Kinross reports 2017 second-quarter results
(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 19 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
2017 second-quarter highlights:
- Production1: 694,874 gold equivalent ounces (Au eq. oz.), compared with 671,267 Au eq. oz. in Q2 2016.
- Revenue: $868.6 million, compared with $876.4 million in Q2 2016.
- Production cost of sales2: $660 per Au eq. oz., compared with $731 in Q2 2016.
- All-in sustaining cost2: $910 per Au eq. oz. sold, compared with $988 in Q2 2016. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $901 in Q2 2017, compared with $976 in Q2 2016.
- Operating cash flow: $179.7 million, compared with $315.9 million in Q2 2016.
- Adjusted operating cash flow2: $230.8 million for Q2 2017, an increase of 23% compared with $187.2 million for Q2 2016.
- Adjusted net earnings (loss)2,3: $54.9 million, or $0.04 per share, compared with adjusted net loss of $9.8 million, or $0.01 per share, in Q2 2016.
- Reported net earnings (loss)3: Net earnings increased to $33.1 million, or $0.03 per share, compared with a net loss of $25.0 million, or $0.02 per share, in Q2 2016, mainly due to a decrease in production cost of sales.
- Organic development projects:
- The Tasiast Phase One expansion continues to advance on time and on budget and is expected to reach full commercial production in Q2 2018. Plant construction is now 55% complete.
- The Tasiast Phase Two and Round Mountain Phase W feasibility studies are on schedule to be completed in September. The Company expects to make a development decision on both projects at that time.
- At Bald Mountain, engineering work at the Vantage Complex in the South area is progressing on schedule.
- In Russia, the Company has started processing ore from the September Northeast satellite deposit near Dvoinoye, while at Moroshka, decline development is on schedule, with construction of surface infrastructure now complete.
- Outlook: Kinross expects to be within its 2017 guidance for production (2.5 – 2.7 million Au eq. oz.), production cost of sales ($660 – $720 per Au eq. oz.) and all-in sustaining cost ($925 – $1,025 per Au eq. oz.). The Company expects to be within its capital expenditures guidance of $900 million (+/- 5%).
- Debt offering: On July 6, 2017, Kinross closed its offering of debt securities, consisting of $500.0 million principal amount of 4.50% Senior Notes due 2027. The Company used the net proceeds, along with available cash on hand, to repay its term loan, which was due August 2020.
- Balance sheet: As of June 30, 2017, Kinross had cash and cash equivalents of $1,061.3 million, and available credit of $1,433.1 million, for total liquidity of approximately $2.5 billion. The Company has no scheduled debt repayments until 2021.
1 Unless otherwise stated, production figures in this news release are based on Kinross' 90% share of Chirano production.
2 These figures are non-GAAP financial measures and are defined and reconciled on pages 14 to 18 of this news release.
3 Net earnings/loss figures in this release represent "net earnings (loss) attributable to common shareholders".
J. Paul Rollinson, President and CEO, made the following comments in relation to 2017 second-quarter results:
"We delivered another quarter of strong and consistent operational results, as our portfolio of mines achieved production targets, lowered costs, and generated strong cash flows.
"Our organic development projects are advancing well, and we expect to complete feasibility studies and make a development decision on the Tasiast Phase Two and Round Mountain Phase W expansion projects in September. The Tasiast Phase One expansion project is proceeding as planned and is expected to reach full commercial production in Q2 2018. Our projects in Russia have progressed well, with ore from the September Northeast deposit now being processed at the Kupol mill. We continue to advance Bald Mountain expansion opportunities and expect production to double this year compared with 2016.
"The $500 million debt financing we completed in July enhances our financial flexibility, strengthens our balance sheet, and leaves no debt maturities until 2021.
"We are once again on track to meet our annual company-wide guidance for production and costs, and Kinross remains strongly positioned to continue delivering value for our shareholders."
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