain 71.9 67.6 749 764
Kettle River - Buckhorn 39.5 36.2 496 389
---------------------- --------------------
North America Total 217.9 196.8 707 608
Kupol (100%) 134.4 134.6 474 334
---------------------- --------------------
Russia Total 134.4 134.6 474 334
Paracatu 213.6 151.6 933 744
La Coipa 80.2 78.0 1,083 651
Maricunga 88.2 53.1 676 445
---------------------- --------------------
South America Total 382.0 282.7 881 638
Tasiast 80.4 60.2 923 616
Chirano (100%) 102.8 86.2 728 684
---------------------- --------------------
West Africa Total 183.2 146.4 802 654
---------------------- --------------------
Continuing operations 917.5 760.5 732 546
Discontinued operations(3) 27.4 23.7 836 796
---------------------- --------------------
Operations Total $ 944.9 784.2 $ 735 551
Less Kupol non-controlling
interest (25%)(2) - (21.0)
Less Chirano non-controlling
interest (10%) (10.3) (8.6)
---------------------- --------------------
Attributable - Continuing
operations $ 907.2 $ 730.9 $ 732 $ 555
---------------------- --------------------
---------------------- --------------------
Attributable Total $ 934.6 $ 754.6 $ 735 $ 560
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(1) "Production cost of sales" is equivalent to "Total cost of sales" per
the consolidated financial statements less depreciation, depletion and
amortization and impairment charges.
(2) On April 27, 2011, Kinross acquired the remaining 25% of CMGC, and
thereby obtained 100% ownership of Kupol. As such, the results up to
April 27, 2011 reflect 75% and results thereafter reflect 100%.
(3) On June 28, 2012, the Company completed the sale of its 50% interest in
the Crixas gold mine.
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Consolidated balance sheets
(Unaudited expressed in millions of United States dollars, except share
amounts)
----------------------------------------------------------------------------
As at
-------------------------------
June 30, December 31,
2012 2011
--------------- ---------------
Assets
Current assets
Cash and cash equivalents $ 1,340.3 $ 1,766.0
Restricted cash 54.8 62.1
Short-term investments - 1.3
Accounts receivable and other assets 383.5 309.4
Inventories 1,015.4 976.2
Unrealized fair value of derivative
assets 2.2 2.8
--------------- ---------------
2,796.2 3,117.8
--------------- ---------------
Non-current assets
Property, plant and equipment 9,638.2 8,959.4
Goodwill 3,382.3 3,420.3
Long-term investments 60.5 79.4
Investments in associates 511.1 502.5
Unrealized fair value of derivative
assets 4.0 1.1
Deferred charges and other long-term
assets 446.6 406.4
Deferred tax assets 35.5 21.9
--------------- ---------------
Total assets $ 16,874.4 $ 16,508.8
--------------- ---------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 596.0 $ 575.3
Current tax payable 142.0 82.9
Current portion of long-term debt 475.9 32.7
Current portion of provisions 35.3 38.1
Current portion of unrealized fair value
of derivative liabilities 51.5 66.7
--------------- ---------------
1,300.7 795.7
--------------- ---------------
Non-current liabilities
Long-term debt 1,147.7 1,600.4
Provisions 592.9 597.1
Unrealized fair value of derivative
liabilities 27.9 32.7
Other long-term liabilities 130.3 133.1
Deferred tax liabilities 960.8 879.1
--------------- ---------------
--------------- ---------------
Total liabilities 4,160.3 4,038.1
--------------- ---------------
Equity
Common shareholders' equity
Common share capital and common share
purchase warrants $ 14,680.6 $ 14,656.6
Contributed surplus 79.8 81.4
Accumulated deficit (2,081.7) (2,249.9)
Accumulated other comprehensive loss (36.3) (97.7)
--------------- ---------------
Total common shareholders' equity 12,642.4 12,390.4
--------------- ---------------
Non-controlling interest 71.7 80.3
--------------- ---------------
Total equity 12,714.1 12,470.7
--------------- ---------------
--------------- ---------------
Total liabilities and equity $ 16,874.4 $ 16,508.8
--------------- ---------------
Common shares
Authorized Unlimited Unlimited
Issued and outstanding 1,139,280,972 1,137,732,344
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Consolidated statements of operations
(Unaudited expressed in millions of United States dollars, except per share
and share amounts)
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Three months ended Six months ended
June 30, June 30,
-------------------- -------------------
2012 2011 2012 2011
---------- --------- --------- ---------
Revenue
Metal sales $1,006.7 $ 963.6 $2,014.8 $1,881.7
Cost of sales
Production cost of sales 464.9 389.0 917.5 760.5
Depreciation, depletion and
amortization 157.0 146.3 299.7 297.0
---------- --------- --------- ---------
Total cost of sales 621.9 535.3 1,217.2 1,057.5
---------- --------- --------- ---------
Gross profit 384.8 428.3 797.6 824.2
---------- --------- --------- ---------
Other operating costs 10.8 9.1 22.3 13.0
Exploration and business
development 71.2 26.3 129.9 49.9
General and administrative 44.0 40.1 83.7 83.4
---------- --------- --------- ---------
Operating earnings 258.8 352.8 561.7 677.9
---------- --------- --------- ---------
Other income (expense) - net (28.5) 17.0 (16.2) 105.1
Equity in gains (losses) of
associates (1.7) 0.2 (2.9) -
Finance income 1.1 1.6 2.1 3.7
Finance expense (9.0) (16.0) (18.8) (32.3)
---------- --------- --------- ---------
Earnings before taxes 220.7 355.6 525.9 754.4
Income tax expense - net (104.7) (97.5) (319.1) (209.1)
---------- --------- --------- ---------
Earnings from continuing operations
after tax 116.0 258.1 206.8 545.3
Earnings from discontinued
operations after tax 37.8 3.1 43.9 7.0
---------- --------- --------- ---------
Net earnings $ 153.8 $ 261.2 $ 250.7 $ 552.3
---------- --------- --------- ---------
---------- --------- --------- ---------
Net earnings from continuing
operations attributed to:
Non-controlling interest $ 0.2 $ 13.8 $ (8.6) $ 54.8
---------- --------- --------- ---------
---------- --------- --------- ---------
Common shareholders $ 115.8 $ 244.3 $ 215.4 $ 490.5
---------- --------- --------- ---------
---------- --------- --------- ---------
Net earnings attributed to:
Non-controlling interest $ 0.2 $ 13.8 $ (8.6) $ 54.8
---------- --------- --------- ---------
---------- --------- --------- ---------
Common shareholders $ 153.6 $ 247.4 $ 259.3 $ 497.5
---------- --------- --------- ---------
---------- --------- --------- ---------
Earnings per share from continuing
operations attributable to common
shareholders
Basic $ 0.10 $ 0.22 $ 0.19 $ 0.43
Diluted $ 0.10 $ 0.21 $ 0.19 $ 0.43
Net earnings per share attributable
to common shareholders
Basic $ 0.13 $ 0.22 $ 0.23 $ 0.44
Diluted $ 0.13 $ 0.22 $ 0.23 $ 0.44
Weighted average number of common
shares outstanding (millions)
Basic 1,138.1 1,135.8 1,138.5 1,134.9
Diluted 1,144.3 1,141.4 1,144.4 1,140.7
----------------------------------------------------------------------------
Consolidated statements of cash flows
(unaudited expressed in millions of United States dollars)
----------------------------------------------------------------------------
Three months ended Six months ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
2012 2011 2012 2011
----------- ----------- ----------- -----------
Net inflow (outflow) of cash
related to the following
activities: Note 4 Note 4
Operating:
Net earnings from continuing
operations $ 116.0 $ 258.1 $ 206.8 $ 545.3
Adjustments to reconcile net
earnings from continuing
operations to net cash
provided from (used in)
operating activities:
Depreciation, depletion
and amortization 157.0 146.3 299.7 297.0
(Gains) losses on
acquisition/disposition
of assets and investments
- net 0.5 (0.6) 0.5 (31.4)
Equity in (gains) losses
of associates 1.7 (0.2) 2.9 -
Non-hedge derivative gains
- net (3.4) (7.1) (13.5) (48.1)
Settlement of derivative
instruments 20.3 - 48.7 -
Share-based compensation
expense 9.4 10.2 18.9 18.4
Accretion expense 5.3 13.8 10.7 26.5
Deferred tax (recovery)
expense (14.0) (19.0) 83.5 (12.1)
Foreign exchange (gains)
losses and other (2.0) 3.3 (18.3) (0.1)
Changes in operating
assets and liabilities:
Accounts receivable and
other assets (53.0) (131.8) (85.4) (167.9)
Inventories (50.2) 11.7 (48.6) (2.5)
Accounts payable and
accrued liabilities,
excluding interest and
taxes 22.7 181.6 140.1 245.0
----------- ----------- ----------- -----------
Cash flow provided from
operating activities 210.3 466.3 646.0 870.1
----------- ----------- ----------- -----------
Income taxes paid (132.9) (119.7) (192.1) (182.9)
----------- ----------- ----------- -----------
Net cash flow of continuing
operations provided from
operating activities 77.4 346.6 453.9 687.2
----------- ----------- ----------- -----------
Net cash flow of
discontinued operations
provided from operating
activities 9.6 14.7 14.8 9.2
----------- ----------- ----------- -----------
Investing:
Additions to property,
plant and equipment (431.2) (408.8) (961.4) (661.7)
Net proceeds from the sale
of long-term investments
and other assets - - 0.2 101.1
Additions to long-term
investments and other
assets - (64.7) (12.7) (76.5)
Net proceeds from the sale
of property, plant and
equipment 0.2 0.7 0.2 0.8
Disposals (additions) of
short-term investments 0.2 (1.3) 1.3 (1.3)
Increase (decrease) in
restricted cash 0.4 (3.9) 1.3 (3.9)
Interest received 1.2 0.7 2.1 1.9
Other 0.4 (2.7) 0.1 (3.0)
----------- ----------- ----------- -----------
Net cash flow of continuing
operations used in
investing activities (428.8) (480.0) (968.9) (642.6)
----------- ----------- ----------- -----------
Net cash flow of
discontinued operations
provided from (used in)
investing activities 204.4 (14.1) 198.9 (16.7)
----------- ----------- ----------- -----------
Financing:
Issuance of common shares
on exercise of options
and warrants 1.6 6.0 3.5 14.9
Acquisition of CMGC 25%
non-controlling interest - (335.4) - (335.4)
Proceeds from issuance of
debt 168.9 99.6 296.3 192.6
Repayment of debt (170.7) (111.1) (322.5) (215.6)
Interest paid (1.6) (0.5) (4.8) (5.1)
Dividends paid to common
shareholders - - (91.1) (56.8)
Settlement of derivative
instruments - (9.4) - (19.7)
Other (0.1) - (0.8) (5.7)
----------- ----------- ----------- -----------
Net cash flow of
continuing operations
used in financing
activities (1.9) (350.8) (119.4) (430.8)
----------- ----------- ----------- -----------
Net cash flow of
discontinued operations
used in financing
activities (0.3) (0.7) (0.6) (1.4)
----------- ----------- ----------- -----------
Effect of exchange rate
changes on cash and cash
equivalents of continuing
operations (7.0) 3.8 (4.4) 8.8
----------- ----------- ----------- -----------
Decrease in cash and cash
equivalents (146.6) (480.5) (425.7) (386.3)
Cash and cash equivalents,
beginning of period 1,486.9 1,560.8 1,766.0 1,466.6
----------- ----------- ----------- -----------
Cash and cash equivalents,
end of period $ 1,340.3 $ 1,080.3 $ 1,340.3 $ 1,080.3
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
----------------------------------------------------------------------------
Operating Summary
----------------------------------------------------------------------------
Ore Gold Eq
Processed Recovery Production
Mine Period Ownership (1) Grade (2) (11)
----------------------------------------------------------------------------
('000
(%) tonnes) (g/t) (%) (ounces)
----------------------------------------------------------------------------
North America
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q2 2012 100 13,084 0.51 85% 71,952
------------------------------------------------------------------
Fort Q1 2012 100 4,156 0.46 84% 61,716
Knox Q4 2011 100 8,197 0.51 79% 70,759
(3) Q3 2011 100 9,415 0.49 77% 76,261
Q2 2011 100 10,000 0.59 79% 77,727
----------------------------------------------------------------------------
Q2 2012 50 4,674 0.82 74% 53,147
------------------------------------------------------------------
Round Q1 2012 50 5,121 0.92 78% 44,758
Mountain Q4 2011 50 6,317 0.98 81% 43,584
(4) Q3 2011 50 6,989 0.95 74% 54,588
Q2 2011 50 6,960 0.99 76% 47,151
----------------------------------------------------------------------------
Q2 2012 100 111 11.52 92% 35,985
------------------------------------------------------------------
Kettle Q1 2012 100 112 12.81 90% 42,618
River Q4 2011 100 123 12.24 89% 42,003
Q3 2011 100 110 13.06 91% 41,200
Q2 2011 100 104 14.77 89% 46,237
----------------------------------------------------------------------------
Russia
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q2 2012 100 329 12.23 93% 149,214
------------------------------------------------------------------
Kupol - Q1 2012 100 309 11.76 93% 126,970
100% Q4 2011 100 325 10.81 93% 138,410
(6) Q3 2011 100 303 10.39 93% 124,912
Q2 2011 100 305 15.88 94% 184,066
----------------------------------------------------------------------------
Q2 2012 100 329 12.23 93% 149,214
------------------------------------------------------------------
Kupol Q1 2012 100 309 11.76 93% 126,970
(6)(7) Q4 2011 100 325 10.81 93% 138,410
(8) Q3 2011 100 303 10.39 93% 124,912
Q2 2011 100 305 15.88 94% 169,470
----------------------------------------------------------------------------
South America
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q2 2012 100 12,988 0.38 74% 118,419
------------------------------------------------------------------
Q1 2012 100 12,910 0.35 72% 104,618
Paracatu Q4 2011 100 11,578 0.42 74% 117,977
Q3 2011 100 13,202 0.43 74% 135,099
Q2 2011 100 10,014 0.41 76% 99,893
----------------------------------------------------------------------------
Q2 2012 50 302 3.43 91% 15,105
------------------------------------------------------------------
Crixas Q1 2012 50 282 3.82 91% 15,889
(13) Q4 2011 50 302 4.58 93% 20,781
Q3 2011 50 300 3.49 92% 15,551
Q2 2011 50 312 3.35 93% 15,438
----------------------------------------------------------------------------
Q2 2012 100 1,256 0.72 77% 36,113
------------------------------------------------------------------
La Q1 2012 100 1,467 0.56 78% 37,740
Coipa Q4 2011 100 1,060 0.58 85% 34,435
(5) Q3 2011 100 1,011 0.70 76% 38,539
Q2 2011 100 1,131 0.72 81% 50,867
----------------------------------------------------------------------------
Q2 2012 100 3,487 0.65 nm 60,841
------------------------------------------------------------------
Q1 2012 100 4,014 0.66 nm 63,989
Maricunga Q4 2011 100 3,960 0.76 nm 54,281
Q3 2011 100 3,284 0.80 nm 53,123
Q2 2011 100 4,023 0.86 nm 70,105
----------------------------------------------------------------------------
West Africa
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q2 2012 100 5,133 1.74 86% 49,807
------------------------------------------------------------------
Tasiast Q1 2012 100 1,597 1.71 89% 37,634
(10) Q4 2011 100 4,581 2.33 88% 54,874
Q3 2011 100 2,679 2.05 87% 47,175
Q2 2011 100 1,990 1.60 91% 47,249
----------------------------------------------------------------------------
Q2 2012 90 802 2.70 92% 63,660
------------------------------------------------------------------
Chirano Q1 2012 90 854 2.97 93% 75,906
- 100% Q4 2011 90 917 2.70 93% 73,539
Q3 2011 90 949 2.45 91% 68,372
Q2 2011 90 858 2.28 91% 57,898
----------------------------------------------------------------------------
Q2 2012 90 802 2.70 92% 57,294
------------------------------------------------------------------
Chirano Q1 2012 90 854 2.97 93% 68,315
(9) Q4 2011 90 917 2.70 93% 66,185
Q3 2011 90 949 2.45 91% 61,535
Q2 2011 90 858 2.28 91% 52,108
----------------------------------------------------------------------------
Operating Summary
----------------------------------------------------------------------------
Production
Gold Eq Production cost of
Sales costs of sales (12) /
Mine Period (11) sales (12) oz Cap Ex DD&A
----------------------------------------------------------------------------
($ ($
(ounces) ($ millions) ($/ounce) millions) millions)
----------------------------------------------------------------------------
North America
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q2 2012 71,978 $ 54.5 $ 757 $ 38.4 $ 11.3
------------------------------------------------------------------
Fort Q1 2012 60,365 52.0 861 24.8 9.1
Knox Q4 2011 69,973 52.3 747 28.4 10.0
(3) Q3 2011 75,611 53.8 712 26.8 15.4
Q2 2011 77,269 52.4 678 26.2 17.2
----------------------------------------------------------------------------
Q2 2012 52,433 34.7 662 19.3 8.4
------------------------------------------------------------------
Round Q1 2012 43,551 37.3 856 13.6 7.8
Mountain Q4 2011 44,231 26.4 597 22.2 6.1
(4) Q3 2011 52,658 35.2 668 9.6 8.8
Q2 2011 46,941 34.7 739 7.9 7.2
----------------------------------------------------------------------------
Q2 2012 40,354 20.5 508 3.2 18.2
------------------------------------------------------------------
Kettle Q1 2012 39,321 18.9 481 0.5 18.9
River Q4 2011 43,089 19.2 446 3.0 21.6
Q3 2011 42,109 19.5 463 3.9 17.5
Q2 2011 45,442 18.3 403 3.4 20.0
----------------------------------------------------------------------------
Russia
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q2 2012 156,716 73.2 467 12.3 29.4
------------------------------------------------------------------
Kupol - Q1 2012 126,735 61.2 483 10.4 23.6
100% Q4 2011 113,936 54.8 481 18.5 21.3
(6) Q3 2011 138,278 58.4 422 8.0 25.7
Q2 2011 199,773 69.1 346 16.1 37.0
----------------------------------------------------------------------------
Q2 2012 156,716 73.2 467 12.3 29.4
------------------------------------------------------------------
Kupol Q1 2012 126,735 61.2 483 10.4 23.6
(6)(7) Q4 2011 113,936 54.8 481 18.5 21.3
(8) Q3 2011 138,278 58.4 422 8.0 25.7
Q2 2011 186,805 65.0 348 15.2 35.4
----------------------------------------------------------------------------
South America
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q2 2012 118,389 108.2 914 67.2 19.2
------------------------------------------------------------------
Q1 2012 110,527 105.4 954 74.6 14.6
Paracatu Q4 2011 112,048 82.6 737 131.6 15.1
Q3 2011 133,827 89.7 670 105.9 16.9
Q2 2011 95,773 77.1 805 65.2 14.3
----------------------------------------------------------------------------
Q2 2012 15,611 13.6 871 3.6 4.9
------------------------------------------------------------------
Crixas Q1 2012 17,153 13.8 805 3.8 4.0
(13) Q4 2011 17,379 11.3 650 7.1 3.6
Q3 2011 16,594 15.3 922 5.4 3.7
Q2 2011 16,165 13.6 841 6.9 3.6
----------------------------------------------------------------------------
Q2 2012 30,325 35.7 1,177 22.2 6.2
------------------------------------------------------------------
La Q1 2012 43,712 44.5 1,018 15.3 4.5
Coipa Q4 2011 35,629 35.4 994 23.2 3.3
(5) Q3 2011 35,566 32.1 903 17.4 6.6
Q2 2011 56,906 40.5 712 15.3 8.1
----------------------------------------------------------------------------
Q2 2012 61,367 44.5 725 50.7 5.5
------------------------------------------------------------------
Q1 2012 69,063 43.7 633 35.6 6.3
Maricunga Q4 2011 52,987 22.2 419 34.0 4.8
Q3 2011 58,591 30.2 515 29.9 5.5
Q2 2011 63,407 26.2 413 44.3 7.1
----------------------------------------------------------------------------
West Africa
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q2 2012 46,296 44.5 961 124.3 19.9
------------------------------------------------------------------
Tasiast Q1 2012 40,827 35.9 879 260.0 13.8
(10) Q4 2011 50,800 37.2 732 204.6 14.8
Q3 2011 48,455 40.8 842 88.3 18.4
Q2 2011 46,213 33.6 727 92.1 14.5
----------------------------------------------------------------------------
Q2 2012 62,978 49.1 780 20.6 36.9
------------------------------------------------------------------
Chirano Q1 2012 78,251 53.7 686 22.5 41.8
- 100% Q4 2011 67,876 45.3 667 28.6 28.4
Q3 2011 68,697 50.5 735 19.5 23.6
Q2 2011 56,558 37.1 656 29.0 19.3
----------------------------------------------------------------------------
Q2 2012 56,680 44.2 780 18.5 33.2
------------------------------------------------------------------
Chirano Q1 2012 70,426 48.3 686 20.3 37.6
(9) Q4 2011 61,086 40.8 667 25.7 25.6
Q3 2011 61,828 45.5 735 17.6 21.2
Q2 2011 50,902 33.4 656 26.1 17.4
----------------------------------------------------------------------------
(1) Ore processed is to 100%, production and costs are to Kinross' account.
(2) Due to the nature of heap leach operations, recovery rates at Maricunga
cannot be accurately measured on a quarterly basis. Recovery rates at
Fort Knox, Round Mountain and Tasiast represent mill recovery only.
(3) Includes 9,632,000 tonnes placed on the heap leach pad during the
second quarter of 2012, and 10,547,000 tonnes for the first six months
of 2012. Grade and recovery represent mill processing only. Ore placed
on the heap leach pad had an average grade of 0.33 grams per tonne for
both the three and six months ended June 30, 2012.
(4) Includes 3,752,000 tonnes placed on the heap leach pad during the
second quarter of 2012, and 8,062,000 tonnes for the first six months
of 2012. The presentation has been amended to reflect mill grade and
recovery only, with heap leach grade disclosed separately, rather than
a blended rate for mill and heap leach grades. Ore placed on the heap
leach pad had an average grade of 0.43 grams per tonne for the second
quarter of 2012, and 0.45 tonnes for the first six months of 2012. In
addition, the presentation has been amended to exclude tonnes
transferred between heap leach pads.
(5) La Coipa silver grade and recovery were as follows: Q2 (2012) 42.04
g/t, 46%; Q1 (2012) 38.78 g/t, 51%; Q4 (2011) 56.82 g/t, 54%; Q3 (2011)
65.00 g/t, 43%; Q2 (2011) 58.85 g/t, 55%
(6) The Kupol segment excludes Dvoinoye capital expenditures.
(7) Kupol silver grade and recovery were as follows: Q2 (2012) 187.49 g/t,
87%; Q1 (2012) 171.8 g/t, 85%; Q4 (2011) 170.52 g/t,85%; Q3 (2011)
159.03 g/t, 82%; Q2 (2011) 215.21 g/t, 84%
(8) On April 27, 2011, Kinross acquired the remaining 25% of CM GC, and
thereby obtained 100% ownership of Kupol. As such, the results up to
April 27, 2011 reflect 75% and results thereafter reflect 100%.
(9) Includes Kinross' share of Chirano at 90%.
(10) Includes 4,477,000 tonnes placed on the heap leach pad during the
second quarter of 2012, and 5,480,000 tonnes for the first six months
of 2012. Grade and recovery represent mill processing only. Ore placed
on the heap leach pad had an average grade of 0.47 grams per tonne for
the second quarter of 2012, and 0.49 grams per tonne for the first six
months of 2012.
(11) 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 2012: 54.77:1, Q1 2012: 51.82:1,
Q4 2011: 52.64:1, Q3 2011: 43.87:1, Q2 2011: 39.67:1.
(12) "Production cost of sales" is equivalent to "Total cost of sales" per
the consolidated financial statements less depreciation, depletion and
amortization and impairment charges.
(13) On June 28, 2012, the Company completed the sale of its 50% interest in
the Crixas gold mine.
Contacts:
Media Contact
Kinross Gold Corporation
Steve Mitchell
Vice-President, Corporate Communications
416-365-2726
steve.mitchell@kinross.com
Investor Relations Contact
Kinross Gold Corporation
Erwyn Naidoo
Vice-President, Investor Relations
416-365-2744
erwyn.naidoo@kinross.com