Kinross Gold Corp 6-K, filed May 11, 2021
Kinross Gold Corp (KGC)
6-K
2021-05-11
For: 2021-03-31
View Original
Added on
April 12, 2026
About this 6-K
Kinross Gold Corp filed this 6-K on May 11, 2021.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March, 2021
Commission File Number: 001-13382
KINROSS GOLD CORPORATION
(Translation of registrant's name into English)
17th Floor, 25 York Street
Toronto, Ontario M5J 2V5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F □ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):_____
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):_____
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private
issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's "home country"), or under the rules of the home country exchange on which the
registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the
subject of a Form 6-K submission or other Commission filing on EDGAR.
This Current Report on Form 6-K, dated May 11, 2021, is specifically incorporated by reference into Kinross Gold Corporation's Registration Statements on Form S-8 (Registration Nos. 333-180822, 333-180823, 333-180824),
filed on April 19, 2012 and (Registration No. 333-217099) filed on April 3, 2017, and on Form F-10 (Registration No. 333-239219) filed on June 16, 2020, as amended.
This report on Form 6-K is being furnished for the sole purpose of providing a copy of the Unaudited Interim Condensed Consolidated Financial Statements and Management’s Discussion and Analysis for the period ended March 31, 2021.
INDEX
Table of Contents
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SIGNATURES
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EXHIBIT INDEX
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99.1
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First Quarter Unaudited Interim Condensed Consolidated Financial Statements and Management’s Discussion and Analysis for the period ended March 31, 2021
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99.2
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CEO Certification of interim filings for the period ended March 31, 2021
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99.3
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CFO Certification of interim filings for the period ended March 31, 2021
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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KINROSS GOLD CORPORATION
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Signed:
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/s/ David Maude
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Vice-President, Finance
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May 11, 2021
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KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
This management's discussion and analysis ("MD&A"), prepared as of May 11, 2021, relates to the financial condition and results of
operations of Kinross Gold Corporation together with its wholly owned subsidiaries, as at March 31, 2021 and for the three months then ended, and is intended to supplement and complement Kinross Gold Corporation’s unaudited interim condensed
consolidated financial statements for the three months ended March 31, 2021 and the notes thereto (the "interim financial statements"). Readers are cautioned that the MD&A contains forward-looking statements about expected future events and
financial and operating performance of the Company, and that actual events may vary from management's expectations. Readers are encouraged to read the Cautionary Statement on Forward Looking Information included with this MD&A and to consult
Kinross Gold Corporation's annual audited consolidated financial statements for 2020 and corresponding notes to the financial statements which are available on the Company's web site at www.kinross.com and on www.sedar.com. The
interim financial statements and MD&A are presented in U.S. dollars. The interim financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting". This discussion addresses matters we
consider important for an understanding of our financial condition and results of operations as at and for the three months ended March 31, 2021, as well as our outlook.
This MD&A contains forward-looking statements and should be read in conjunction with the risk factors described in "Risk Analysis"
and in the "Cautionary Statement on Forward-Looking Information" on pages 33 – 34 of this MD&A. In certain instances, references are made to relevant notes in the interim financial statements for additional information.
Where we say "we", "us", "our", the "Company" or "Kinross", we mean Kinross Gold Corporation or Kinross Gold Corporation and/or one or
more or all of its subsidiaries, as it may apply. Where we refer to the "industry", we mean the gold mining industry.
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1.
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DESCRIPTION OF THE BUSINESS
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Kinross is engaged in gold mining and related activities, including exploration and acquisition of gold-bearing properties, the extraction and processing
of gold-containing ore, and reclamation of gold mining properties. Kinross’ gold production and exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania. Gold is
produced in the form of doré, which is shipped to refineries for final processing. Kinross also produces and sells a quantity of silver.
The profitability and operating cash flow of Kinross are affected by various factors, including the amount of gold and silver produced, the market prices of
gold and silver, operating costs, interest rates, regulatory and environmental compliance, the level of exploration activity and capital expenditures, general and administrative costs, and other discretionary costs and activities. Kinross is also
exposed to fluctuations in currency exchange rates, political risks, and varying levels of taxation that can impact profitability and cash flow. Many of these factors have been or may be influenced by the continued economic and business uncertainties
caused by the COVID-19 pandemic. Kinross seeks to manage the risks associated with its business operations; however, many of the factors affecting these risks are beyond the Company’s control.
Commodity prices continue to be volatile as economies around the world continue to experience economic challenges along with political changes and
uncertainties, including as a result of the impacts of the COVID-19 pandemic. Volatility in the price of gold and silver impacts the Company's revenue, while volatility in the price of input costs, such as oil, and foreign exchange rates,
particularly the Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi, and Canadian dollar, may have an impact on the Company's operating costs and capital expenditures.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Consolidated Financial and Operating Highlights
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Three months ended March 31,
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||||||||||||||||
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(in millions, except ounces, per share amounts and per ounce amounts)
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2021
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2020
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Change
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% Change
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||||||||||||
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Operating Highlights
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Total gold equivalent ounces(a)
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Produced(c)
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563,166
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571,773
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(8,607
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)
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(2%
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)
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Sold(c)
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552,198
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556,676
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(4,478
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)
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(1%
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)
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Attributable gold equivalent ounces(a)
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Produced(c)
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558,777
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567,327
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(8,550
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)
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(2%
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)
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Sold(c)
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548,084
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552,742
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(4,658
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)
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(1%
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)
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Financial Highlights
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Metal sales
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$
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986.5
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$
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879.8
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$
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106.7
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12%
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Production cost of sales
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$
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419.9
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$
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421.3
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$
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(1.4
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)
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(0%
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)
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Depreciation, depletion and amortization
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$
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207.0
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$
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193.1
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$
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13.9
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7%
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Operating earnings
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$
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242.3
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$
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192.6
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$
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49.7
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26%
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Net earnings attributable to common shareholders
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$
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149.5
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$
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122.7
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$
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26.8
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22%
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Basic earnings per share attributable to common shareholders
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$
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0.12
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$
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0.10
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$
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0.02
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20%
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Diluted earnings per share attributable to common shareholders
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$
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0.12
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$
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0.10
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$
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0.02
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20%
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Adjusted net earnings attributable to common shareholders(b)
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$
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192.8
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$
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127.4
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$
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65.4
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51%
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Adjusted net earnings per share(b)
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$
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0.15
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$
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0.10
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$
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0.05
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50%
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Net cash flow provided from operating activities
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$
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279.8
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$
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299.6
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$
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(19.8
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)
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(7%
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)
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Adjusted operating cash flow(b)
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$
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399.6
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$
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418.6
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$
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(19.0
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)
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(5%
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)
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Capital expenditures(d)
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$
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204.2
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$
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191.4
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$
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12.8
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7%
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Free cash flow(b)
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$
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75.6
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$
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108.2
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$
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(32.6
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)
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(30%
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)
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Average realized gold price per ounce(b)
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$
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1,787
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$
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1,581
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$
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206
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13%
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Consolidated production cost of sales per equivalent ounce(c) sold(b)
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$
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760
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$
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757
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$
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3
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0%
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Attributable(a) production cost of sales per equivalent ounce(c) sold(b)
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$
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756
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$
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754
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$
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2
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0%
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Attributable(a) production cost of sales per ounce sold on a by-product basis(b)
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$
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728
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$
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738
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$
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(10
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)
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(1%
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Attributable(a) all-in sustaining cost per ounce sold on a by-product basis(b)
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$
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953
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$
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982
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$
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(29
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)
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(3%
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)
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Attributable(a) all-in sustaining cost per equivalent ounce(c) sold(b)
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$
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975
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$
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993
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$
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(18
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)
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(2%
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)
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Attributable(a) all-in cost per ounce sold on a by-product basis(b)
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$
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1,279
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$
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1,245
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$
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34
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3%
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Attributable(a) all-in cost per equivalent ounce(c) sold(b)
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$
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1,292
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$
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1,251
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$
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41
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3%
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(a)
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"Total" includes 100% of Chirano
production. "Attributable" includes Kinross' share of Chirano (90%) production and costs, and Manh Choh (formerly known as the Peak project) (70%) costs.
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(b)
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The definition and reconciliation of these non-GAAP financial measures is included in
Section 11.
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(c)
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"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 first quarter of 2021 was 68.33:1 (first quarter of 2020 - 93.63:1).
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(d)
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"Capital expenditures" is as reported as "Additions to property,
plant and equipment" on the interim condensed consolidated statement of cash flows.
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KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Consolidated Financial Performance
First quarter 2021 vs. First quarter 2020
Kinross’ attributable production decreased by 2% compared to the first quarter of 2020, primarily due to lower production at Tasiast largely due to the decrease in grade and at
Round Mountain due to lower recoveries from the heap leach pads and a decrease in mill grades. These decreases were partially offset by higher production at Bald Mountain due to the timing of ounces recovered from the heap leach pads.
Metal sales increased by 12% compared to the first quarter of 2020 due to an increase in average realized gold price, partially offset by a decrease in gold equivalent ounces
sold. The average realized gold price increased to $1,787 per ounce in the first quarter of 2021 from $1,581 per ounce in the same period in 2020. Total gold equivalent ounces sold decreased to 552,198 ounces in the first quarter of 2021 compared to
556,676 ounces in the first quarter of 2020, primarily due to the decreases in production as described above.
Production cost of sales in the first quarter of 2021 was comparable to the first quarter of 2020, with lower operating waste mined at Fort Knox and favourable foreign exchange
movements at Paracatu largely offset by increases at Round Mountain due to higher operating waste mined and royalties, and at Chirano due to an increase in ounces sold and higher maintenance and milling costs.
Attributable production cost of sales per equivalent ounce sold and per ounce sold on a by-product basis in the first quarter of 2021 were comparable to the same period in 2020.
In the first quarter of 2021, depreciation, depletion and amortization increased by 7% compared to the same period in 2020, mainly due to the increase in depreciable asset
base and higher gold equivalent ounces sold at Bald Mountain, and increases in depreciable asset bases at Tasiast and Chirano, largely related to reversals of property, plant and equipment impairments at the end of 2020. These increases were
partially offset by a decrease at Kupol due to a decrease in the depreciable asset base related to the completion of mining activities at Dvoinoye in the fourth quarter of 2020.
Operating earnings increased to $242.3 million in the first quarter of 2021 from $192.6 million in the same period in 2020. This increase was primarily due to an increase in
margins (metal sales less production cost of sales), partially offset by the increase in depreciation, depletion and amortization, as described above.
In the first quarter of 2021, the Company recorded a tax expense of $77.9 million, compared to a tax expense of $45.0 million in the first quarter of 2020. The $77.9 million
tax expense recognized in the first quarter of 2021 included $7.4 million of deferred tax expense, compared to $26.3 million in the first quarter of 2020, resulting from the net foreign currency translation of tax deductions related to the Company’s
operations in Brazil and Russia. In the first quarter of 2020 the Company recorded a net tax benefit of $20.4 million related to the enactment of the U.S. CARES Act in March 2020. In addition, income tax expense increased in the first quarter of 2021
compared to the first quarter of 2020, due to differences in the level of income in the Company’s operating jurisdictions. Kinross' combined federal and provincial statutory tax rate for the first quarters of both 2021 and 2020 was 26.5%.
Net earnings attributable to common shareholders in the first quarter of 2021 were $149.5 million, or $0.12 per share, compared to $122.7 million, or $0.10 per share, in the
same period in 2020. The increase was primarily a result of the increase in operating earnings as described above, partially offset by the increase in income tax expense in the first quarter of 2021.
Adjusted net earnings attributable to common shareholders in the first quarter of 2021 were $192.8 million, or $0.15 per share, compared to adjusted net earnings attributable
to common shareholders of $127.4 million, or $0.10 per share, for the same period in 2020. The increase in adjusted net earnings was primarily due to the increase in margins, as described above.
Net cash flow provided from operating activities decreased to $279.8 million in the first quarter of 2021 from $299.6 million in the first quarter of 2020,
primarily due to higher taxes paid, offset by increased operating earnings.
In the first quarter of 2021, adjusted operating cash flow decreased to $399.6 million from $418.6 million in the same period of 2020, primarily due to an increase in current
tax expense, offset by increased operating earnings.
Capital expenditures increased to $204.2 million compared to $191.4 million in the first quarter of 2020, primarily due to increased spending on development
at La Coipa, and the Lobo-Marte and Udinsk projects, partially offset by decreased capital development activities at Bald Mountain and Round Mountain.
Free cash flow decreased to $75.6 million in the first quarter of 2021, compared with $108.2 million in the same period of 2020, due to the increases in income taxes paid and
capital expenditures, partially offset by increased margins.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
In the first quarter of 2021, attributable all-in sustaining cost per equivalent ounce sold and per ounce sold on a by-product basis decreased by 2% and 3%, respectively,
compared to the same period in 2020 primarily due to a decrease in sustaining capital expenditures. In the first quarter of 2021, attributable all-in cost per equivalent ounce sold and per ounce sold on a by-product basis both increased by 3%
compared to the same period in 2020 primarily due to the decrease in ounces sold.
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2.
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IMPACT OF KEY ECONOMIC TRENDS AND THE COVID-19 PANDEMIC
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Kinross’ 2020 annual MD&A contains a discussion of key economic trends that affect the Company and its financial statements. Please refer to the
MD&A for the year ended December 31, 2020, which is available on the Company's website www.kinross.com and on www.sedar.com or is available upon request from the Company. Included in this MD&A is an update reflecting
significant changes since the preparation of the 2020 annual MD&A.
COVID-19 Pandemic
Kinross’ protocols and contingency plans, which the Company began implementing in late January 2020, have mitigated impacts of the COVID-19 pandemic to its
global portfolio. All of Kinross’ mines continued production during the quarter, as the Company’s ongoing response to the pandemic continued to maintain the safety of its global workforce and host communities while mitigating operational impacts.
However, the pandemic continued to affect overall performance, productivity rates and costs, mainly as a result of global travel constraints and the implementation of rigorous safety protocols and measures at all mines and projects.
Price of Gold
The price of gold is the largest single factor in determining profitability and cash flow from operations, therefore, the financial performance of the
Company has been, and is expected to continue to be, closely linked to the price of gold. During the first quarter of 2021, the average price of gold was $1,794 per ounce, with gold trading between $1,684 and $1,943 per ounce based on the London PM
Fix gold price. This compares to an average of $1,583 per ounce during the first quarter of 2020, with a low of $1,474 and a high of $1,683 per ounce. During the first quarter of 2021, Kinross realized an average price of $1,787 per ounce compared to
$1,581 per ounce for the same period in 2020.
Cost Sensitivity
The Company’s profitability is subject to industry-wide cost pressures on development and operating costs with respect to labour, energy, capital
expenditures and consumables in general. Since mining is generally an energy intensive activity, especially in open pit mining, energy prices can have a significant impact on operations.
The cost of fuel as a percentage of operating costs varies amongst the Company’s mines, and overall, operations have experienced fuel price increases in the
first quarter of 2021, compared to the first quarter of 2020, as global fuel supply and demand continued to move towards an equilibrium. Kinross manages its exposure to energy costs by entering, from time to time, into various hedge positions – refer
to Section 6 - Liquidity and Capital Resources for details.
Currency Fluctuations
At the Company’s non-U.S. mining operations and exploration activities, which are primarily located in Brazil, Chile, the Russian Federation, Ghana,
Mauritania, and Canada, a portion of operating costs and capital expenditures are denominated in their respective local currencies. Generally, as the U.S. dollar strengthens, these currencies weaken, and as the U.S. dollar weakens, these foreign
currencies strengthen. During the first quarter of 2021, the U.S. dollar, on average, was stronger relative to the Brazilian real, Ghanaian cedi and Russian rouble and was weaker compared to the Chilean peso, Mauritanian ouguiya, and Canadian dollar,
compared to the same period in 2020. As at March 31, 2021, the U.S. dollar was stronger compared to the December 31, 2020 spot exchange rates of the Brazilian real, Chilean peso and Russian rouble and was weaker compared to the December 31, 2020 spot
exchange rates of the Canadian dollar, Ghanaian cedi and Mauritanian ouguiya. In order to manage this risk, the Company uses currency hedges for certain foreign currency exposures – refer to Section 6 - Liquidity
and Capital Resources for details.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
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3.
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OUTLOOK
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The following section of this MD&A 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 pages 33 – 34 of this MD&A.
Unless otherwise stated, production, production cost of sales per gold equivalent ounce sold, all-in sustaining cost per gold equivalent
ounce in this Outlook section include only Kinross' share of Chirano (90%) production and costs, and Manh Choh (70%) costs. The definitions of these non-GAAP measures are included in Section 11 of this MD&A.
Operational Outlook
The Company is on track to meet its 2021 production guidance of 2.4 million gold equivalent ounces (+/- 5%). Production is expected to increase quarter-over-quarter in 2021,
largely driven by anticipated higher production at Paracatu, and expected higher production in the fourth quarter at Tasiast.
The Company is also on track to meet its 2021 guidance for production cost of sales per gold equivalent ounce sold of $790 (+/- 5%), all-in sustaining cost per gold equivalent
ounce sold of $1,025 (+/-5%) and capital expenditures of $900 million (+/-5%). Cost of sales is expected to increase through the year as a result of planned increases in operating waste mined.
In 2022 and 2023, consistent with the three-year guidance the Company provided in October 2020, annual production is expected to increase to approximately 2.7 million gold
equivalent ounces (+/- 5%) and 2.9 million gold equivalent ounces (+/- 5%), respectively. The Company also expects to produce an average of 2.5 million gold equivalent ounces, per year through the end of the decade.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
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4.
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PROJECT UPDATES AND NEW DEVELOPMENTS
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Tasiast 24k
The Tasiast 24k project remains on budget and on schedule to increase throughput capacity to 21,000 tonnes per day ("t/d") by the end of 2021, and then
to 24,000 t/d by mid-2023. The first phase of the project is now 80% complete. Power plant construction is advancing well and is now 80% complete, with commissioning expected to commence shortly. The new leach tank has been assembled and the
thickener is now mechanically complete.
Chulbatkan – Udinsk
Kinross continues to make good progress at Udinsk, the first project that is expected to be developed on the Chulbatkan license. The project’s
pre-feasibility study is on track to be completed in the fourth quarter of 2021 and is focusing on fast-tracking construction. First production is anticipated to occur in 2025.
Exploration activities on the larger Chulbatkan license that were planned for 2021 have commenced, with drilling focused on new targets showing soil and
geophysics anomalies near the Udinsk resource pit to the northeast and southwest.
Alaska projects
The "Peak" project, which was formally re-named "Manh Choh", continued to advance well during the quarter. The Athabascan name of "Manh Choh" (meaning
"Big Lake") has considerable cultural significance to the local community and was chosen for the project after close consultation with the Upper Tanana Athabascan Village of Tetlin.
The project’s scoping study remains on schedule to be completed by the end of the second quarter of 2021, with infill, metallurgical and geotechnical
drilling now complete. Engineering, environmental studies for permitting, and community engagement initiatives are all progressing well. The Manh Choh feasibility study is expected to be completed by the end of 2022 and first production is expected
in 2024.
The Company has also commenced development of the Gil satellite pits, which are located approximately 13 kilometres east of Fort Knox. The Gil pits
are expected to produce approximately 160,000 gold equivalent ounces over a two year mine life at an estimated average production cost of sales of approximately $920 per gold equivalent ounce sold, with expected average mining grades of 0.8 grams
per tonne1. Production is scheduled to commence in the fourth quarter of 20211. Initial non-sustaining capital and sustaining capital expenditures are expected to be approximately $30 million and $10 million, respectively1.
The Company plans to haul Gil ore to the Fort Knox mill for processing using the mine’s existing road network.
La Coipa Restart and Lobo-Marte
The La Coipa Restart project is on schedule to commence production in mid-2022 and continues to progress well, with pre-stripping now ramped up after commencing in January
2021. Fleet refurbishments are expected to be completed during the second quarter of 2021, with plant refurbishments and mine road construction advancing as planned. Work on studies to incorporate adjacent deposits into La Coipa’s mine plan to
potentially extend mine life is proceeding well. The Company is also evaluating the option of sourcing renewable power for the project.
The Lobo-Marte feasibility study is advancing on schedule and is expected to be completed in the fourth quarter of 2021. Kinross is targeting to commence production in
2027 subject to permitting and after the completion of mining at La Coipa, with construction potentially starting in 2025. Kinross continues to believe that Lobo-Marte has the potential to be a long-life, cornerstone asset with attractive costs.
Agreement in principle with Government of Mauritania
On June 15, 2020, Kinross reached an agreement in principle with the Government of Mauritania to resolve outstanding matters between the parties. The terms are subject to
finalizing definitive agreements and provide Kinross with a 30-year exploitation license for Tasiast Sud, with expedited permitting and the possibility of early mining. The terms also provide for the reinstatement of a tax exemption on fuel duties
and repayment by the Government of Mauritania to Kinross of outstanding value added tax (“VAT”) refunds. Kinross also volunteered to update the royalty structure for Tasiast so it is tied to the gold price, is in line with Mauritania’s current
mining conventions and codes, and further aligns interests by ensuring the country receives an appropriate share of economic benefits from the Tasiast mine. Preparation of the definitive documentation is ongoing.
1 The estimates for the Gil satellite pits are based on a feasibility study mine plan optimized using a $1,200 per ounce gold price.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
|
5.
|
CONSOLIDATED RESULTS OF OPERATIONS
|
Operating Highlights
|
Three months ended March 31,
|
||||||||||||||||
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(in millions, except ounces and per ounce amounts)
|
2021
|
2020
|
Change
|
% Change
|
||||||||||||
|
Operating Statistics
|
||||||||||||||||
|
Total gold equivalent ounces(a)
|
||||||||||||||||
|
Produced(b)
|
563,166
|
571,773
|
(8,607
|
)
|
(2%
|
)
|
||||||||||
|
Sold(b)
|
552,198
|
556,676
|
(4,478
|
)
|
(1%
|
)
|
||||||||||
|
|
||||||||||||||||
|
Attributable gold equivalent ounces(a)
|
||||||||||||||||
|
Produced(b)
|
558,777
|
567,327
|
(8,550
|
)
|
(2%
|
)
|
||||||||||
|
Sold(b)
|
548,084
|
552,742
|
(4,658
|
)
|
(1%
|
)
|
||||||||||
|
Gold ounces - sold
|
537,314
|
545,967
|
(8,653
|
)
|
(2%
|
)
|
||||||||||
|
Silver ounces - sold (000's)
|
1,017
|
1,003
|
14
|
1%
|
|
|||||||||||
|
Average realized gold price per ounce(c)
|
$
|
1,787
|
$
|
1,581
|
$
|
206
|
13%
|
|
||||||||
|
Financial data
|
||||||||||||||||
|
Metal sales
|
$
|
986.5
|
$
|
879.8
|
$
|
106.7
|
12%
|
|
||||||||
|
Production cost of sales
|
$
|
419.9
|
$
|
421.3
|
$
|
(1.4
|
)
|
(0%
|
)
|
|||||||
|
Depreciation, depletion and amortization
|
$
|
207.0
|
$
|
193.1
|
$
|
13.9
|
7%
|
|
||||||||
|
Operating earnings
|
$
|
242.3
|
$
|
192.6
|
$
|
49.7
|
26%
|
|
||||||||
|
Net earnings attributable to common shareholders
|
$
|
149.5
|
$
|
122.7
|
$
|
26.8
|
22%
|
|
||||||||
|
(a)
|
"Total" includes 100% of Chirano
production. "Attributable" includes Kinross' share of Chirano (90%) production.
|
|
(b)
|
"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 first quarter of 2021 was 68.33:1 (first quarter of 2020 - 93.63:1).
|
|
(c)
|
"Average realized gold price per ounce" is a non-GAAP financial measure
and is defined in Section 11.
|
Operating Earnings (Loss) by Segment
|
Three months ended March 31,
|
||||||||||||||||
|
(in millions)
|
2021
|
2020
|
Change
|
% Change(c)
|
||||||||||||
|
Operating segments
|
||||||||||||||||
|
Fort Knox
|
$
|
17.9
|
$
|
(7.4
|
)
|
$
|
25.3
|
nm
|
||||||||
|
Round Mountain
|
47.3
|
66.7
|
(19.4
|
)
|
(29%
|
)
|
||||||||||
|
Bald Mountain
|
7.1
|
1.4
|
5.7
|
nm
|
||||||||||||
|
Paracatu
|
103.8
|
65.8
|
38.0
|
58%
|
|
|||||||||||
|
Kupol(a)
|
104.9
|
79.1
|
25.8
|
33%
|
|
|||||||||||
|
Tasiast
|
37.0
|
48.2
|
(11.2
|
)
|
(23%
|
)
|
||||||||||
|
Chirano
|
(1.6
|
)
|
(4.1
|
)
|
2.5
|
61%
|
|
|||||||||
|
Non-operating segment
|
||||||||||||||||
|
Corporate and other(b)
|
(74.1
|
)
|
(57.1
|
)
|
(17.0
|
)
|
(30%
|
)
|
||||||||
|
Total
|
$
|
242.3
|
$
|
192.6
|
$
|
49.7
|
26%
|
|
||||||||
|
(a)
|
The Kupol segment includes the Kupol and Dvoinoye mines. Mining activities at
Dvoinoye were completed in the fourth quarter of 2020.
|
|
(b)
|
"Corporate and other" includes operating costs which are not directly related to individual mining properties such as overhead expenses, gains and losses on disposal of assets and
investments, and other costs relating to corporate, shutdown, and other non-operating assets (including Chulbatkan, Kettle River-Buckhorn, La Coipa, Lobo-Marte, Maricunga and Manh Choh).
|
|
(c)
|
"nm" means not meaningful.
|
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Mining Operations
Fort Knox (100% ownership and operator) – USA
|
|
Three months ended March 31,
|
|||||||||||||||
|
|
2021
|
2020
|
Change
|
% Change(c)
|
||||||||||||
|
Operating Statistics
|
||||||||||||||||
|
Tonnes ore mined (000's)
|
8,174
|
6,795
|
1,379
|
20%
|
|
|||||||||||
|
Tonnes processed (000's)(a)
|
9,147
|
7,553
|
1,594
|
21%
|
|
|||||||||||
|
Grade (grams/tonne)(b)
|
0.57
|
0.60
|
(0.03
|
)
|
(5%
|
)
|
||||||||||
|
Recovery(b)
|
80.3%
|
|
80.0%
|
|
0.3%
|
|
0%
|
|
||||||||
|
Gold equivalent ounces:
|
||||||||||||||||
|
Produced
|
55,815
|
51,667
|
4,148
|
8%
|
|
|||||||||||
|
Sold
|
55,561
|
50,768
|
4,793
|
9%
|
|
|||||||||||
|
|
||||||||||||||||
|
Financial Data (in millions)
|
||||||||||||||||
|
Metal sales
|
$
|
98.5
|
$
|
80.3
|
$
|
18.2
|
23%
|
|
||||||||
|
Production cost of sales
|
57.7
|
64.6
|
(6.9
|
)
|
(11%
|
)
|
||||||||||
|
Depreciation, depletion and amortization
|
22.5
|
22.8
|
(0.3
|
)
|
(1%
|
)
|
||||||||||
|
|
18.3
|
(7.1
|
)
|
25.4
|
nm
|
|||||||||||
|
Other operating expense
|
0.3
|
0.3
|
-
|
0%
|
|
|||||||||||
|
Exploration and business development
|
0.1
|
-
|
0.1
|
nm
|
||||||||||||
|
Segment operating earnings (loss)
|
$
|
17.9
|
$
|
(7.4
|
)
|
$
|
25.3
|
nm
|
|
|||||||
|
(a)
|
Includes 7,396,000 tonnes placed on the heap leach pad during the first quarter of 2021 (first quarter of 2020
- 5,694,000 tonnes).
|
|
(b)
|
Amount represents mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.20
grams per tonne during the first quarter of 2021 (first quarter of 2020 - 0.23 grams per tonne). Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
|
|
(c)
|
"nm" means not meaningful.
|
First quarter 2021 vs. First quarter 2020
Tonnes of ore mined increased by 20% in the first quarter of 2021 largely due to planned mine sequencing. During the first quarter of 2021, mining
activities were primarily focused on mining a higher proportion of leachable ore from Phase 8 East. Tonnes of ore processed increased by 21%, compared to the first quarter of 2020, due to the increase in tonnes of ore mined and an increase in tonnes
placed on the new Barnes Creek heap leach facility, partially offset by a decrease in tonnes milled. Gold equivalent ounces produced and sold increased by 8% and 9%, respectively, compared to the first quarter of 2020, largely due to the timing of
ounces processed through the mill and an increase in ounces recovered from the heap leach pads, partially offset by a decrease in grades.
During the first quarter of 2021, metal sales increased by 23%, compared to the same period in 2020, due to the increase in gold equivalent ounces sold and
the increase in average metal prices realized. Production cost of sales decreased by 11% compared to the first quarter of 2020, primarily due to lower operating waste mined partially offset by the increase in gold equivalent ounces sold. During the
first quarter of 2021, depreciation, depletion, and amortization remained comparable to the same period in 2020, due to the increase in gold equivalent ounces sold offset by a higher proportion of depreciation allocated to capital development
activity related to Phase 9.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Round Montain (100% ownership and operator) – USA
|
Three months ended March 31,
|
||||||||||||||||
|
|
2021
|
2020
|
Change
|
% Change(c)
|
||||||||||||
|
Operating Statistics
|
||||||||||||||||
|
Tonnes ore mined (000's)
|
3,843
|
3,700
|
143
|
4%
|
|
|||||||||||
|
Tonnes processed (000's)(a)
|
4,995
|
4,548
|
447
|
10%
|
|
|||||||||||
|
Grade (grams/tonne)(b)
|
0.70
|
0.83
|
(0.13
|
)
|
(16%
|
)
|
||||||||||
|
Recovery(b)
|
80.9%
|
|
83.3%
|
|
(2.4%
|
)
|
(3%
|
)
|
||||||||
|
Gold equivalent ounces:
|
||||||||||||||||
|
Produced
|
74,286
|
84,465
|
(10,179
|
)
|
(12%
|
)
|
||||||||||
|
Sold
|
73,878
|
85,715
|
(11,837
|
)
|
(14%
|
)
|
||||||||||
|
Financial Data (in millions)
|
||||||||||||||||
|
Metal sales
|
$
|
131.6
|
$
|
135.7
|
$
|
(4.1
|
)
|
(3%
|
)
|
|||||||
|
Production cost of sales
|
63.1
|
56.1
|
7.0
|
12%
|
|
|||||||||||
|
Depreciation, depletion and amortization
|
17.0
|
12.6
|
4.4
|
35%
|
|
|||||||||||
|
|
51.5
|
67.0
|
(15.5
|
)
|
(23%
|
)
|
||||||||||
|
Other operating expense
|
3.8
|
-
|
3.8
|
nm
|
||||||||||||
|
Exploration and business development
|
0.4
|
0.3
|
0.1
|
33%
|
|
|||||||||||
|
Segment operating earnings
|
$
|
47.3
|
$
|
66.7
|
$
|
(19.4
|
)
|
(29%
|
)
|
|||||||
|
(a)
|
Includes 4,019,000 tonnes placed on the heap leach pads during the first quarter of 2021 (first quarter of 2020 – 3,594,000
tonnes).
|
|
(b)
|
Amount represents mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.46 grams per tonne during the first quarter of 2021 (first quarter of 2020 – 0.43
grams per tonne). Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
|
|
(c)
|
"nm" means not meaningful.
|
First quarter 2021 vs First quarter 2020
Tonnes of ore mined increased by 4%, compared to the first quarter of 2020, primarily due to a decrease in capital development
activity at Phase W. However, late in the first quarter of 2021, mining activities were impacted by precautionary measures taken after wall movements in the north wall of the pit were detected by the site’s comprehensive monitoring system. The site
deferred mining in the area, which delayed access to Phase W ore and affected production during the quarter. The site has accelerated dewatering in the area and is moving waste material to mitigate the issue and to enhance the stability of the wall.
A mine optimization program has also commenced, which is expected to be completed in the second quarter of 2022 and will evaluate opportunities for Phase S, the mine’s next planned pushback after Phase W. While production timing and mine sequencing
are expected to be impacted, including potentially deferring access to higher grade Phase W ore for approximately two years, Kinross does not anticipate this issue to impact the Company’s 2021 production and cost of sales guidance and its longer-term
production profile, or Round Mountain’s total life of mine production.
Tonnes of ore processed increased by 10%, compared to the first quarter of 2020, due to an increase in tonnes of ore placed on the heap leach pads. Mill
grades decreased by 16% compared to the first quarter of 2020, due to planned mine sequencing. Gold equivalent ounces produced and sold decreased by 12% and 14%, respectively, compared to the first quarter of 2020, due to a decrease in ounces
recovered from the heap leach pads and the lower mill grade.
Metal sales decreased by 3% in the first quarter of 2021 compared to the same period in 2020, due to the decrease in gold equivalent ounces sold, partially
offset by the increase in average metal prices realized. Production cost of sales increased by 12% compared to the first quarter of 2020, primarily due to higher operating waste mined and royalties, partially offset by the decrease in gold equivalent
ounces sold. Depreciation, depletion and amortization increased by 35% in the first quarter of 2021 compared to the same period in 2020, primarily due to an increase in the depreciable asset base, largely related to the completion of Phase W
construction, partially offset by the decrease in gold equivalent ounces sold. In the first quarter of 2021, other operating expense included $3.5 million of costs associated with stabilizing the north wall.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Bald Mountain (100% ownership and operator) – USA
|
Three months ended March 31,
|
||||||||||||||||
|
|
2021
|
2020
|
Change
|
% Change(b)
|
||||||||||||
|
Operating Statistics(a)
|
||||||||||||||||
|
Tonnes ore mined (000's)
|
2,025
|
3,254
|
(1,229
|
)
|
(38%
|
)
|
||||||||||
|
Tonnes processed (000's)
|
2,025
|
3,254
|
(1,229
|
)
|
(38%
|
)
|
||||||||||
|
Grade (grams/tonne)
|
0.48
|
0.55
|
(0.07
|
)
|
(13%
|
)
|
||||||||||
|
Gold equivalent ounces:
|
||||||||||||||||
|
Produced
|
51,408
|
42,087
|
9,321
|
22%
|
|
|||||||||||
|
Sold
|
48,250
|
42,376
|
5,874
|
14%
|
|
|||||||||||
|
Financial Data (in millions)
|
||||||||||||||||
|
Metal sales
|
$
|
85.8
|
$
|
66.9
|
$
|
18.9
|
28%
|
|
||||||||
|
Production cost of sales
|
37.0
|
35.7
|
1.3
|
4%
|
|
|||||||||||
|
Depreciation, depletion and amortization
|
40.2
|
26.7
|
13.5
|
51%
|
|
|||||||||||
|
|
8.6
|
4.5
|
4.1
|
91%
|
|
|||||||||||
|
Other operating expense
|
0.3
|
2.6
|
(2.3
|
)
|
(88%
|
)
|
||||||||||
|
Exploration and business development
|
1.2
|
0.5
|
0.7
|
140%
|
|
|||||||||||
|
Segment operating earnings
|
$
|
7.1
|
$
|
1.4
|
$
|
5.7
|
nm
|
|||||||||
|
(a)
|
Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
|
|
(b)
|
"nm" means not meaningful.
|
First quarter 2021 vs. First quarter 2020
In the first quarter of 2021, tonnes of ore mined and processed each decreased by 38% compared to the first quarter of 2020, due to planned mine sequencing,
as mining activities continue to be focused in the North Area with decreased mining activities in the South Area pits. Gold equivalent ounces produced and sold increased by 22% and 14%, respectively, compared to the first quarter of 2020, largely due
to the timing of ounces recovered from the heap leach pads.
In the first quarter of 2021, metal sales increased by 28% compared to the same period in 2020, due to the increases in average metal prices realized and
gold equivalent ounces sold. Production cost of sales increased by 4% compared to the first quarter of 2020, due to higher operating waste mined and the increase in gold equivalent ounces sold, partially offset by a decrease in contractor, fuel and
reagent costs. Depreciation, depletion and amortization increased by 51% compared to the first quarter of 2020, primarily due to an increase in the depreciable asset base and the increase in gold equivalent ounces sold.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Paracatu (100% ownership and operator) – Brazil
|
Three months ended March 31,
|
||||||||||||||||
|
|
2021
|
2020
|
Change
|
% Change(a)
|
||||||||||||
|
Operating Statistics
|
||||||||||||||||
|
Tonnes ore mined (000's)
|
12,612
|
12,350
|
262
|
2%
|
|
|||||||||||
|
Tonnes processed (000's)
|
15,372
|
13,224
|
2,148
|
16%
|
|
|||||||||||
|
Grade (grams/tonne)
|
0.38
|
0.39
|
(0.01
|
)
|
(3%
|
)
|
||||||||||
|
Recovery
|
75.2%
|
|
74.9%
|
|
0.3%
|
|
0%
|
|
||||||||
|
Gold equivalent ounces:
|
||||||||||||||||
|
Produced
|
126,547
|
124,367
|
2,180
|
2%
|
|
|||||||||||
|
Sold
|
126,811
|
121,197
|
5,614
|
5%
|
|
|||||||||||
|
Financial Data (in millions)
|
||||||||||||||||
|
Metal sales
|
$
|
225.8
|
$
|
191.8
|
$
|
34.0
|
18%
|
|
||||||||
|
Production cost of sales
|
82.8
|
87.5
|
(4.7
|
)
|
(5%
|
)
|
||||||||||
|
Depreciation, depletion and amortization
|
37.7
|
37.7
|
-
|
0%
|
|
|||||||||||
|
|
105.3
|
66.6
|
38.7
|
58%
|
|
|||||||||||
|
Other operating expense
|
1.4
|
0.8
|
0.6
|
75%
|
|
|||||||||||
|
Exploration and business development
|
0.1
|
-
|
0.1
|
nm
|
||||||||||||
|
Segment operating earnings
|
$
|
103.8
|
$
|
65.8
|
$
|
38.0
|
58%
|
|
||||||||
|
(a)
|
"nm" means not meaningful.
|
First quarter 2021 vs. First quarter 2020
Tonnes of ore mined increased by 2% compared to the first quarter of 2020, largely due to planned mine sequencing. Tonnes of ore processed increased by 16% compared to the first
quarter of 2020, mainly due to lower mill throughput in the first quarter of 2020 as a result of temporary downtime at the crusher. Grade decreased by 3% compared to the first quarter of 2020, due to planned mine sequencing. In the first quarter of
2021, gold equivalent ounces produced and sold increased by 2% and 5%, respectively, compared to the same period in 2020, primarily due to the increase in throughput, largely offset by the timing of ounces processed through the mill and the decrease
in grades. Gold equivalent ounces sold in the first quarter of 2021 were slightly higher than production due to timing of sales.
Metal sales increased by 18% compared to the first quarter of 2020, due to increases in average metal prices realized and gold equivalent ounces sold.
Production cost of sales decreased by 5% compared to the same period in 2020, largely due to favourable foreign exchange movements, partially offset by the increase in gold equivalent ounces sold. Depreciation, depletion and amortization was
consistent with the first quarter of 2020.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Kupol (100% ownership and operator) – Russian Federation(a)
|
Three months ended March 31,
|
||||||||||||||||
|
|
2021
|
2020
|
Change
|
% Change(d)
|
||||||||||||
|
Operating Statistics
|
||||||||||||||||
|
Tonnes ore mined (000's)(b)
|
312
|
500
|
(188
|
)
|
(38%
|
)
|
||||||||||
|
Tonnes processed (000's)
|
418
|
425
|
(7
|
)
|
(2%
|
)
|
||||||||||
|
Grade (grams/tonne):
|
||||||||||||||||
|
Gold
|
8.71
|
8.73
|
(0.02
|
)
|
(0%
|
)
|
||||||||||
|
Silver
|
69.95
|
62.70
|
7.25
|
12%
|
|
|||||||||||
|
Recovery:
|
||||||||||||||||
|
Gold
|
94.2%
|
|
94.5%
|
|
(0.3%
|
)
|
(0%
|
)
|
||||||||
|
Silver
|
82.6%
|
|
84.3%
|
|
(1.7%
|
)
|
(2%
|
)
|
||||||||
|
Gold equivalent ounces:(c)
|
||||||||||||||||
|
Produced
|
122,252
|
120,885
|
1,367
|
1%
|
|
|||||||||||
|
Sold
|
122,153
|
122,024
|
129
|
0%
|
|
|||||||||||
|
Silver ounces:
|
||||||||||||||||
|
Produced (000's)
|
765
|
722
|
43
|
6%
|
|
|||||||||||
|
Sold (000's)
|
763
|
735
|
28
|
4%
|
|
|||||||||||
|
Financial Data (in millions)
|
||||||||||||||||
|
Metal sales
|
$
|
217.8
|
$
|
192.7
|
$
|
25.1
|
13%
|
|
||||||||
|
Production cost of sales
|
74.7
|
76.9
|
(2.2
|
)
|
(3%
|
)
|
||||||||||
|
Depreciation, depletion and amortization
|
18.2
|
34.4
|
(16.2
|
)
|
(47%
|
)
|
||||||||||
|
|
124.9
|
81.4
|
43.5
|
53%
|
|
|||||||||||
|
Other operating expense
|
17.8
|
0.2
|
17.6
|
nm
|
||||||||||||
|
Exploration and business development
|
2.2
|
2.1
|
0.1
|
5%
|
|
|||||||||||
|
Segment operating earnings
|
$
|
104.9
|
$
|
79.1
|
$
|
25.8
|
33%
|
|
||||||||
|
(a)
|
The Kupol segment includes the Kupol and Dvoinoye mines. Mining activities were completed at Dvoinoye in the fourth quarter
of 2020.
|
|
(b)
|
Tonnes of ore mined relates entirely to the Kupol mine during the first quarter of 2021 (first quarter of 2020 included
156,300 tonnes of ore mined from Dvoinoye).
|
|
(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 first quarter of 2021 was 68.33:1 (first quarter of 2020 - 93.63:1).
|
|
(d)
|
"nm" means not meaningful.
|
First quarter 2021 vs. First quarter 2020
Tonnes of ore mined decreased by 38% compared to the first quarter of 2020, largely due to the completion of mining activities at Dvoinoye in November 2020.
Mill grades and gold equivalent ounces produced and sold were consistent with the first quarter of 2020.
During the first quarter of 2021, metal sales increased by 13% compared to the same period in 2020, due to the increase in average metal prices realized.
Production cost of sales decreased by 3% compared to the first quarter of 2020, mainly due to lower mining costs as a result of the completion of mining activities at Dvoinoye and favourable foreign exchange movements. Depreciation, depletion and
amortization decreased by 47% compared to the first quarter of 2020, largely due to a decrease in the depreciable asset base related to the completion of mining activities at Dvoinoye. In the first quarter of 2021, other operating expense included
$5.6 million of labour, contractors, health and safety and other support program costs associated with the COVID-19 pandemic.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Tasiast (100% ownership and operator) – Mauritania
|
Three months ended March 31,
|
||||||||||||||||
|
|
2021
|
2020
|
Change
|
% Change
|
||||||||||||
|
Operating Statistics
|
||||||||||||||||
|
Tonnes ore mined (000's)
|
843
|
1,160
|
(317
|
)
|
(27%
|
)
|
||||||||||
|
Tonnes processed (000's)
|
1,504
|
1,467
|
37
|
3%
|
|
|||||||||||
|
Grade (grams/tonne)
|
1.85
|
2.31
|
(0.46
|
)
|
(20%
|
)
|
||||||||||
|
Recovery
|
95.5%
|
|
95.0%
|
|
0.5%
|
|
1%
|
|
||||||||
|
Gold equivalent ounces:
|
||||||||||||||||
|
Produced
|
88,964
|
103,837
|
(14,873
|
)
|
(14%
|
)
|
||||||||||
|
Sold
|
83,670
|
93,950
|
(10,280
|
)
|
(11%
|
)
|
||||||||||
|
Financial Data (in millions)
|
||||||||||||||||
|
Metal sales
|
$
|
151.4
|
$
|
148.7
|
$
|
2.7
|
2%
|
|
||||||||
|
Production cost of sales
|
51.3
|
51.9
|
(0.6
|
)
|
(1%
|
)
|
||||||||||
|
Depreciation, depletion and amortization
|
48.3
|
40.3
|
8.0
|
20%
|
|
|||||||||||
|
|
51.8
|
56.5
|
(4.7
|
)
|
(8%
|
)
|
||||||||||
|
Other operating expense
|
14.3
|
7.9
|
6.4
|
81%
|
|
|||||||||||
|
Exploration and business development
|
0.5
|
0.4
|
0.1
|
25%
|
|
|||||||||||
|
Segment operating earnings
|
$
|
37.0
|
$
|
48.2
|
$
|
(11.2
|
)
|
(23%
|
)
|
|||||||
First quarter 2021 vs. First quarter 2020
Tonnes of ore mined decreased by 27% compared to the first quarter of 2020, mainly due to mine sequencing involving the completion of mining in West Branch
3. Tonnes of ore processed increased by 3% in the first quarter of 2021 due to an increase in mill throughput related to better availability of the SAG mill. Mill grades decreased by 20% in the first quarter of 2021 compared to the same period in
2020, mainly due to mine sequencing. In the first quarter of 2021, gold equivalent ounces produced and sold decreased by 14% and 11%, respectively, compared to the same period in 2020, largely due to the decrease in grade, partially offset by the
increases in mill throughput and recovery.
In the first quarter of 2021, metal sales increased by 2% compared to the first quarter of 2020, due to the increase in average metal prices realized,
largely offset by the decrease in gold equivalent ounces sold. Production cost of sales decreased slightly in the first quarter of 2021, primarily due to the decrease in gold equivalent ounces sold and lower fuel costs, offset by an increase in
royalty expense. Depreciation, depletion and amortization increased by 20% in the first quarter of 2021, primarily due to an increase in the depreciable asset base, largely related to the reversal of property, plant and equipment impairment at the
end of 2020, partially offset by the decrease in gold equivalent ounces sold. In the first quarter of 2021, other operating expense included $3.6 million of labour, contractors, health and safety and other support program costs associated with the
COVID-19 pandemic.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Chirano (90% ownership and operator) – Ghana(a)
|
Three months ended March 31,
|
||||||||||||||||
|
|
2021
|
2020
|
Change
|
% Change(b)
|
||||||||||||
|
Operating Statistics
|
||||||||||||||||
|
Tonnes ore mined (000's)
|
735
|
690
|
45
|
7%
|
|
|||||||||||
|
Tonnes processed (000's)
|
821
|
873
|
(52
|
)
|
(6%
|
)
|
||||||||||
|
Grade (grams/tonne)
|
1.81
|
1.73
|
0.08
|
5%
|
|
|||||||||||
|
Recovery
|
88.1%
|
|
87.9%
|
|
0.2%
|
|
0%
|
|
||||||||
|
Gold equivalent ounces:
|
||||||||||||||||
|
Produced
|
43,894
|
44,465
|
(571
|
)
|
(1%
|
)
|
||||||||||
|
Sold
|
41,144
|
39,335
|
1,809
|
5%
|
|
|||||||||||
|
Financial Data (in millions)
|
||||||||||||||||
|
Metal sales
|
$
|
74.3
|
$
|
61.6
|
$
|
12.7
|
21%
|
|
||||||||
|
Production cost of sales
|
52.8
|
47.8
|
5.0
|
10%
|
|
|||||||||||
|
Depreciation, depletion and amortization
|
21.2
|
15.9
|
5.3
|
33%
|
|
|||||||||||
|
|
0.3
|
(2.1
|
)
|
2.4
|
114%
|
|
||||||||||
|
Other operating expense
|
-
|
0.2
|
(0.2
|
)
|
nm
|
|||||||||||
|
Exploration and business development
|
1.9
|
1.8
|
0.1
|
6%
|
|
|||||||||||
|
Segment operating loss
|
$
|
(1.6
|
)
|
$
|
(4.1
|
)
|
$
|
2.5
|
61%
|
|
||||||
|
(a)
|
Operating and financial data are at 100% for all periods.
|
|
(b)
|
"nm" means not meaningful.
|
First quarter 2021 vs. First quarter 2020
In the first quarter of 2021, tonnes of ore mined increased by 7%, compared to the first quarter of 2020, primarily due to more ore mined from the Akoti and
Tano underground deposits, partially offset by less ore mined from the Paboase underground deposit. Tonnes of ore processed decreased by 6% compared to the first quarter of 2020, largely due to a decrease in mill availability as a result of less
stable power supply. Mill grade increased by 5% in the first quarter of 2021, compared to the same period in 2020, mainly due to higher grade ore mined at the underground deposits. Gold equivalent ounces produced decreased slightly, compared to the
first quarter of 2020, primarily due to the decrease in mill throughput, largely offset by the increase in grades. Gold equivalent ounces sold in the first quarter of 2021 increased by 5% compared to the same period in 2020 due to timing of sales.
Metal sales increased by 21%, compared to the first quarter of 2020, due to increases in average metal prices realized and gold equivalent ounces sold.
Production cost of sales increased by 10% in the first quarter of 2021, primarily due to the increase in gold equivalent ounces sold and higher maintenance and milling costs, partially offset by a decrease in operating waste mined. Depreciation,
depletion and amortization increased by 33%, compared to the first quarter of 2020, primarily due to the increase in depreciable asset base, largely related to the reversal of property, plant and equipment impairment at the end of 2020, partially
offset by the increase in mineral reserves.
As previously reported, Kinross’ operating subsidiary Chirano Gold Mines Ltd. ("CGML"), was recently audited by Ghana’s Ministry of Lands and Natural
Resources and the Ghana Mineral Commission pursuant to a country-wide audit of mining activities, including historical mineral sales, exports and related taxes. In connection with this process, CGML received an audit report and provided a
comprehensive response clarifying various issues addressed in the report. Following ongoing communications among the parties respecting the audit, the Government appointed an ombudsman to analyze the audit report and provide an independent assessment
of the issues addressed in the report. CGML is fully cooperating with the Government in connection with this ongoing process.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Maricunga (100% ownership and operator) – Chile
As a result of the suspension of mining and crushing activities at Maricunga in the fourth quarter of 2019, no ore was mined and processed in both the first
quarters of 2021 and 2020. In the first quarter of 2021, gold equivalent ounces sold of 731 decreased by 44% compared to gold equivalent ounces sold of 1,311 for the first quarter of 2020. No further production is expected while Maricunga continues
to sell its remaining finished metals inventories. Metal sales and operating losses were $1.3 million and $(3.4) million, respectively, for the first quarter of 2021, compared to $2.1 million and $(3.2) million, respectively, for the first quarter of
2020.
Exploration and Business Development
|
|
Three months ended March 31,
|
|||||||||||||||
|
(in millions)
|
2021
|
2020
|
Change
|
% Change
|
||||||||||||
|
Exploration and business development
|
$
|
25.4
|
$
|
19.1
|
$
|
6.3
|
33%
|
|
||||||||
Of the total exploration and business development expense in the first quarter of 2021, expenditures on exploration totaled $18.1 million compared to $9.7
million in the first quarter of 2020. Capitalized exploration expenses, including capitalized evaluation expenditures, totaled $12.7 million for the first quarter of 2021 compared to $3.0 million for the first quarter of 2020.
Kinross was active on 13 mine sites, near-mine and greenfield initiatives in the first quarter of 2021, with a total of 44,634 metres drilled. In the first
quarter of 2020, Kinross was active on 11 mine sites, near-mine and greenfield initiatives, with a total of 40,906 metres drilled.
General and Administrative
|
|
Three months ended March 31,
|
|||||||||||||||
|
(in millions)
|
2021
|
2020
|
Change
|
% Change
|
||||||||||||
|
General and administrative
|
$
|
34.0
|
$
|
31.8
|
$
|
2.2
|
7%
|
|
||||||||
General and administrative costs include expenses related to the overall management of the business which are not part of direct mine operating costs. These
are costs that are incurred at corporate offices located in Canada, U.S., Brazil, the Russian Federation, Chile, the Netherlands, and the Canary Islands.
Other Income (Expense) – Net
|
|
Three months ended March 31,
|
|||||||||||||||
|
(in millions)
|
2021
|
2020
|
Change
|
% Change(a)
|
||||||||||||
|
Net (losses) gains on dispositions of assets
|
$ |
(0.2
|
)
|
$ |
1.1
|
$ |
(1.3
|
)
|
(118%
|
)
|
||||||
|
Foreign exchange gains (losses) - net
|
3.9
|
(2.3
|
)
|
6.2
|
nm
|
|||||||||||
|
Net non-hedge derivative losses
|
(1.5
|
)
|
(0.8
|
)
|
(0.7
|
)
|
(88%
|
)
|
||||||||
|
Other - net
|
0.1
|
1.4
|
(1.3
|
)
|
(93%
|
)
|
||||||||||
|
Other income (expense) - net
|
$
|
2.3
|
$
|
(0.6
|
)
|
$
|
2.9
|
nm
|
||||||||
|
(a)
|
"nm" means not meaningful.
|
Other income (expense) - net changed from a loss of $0.6 million in the first quarter of 2020 to income of $2.3 million in the first
quarter of 2021.
Finance Expense
|
|
Three months ended March 31,
|
|||||||||||||||
|
(in millions)
|
2021
|
2020
|
Change
|
% Change
|
||||||||||||
|
Accretion of reclamation and remediation obligations
|
$
|
3.6
|
$
|
5.8
|
$
|
(2.2
|
)
|
(38%
|
)
|
|||||||
|
Interest expense, including accretion of debt and lease liabilities
|
15.7
|
19.9
|
(4.2
|
)
|
(21%
|
)
|
||||||||||
|
Finance expense
|
$
|
19.3
|
$
|
25.7
|
$
|
(6.4
|
)
|
(25%
|
)
|
|||||||
Interest expense in the first quarter of 2021 was $15.7 million compared to $19.9 million in the same period in 2020. Interest capitalized in the first quarter of 2021 was $15.9
million compared to $8.9 million in the first quarter of 2020.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Income and Other Taxes
Kinross is subject to tax in various jurisdictions including Canada, the United States, Brazil, Chile, the Russian Federation, Mauritania, and Ghana.
The Company recorded an income tax expense of $77.9 million in the first quarter of 2021, compared to $45.0 million in the first quarter of 2020. The $77.9
million income tax expense included $7.4 million of deferred tax expense, compared to $26.3 million in the first quarter of 2020, resulting from the net foreign currency translation of tax deductions of the Company’s operations in Brazil and Russia.
In the first quarter of 2020 the Company recorded a net tax benefit of $20.4 million from the March 27, 2020 enactment of the U.S. CARES Act. In addition, tax expense increased in the first quarter of 2021 compared to the first quarter of 2020, due
to differences in the level of income in the Company’s operating jurisdictions from one period to the next. Kinross' combined federal and provincial statutory tax rate for the first quarters of both 2021 and 2020 was 26.5%.
There are a number of factors that can significantly impact the Company’s effective tax rate, including geographical distribution of income, varying rates in
different jurisdictions, the non-recognition of tax assets, mining allowance, mining specific taxes, foreign currency exchange movements, changes in tax laws, and the impact of specific transactions and assessments.
Kinross’ tax records, transactions and filing positions may be subject to examination by the tax authorities in the countries in which the Company has
operations. The tax authorities may review the Company’s transactions in respect of the year, or multiple years, which they have chosen for examination. The tax authorities may interpret the tax implications of a transaction, in form or in fact,
differently from the interpretation reached by the Company.
In circumstances where the Company and the tax authority cannot reach a consensus on the tax impact, there are processes and procedures which both parties
may undertake in order to reach a resolution, which may span many years in the future. The Company assesses the expected outcome of examination of transactions by the tax authorities, and accrues the expected outcome in accordance with International
Financial Reporting Standards ("IFRS").
Uncertainty in the interpretation and application of applicable tax laws, regulations or the relevant sections of Mining Conventions by the tax authorities,
or the failure of relevant Governments or tax authorities to honour tax laws, regulations or the relevant sections of Mining Conventions could adversely affect Kinross.
Due to the number of factors that can potentially impact the effective tax rate and the sensitivity of the tax provision to these factors, as discussed
above, it is expected that the Company's effective tax rate will fluctuate in future periods.
|
6.
|
LIQUIDITY AND CAPITAL RESOURCES
|
The following table summarizes Kinross’ cash flow activity:
|
Three months ended March 31,
|
||||||||||||||||
|
(in millions)
|
2021
|
2020
|
Change
|
% Change
|
||||||||||||
|
Cash Flow:
|
||||||||||||||||
|
Provided from operating activities
|
$
|
279.8
|
$
|
299.6
|
$
|
(19.8
|
)
|
(7%
|
)
|
|||||||
|
Used in investing activities
|
(368.8
|
)
|
(339.6
|
)
|
(29.2
|
)
|
(9%
|
)
|
||||||||
|
(Used in) provided from financing activities
|
(64.4
|
)
|
613.1
|
(677.5
|
)
|
(111%
|
)
|
|||||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
(1.4
|
)
|
(9.6
|
)
|
8.2
|
85%
|
|
|||||||||
|
(Decrease) increase in cash and cash equivalents
|
(154.8
|
)
|
563.5
|
(718.3
|
)
|
(127%
|
)
|
|||||||||
|
Cash and cash equivalents, beginning of period
|
1,210.9
|
575.1
|
635.8
|
111%
|
|
|||||||||||
|
Cash and cash equivalents, end of period
|
$
|
1,056.1
|
$
|
1,138.6
|
$
|
(82.5
|
)
|
(7%
|
)
|
|||||||
In the first quarter of 2021, cash and cash equivalent balances decreased by $154.8 million from December 31, 2020 compared to an increase of $563.5 million
in the first quarter of 2020. Detailed discussions regarding cash flow movements are noted below.
Operating Activities
First quarter 2021 vs. First quarter 2020
Net cash flow provided from operating activities decreased by $19.8 million compared to the first quarter of 2020, mainly due to higher taxes paid, offset
by increased operating earnings.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Investing Activities
First quarter 2021 vs. First quarter 2020
Net cash flow used in investing activities was $368.8 million in the first quarter of 2021 compared to $339.6 million in the first quarter of 2020.
In the first quarter of 2021, cash was primarily used for capital expenditures of $204.2 million, as well as the final installment of $141.5 million paid
for the Chulbatkan license. The primary uses of cash in the first quarter of 2020 were for capital expenditures of $191.4 million, as well as the initial $128.3 million payment for the acquisition of the Chulbatkan license. Interest paid capitalized
to property, plant and equipment was $23.9 million in the first quarter of 2021 compared to $22.3 million in the same period in 2020.
The following table presents a breakdown of capital expenditures(a) on a
cash basis:
|
|
Three months ended March 31,
|
|||||||||||||||
|
(in millions)
|
2021
|
2020
|
Change
|
% Change(d)
|
||||||||||||
|
Operating segments
|
||||||||||||||||
|
Fort Knox
|
$
|
25.4
|
$
|
19.1
|
$
|
6.3
|
33%
|
|
||||||||
|
Round Mountain
|
31.3
|
41.8
|
(10.5
|
)
|
(25%
|
)
|
||||||||||
|
Bald Mountain
|
8.9
|
31.5
|
(22.6
|
)
|
(72%
|
)
|
||||||||||
|
Paracatu
|
20.8
|
14.4
|
6.4
|
44%
|
|
|||||||||||
|
Kupol(b)
|
6.8
|
5.6
|
1.2
|
21%
|
|
|||||||||||
|
Tasiast
|
68.6
|
69.2
|
(0.6
|
)
|
(1%
|
)
|
||||||||||
|
Chirano
|
10.1
|
5.1
|
5.0
|
98%
|
|
|||||||||||
|
Non-operating segment
|
||||||||||||||||
|
Corporate and other(c)
|
32.3
|
4.7
|
27.6
|
nm
|
||||||||||||
|
Total
|
$
|
204.2
|
$
|
191.4
|
$
|
12.8
|
7%
|
|
||||||||
|
(a)
|
"Capital expenditures" is as reported as "Additions to property, plant and equipment"
on the interim condensed consolidated statement of cash flows.
|
|
(b)
|
Includes $1.1 million of capital expenditures at Dvoinoye during the first quarter of 2021 (first quarter of 2020 - $0.7 million).
|
|
(c)
|
"Corporate and other" includes corporate and other non-operating assets (including Chulbatkan, Kettle River-Buckhorn, La Coipa, Lobo-Marte, Maricunga and Manh Choh).
|
|
(d)
|
"nm" means not meaningful.
|
In the first quarter of 2021, capital expenditures increased by $12.8 million, compared to the same period in 2020, primarily due to increased expenditures for development
activities at La Coipa, the feasibility study at Lobo-Marte and the pre-feasibility study at Udinsk, partially offset by reduced capital stripping at Bald Mountain and Round Mountain.
Financing Activities
First quarter 2021 vs. First quarter 2020
Net cash flow used in financing activities was $64.4 million in the first quarter of 2021 compared with net cash flow provided from financing activities of
$613.1 million in the first quarter of 2020.
In the first quarter of 2021, net cash flow used in financing activities included dividends paid to common shareholders of $37.8 million and interest paid
of $23.6 million. In the first quarter of 2020, net cash flow provided from financing activities included a net drawdown of $650.0 million on the revolving credit facility as a precautionary measure to protect against economic and business
uncertainties caused by the onset of the COVID-19 pandemic, and interest paid of $25.6 million. No dividends were paid in the first quarter of 2020.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Balance Sheets
|
|
As at,
|
|||||||
|
|
March 31,
|
December 31,
|
||||||
|
(in millions)
|
2021
|
2020
|
||||||
|
Cash and cash equivalents
|
$
|
1,056.1
|
$
|
1,210.9
|
||||
|
Current assets
|
$
|
2,315.1
|
$
|
2,449.7
|
||||
|
Total assets
|
$
|
10,782.4
|
$
|
10,933.2
|
||||
|
Current liabilities, including current portion of long-term debt
|
$
|
1,072.0
|
$
|
1,348.4
|
||||
|
Total long-term financial liabilities(a)
|
$
|
2,330.5
|
$
|
2,331.6
|
||||
|
Total debt and credit facilities, including current portion
|
$
|
1,925.3
|
$
|
1,923.9
|
||||
|
Total liabilities
|
$
|
4,010.8
|
$
|
4,270.2
|
||||
|
Common shareholders' equity
|
$
|
6,704.5
|
$
|
6,596.5
|
||||
|
Non-controlling interests
|
$
|
67.1
|
$
|
66.5
|
||||
|
Statistics
|
||||||||
|
Working capital(b)
|
$
|
1,243.1
|
$
|
1,101.3
|
||||
|
Working capital ratio(c)
|
2.16:1
|
1.82:1
|
||||||
|
(a)
|
Includes long-term debt and credit facilities, provisions, and long-term lease liabilities.
|
|
(b)
|
Calculated as current assets less current liabilities.
|
|
(c)
|
Calculated as current assets divided by current liabilities.
|
At March 31, 2021, Kinross had cash and cash equivalents of $1,056.1 million, a decrease of $154.8 million from the balance as at December 31, 2020,
primarily due to capital expenditures of $204.2 million, the final installment of $141.5 million for the Chulbatkan license paid on January 15, 2021, and net cash flow used in financing activities of $64.4 million. These decreases were partially
offset by cash flow provided from operating activities of $279.8 million. Current assets decreased by $134.6 million to $2,315.1 million mainly due to the decrease in cash and cash equivalents. Total assets decreased by $150.8 million to $10,782.4
million, mainly due to the decrease in current assets. Current liabilities decreased by $276.4 million to $1,072.0 million, primarily due to the final installment of $141.5 million for the Chulbatkan license and decreases in accounts payable and
accrued liabilities and current income tax payable. Total liabilities decreased by $259.4 million to $4,010.8 million, mainly due to the decrease in current liabilities.
As of May 10, 2021, there were 1,261.2 million common shares of the Company issued and outstanding. In addition, at the same date, the Company had 4.5
million share purchase options outstanding under its share option plan.
On May 11, 2021, the Board of Directors declared a dividend of $0.03 per common share payable on June 17, 2021 to shareholders of record on June 3, 2021.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the three months ended March 31, 2021
Financings and Credit Facilities
Senior notes
The Company’s $1,750.0 million of senior notes consist of $500.0 million principal amount of 5.125% notes due in September 2021, $500.0 million principal
amount of 5.950% notes due in 2024, $500.0 million principal amount of 4.50% notes due in 2027 and $250.0 million principal amount of 6.875% notes due in 2041.
On April 29, 2021, notice was sent to the noteholders of the 5.125% senior notes due September 1, 2021, of the Company’s intention to redeem all such
outstanding notes, which have an aggregate principal amount of $500.0 million outstanding, on June 1, 2021. These notes will be redeemed at a redemption price equal to their principal amount outstanding plus accrued and unpaid interest to, but not
including, June 1, 2021, in accordance with the terms of the notes.
Revolving credit and term loan facilities
As at March 31, 2021, the Company had utilized $7.3 million (December 31, 2020 - $7.5 million) of its $1,500.0 million revolving credit facility, entirely
for letters of credit.
Loan interest on the revolving credit facility is variable, set at LIBOR plus an interest rate margin, which is dependent on the Company’s credit rating. Based on the Company’s
credit rating at March 31, 2021, interest charges and fees are as follows:
|
Type of credit
|
|
|
Revolving credit facility
|
LIBOR plus 1.625%
|
|
Letters of credit
|
1.0833-1.625%
|
|
Standby fee applicable to unused availability
|
0.325%
|
The revolving credit facility agreement contains various covenants including limits on indebtedness, asset sales and liens. The Company is in compliance with its financial
covenant in the credit agreement at March 31, 2021.
The Company is monitoring the announced future LIBOR reference rate phase out and replacement, and will engage in discussions with applicable financial institutions to ensure a
comparable replacement pricing mechanism is agreed to where LIBOR is required as a reference rate.
Tasiast loan
On December 16, 2019, the Company completed a definitive loan agreement for up to $300.0 million for Tasiast, with the first drawdown of $200.0 million
received on April 9, 2020. The remaining $100.0 million is available to be drawn up to March 2022.
The asset recourse loan has a term of eight years, maturing in December 2027, a floating interest rate of LIBOR plus a weighted average margin of 4.38% and
a standby fee applicable to unused availability of 1.60%, with semi-annual interest payments to be made in June and December for the term of the loan, and first principal repayments due in June 2022.
As at March 31, 2021, the Company held $25.0 million in a separate bank account as required under the Tasiast loan agreement. This cash, which is subject
to fluctuations over time depending on the next scheduled principal and interest payments, is required to remain in the bank account for the duration of the loan and is therefore recorded as restricted cash in other long-term assets.
Other
The maturity date for the Company’s $300.0 million Letter of Credit guarantee facility with EDC was extended to June 30, 2022, effective July 1, 2020. As
part of the EDC renewal, the facility was expanded to allow for use for other obligations beyond reclamation liabilities. Total fees related to letters of credit under this facility were 0.75% of the utilized amount. As at March 31, 2021, $228.8
million (December 31, 2020 - $228.9 million) was utilized under this facility.
In addition, at March 31, 2021, the Company had $179.5 million (December 31, 2020 - $175.6 million) in letters of credit and surety bonds outstanding in
respect of its operations in Brazil, Mauritania, Ghana and Chile. These have been issued pursuant to arrangements with certain international banks and incur average fees of 0.80%.
As at March 31, 2021, $297.6 million (December 31, 2020 - $290.1 million) of surety bonds were outstanding with respect to Kinross’ properties in the United
States. These surety bonds were issued pursuant to arrangements with international insurance companies and incur fees of 0.50%.
The following table outlines the credit facility utilizations and availabilities:
| As at, |
||||||||
|
|
March 31,
|
December 31,
|
||||||
|
(in millions)
|
2021
|
2020
|
||||||
|
Utilization of revolving credit facility
|
$
|
(7.3
|
)
|
$
|
(7.5
|
)
|
||
|
Utilization of EDC facility
|
(228.8
|
)
|
(228.9
|
)
|
||||
|
Borrowings
|
$
|
(236.1
|
)
|
$
|
(236.4
|
)
|
||
|
|
||||||||
|
Available under revolving credit facility
|
$
|
1,492.7
|
$
|
1,492.5
|
||||
|
Available under EDC credit facility
|
71.2
|
71.1
|
||||||
|
Available credit
|
$
|
1,563.9
|
$
|
1,563.6
|
||||
Total debt of $1,925.3 million as at March 31, 2021 consists of $1,740.4 million related to the senior notes, and $184.9 million related
to the Tasiast loan. The current portion of this debt as at March 31, 2021 is $499.8 million and relates to the Company’s 5.125% senior notes due in September 2021.
Liquidity Outlook
As at March 31, 2021, the Company has $500.0 million in scheduled debt repayments due in September 2021, which it expects to repay early, on June 1, 2021.
We believe that the Company’s existing cash and cash equivalents balance of $1,056.1 million, available credit of $1,563.9 million, and expected operating
cash flows based on current assumptions (noted in Section 3 - Outlook) will be sufficient to fund operations, our forecasted exploration and capital expenditures (noted in Section 3 - Outlook), debt repayments noted above, reclamation and remediation obligations, and lease liabilities, currently estimated for the next 12 months. All of Kinross’ mines continued production during the first
quarter of 2021, as the Company’s ongoing response to the COVID-19 pandemic continued to maintain the safety of its global workforce and host communities while mitigating operational impacts. However, the pandemic continued to affect overall
performance, productivity rates and costs, mainly as a result of global travel constraints and the implementation of rigorous safety protocols and measures at all mines and projects. Prior to any capital investments, consideration is given to the
cost and availability of various sources of capital resources.
With respect to longer term capital expenditure funding requirements, the Company continues to have discussions with lending institutions that have been
active in the jurisdictions in which the Company’s development projects are located. Some of the jurisdictions in which the Company operates have seen the participation of additional lenders that include export credit agencies, development banks and
multi-lateral agencies. The Company believes the capital from these institutions combined with traditional bank loans and capital available through debt capital market transactions may fund a portion of the Company’s longer term capital expenditure
requirements. Another possible source of capital could be proceeds from the sale of non-core assets. These capital sources together with operating cash flow and the Company’s active management of its operations and development activities will enable
the Company to maintain an appropriate overall liquidity position.
Contractual Obligations and Commitments
The Company manages its exposure to fluctuations in input commodity prices, currency exchange rates and interest rates, by entering into derivative
financial instruments from time to time, in accordance with the Company's risk management policy.
The following table provides a summary of derivative contracts outstanding at March 31, 2021 and their respective maturities:
|
Foreign currency
|
2021
|
2022
|
2023
|
2024
|
||||||||||||
|
Brazilian real zero cost collars (in millions of U.S. dollars)
|
$
|
78.2
|
$
|
85.2
|
$
|
43.2
|
$
|
27.6
|
||||||||
|
Average put strike (Brazilian real)
|
4.36
|
4.75
|
5.00
|
5.55
|
||||||||||||
|
Average call strike (Brazilian real)
|
5.42
|
6.73
|
7.26
|
9.01
|
||||||||||||
|
Canadian dollar forward buy contracts (in millions of U.S. dollars)
|
$
|
18.9
|
$
|
12.0
|
$
|
-
|
$
|
-
|
||||||||
|
Average rate (Canadian dollar)
|
1.37
|
1.40
|
-
|
-
|
||||||||||||
|
Russian rouble zero cost collars (in millions of U.S. dollars)
|
$
|
38.7
|
$
|
36.0
|
$
|
20.4
|
$
|
-
|
||||||||
|
Average put strike (Russian rouble)
|
70.3
|
75.0
|
77.0
|
-
|
||||||||||||
|
Average call strike (Russian rouble)
|
89.0
|
100.6
|
97.8
|
-
|
||||||||||||
|
Energy
|
||||||||||||||||
|
WTI oil swap contracts (barrels)
|
793,250
|
822,600
|
565,200
|
-
|
||||||||||||
|
Average price
|
$
|
47.27
|
$
|
42.14
|
$
|
39.58
|
$
|
-
|
||||||||
Subsequent to March 31, 2021, the following new derivative contracts were entered into:
| • |
$25.2 million Brazilian real zero cost collar contracts with an average put strike of 5.35 and an average call strike of 7.48 maturing in 2023.
|
The Company enters into total return swaps ("TRS") as economic hedges of the Company’s deferred share units and cash-settled restricted share units. Hedge
accounting was not applied to the TRSs. At March 31, 2021, 5,695,000 TRS units were outstanding.
In order to manage short-term metal price risk, the Company may enter into derivative contracts in relation to metal sales that it believes are highly
likely to occur within a given quarter. No such contracts were outstanding at March 31, 2021 or December 31, 2020.
Fair value of derivative instruments
The fair values of derivative instruments are noted in the table below:
| As at, |
||||||||
|
|
March 31,
|
December 31,
|
||||||
|
(in millions)
|
2021
|
2020
|
||||||
|
Asset (liability)
|
||||||||
|
Foreign currency forward and collar contracts
|
$
|
(11.8
|
)
|
$
|
(4.3
|
)
|
||
|
Energy swap contracts
|
25.1
|
7.6
|
||||||
|
Total return swap contracts
|
(8.3
|
)
|
(11.0
|
)
|
||||
|
|
$
|
5.0
|
$
|
(7.7
|
)
|
|||
Other legal matters
The Company is from time to time involved in legal proceedings, arising in the ordinary course of its business. Typically, the amount of ultimate liability
with respect to these actions will not, in the opinion of management, materially affect Kinross’ financial position, results of operations or cash flows.
Maricunga regulatory proceedings
In May 2015, Chilean environmental enforcement authority ("SMA") commenced an administrative proceeding against CMM alleging that pumping of groundwater to
support the Maricunga operation had impacted area wetlands and, on March 18, 2016, issued a resolution alleging that CMM’s pumping was impacting the "Valle Ancho" wetland. Beginning in May 2016, the SMA issued a series of resolutions ordering CMM to
temporarily curtail pumping from its wells.
In response, CMM suspended mining and crushing activities and reduced water consumption to minimal levels. CMM contested these resolutions, but its efforts
were unsuccessful and, except for a short period of time in July 2016, CMM’s operations have remained suspended. On June 24, 2016, the SMA amended its initial sanction (the "Amended Sanction") and effectively required CMM to cease
operations and close the mine, with water use from its wells curtailed to minimal levels. On July 9, 2016, CMM appealed the sanctions and, on August 30,
2016, submitted a request to the Environmental Tribunal that it issue an injunction suspending the effectiveness of the Amended Sanction pending a final decision on the merits of CMM’s appeal. On September 16, 2016, the Environmental Tribunal
rejected CMM’s injunction request and on August 7, 2017, upheld the SMA’s Amended Sanction and curtailment orders on procedural grounds. On October 9, 2018, the Supreme Court affirmed the Environmental Tribunal’s ruling on procedural grounds and
dismissed CMM’s appeal.
On June 2, 2016, CMM was served with two separate lawsuits filed by the Chilean State Defense Counsel ("CDE"). Both lawsuits, filed with the Environmental
Tribunal, alleged that pumping from the Maricunga groundwater wells caused environmental damage to area wetlands. One action relates to the "Pantanillo" wetland and the other action relates to the Valle Ancho wetland (described above). Hearings on
the CDE lawsuits took place in 2016 and 2017, and on November 23, 2018, the Tribunal ruled in favor of CMM in the Pantanillo case and against CMM in the Valle Ancho case. In the Valle Ancho case, the Tribunal is requiring CMM to, among other things,
submit a restoration plan to the SMA for approval. CMM has appealed the Valle Ancho ruling to the Supreme Court. The CDE has appealed to the Supreme Court in both cases and is asserting in the Valle Ancho matter that the Environmental Tribunal
erred by not ordering a complete shutdown of Maricunga’s groundwater wells. The timing of any rulings by the Supreme Court on the parties’ respective appeals remains uncertain.
Sunnyside litigation
The Sunnyside Mine is an inactive mine situated in the so-called Bonita Peak Mining District ("District") near Silverton, Colorado. A subsidiary of
Kinross, Sunnyside Gold Corporation ("SGC"), was involved in operations at the mine from 1985 through 1991 and subsequently conducted various reclamation and closure activities at the mine and in the surrounding area. On August 5, 2015, while
working in another mine in the District known as the Gold King, the Environmental Protection Agency (the "EPA") caused a release of approximately three million gallons of contaminated water into a tributary of the Animas River. In the third quarter
of 2016, the EPA listed the District, including areas impacted by SGC’s operations and closure activities, on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"). SGC
challenged portions of the CERCLA listing in the United States Court of Appeals for District of Columbia Circuit, but SGC’s petition for review was denied, as was its subsequent petition for rehearing. The EPA has notified SGC that SGC is a
potentially responsible party under CERCLA and may be jointly and severally liable for cleanup of the District or cleanup costs incurred by the EPA in the District. The EPA may in the future provide similar notification to Kinross, as the EPA
contends that Kinross has liability in the District under CERCLA and other statutes. In the second quarter of 2018, the EPA issued to SGC a modified Unilateral Administrative Order for Remedial Investigation (the "Order"). In the second quarter of
2019, pursuant to the original Order, the EPA issued to SGC a Modified Statement of Work, Work Plan and Field Sampling Plan (together with the Order, the "Modified Order"). The Modified Order significantly altered and expanded upon the work set out
under the original Order. In the third quarter of 2019, after consulting with external legal counsel, SGC provided notice to the EPA that the Modified Order is legally indefensible, does not address any imminent hazard and SGC does not intend to
comply with the Modified Order. On July 26, 2019, the EPA acknowledged receipt of SGC’s notice of its intention not to comply with the Modified Order. The EPA indicated that it would undertake to complete the work ordered under the Modified Order,
and has subsequently completed some of that work. While SGC believes that it has good cause not to comply with the Modified Order, failure to comply with the Modified Order may subject SGC to significant penalties, damages and/or potential
reimbursement of the cost of remediation work undertaken by the EPA.
In the second quarter of 2016, the State of New Mexico filed a complaint naming the EPA, SGC, Kinross and others alleging violations of CERCLA, the Resource
Conservation and Recovery Act ("RCRA"), and the Clean Water Act ("CWA") and claiming negligence, gross negligence, public nuisance and trespass. New Mexico subsequently dropped the RCRA claim. The New Mexico complaint seeks cost recovery, damages,
injunctive relief, and attorney’s fees. In the third quarter of 2016, the Navajo Nation initiated litigation against the EPA, SGC and Kinross, alleging entitlement to cost recovery under CERCLA for past and future costs incurred, negligence, gross
negligence, trespass, and public and private nuisance, and seeking reimbursement of past and future costs, compensatory, consequential and punitive damages, injunctive relief and attorneys’ fees. In the third quarter of 2017, the State of Utah filed
a complaint, which has been amended to name the EPA, SGC, Kinross and others, alleging negligence, gross negligence, public nuisance, trespass, and violation of the Utah Water Quality Act and the Utah Solid and Hazardous Waste Act.
The Utah complaint seeks cost recovery, compensatory, consequential and punitive damages, penalties, disgorgement of profits, declaratory, injunctive and
other relief under CERCLA, attorney’s fees, and costs. In the third quarter of 2018, numerous members of the Navajo Nation initiated litigation against the EPA, SGC and Kinross, alleging negligence, gross negligence and injury, including great
spiritual and emotional distress. The complaint of the Navajo members seeks compensatory and consequential damages, interest, punitive damages, attorneys’ fees and expenses. The New Mexico, Navajo Nation, Utah and Navajo member cases have been
centralized for coordinated or consolidated pretrial proceedings in the United States District Court for the District of New Mexico. In the third quarter of 2019 (i) the EPA filed a cross claim against SGC and Kinross seeking contribution, including
contribution under CERCLA, for any damages awarded to New Mexico, the Navajo Nation, or Utah as well as cost-recovery for the EPA’s response costs
and remedial expenses incurred by the EPA in the District pursuant to CERCLA or other laws; (ii) Environmental Restoration, LLC, an EPA contractor, filed a
cross claim against SGC seeking contribution under CERCLA and attorneys’ fees and expenses; and (iii) SGC filed a cross claim against the United States and certain contractors of the United States seeking contribution and equitable indemnity and
making a due process claim against the United States. In the first quarter of 2020, the Court granted the United States judgment on SGC’s due process cross claim and dismissed it. In the first quarter of 2021, the Court granted SGC summary judgment
as to the claims of the individual Navajo Nation members.
In the fourth quarter of 2020 and first quarter of 2021, SGC and Kinross reached settlements with the Navajo Nation, State of New Mexico, and the State of
Utah which settlements will result in a dismissal with prejudice of all claims by these parties against SGC and Kinross. Although these settlements are not subject to entry of a Consent Decree approving the settlements, a Consent Decree approving the
settlements has been lodged with the United States District Court for the District of New Mexico for public notice and comment for the Utah settlement and will be lodged in the near-term for the Navajo Nation and State of New Mexico settlements. Upon
expiration of the comment period, the parties will move the Court for entry of the Consent Decree.
In the first quarter of 2021, the Court granted SGC’s motion for summary judgment against the individual Navajo members based on a statute of repose
defense. In April 2021, the Court granted Kinross Gold Corporation and Kinross Gold U.S.A., Inc.’s motion for summary judgment against the individual Navajo members based personal jurisdiction grounds. In May 2021, the Court partially granted
Kinross Gold Corporation’s motion for summary judgment based on a lack of specific jurisdiction as to the United States’ crossclaims, but has granted the United States the right to file a motion asserting personal jurisdiction under an alternative
grounds.
Kettle River-Buckhorn regulatory proceedings
Crown Resources Corporation ("Crown") is the holder of a waste discharge permit (the "Permit") in respect of the Buckhorn Mine, which authorizes and regulates mine-related
discharges from the mine and its water treatment plant. On February 27, 2014, the Washington Department of Ecology (the "WDOE") renewed Buckhorn Mine’s National Pollution Discharge Elimination System Permit (the "Renewed Permit"), with an effective
date of March 1, 2014. The Renewed Permit contained conditions that were more restrictive than the original discharge permit. In addition, Crown felt that the Renewed Permit was internally inconsistent, technically unworkable and inconsistent with
existing agreements in place with the WDOE, including a settlement agreement previously entered into by Crown and the WDOE in June 2013 (the "Settlement Agreement"). On February 28, 2014, Crown filed an appeal of the Renewed Permit with the
Washington Pollution Control Hearings Board ("PCHB"). In addition, on January 15, 2015, Crown filed a lawsuit against the WDOE in Ferry County Superior Court, Washington, claiming that the WDOE breached the Settlement Agreement by including various
unworkable compliance terms in the Renewed Permit (the "Crown Action"). On July 30, 2015, the PCHB upheld the Renewed Permit. Crown filed a Petition for Review in Ferry County Superior Court, Washington, on August 27, 2015, seeking to have the PCHB
decision overturned. On March 13, 2017, the Ferry County Superior Court upheld the PCHB’s decision. On April 12, 2017, Crown appealed the Ferry County Superior Court’s ruling to the State of Washington Court of Appeals. On October 8, 2019, the Court
of Appeals affirmed the Superior Court’s decision and the PCHB’s decision. On December 31, 2019, the Court of Appeals denied Crown’s Motion for Reconsideration and to Supplement the Record. Crown did not petition the Washington Supreme Court for
review and, as a result, appeal of this matter has been exhausted.
On July 19, 2016, the WDOE issued an Administrative Order ("AO") to Crown and Kinross Gold Corporation asserting that the companies had exceeded the discharge limits in the
Renewed Permit a total of 931 times and has also failed to maintain the capture zone required under the Renewed Permit. The AO orders the companies to develop an action plan to capture and treat water escaping the capture zone, undertake various
investigations and studies, revise its Adaptive Management Plan, and report findings by various deadlines in the fourth quarter 2016. The companies timely made the required submittals. On August 17, 2016, the companies filed an appeal of the AO with
the PCHB (the "AO Appeal"). Because the AO Appeal raises many of the same issues that have been raised in the Appeal and Crown Action, the companies and the WDOE agreed to stay the AO Appeal indefinitely to allow these matters to be resolved. The
PCHB granted the request for stay on August 26, 2016, which stay has been subsequently extended. On June 2, 2020, the PCHB dismissed the appeal based on a Joint Stipulation of Voluntary Dismissal filed by the parties. The basis for the dismissal was
the exhaustion of appeals as to the Renewed Permit and Crown’s satisfaction of the AO.
On November 30, 2017, the WDOE issued a Notice of Violation ("NOV") to Crown and Kinross asserting that the companies had exceeded the discharge limits in the Permit a total of
113 times during the third quarter of 2017 and also failed to maintain the capture zone as required under the Permit. The NOV ordered the companies to file a report with the WDOE identifying the steps which have been and are being taken to "control
such waste or pollution or otherwise comply with this determination," which report was timely filed. Following its review of this report, the WDOE may issue an AO or other directives to the Company. The NOV is not immediately appealable, but any
subsequent AO or other directive relating to the NOV may be appealed, as appropriate.
Each calendar quarter beginning April 2018, the WDOE has issued a NOV to Crown and, on one occasion, also to Kinross, asserting that the companies had exceeded the discharge
limits in the Permit and have failed to maintain the capture zone as required under the Permit. The most recent NOV, dated May 10, 2021, asserted 133 alleged violations had occurred in the first quarter of 2021.
The NOVs order the companies to file a report with WDOE within 30 days identifying the steps which have been and are being taken to "control such waste or pollution or otherwise
comply with this determination," which reports have been, or will be, timely filed. Following its review of these reports, WDOE may issue an AO or other directives to the Company. The NOV is not immediately appealable, but any subsequent AO or other
directive relating to the NOV may be appealed, as appropriate.
On April 10, 2020, the Okanogan Highlands Alliance ("OHA") filed a citizen’s suit against Crown and Kinross Gold U.S.A., Inc. ("KGUSA") under the Clean Water Act ("CWA") for
alleged failure adequately to capture and treat mine-impacted groundwater and surface water at the site in violation of the Permit and renewed Permit. The suit seeks injunctive relief and civil penalties in the amount of up to $55,800 per day per
violation. On May 7, 2020, the Attorney General for the State of Washington filed suit against Crown and KGUSA under the CWA and the state Water Pollution Control Act alleging the same alleged permit violations and seeking similar relief as OHA.
These lawsuits have been consolidated and remain pending.
Guarantor summarized financial information
The obligations of the Company under the senior notes are guaranteed by the following 100% owned and consolidated subsidiaries of the Company (the "guarantor subsidiaries"):
Round Mountain Gold Corporation, Kinross Brasil Mineração S.A., Fairbanks Gold Mining, Inc., Melba Creek Mining, Inc., KG Mining (Round Mountain) Inc., KG Mining (Bald Mountain) Inc., Red Back Mining (Ghana) Limited, White Ice Ventures Limited and KG
Far East (Luxembourg) Sarl. All guarantees by the guarantor subsidiaries are joint and several, and full and unconditional, subject to certain customary release provisions contained in the indenture governing the senior notes. The guarantees are
unsecured senior obligations of the respective guarantor subsidiaries and rank equally with all other unsecured senior obligations. The guarantees are effectively subordinated to any secured indebtedness and other secured liabilities of the
respective guarantor subsidiaries. The obligations of each guarantor subsidiary under its respective guarantee is limited to an amount not to exceed the maximum amount that can be guaranteed by law or without resulting in its obligations under such
guarantee being voidable or unenforceable under applicable laws relating to fraudulent transfer, or under similar laws affecting the rights of creditors generally.
The summarized financial information of Kinross Gold Corporation, as issuer of the senior notes, and the guarantor subsidiaries is presented on a combined basis with
intercompany balances and transactions between Kinross Gold Corporation and the guarantor subsidiaries eliminated. Kinross Gold Corporation’s or the guarantor subsidiaries' equity in the earnings (losses) of and other gains from, intercompany
receivables and payables with, and investments in non-guarantor subsidiaries are presented separately in, and have been excluded from, the accompanying supplemental summarized combined financial information.
Summarized combined statement of operations information
|
Three months ended
|
Year ended
|
|||||||
|
(in millions)
|
March 31, 2021
|
December 31, 2020
|
||||||
|
Revenue
|
$
|
542.3
|
$
|
2,288.6
|
||||
|
Cost of sales
|
360.6
|
1,460.8
|
||||||
|
Gross profit
|
181.7
|
827.8
|
||||||
|
Operating earnings
|
142.1
|
670.3
|
||||||
|
Net earnings before equity in the earnings (losses) of, and other gains from, non-guarantor subsidiaries
|
105.2
|
459.7
|
||||||
|
Equity in the earnings (losses) of, and other gains from, non-guarantor subsidiaries
|
44.3
|
882.7
|
||||||
|
Net earnings
|
149.5
|
1,342.4
|
||||||
|
Net earnings attributable to common shareholders
|
$
|
149.5
|
$
|
1,342.4
|
||||
Summarized combined balance sheet information
|
|
As at,
|
|||||||
|
|
March 31,
|
December 31,
|
||||||
|
(in millions)
|
2021
|
2020
|
||||||
|
Current assets
|
$
|
1,217.4
|
$
|
1,135.7
|
||||
|
Current assets – with non-guarantor subsidiaries
|
1,875.8
|
1,863.5
|
||||||
|
Non-current assets
|
4,134.3
|
4,185.5
|
||||||
|
Non-current assets – with non-guarantor subsidiaries
|
4,383.8
|
4,628.2
|
||||||
|
Current liabilities
|
831.4
|
982.8
|
||||||
|
Current liabilities – with non-guarantor subsidiaries
|
741.1
|
674.1
|
||||||
|
Non-current liabilities
|
2,113.7
|
2,118.4
|
||||||
|
Non-current liabilities – with non-guarantor subsidiaries
|
1,220.6
|
1,441.1
|
||||||
|
7.
|
SUMMARY OF QUARTERLY INFORMATION
|
|
2021
|
2020
|
2019
|
||||||||||||||||||||||||||||||
|
(in millions, except per share amounts)
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
||||||||||||||||||||||||
|
Metal sales
|
$
|
986.5
|
$
|
1,195.1
|
$
|
1,131.3
|
$
|
1,007.2
|
$
|
879.8
|
$
|
996.2
|
$
|
877.1
|
$
|
837.8
|
||||||||||||||||
|
Net earnings attributable to common shareholders
|
$
|
149.5
|
$
|
783.3
|
$
|
240.7
|
$
|
195.7
|
$
|
122.7
|
$
|
521.5
|
$
|
60.9
|
$
|
71.5
|
||||||||||||||||
|
Basic earnings per share attributable to common shareholders
|
$
|
0.12
|
$
|
0.62
|
$
|
0.19
|
$
|
0.16
|
$
|
0.10
|
$
|
0.41
|
$
|
0.05
|
$
|
0.06
|
||||||||||||||||
|
Diluted earnings per share attributable to common shareholders
|
$
|
0.12
|
$
|
0.62
|
$
|
0.19
|
$
|
0.15
|
$
|
0.10
|
$
|
0.41
|
$
|
0.05
|
$
|
0.06
|
||||||||||||||||
|
Net cash flow provided from operating activities
|
$
|
279.8
|
$
|
681.1
|
$
|
544.1
|
$
|
432.8
|
$
|
299.6
|
$
|
408.6
|
$
|
231.7
|
$
|
333.0
|
||||||||||||||||
The Company’s results over the past several quarters have been driven primarily by fluctuations in the gold price, input costs and
changes in gold equivalent ounces sold. Fluctuations in the silver price and foreign exchange rates have also affected results.
During the first quarter of 2021, revenue decreased to $986.5 million on sales of 552,198 total gold equivalent ounces compared to $879.8 million on sales
of 556,676 total gold equivalent ounces during the first quarter of 2020. The average gold price realized in the first quarter of 2021 was $1,787 per ounce compared to $1,581 per ounce in the first quarter of 2020.
Production cost of sales in the first quarter of 2021 was comparable to the first quarter of 2020, with lower operating waste mined at Fort Knox and favourable foreign exchange
movements at Paracatu largely offset by increases mainly at Round Mountain due to higher operating waste mined and royalties, and at Chirano due to an increase in ounces sold and higher maintenance and milling costs.
Depreciation, depletion and amortization varied between each of the above quarters largely due to changes in gold equivalent ounces sold and depreciable
asset bases. In addition, changes in mineral reserves as well as reversals of impairment charges during some of these periods affected depreciation, depletion and amortization for quarters in subsequent periods.
In the fourth quarter of 2020, the Company recorded net, after‐tax, impairment reversals of $564.5 million related to property, plant and equipment at Tasiast, Chirano and
Lobo-Marte, and net, after-tax, impairment charges of $32.5 million relating to certain supplies inventories at Kupol and Tasiast. In the second quarter of 2020, the Company recorded an impairment reversal of $48.3 million related to property, plant
and equipment at Lobo-Marte. In the fourth quarter of 2019, the Company recorded net, after‐tax, impairment reversals of $293.6 million related to impairment reversals of property, plant and equipment at Paracatu and Tasiast.
Net cash flow provided from operating activities decreased to $279.8 million in the first quarter of 2021 from $299.6 million in the first quarter of 2020,
primarily due to higher taxes paid, offset by increased operating earnings.
On September 30, 2020, the Company acquired a 70% interest in the Manh Choh project in Alaska from Royal Gold, Inc. and CORE Alaska, LLC for a total cash
consideration of $93.7 million.
On December 2, 2019, the Company entered into an agreement with Maverix Metals, Inc. ("Maverix") to sell a royalty portfolio of precious metals royalties.
On December 19, 2019, the Company completed the sale for total consideration of $73.9 million, including $25.0 million in cash and approximately 11.2 million common shares, representing 9.4% of the issued and outstanding common shares, of Maverix.
On July 31, 2019, the Company announced an agreement to acquire the Chulbatkan license located in Khabarovsk Krai, Far East Russia, from N-Mining, for
total fixed consideration of $283.0 million. On January 16, 2020, the Company closed the acquisition of this Chulbatkan license area. In accordance with an amended acquisition agreement, the first installment of $141.5 million, representing 50% of
the $283.0 million fixed purchase price, plus ordinary course net working capital adjustments of $3.1 million, were paid in cash. On January 15, 2021, in accordance with a further amended acquisition agreement, the Company paid the final
installment of $141.5 million in cash.
|
8.
|
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING
|
Pursuant to regulations adopted by the U.S. Securities and Exchange Commission, under the U.S. Sarbanes-Oxley Act of 2002 and those of the Canadian
Securities Administrators, Kinross' management evaluates the effectiveness of the design and operation of the Company's disclosure controls and procedures, and internal control over financial reporting. This evaluation is done under the supervision
of, and with the participation of, the Chief Executive Officer and the Chief Financial Officer.
For the quarter ended March 31, 2021, the Chief Executive Officer and the Chief Financial Officer concluded that Kinross’ disclosure controls and
procedures, and internal control over financial reporting are designed to provide reasonable assurance regarding the reliability of information disclosed in its filings, including its interim financial statements prepared in accordance with IFRS.
There has been no change in the Company’s internal control over financial reporting during the quarter ended March 31, 2021, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting.
Limitations of Controls and Procedures
Kinross’ management, including the Chief Executive Officer and the Chief Financial Officer, believes that any disclosure controls and procedures and
internal control over financial reporting, no matter how well designed and operated, can have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance that the objectives of the control
system are met.
|
9.
|
CRITICAL ACCOUNTING POLICIES, ESTIMATES AND ACCOUNTING CHANGES
|
Critical Accounting Policies and Estimates
The preparation of the Company’s consolidated financial statements requires management to make judgments, estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. The critical estimates, assumptions and judgments applied in the preparation of the Company’s interim financial statements are consistent with those applied and disclosed in
Note 5 of the Company’s annual audited consolidated financial statements for the year ended December 31, 2020.
Accounting Changes
The accounting policies applied in the preparation of the Company’s interim financial statements are consistent with those used in the Company’s annual
audited consolidated financial statements for the year ended December 31, 2020.
|
10.
|
RISK ANALYSIS
|
The business of Kinross contains significant risk due to the nature of mining, exploration, and development activities. Certain risk factors are similar
across the mining industry while others are specific to Kinross. For a discussion of these risk factors, please refer to the MD&A for the year ended December 31, 2020 and for additional information please refer to the Annual Information Form for
the year ended December 31, 2020, each of which is available on the Company's website www.kinross.com and on www.sedar.com or is available upon request from the Company.
|
11.
|
SUPPLEMENTAL INFORMATION
|
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 Attributable to Common Shareholders and Adjusted Net Earnings per Share
Adjusted net earnings attributable 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 (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, 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 to adjusted net earnings for the periods presented:
|
|
Three months ended March 31,
|
|||||||
|
(in millions, except per share amounts)
|
2021
|
2020
|
||||||
|
Net earnings attributable to common shareholders - as reported
|
$
|
149.5
|
$
|
122.7
|
||||
|
Adjusting items:
|
||||||||
|
Foreign exchange (gains) losses
|
(3.9
|
)
|
2.3
|
|||||
|
Foreign exchange losses on translation of tax basis and foreign exchange on deferred income taxes within income tax expense
|
7.4
|
26.3
|
||||||
|
Taxes in respect of prior periods
|
18.1
|
(3.0
|
)
|
|||||
|
COVID-19 costs(a)
|
11.8
|
0.8
|
||||||
|
Round Mountain pit wall stabilization costs
|
3.5
|
-
|
||||||
|
U.S. CARES Act net benefit
|
-
|
(20.4
|
)
|
|||||
|
Other
|
11.7
|
(1.0
|
)
|
|||||
|
Tax effect of the above adjustments
|
(5.3
|
)
|
(0.3
|
)
|
||||
|
|
43.3
|
4.7
|
||||||
|
Adjusted net earnings attributable to common shareholders
|
$
|
192.8
|
$
|
127.4
|
||||
|
Weighted average number of common shares outstanding - Basic
|
1,259.2
|
1,254.6
|
||||||
|
Adjusted net earnings per share
|
$
|
0.15
|
$
|
0.10
|
||||
|
(a)
|
Includes COVID-19 related labour, health and safety, donations and other support program costs.
|
Free Cash Flow
Free cash flow is a non-GAAP measure and is defined as net cash flow provided from operating activities less capital expenditures. The Company believes that that this measure,
which is used internally to evaluate the Company’s underlying cash generation performance and the ability to repay creditors and return cash to shareholders, provides investors with the ability to better evaluate the Company’s underlying performance.
However, the free cash flow measure is not necessarily indicative of operating earnings or net cash flow from operations as determined under IFRS.
The following table provides a reconciliation of free cash flow for the periods presented:
|
|
Three months ended March 31,
|
|||||||
|
(in millions)
|
2021
|
2020
|
||||||
|
Net cash flow provided from operating activities - as reported
|
$
|
279.8
|
$
|
299.6
|
||||
|
Less: Additions to property, plant and equipment
|
(204.2
|
)
|
(191.4
|
)
|
||||
|
Free cash flow
|
$
|
75.6
|
$
|
108.2
|
||||
Adjusted Operating Cash Flow
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, the adjusted operating cash flow measure
is not necessarily indicative of net cash flow from operations as determined under IFRS.
The following table provides a reconciliation of adjusted operating cash flow for the periods presented:
|
|
Three months ended March 31,
|
|||||||
|
(in millions)
|
2021
|
2020
|
||||||
|
Net cash flow provided from operating activities - as reported
|
$
|
279.8
|
$
|
299.6
|
||||
|
Adjusting items:
|
||||||||
|
Working capital changes:
|
||||||||
|
Accounts receivable and other assets
|
5.1
|
78.6
|
||||||
|
Inventories
|
(0.3
|
)
|
(7.7
|
)
|
||||
|
Accounts payable and other liabilities, including income taxes paid
|
115.0
|
48.1
|
||||||
|
|
119.8
|
119.0
|
||||||
|
Adjusted operating cash flow
|
$
|
399.6
|
$
|
418.6
|
||||
Consolidated and Attributable Production Cost of Sales per Equivalent Ounce Sold
Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of sales as reported on the
interim condensed consolidated statement of operations 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.
The following table provides a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for the periods presented:
|
|
Three months ended March 31,
|
|||||||
|
(in millions, except ounces and production cost of sales per equivalent ounce)
|
2021
|
2020
|
||||||
|
Production cost of sales - as reported
|
$
|
419.9
|
$
|
421.3
|
||||
|
Less: portion attributable to Chirano non-controlling interest(a)
|
(5.3
|
)
|
(4.8
|
)
|
||||
|
Attributable(b) production cost of sales
|
$
|
414.6
|
$
|
416.5
|
||||
|
Gold equivalent ounces sold
|
552,198
|
556,676
|
||||||
|
Less: portion attributable to Chirano non-controlling interest(j)
|
(4,114
|
)
|
(3,934
|
)
|
||||
|
Attributable(b) gold equivalent ounces sold
|
548,084
|
552,742
|
||||||
|
Consolidated production cost of sales per equivalent ounce sold
|
$
|
760
|
$
|
757
|
||||
|
Attributable(b) production cost of sales per equivalent ounce sold
|
$
|
756
|
$
|
754
|
||||
See page 32 of this MD&A for details of the footnotes referenced within the table
above.
Attributable Production Cost of Sales per Ounce Sold on a By-Product Basis
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:
|
|
Three months ended March 31,
|
|||||||
|
(in millions, except ounces and production cost of sales per ounce)
|
2021
|
2020
|
||||||
|
Production cost of sales - as reported
|
$
|
419.9
|
$
|
421.3
|
||||
|
Less: portion attributable to Chirano non-controlling interest(a)
|
(5.3
|
)
|
(4.8
|
)
|
||||
|
Less: attributable(b) silver revenue(c)
|
(26.2
|
)
|
(16.4
|
)
|
||||
|
Attributable(b) production cost of sales net of silver by-product revenue
|
$
|
388.4
|
$
|
400.1
|
||||
|
Gold ounces sold
|
537,314
|
545,967
|
||||||
|
Less: portion attributable to Chirano non-controlling interest(j)
|
(4,107
|
)
|
(3,924
|
)
|
||||
|
Attributable(b) gold ounces sold
|
533,207
|
542,043
|
||||||
|
Attributable(b) production cost of sales per ounce sold on a by-product basis
|
$
|
728
|
$
|
738
|
||||
See page 32 of this MD&A for details of the footnotes referenced within the table
above.
Attributable All-In Sustaining Cost and All-In Cost per Ounce Sold on a By-Product Basis
In November 2018, the World Gold Council ("WGC") published updates to its guidelines for reporting all-in sustaining costs and all-in costs to address how
the costs associated with leases, after a company’s adoption of IFRS 16, should be treated. The WGC is a market development organization for the gold industry and is an association whose membership comprises leading gold mining companies including
Kinross. Although the WGC is not a mining industry regulatory organization, it worked closely with its member companies to develop these non-GAAP measures. Adoption of the all-in sustaining cost and all-in cost metrics is voluntary and not
necessarily standard, and therefore, these measures presented by the Company may not be comparable to similar measures presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing
measures reported by Kinross.
All-in sustaining cost includes both operating and capital costs required to sustain gold production on an ongoing basis. The value of silver sold is
deducted from the total production cost of sales as it is considered residual production. Sustaining operating costs represent expenditures incurred at current operations that are considered necessary to maintain current production. Sustaining
capital represents capital expenditures at existing operations comprising mine development costs and ongoing replacement of mine equipment and other capital facilities, and does not include capital expenditures for major growth projects or
enhancement capital for significant infrastructure improvements at existing operations.
All-in cost is comprised of all-in sustaining cost as well as operating expenditures incurred at locations with no current operation, or costs related to
other non-sustaining activities, and capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.
Attributable all-in sustaining cost and all-in cost per ounce sold on a by-product basis are calculated by adjusting total production cost of sales, as
reported on the interim condensed consolidated statement of operations, as follows:
|
|
Three months ended March 31,
|
|||||||
|
(in millions, except ounces and costs per ounce)
|
2021
|
2020
|
||||||
|
Production cost of sales - as reported
|
$
|
419.9
|
$
|
421.3
|
||||
|
Less: portion attributable to Chirano non-controlling interest(a)
|
(5.3
|
)
|
(4.8
|
)
|
||||
|
Less: attributable(b) silver revenue(c)
|
(26.2
|
)
|
(16.4
|
)
|
||||
|
Attributable(b) production cost of sales net of silver by-product revenue
|
$
|
388.4
|
$
|
400.1
|
||||
|
Adjusting items on an attributable(b) basis:
|
||||||||
|
General and administrative(d)
|
34.0
|
31.8
|
||||||
|
Other operating expense - sustaining(e)
|
2.6
|
4.4
|
||||||
|
Reclamation and remediation - sustaining(f)
|
10.9
|
13.5
|
||||||
|
Exploration and business development - sustaining(g)
|
9.6
|
11.9
|
||||||
|
Additions to property, plant and equipment - sustaining(h)
|
55.3
|
66.4
|
||||||
|
Lease payments - sustaining(i)
|
7.5
|
4.3
|
||||||
|
All-in Sustaining Cost on a by-product basis - attributable(b)
|
$
|
508.3
|
$
|
532.4
|
||||
|
Other operating expense - non-sustaining(e)
|
10.0
|
10.9
|
||||||
|
Reclamation and remediation - non-sustaining(f)
|
0.9
|
1.3
|
||||||
|
Exploration - non-sustaining(g)
|
15.6
|
7.0
|
||||||
|
Additions to property, plant and equipment - non-sustaining(h)
|
147.0
|
122.9
|
||||||
|
Lease payments - non-sustaining(i)
|
0.1
|
0.4
|
||||||
|
All-in Cost on a by-product basis - attributable(b)
|
$
|
681.9
|
$
|
674.9
|
||||
|
Gold ounces sold
|
537,314
|
545,967
|
||||||
|
Less: portion attributable to Chirano non-controlling interest(j)
|
(4,107
|
)
|
(3,924
|
)
|
||||
|
Attributable(b) gold ounces sold
|
533,207
|
542,043
|
||||||
|
Attributable(b) all-in sustaining cost per ounce sold on a by-product
basis
|
$
|
953
|
$
|
982
|
||||
|
Attributable(b) all-in cost per ounce sold on a by-product basis
|
$
|
1,279
|
$
|
1,245
|
||||
See page 32 of this MD&A for details of the footnotes referenced within the table
above.
Attributable All-In Sustaining Cost and All-In Cost per Equivalent Ounce Sold
The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP measures, the Company’s
production of silver is converted into gold equivalent ounces and credited to total production.
Attributable all-in sustaining cost and all-in cost per equivalent ounce sold are calculated by adjusting total production cost of sales, as reported on the
interim condensed consolidated statement of operations, as follows:
|
|
Three months ended March 31,
|
|||||||
|
(in millions, except ounces and costs per equivalent ounce)
|
2021
|
2020
|
||||||
|
Production cost of sales - as reported
|
$
|
419.9
|
$
|
421.3
|
||||
|
Less: portion attributable to Chirano non-controlling interest(a)
|
(5.3
|
)
|
(4.8
|
)
|
||||
|
Attributable(b) production cost of sales
|
$
|
414.6
|
$
|
416.5
|
||||
|
Adjusting items on an attributable(b) basis:
|
||||||||
|
General and administrative(d)
|
34.0
|
31.8
|
||||||
|
Other operating expense - sustaining(e)
|
2.6
|
4.4
|
||||||
|
Reclamation and remediation - sustaining(f)
|
10.9
|
13.5
|
||||||
|
Exploration and business development - sustaining(g)
|
9.6
|
11.9
|
||||||
|
Additions to property, plant and equipment - sustaining(h)
|
55.3
|
66.4
|
||||||
|
Lease payments - sustaining(i)
|
7.5
|
4.3
|
||||||
|
All-in Sustaining Cost - attributable(b)
|
$
|
534.5
|
$
|
548.8
|
||||
|
Other operating expense - non-sustaining(e)
|
10.0
|
10.9
|
||||||
|
Reclamation and remediation - non-sustaining(f)
|
0.9
|
1.3
|
||||||
|
Exploration - non-sustaining(g)
|
15.6
|
7.0
|
||||||
|
Additions to property, plant and equipment - non-sustaining(h)
|
147.0
|
122.9
|
||||||
|
Lease payments - non-sustaining(i)
|
0.1
|
0.4
|
||||||
|
All-in Cost - attributable(b)
|
$
|
708.1
|
$
|
691.3
|
||||
|
Gold equivalent ounces sold
|
552,198
|
556,676
|
||||||
|
Less: portion attributable to Chirano non-controlling interest(j)
|
(4,114
|
)
|
(3,934
|
)
|
||||
|
Attributable(b) gold equivalent ounces sold
|
548,084
|
552,742
|
||||||
|
Attributable(b) all-in sustaining cost per equivalent ounce sold
|
$
|
975
|
$
|
993
|
||||
|
Attributable(b) all-in cost per equivalent ounce sold
|
$
|
1,292
|
$
|
1,251
|
||||
See page 32 of this MD&A for details of the footnotes referenced within the table
above.
|
(a)
|
The portion attributable to Chirano non-controlling interest represents the non-controlling interest (10%) in the production cost of sales for the Chirano mine.
|
|
(b)
|
"Attributable" includes Kinross' share of Chirano (90%) production and costs, and Manh Choh (70%) costs.
|
|
(c)
|
"Attributable silver revenues" represents the attributable portion of metal sales realized from the production of the secondary or by-product metal (i.e. silver). Revenue from the sale of
silver, which is produced as a by-product of the process used to produce gold, effectively reduces the cost of gold production.
|
|
(d)
|
"General and administrative" expenses is as reported on the interim condensed consolidated statement of operations, net of certain restructuring expenses. General and administrative
expenses are considered sustaining costs as they are required to be absorbed on a continuing basis for the effective operation and governance of the Company.
|
|
(e)
|
"Other operating expense – sustaining" is calculated as "Other operating expense" as reported on the interim condensed consolidated statement of operations, less other operating and
reclamation and remediation expenses related to non-sustaining activities as well as other items not reflective of the underlying operating performance of our business. Other operating expenses are classified as either sustaining or
non-sustaining based on the type and location of the expenditure incurred. The majority of other operating expenses that are incurred at existing operations are considered costs necessary to sustain operations, and are therefore
classified as sustaining. Other operating expenses incurred at locations where there is no current operation or related to other non-sustaining activities are classified as non-sustaining.
|
|
(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 statement of
operations, less non-sustaining exploration 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 considered sustaining costs as they are
required for general 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 months ended March
31, 2021, primarily related to major projects at Tasiast, Round Mountain, Fort Knox and La Coipa. Non-sustaining capital expenditures during the three months ended March 31, 2020, primarily related to major projects at Tasiast, Round
Mountain and Fort Knox.
|
|
(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)
|
"Portion attributable to Chirano non-controlling interest" represents the non-controlling interest (10%) in the ounces sold from the Chirano mine.
|
|
(k)
|
"Average realized gold price per ounce" is a non-GAAP financial measure and is defined as gold metal sales divided by the total number of gold ounces sold. This measure
is intended to enable Management to better understand the price realized in each reporting period. The realized price measure does not have any standardized definition under IFRS and should not be considered a substitute for measure of
performance prepared in accordance with IFRS.
|
Cautionary Statement on Forward-Looking Information
All statements, other than statements of historical fact, contained or incorporated by reference in this MD&A
including, 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 harbor” 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 MD&A.
Forward-looking statements contained in this MD&A, include, but are not limited to, those under the headings (or headings that include) “Operational Outlook”, “Project Updates and New Development”, and “Liquidity Outlook” and include, without
limitation, statements with respect to our guidance for production, production costs of sales, cash flow, free cash flow, all-in sustaining cost of sales, and capital expenditures; the declaration, payment and sustainability of the Company’s
dividends; optimization of mine plans; identification of additional resources and reserves; the schedules and budgets for the Company’s development projects; mine life and any potential extensions; the Company’s capital reinvestment program and
continuous improvement initiatives and project performance or outperformance, as well as references to other possible events, the future price of gold and silver, the timing and amount of estimated future production, costs of production, operating
costs; capital expenditures, costs and timing of the development of projects and new deposits, estimates and the realization of such estimates (such as mineral or gold reserves and resources or mine life), success of exploration, development and
mining, currency fluctuations, capital requirements, project studies, government regulation permit applications and conversions, restarting suspended or disrupted operations; environmental risks and proceedings; and resolution of pending litigation.
The words “advance”, “anticipate”, “believe”, “continue”, “estimates”, “expects”, “explore”, “forecast”, “growth projects”, “guidance”, “on schedule”, “on track”, “outlook”, “plan”, “progress”, “potential”, “target” or variations of or similar such
words and phrases or statements that certain actions, events or results may, could, should or will be achieved, received or taken, or will occur or result and similar such 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 MD&A, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein and in our MD&A for
the year ended December 31, 2020, and the Annual Information Form dated March 30, 2021 as well as: (1) there being no significant disruptions affecting the operations of the Company, whether due to extreme weather events (including, without
limitation, excessive or lack of rainfall, in particular, the potential for further production curtailments at Paracatu resulting from insufficient rainfall and the operational challenges at Fort Knox and Bald Mountain resulting from excessive
rainfall, which can impact costs and/or production) and other or related natural disasters, labour disruptions (including but not limited to strikes or workforce reductions), supply disruptions, power disruptions, damage to equipment, pit wall slides
or otherwise; (2) permitting, development, operations and production from the Company’s operations and development projects being consistent with Kinross’ current expectations including, without limitation: the maintenance of existing permits and
approvals and the timely receipt of all permits and authorizations necessary for the operation of Tasiast, and the development and operation of the 24k Project; operation of the SAG mill at Tasiast; water and power supply and continued operation of
the tailings reprocessing facility at Paracatu; the Lobo-Marte project; commencement of production at the La Coipa project; approval of an enhanced mine plan at Fort Knox; in each case in a manner consistent with the Company’s expectations; and the
successful completion of exploration consistent with the Company’s expectations at the Company’s projects; (3) political and legal developments in any jurisdiction in which the Company operates being consistent with its current expectations
including, without limitation, the impact of any political tensions and uncertainty in the Russian Federation or any related sanctions and any other similar restrictions or penalties imposed, or actions taken, by any government, including but not
limited to amendments to the mining laws, and potential power rationing and tailings facility regulations in Brazil, potential amendments to water laws and/or other water use restrictions and regulatory actions in Chile, new dam safety regulations,
potential amendments to minerals and mining laws and energy levies laws, new regulations relating to work permits, potential amendments to customs and mining laws (including but not limited to amendments to the VAT) and the potential application of
revisions to the tax code in Mauritania, the European Union’s General Data Protection Regulation or similar legislation in other jurisdictions, potential amendments to and enforcement of tax laws in Russia or the modification or revocation of
Russia’s international tax treaties, Ghana and Mauritania (including, but not limited to, the interpretation, implementation, application and enforcement of any such laws and amendments thereto), and the impact of any trade tariffs being consistent
with Kinross’ current expectations; (4) the completion of studies, including optimization studies, improvement studies; scoping studies and pre-feasibility and feasibility studies, on the timelines currently expected and the results of those studies
being consistent with Kinross’ current expectations, including the completion of the Lobo-Marte and Manh Choh feasibility studies and Udinsk pre-feasibility study; (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 diesel, natural gas, fuel oil, electricity and other key
supplies being approximately consistent with the Company’s expectations; (8) production and cost of sales forecasts for the Company meeting expectations; (9) the accuracy of: the current mineral reserve and mineral resource estimates of the Company
and Kinross’ analysis thereof being consistent with expectations (including but not limited to ore tonnage and ore grade estimates), future mineral resource and mineral reserve estimates being consistent with preliminary work undertaken by the
Company, mine plans for the Company’s current and future mining operations, and the Company’s internal models; (10) labour and materials costs increasing on a basis consistent with Kinross’ current expectations; (11) 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 and without material amendment or formal dispute (including without
limitation the application of tax, customs and duties exemptions and royalties); (12) goodwill and/or asset impairment potential; (13) the regulatory and legislative regime regarding mining, electricity production and transmission (including rules
related to power tariffs) in Brazil being consistent with Kinross’ current expectations; (14) access to capital markets, including but not limited to maintaining our current credit ratings consistent with the Company’s current expectations; (15) that
the Brazilian power plants will operate in a manner consistent with our expectations; (16) that drawdown of remaining funds under the Tasiast project financing will proceed in a manner consistent with our current expectations; (17) potential direct
or indirect operational impacts resulting from infectious diseases or pandemics such as the ongoing COVID-19 pandemic; (18) the effectiveness of preventative actions and contingency plans put in place by the Company to respond to the COVID-19
pandemic, including, but not limited to, social distancing, travel restrictions, business continuity plans, and efforts to mitigate supply chain disruptions; (19) changes in national and local government legislation or other government actions,
particularly in response to the COVID-19 outbreak; (20) litigation, regulatory proceedings and audits, and the potential ramifications thereof, being concluded in a manner consistent with the Corporation’s expectations (including without limitation
the audit of mining companies in Ghana which includes the Corporation’s Ghanaian subsidiaries, litigation in Chile relating to the alleged damage of wetlands and the scope of any remediation plan or other environmental obligations arising therefrom,
the ongoing litigation with the Russian tax authorities regarding dividend withholding tax and the ongoing Sunnyside litigation regarding potential liability under the U.S. Comprehensive Environmental Response, Compensation, and Liability Act); (21)
that the Company will enter into definitive documentation with the Government of Mauritania substantially in accordance with the terms and conditions of the term sheet, on a basis consistent with our expectations and that the parties will perform
their respective obligations thereunder on the timelines agreed; (22) that the exploitation permit for Tasiast Sud will be issued under the terms and on timelines consistent with our expectations; (23) that the benefits of the contemplated
arrangements related to the agreement in principle will result in increased stability at the Company’s operations in Mauritania; (24) the Company’s financial results, cash flows and future prospects being consistent with Company expectations in
amounts sufficient to permit sustained dividend payments and (25) the impacts of the pit wall issues at Round Mountain being consistent with the Company’s expectations including but not limited to its impact on the Company’s overall annual guidance.
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: the inaccuracy of any of the foregoing assumption, sanctions (any other similar restrictions or penalties) now
or subsequently imposed, other actions taken, by, against, in respect of or otherwise impacting any jurisdiction in which the Company is domiciled or operates (including but not limited to the Russian Federation, Canada, the European Union and the
United States), or any government or citizens of, persons or companies domiciled in, or the Company’s business, operations or other activities in, any such jurisdiction; reductions in the ability of the Company to transport and refine doré;
fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as fuel and electricity); changes in the discount rates applied to calculate the present value of net future cash flows
based on country-specific real weighted average cost of capital; changes 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 various market
variables, such as interest rates, foreign exchange rates, gold or silver prices and lease rates, or global fuel prices, that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under any
financial 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, production royalties, 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, Mauritania, Ghana, or other countries in which Kinross does 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, development or refining activities; employee relations; litigation or other claims against, or
regulatory investigations and/or any enforcement actions, administrative orders or sanctions in respect of the Company (and/or its directors, officers, or employees) including, but not limited to, securities class action litigation in Canada and/or
the United States, environmental litigation or regulatory proceedings or any investigations, enforcement actions and/or sanctions under any applicable anti-corruption, international sanctions and/or anti-money laundering laws and regulations in
Canada, the United States or any other applicable jurisdiction; 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 ratings; 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 MD&A are qualified by this
cautionary statement 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 Analysis” section of our MD&A for the year ended
December 31, 2020 and the Annual Information Form dated March 30, 2021. 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 70%-80% of the Company's costs are denominated in U.S. dollars.
A 10% change in foreign currency exchange rates would be expected to result in an approximate $14 impact on production
cost of sales per equivalent ounce sold2.
Specific to the Russian rouble, a 10% change in the exchange rate would be expected to result in an approximate $15 impact on Russian
production cost of sales per equivalent ounce sold.
Specific to the Brazilian real, a 10% change in the exchange rate would be expected to result in an approximate $25 impact on Brazilian
production cost of sales per equivalent ounce sold.
A $10 per barrel change in the price of oil would be expected to result in an approximate $3 impact on production cost of sales per
equivalent ounce sold.
A $100 change in the price of gold would be expected to result in an approximate $5 impact on production cost of sales per equivalent ounce sold as a result
of a change in royalties.
Other information
Where we say ‘‘we’’, ‘‘us’’, ‘‘our’’, the ‘‘Company’’, or ‘‘Kinross’’ in this MD&A, 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 mineral properties contained in this MD&A has been prepared under the supervision of Mr. John Sims who is
a “qualified person” within the meaning of National Instrument 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.
2 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.
34
KINROSS GOLD CORPORATION
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited expressed in millions of United States dollars, except share amounts)
|
|
|
As at
|
|||||||
|
|
|
March 31,
|
December 31,
|
||||||
|
|
|
2021
|
2020
|
||||||
|
|
|
||||||||
|
Assets
|
|
||||||||
|
Current assets
|
|
||||||||
|
Cash and cash equivalents
|
Note 5
|
$
|
1,056.1
|
$
|
1,210.9
|
||||
|
Restricted cash
|
Note 5
|
11.3
|
13.7
|
||||||
|
Accounts receivable and other assets
|
Note 5
|
124.0
|
122.3
|
||||||
|
Current income tax recoverable
|
25.5
|
29.9
|
|||||||
|
Inventories
|
Note 5
|
1,098.2
|
1,072.9
|
||||||
|
|
|
2,315.1
|
2,449.7
|
||||||
|
Non-current assets
|
|
||||||||
|
Property, plant and equipment
|
Note 5
|
7,627.1
|
7,653.5
|
||||||
|
Goodwill
|
|
158.8
|
158.8
|
||||||
|
Long-term investments
|
Note 5
|
101.3
|
113.0
|
||||||
|
Investment in joint venture
|
|
18.3
|
18.3
|
||||||
|
Other long-term assets
|
Note 5
|
557.9
|
537.2
|
||||||
|
Deferred tax assets
|
3.9
|
2.7
|
|||||||
|
Total assets
|
|
$
|
10,782.4
|
$
|
10,933.2
|
||||
|
|
|
||||||||
|
Liabilities
|
|
||||||||
|
Current liabilities
|
|
||||||||
|
Accounts payable and accrued liabilities
|
Note 5
|
$
|
402.7
|
$
|
479.2
|
||||
|
Current income tax payable
|
|
51.2
|
114.5
|
||||||
|
Current portion of long-term debt and credit facilities
|
Note 7
|
499.8
|
499.7
|
||||||
|
Current portion of provisions
|
Note 8
|
73.3
|
63.8
|
||||||
|
Other current liabilities
|
Note 5
|
45.0
|
49.7
|
||||||
|
Deferred payment obligation
|
Note 4
|
-
|
141.5
|
||||||
|
|
|
1,072.0
|
1,348.4
|
||||||
|
Non-current liabilities
|
|
||||||||
|
Long-term debt and credit facilities
|
Note 7
|
1,425.5
|
1,424.2
|
||||||
|
Provisions
|
Note 8
|
858.9
|
861.1
|
||||||
|
Long-term lease liabilities
|
|
46.1
|
46.3
|
||||||
|
Other long-term liabilities
|
|
116.0
|
102.4
|
||||||
|
Deferred tax liabilities
|
492.3
|
487.8
|
|||||||
|
Total liabilities
|
|
$
|
4,010.8
|
$
|
4,270.2
|
||||
|
|
|
||||||||
|
Equity
|
|
||||||||
|
Common shareholders' equity
|
|
||||||||
|
Common share capital
|
Note 9
|
$
|
4,486.2
|
$
|
4,473.7
|
||||
|
Contributed surplus
|
|
10,697.1
|
10,709.0
|
||||||
|
Accumulated deficit
|
|
(8,450.8
|
)
|
(8,562.5
|
)
|
||||
|
Accumulated other comprehensive income (loss)
|
Note 5
|
(28.0
|
)
|
(23.7
|
)
|
||||
|
Total common shareholders' equity
|
|
6,704.5
|
6,596.5
|
||||||
|
Non-controlling interests
|
|
67.1
|
66.5
|
||||||
|
Total equity
|
|
$
|
6,771.6
|
$
|
6,663.0
|
||||
|
Commitments and contingencies
|
Note 13
|
||||||||
|
Subsequent events
|
Note 7 and 9
|
||||||||
|
Total liabilities and equity
|
|
$
|
10,782.4
|
$
|
10,933.2
|
||||
|
|
|
||||||||
|
Common shares
|
|
||||||||
|
Authorized
|
|
Unlimited
|
Unlimited
|
||||||
|
Issued and outstanding
|
Note 9
|
1,261,073,345
|
1,258,320,461
|
||||||
|
|
|
||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
KINROSS GOLD CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited expressed in millions of United States dollars, except share and per share amounts)
|
|
|
Three months ended
|
|||||||
|
|
|
March 31,
|
March 31,
|
||||||
|
|
|
2021
|
2020
|
||||||
|
|
|
||||||||
|
Revenue
|
|
||||||||
|
Metal sales
|
|
$
|
986.5
|
$
|
879.8
|
||||
|
|
|
||||||||
|
Cost of sales
|
|
||||||||
|
Production cost of sales
|
|
419.9
|
421.3
|
||||||
|
Depreciation, depletion and amortization
|
|
207.0
|
193.1
|
||||||
|
Total cost of sales
|
|
626.9
|
614.4
|
||||||
|
Gross profit
|
|
359.6
|
265.4
|
||||||
|
Other operating expense
|
|
57.9
|
21.9
|
||||||
|
Exploration and business development
|
|
25.4
|
19.1
|
||||||
|
General and administrative
|
|
34.0
|
31.8
|
||||||
|
Operating earnings
|
|
242.3
|
192.6
|
||||||
|
Other income (expense) - net
|
Note 5
|
2.3
|
(0.6
|
)
|
|||||
|
Finance income
|
|
1.8
|
2.0
|
||||||
|
Finance expense
|
Note 5
|
(19.3
|
)
|
(25.7
|
)
|
||||
|
Earnings before tax
|
|
227.1
|
168.3
|
||||||
|
Income tax expense - net
|
|
(77.9
|
)
|
(45.0
|
)
|
||||
|
Net earnings
|
|
$
|
149.2
|
$
|
123.3
|
||||
|
Net earnings (loss) attributable to:
|
|
||||||||
|
Non-controlling interests
|
|
$
|
(0.3
|
)
|
$
|
0.6
|
|||
|
Common shareholders
|
|
$
|
149.5
|
$
|
122.7
|
||||
|
|
|
||||||||
|
Earnings per share attributable to common shareholders
|
|
||||||||
|
Basic
|
|
$
|
0.12
|
$
|
0.10
|
||||
|
Diluted
|
|
$
|
0.12
|
$
|
0.10
|
||||
|
|
|
||||||||
|
Weighted average number of common shares outstanding
(millions) |
Note 11
|
||||||||
|
Basic
|
|
1,259.2
|
1,254.6
|
||||||
|
Diluted
|
|
1,268.4
|
1,265.3
|
||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
KINROSS GOLD CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited expressed in millions of United States dollars)
|
|
|
Three months ended
|
|||||||
|
|
|
March 31,
|
March 31,
|
||||||
|
|
|
2021
|
2020
|
||||||
|
|
|
||||||||
|
|
|
||||||||
|
Net earnings
|
|
$
|
149.2
|
$
|
123.3
|
||||
|
|
|
||||||||
|
Other comprehensive income (loss), net of tax:
|
Note 5
|
||||||||
|
Items that will not be reclassified to profit or loss:
|
|
||||||||
|
Equity investments at fair value through other comprehensive income ("FVOCI") - net change in fair value(a)
|
|
(13.7
|
)
|
(52.9
|
)
|
||||
|
|
|
||||||||
|
Items that are or may be reclassified to profit or loss in subsequent periods:
|
|
||||||||
|
Cash flow hedges - effective portion of changes in fair value(b)
|
|
10.4
|
(58.7
|
)
|
|||||
|
Cash flow hedges - reclassified out of accumulated other comprehensive income ("AOCI")(c)
|
|
(1.0
|
)
|
3.3
|
|||||
|
|
|
(4.3
|
)
|
(108.3
|
)
|
||||
|
Total comprehensive income
|
|
$
|
144.9
|
$
|
15.0
|
||||
|
|
|
||||||||
|
Attributable to non-controlling interest
|
|
$
|
(0.3
|
)
|
$
|
0.6
|
|||
|
Attributable to common shareholders
|
|
$
|
145.2
|
$
|
14.4
|
||||
|
|
|
||||||||
|
(a) Net of tax expense (recovery) of $nil (2020 - $nil).
|
|
(b) Net of tax expense (recovery) of $2.3 million (2020 - $(16.2) million).
(c) Net of tax (recovery) expense of $(0.1) million (2020 - $1.1 million).
|
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
KINROSS GOLD CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited expressed in millions of United States dollars)
|
|
|
Three months ended
|
|||||||
|
|
|
March 31,
|
March 31,
|
||||||
|
|
|
2021
|
2020
|
||||||
|
Net inflow (outflow) of cash related to the following activities:
|
|
||||||||
|
Operating:
|
|
||||||||
|
Net earnings
|
|
$
|
149.2
|
$
|
123.3
|
||||
|
Adjustments to reconcile net earnings to net cash provided from
operating activities: |
|||||||||
|
Depreciation, depletion and amortization
|
|
207.0
|
193.1
|
||||||
|
Share-based compensation expense
|
|
3.8
|
4.5
|
||||||
|
Finance expense
|
|
19.3
|
25.7
|
||||||
|
Deferred tax expense
|
|
1.1
|
68.4
|
||||||
|
Foreign exchange losses and other
|
|
19.2
|
3.6
|
||||||
|
Changes in operating assets and liabilities:
|
|
||||||||
|
Accounts receivable and other assets
|
|
(5.1
|
)
|
(78.6
|
)
|
||||
|
Inventories
|
|
0.3
|
7.7
|
||||||
|
Accounts payable and accrued liabilities
|
|
10.1
|
15.8
|
||||||
|
Cash flow provided from operating activities
|
|
404.9
|
363.5
|
||||||
|
Income taxes paid
|
(125.1
|
)
|
(63.9
|
)
|
|||||
|
Net cash flow provided from operating activities
|
|
279.8
|
299.6
|
||||||
|
Investing:
|
|
||||||||
|
Additions to property, plant and equipment
|
|
(204.2
|
)
|
(191.4
|
)
|
||||
|
Interest paid capitalized to property, plant and equipment
|
Note 7
|
(23.9
|
)
|
(22.3
|
)
|
||||
|
Acquisitions
|
Note 4
|
(141.5
|
)
|
(128.3
|
)
|
||||
|
Net additions to long-term investments and other assets
|
|
(2.7
|
)
|
(1.9
|
)
|
||||
|
Net proceeds from the sale of property, plant and equipment
|
|
0.4
|
1.5
|
||||||
|
Decrease in restricted cash - net
|
|
2.4
|
1.8
|
||||||
|
Interest received and other - net
|
|
0.7
|
1.0
|
||||||
|
Net cash flow used in investing activities
|
|
(368.8
|
)
|
(339.6
|
)
|
||||
|
Financing:
|
|
||||||||
|
Proceeds from drawdown of debt
|
|
-
|
750.0
|
||||||
|
Repayment of debt
|
|
-
|
(100.0
|
)
|
|||||
|
Interest paid
|
Note 7
|
(23.6
|
)
|
(25.6
|
)
|
||||
|
Payment of lease liabilities
|
|
(7.6
|
)
|
(4.7
|
)
|
||||
|
Dividends paid to common shareholders
|
Note 9
|
(37.8
|
)
|
-
|
|||||
|
Other - net
|
|
4.6
|
(6.6
|
)
|
|||||
|
Net cash flow (used in) provided from financing activities
|
|
(64.4
|
)
|
613.1
|
|||||
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(1.4
|
)
|
(9.6
|
)
|
||||
|
(Decrease) increase in cash and cash equivalents
|
|
(154.8
|
)
|
563.5
|
|||||
|
Cash and cash equivalents, beginning of period
|
|
1,210.9
|
575.1
|
||||||
|
Cash and cash equivalents, end of period
|
|
$
|
1,056.1
|
$
|
1,138.6
|
||||
|
|
|
||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
KINROSS GOLD CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited expressed in millions of United States dollars)
|
|
|
Three months ended
|
|||||||
|
|
|
March 31,
|
March 31,
|
||||||
|
|
|
2021
|
2020
|
||||||
|
|
|
||||||||
|
Common share capital
|
|
||||||||
|
Balance at the beginning of the period
|
|
$
|
4,473.7
|
$
|
14,926.2
|
||||
|
Transfer from contributed surplus on exercise of restricted shares
|
|
7.4
|
7.1
|
||||||
|
Options exercised, including cash
|
|
5.1
|
8.2
|
||||||
|
Balance at the end of the period
|
|
$
|
4,486.2
|
$
|
14,941.5
|
||||
|
|
|
||||||||
|
Contributed surplus
|
|
||||||||
|
Balance at the beginning of the period
|
|
$
|
10,709.0
|
$
|
242.1
|
||||
|
Share-based compensation
|
|
3.8
|
4.5
|
||||||
|
Transfer of fair value of exercised options and restricted shares
|
|
(15.7
|
)
|
(16.2
|
)
|
||||
|
Balance at the end of the period
|
|
$
|
10,697.1
|
$
|
230.4
|
||||
|
|
|
||||||||
|
Accumulated deficit
|
|
||||||||
|
Balance at the beginning of the period
|
|
$
|
(8,562.5
|
)
|
$
|
(9,829.4
|
)
|
||
|
Dividends paid
|
Note 9
|
(37.8
|
)
|
-
|
|||||
|
Net earnings attributable to common shareholders
|
|
149.5
|
122.7
|
||||||
|
Balance at the end of the period
|
|
$
|
(8,450.8
|
)
|
$
|
(9,706.7
|
)
|
||
|
|
|
||||||||
|
Accumulated other comprehensive loss
|
|
||||||||
|
Balance at the beginning of the period
|
|
$
|
(23.7
|
)
|
$
|
(20.4
|
)
|
||
|
Other comprehensive loss, net of tax
|
|
(4.3
|
)
|
(108.3
|
)
|
||||
|
Balance at the end of the period
|
|
$
|
(28.0
|
)
|
$
|
(128.7
|
)
|
||
|
Total accumulated deficit and accumulated other comprehensive loss
|
|
$
|
(8,478.8
|
)
|
$
|
(9,835.4
|
)
|
||
|
|
|
||||||||
|
Total common shareholders' equity
|
|
$
|
6,704.5
|
$
|
5,336.5
|
||||
|
|
|
||||||||
|
Non-controlling interests
|
|
||||||||
|
Balance at the beginning of the period
|
|
$
|
66.5
|
$
|
14.1
|
||||
|
Net (loss) earnings attributable to non-controlling interests
|
|
(0.3
|
)
|
0.6
|
|||||
|
Funding from non-controlling interest
|
|
0.9
|
-
|
||||||
|
Balance at the end of the period
|
|
$
|
67.1
|
$
|
14.7
|
||||
|
|
|
||||||||
|
Total equity
|
|
$
|
6,771.6
|
$
|
5,351.2
|
||||
|
|
|
||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
1.
|
DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS
|
Kinross Gold Corporation and its subsidiaries and joint arrangements (collectively, "Kinross" or the "Company") are engaged in gold mining and related activities, including
exploration and acquisition of gold-bearing properties, extraction and processing of gold-containing ore and reclamation of gold mining properties. Kinross Gold Corporation, the ultimate parent, is a public company incorporated and domiciled in
Canada with its registered office at 25 York Street, 17th floor, Toronto, Ontario, Canada, M5J 2V5. Kinross' gold production and exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Chile,
Ghana and Mauritania. Gold is produced in the form of doré, which is shipped to refineries for final processing. Kinross also produces and sells a quantity of silver. The Company is listed on the Toronto Stock Exchange and the New York Stock
Exchange.
The interim condensed consolidated financial statements of the Company for the period ended March 31, 2021 were authorized for issue in accordance with a resolution of the
board of directors on May 11, 2021.
|
2.
|
BASIS OF PRESENTATION
|
These unaudited interim condensed consolidated financial statements (“interim financial statements”) have been prepared in accordance with IAS 34 “Interim Financial
Reporting”. The accounting policies applied in these interim financial statements are consistent with those used in the annual audited consolidated financial statements for the year ended December 31, 2020.
These interim financial statements do not include all disclosures required by International Financial Reporting Standards (“IFRS”) for annual audited consolidated financial
statements and accordingly should be read in conjunction with the Company’s annual audited consolidated financial statements for the year ended December 31, 2020 prepared in accordance with IFRS as issued by the International Accounting Standards
Board.
|
3.
|
SIGNIFICANT JUDGMENTS, ESTIMATES AND ASSUMPTIONS
|
The preparation of these interim financial statements requires the use of certain significant accounting estimates and judgments by management in applying the Company’s
accounting policies. The areas involving significant judgments, estimates and assumptions have been set out in and are consistent with Note 5 of the Company’s annual audited consolidated financial statements for the year ended December 31, 2020.
|
4.
|
ACQUISITIONS
|
|
i.
|
Acquisition of Chulbatkan license
|
On January 16, 2020, the Company closed the acquisition of the Chulbatkan license and paid the first installment of $141.5 million, representing 50% of the
$283.0 million fixed purchase price, plus ordinary course net working capital adjustments of $3.1 million. On January 15, 2021, the remaining $141.5 million was paid in cash, settling the related deferred payment obligation.
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
5.
|
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENT DETAILS
|
Interim Condensed Consolidated Balance Sheets
|
i.
|
Cash and cash equivalents:
|
|
|
March 31,
|
December 31,
|
||||||
|
|
2021
|
2020
|
||||||
|
Cash on hand and balances with banks
|
$
|
582.5
|
$
|
562.0
|
||||
|
Short-term deposits
|
473.6
|
648.9
|
||||||
|
|
$
|
1,056.1
|
$
|
1,210.9
|
||||
|
ii.
|
Restricted cash:
|
|
|
March 31,
|
December 31,
|
||||||
|
|
2021
|
2020
|
||||||
|
Restricted cash(a)
|
$
|
11.3
|
$
|
13.7
|
||||
|
(a)
|
Restricted cash relates to loan escrow judicial deposits and environmental indemnity deposits.
|
|
iii.
|
Accounts receivable and other assets:
|
|
|
March 31,
|
December 31,
|
||||||
|
|
2021
|
2020
|
||||||
|
Trade receivables
|
$
|
12.0
|
$
|
8.1
|
||||
|
Prepaid expenses
|
16.8
|
21.6
|
||||||
|
VAT receivable
|
42.7
|
46.6
|
||||||
|
Deposits
|
28.5
|
28.9
|
||||||
|
Unrealized fair value of derivative assets(a)
|
14.2
|
6.5
|
||||||
|
Other
|
9.8
|
10.6
|
||||||
|
|
$
|
124.0
|
$
|
122.3
|
||||
|
(a)
|
See Note 6 for details of the current portion of unrealized fair value of derivative assets.
|
|
iv.
|
Inventories:
|
|
|
March 31,
|
December 31,
|
||||||
|
|
2021
|
2020
|
||||||
|
Ore in stockpiles(a)
|
$
|
258.8
|
$
|
277.4
|
||||
|
Ore on leach pads(b)
|
568.4
|
498.8
|
||||||
|
In-process
|
106.8
|
108.0
|
||||||
|
Finished metal
|
66.5
|
50.3
|
||||||
|
Materials and supplies
|
425.3
|
448.2
|
||||||
|
|
1,425.8
|
1,382.7
|
||||||
|
Long-term portion of ore in stockpiles and ore on leach pads(a),(b)
|
(327.6
|
)
|
(309.8
|
)
|
||||
|
|
$
|
1,098.2
|
$
|
1,072.9
|
||||
|
(a)
|
Ore in stockpiles relates to the Company’s operating mines. Low-grade material not scheduled for processing within the
next 12 months is included in other long-term assets. See Note 5vii.
|
|
(b)
|
Ore on leach pads relates to the Company's Tasiast, Bald Mountain, Round Mountain and Fort Knox mines. Based on current
mine plans, the Company expects to place the last tonne of ore on its leach pads at Bald Mountain in 2023, Round Mountain in 2026 and Fort Knox in 2028. The last tonne of ore was placed on the Tasiast leach pads during 2020. Material not
scheduled for processing within the next 12 months is included in other long-term assets. See Note 5vii.
|
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
v.
|
Property, plant and equipment:
|
|
|
Mineral Interests
|
|||||||||||||||
|
|
Land, plant and equipment(a)
|
Development and operating properties(b)
|
Pre-development properties(c)
|
Total
|
||||||||||||
|
Cost
|
||||||||||||||||
|
Balance at January 1, 2021
|
$
|
10,190.0
|
$
|
10,136.2
|
$
|
465.3
|
$
|
20,791.5
|
||||||||
|
Additions
|
96.3
|
126.5
|
8.0
|
230.8
|
||||||||||||
|
Capitalized interest
|
8.1
|
6.6
|
1.2
|
15.9
|
||||||||||||
|
Disposals
|
(4.1
|
)
|
-
|
-
|
(4.1
|
)
|
||||||||||
|
Other
|
0.7
|
-
|
-
|
0.7
|
||||||||||||
|
Balance at March 31, 2021
|
10,291.0
|
10,269.3
|
474.5
|
21,034.8
|
||||||||||||
|
|
||||||||||||||||
|
Accumulated depreciation, depletion, and amortization
|
||||||||||||||||
|
Balance at January 1, 2021
|
$
|
(6,471.3
|
)
|
$
|
(6,666.7
|
)
|
$
|
-
|
$
|
(13,138.0
|
)
|
|||||
|
Depreciation, depletion and amortization
|
(142.7
|
)
|
(130.2
|
)
|
-
|
(272.9
|
)
|
|||||||||
|
Disposals
|
3.5
|
-
|
-
|
3.5
|
||||||||||||
|
Other
|
2.1
|
(2.4
|
)
|
-
|
(0.3
|
)
|
||||||||||
|
Balance at March 31, 2021
|
(6,608.4
|
)
|
(6,799.3
|
)
|
-
|
(13,407.7
|
)
|
|||||||||
|
|
||||||||||||||||
|
Net book value
|
$
|
3,682.6
|
$
|
3,470.0
|
$
|
474.5
|
$
|
7,627.1
|
||||||||
|
|
||||||||||||||||
|
Amount included above as at March 31, 2021:
|
||||||||||||||||
|
Assets under construction
|
$
|
376.8
|
$
|
264.1
|
$
|
27.0
|
$
|
667.9
|
||||||||
|
Assets not being depreciated(d)
|
$
|
609.9
|
$
|
592.7
|
$
|
474.5
|
$
|
1,677.1
|
||||||||
|
|
||||||||||||||||
|
(a)
|
Additions includes $4.4 million of right-of-use assets for lease arrangements entered into during the three months ended
March 31, 2021. Depreciation, depletion and amortization includes depreciation for leased right-of-use assets of $8.6 million during the three months ended March 31, 2021. The net book value of property, plant and equipment includes
leased right-of use assets with an aggregate net book value of $72.0 million as at March 31, 2021.
|
|
(b)
|
At March 31, 2021, the significant development and operating properties are Fort Knox, Round Mountain, Bald Mountain,
Paracatu, Kupol, Tasiast, Chirano, La Coipa and Lobo-Marte.
|
|
(c)
|
At March 31, 2021, the significant pre-development properties include the Chulbatkan license area, including the Udinsk
project, and the Manh Choh project (formerly known as the Peak project).
|
|
(d)
|
Assets not being depreciated relate to land, capitalized exploration and evaluation (“E&E”) costs, assets under
construction, which relate to expansion projects, and other assets that are in various stages of being readied for use.
|
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
|
Mineral Interests
|
|||||||||||||||
|
|
Land, plant and equipment(a)
|
Development and operating properties(b)
|
Pre-development properties
|
Total
|
||||||||||||
|
Cost
|
||||||||||||||||
|
Balance at January 1, 2020
|
$
|
9,715.0
|
$
|
9,540.6
|
$
|
13.4
|
$
|
19,269.0
|
||||||||
|
Additions
|
535.5
|
539.9
|
15.5
|
1,090.9
|
||||||||||||
|
Acquisitions(c)
|
8.2
|
15.4
|
441.8
|
465.4
|
||||||||||||
|
Capitalized interest
|
22.8
|
25.5
|
0.8
|
49.1
|
||||||||||||
|
Disposals
|
(82.9
|
)
|
-
|
(0.1
|
)
|
(83.0
|
)
|
|||||||||
|
Other
|
(8.6
|
)
|
14.8
|
(6.1
|
)
|
0.1
|
||||||||||
|
Balance at December 31, 2020
|
10,190.0
|
10,136.2
|
465.3
|
20,791.5
|
||||||||||||
|
|
||||||||||||||||
|
Accumulated depreciation, depletion, amortization and reversal of impairment charges
|
||||||||||||||||
|
Balance at January 1, 2020
|
$
|
(6,114.1
|
)
|
$
|
(6,814.9
|
)
|
$
|
-
|
$
|
(12,929.0
|
)
|
|||||
|
Depreciation, depletion and amortization
|
(589.9
|
)
|
(380.3
|
)
|
-
|
(970.2
|
)
|
|||||||||
|
Reversals of impairment charges(d)
|
160.5
|
528.5
|
-
|
689.0
|
||||||||||||
|
Disposals
|
73.8
|
-
|
-
|
73.8
|
||||||||||||
|
Other
|
(1.6
|
)
|
-
|
-
|
(1.6
|
)
|
||||||||||
|
Balance at December 31, 2020
|
(6,471.3
|
)
|
(6,666.7
|
)
|
-
|
(13,138.0
|
)
|
|||||||||
|
|
||||||||||||||||
|
Net book value
|
$
|
3,718.7
|
$
|
3,469.5
|
$
|
465.3
|
$
|
7,653.5
|
||||||||
|
|
||||||||||||||||
|
Amount included above as at December 31, 2020:
|
||||||||||||||||
|
Assets under construction
|
$
|
540.8
|
$
|
189.1
|
$
|
19.1
|
$
|
749.0
|
||||||||
|
Assets not being depreciated(e)
|
$
|
769.9
|
$
|
607.0
|
$
|
465.3
|
$
|
1,842.2
|
||||||||
|
|
||||||||||||||||
|
(a)
|
Additions includes $38.2 million of right-of-use assets for lease arrangements entered into during the year ended December
31, 2020. Depreciation, depletion and amortization includes depreciation for leased right-of-use assets of $16.1 million during the year ended December 31, 2020. The net book value of property, plant and equipment includes leased right-of
use assets with an aggregate net book value of $76.2 million as at December 31, 2020.
|
|
(b)
|
At December 31, 2020, the significant development and operating properties are Fort Knox, Round Mountain, Bald Mountain,
Paracatu, Kupol, Tasiast, Chirano, La Coipa, and Lobo-Marte.
|
|
(c)
|
During the year ended December 31, 2020, the Company acquired the Chulbatkan license area and a 70% interest in the Manh
Choh project, with both respective mineral interests classified in pre-development properties.
|
|
(d)
|
At December 31, 2020, impairment reversals of property, plant and equipment were recorded at Tasiast, Chirano, and
Lobo-Marte. At June 30, 2020, an impairment reversal was recorded at Lobo-Marte, entirely related to property, plant and equipment.
|
|
(e)
|
Assets not being depreciated relate to land, capitalized E&E costs, assets under construction, which relate to
expansion projects, and other assets that are in various stages of being readied for use.
|
Capitalized interest primarily relates to qualifying capital expenditures at Tasiast, Fort Knox and Round Mountain and had an annualized weighted average borrowing rate of
5.68% for the three months ended March 31, 2021 (three months ended March 31, 2020 - 5.42%).
At March 31, 2021, $538.8 million of E&E assets were included in mineral interests (December 31, 2020 - $526.1 million). The Company had no additions or transfers to
capitalized development during the three months ended March 31, 2021. The Company capitalized $12.7 million and expensed $8.0 million of E&E costs during the three months ended March 31, 2021 (three months ended March 31, 2020 - $3.0 million
and $2.0 million, respectively). The amounts capitalized and expensed are included in investing and operating cash flows, respectively.
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
vi.
|
Long-term investments:
|
Gains and losses on equity investments at FVOCI are recorded in AOCI as follows:
|
|
March 31, 2021
|
December 31, 2020
|
||||||||||||||
|
|
Fair value
|
Gains (losses) in AOCI(a)
|
Fair value
|
Gains (losses) in AOCI(a)
|
||||||||||||
|
Investments in an accumulated gain position
|
$
|
70.0
|
$
|
11.0
|
$
|
80.9
|
$
|
18.2
|
||||||||
|
Investments in an accumulated loss position
|
31.3
|
(53.5
|
)
|
32.1
|
(47.0
|
)
|
||||||||||
|
Net realized gains (losses)
|
-
|
2.9
|
-
|
2.9
|
||||||||||||
|
|
$
|
101.3
|
$
|
(39.6
|
)
|
$
|
113.0
|
$
|
(25.9
|
)
|
||||||
|
(a)
|
See the interim condensed consolidated statements of comprehensive income and Note 5x for details of changes in fair
values recognized in other comprehensive income during the three months ended March 31, 2021 and 2020.
|
|
vii.
|
Other long-term assets:
|
|
|
March 31,
|
December 31,
|
||||||
|
|
2021
|
2020
|
||||||
|
Long-term portion of ore in stockpiles and ore on leach pads(a)
|
$
|
327.6
|
$
|
309.8
|
||||
|
Deferred charges, net of amortization
|
6.4
|
6.0
|
||||||
|
Long-term receivables
|
120.0
|
124.1
|
||||||
|
Advances for the purchase of capital equipment
|
8.5
|
9.1
|
||||||
|
Restricted cash(b)
|
25.0
|
25.0
|
||||||
|
Unrealized fair value of derivative assets(c)
|
15.5
|
10.5
|
||||||
|
Other
|
54.9
|
52.7
|
||||||
|
|
$
|
557.9
|
$
|
537.2
|
||||
|
(a)
|
Long-term portion of ore in stockpiles and ore on leach pads represents low-grade material not scheduled for processing
within the next 12 months. As at March 31, 2021, long-term ore in stockpiles was at the Company’s Fort Knox, Kupol, Tasiast and Paracatu mines, and long-term ore on leach pads was at the Company’s Fort Knox and Round Mountain mines.
|
|
(b)
|
See Note 7iii for details of the Tasiast loan and cash restricted for future loan payments as at March 31, 2021.
|
|
(c)
|
See Note 6 for details of the non-current portion of unrealized fair value of derivative assets.
|
|
viii.
|
Accounts payable and accrued liabilities:
|
|
|
March 31,
|
December 31,
|
||||||
|
|
2021
|
2020
|
||||||
|
Trade payables
|
$
|
85.3
|
$
|
89.1
|
||||
|
Accrued liabilities
|
204.0
|
242.8
|
||||||
|
Employee related accrued liabilities
|
113.4
|
147.3
|
||||||
|
|
$
|
402.7
|
$
|
479.2
|
||||
|
ix.
|
Other current liabilities:
|
|
|
March 31,
|
December 31,
|
||||||
|
|
2021
|
2020
|
||||||
|
Current portion of lease liabilities
|
$
|
26.6
|
$
|
28.4
|
||||
|
Current portion of unrealized fair value of derivative liabilities(a)
|
18.4
|
21.3
|
||||||
|
|
$
|
45.0
|
$
|
49.7
|
||||
|
(a)
|
See Note 6 for details of the current portion of unrealized fair value of derivative liabilities.
|
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
x.
|
Accumulated other comprehensive income (loss):
|
|
|
Long-term Investments
|
Derivative
Contracts |
Total
|
|||||||||
|
Balance at December 31, 2019
|
$
|
(26.2
|
)
|
$
|
5.8
|
$
|
(20.4
|
)
|
||||
|
Other comprehensive income (loss) before tax
|
0.3
|
(5.7
|
)
|
(5.4
|
)
|
|||||||
|
Tax
|
-
|
2.1
|
2.1
|
|||||||||
|
Balance at December 31, 2020
|
$
|
(25.9
|
)
|
$
|
2.2
|
$
|
(23.7
|
)
|
||||
|
Other comprehensive income (loss) before tax
|
(13.7
|
)
|
11.6
|
(2.1
|
)
|
|||||||
|
Tax
|
-
|
(2.2
|
)
|
(2.2
|
)
|
|||||||
|
Balance at March 31, 2021
|
$
|
(39.6
|
)
|
$
|
11.6
|
$
|
(28.0
|
)
|
||||
Interim Condensed Consolidated Statements of Operations
|
xi.
|
Other income (expense) – net:
|
|
|
Three months ended March 31,
|
|||||||
|
|
2021
|
2020
|
||||||
|
Net (losses) gains on dispositions of assets
|
$
|
(0.2
|
)
|
$
|
1.1
|
|||
|
Foreign exchange gains (losses) - net
|
3.9
|
(2.3
|
)
|
|||||
|
Net non-hedge derivative losses
|
(1.5
|
)
|
(0.8
|
)
|
||||
|
Other - net
|
0.1
|
1.4
|
||||||
|
|
$
|
2.3
|
$
|
(0.6
|
)
|
|||
|
xii.
|
Finance expense:
|
|
|
Three months ended March 31,
|
|||||||
|
|
2021
|
2020
|
||||||
|
Accretion of reclamation and remediation obligations
|
$
|
(3.6
|
)
|
$
|
(5.8
|
)
|
||
|
Interest expense, including accretion of debt and lease liabilities(a), (b)
|
(15.7
|
)
|
(19.9
|
)
|
||||
|
|
$
|
(19.3
|
)
|
$
|
(25.7
|
)
|
||
|
(a)
|
During the three months ended March 31, 2021, $15.9 million of interest was capitalized to property, plant and equipment
(three months ended March 31, 2020 - $8.9 million). See Note 5v.
|
|
(b)
|
During the three months ended March 31, 2021, accretion of lease liabilities was $1.0 million (three months ended March
31, 2020 - $0.7 million).
|
Total interest paid, including interest capitalized, during the three months ended March 31, 2021 was $47.5 million (three months ended March 31, 2020 - $47.9 million).
|
6.
|
FAIR VALUE MEASUREMENT
|
|
(a)
|
Recurring fair value measurement
|
Carrying values for financial instruments carried at amortized cost, including cash and cash equivalents, restricted cash, short-term investments,
accounts receivable, and accounts payable and accrued liabilities, approximate fair values due to their short-term maturities.
Assets (liabilities) measured at fair value on a recurring basis as at March 31, 2021 include:
|
|
||||||||||||||||
|
|
Level 1
|
Level 2
|
Level 3
|
Aggregate
Fair Value |
||||||||||||
|
Equity investments at FVOCI
|
$
|
101.3
|
$
|
-
|
$
|
-
|
$
|
101.3
|
||||||||
|
Derivative contracts:
|
||||||||||||||||
|
Foreign currency forward and collar contracts
|
-
|
(11.8
|
)
|
-
|
(11.8
|
)
|
||||||||||
|
Energy swap contracts
|
-
|
25.1
|
-
|
25.1
|
||||||||||||
|
Total return swap contracts
|
-
|
(8.3
|
)
|
-
|
(8.3
|
)
|
||||||||||
|
|
$
|
101.3
|
$
|
5.0
|
$
|
-
|
$
|
106.3
|
||||||||
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
The valuation techniques that are used to measure fair value are as follows:
Equity investments at FVOCI
Equity investments at FVOCI include shares in publicly traded companies listed on a stock exchange. The fair value of equity investments at FVOCI is
determined based on a market approach reflecting the closing price of each particular security at the consolidated balance sheet date. The closing price is a quoted market price obtained from the exchange that is the principal active market for the
particular security, and therefore equity investments at FVOCI are classified within Level 1 of the fair value hierarchy.
Derivative contracts
The Company’s derivative contracts are valued using pricing models and the Company generally uses similar models to value similar instruments. Such
pricing models require a variety of inputs, including contractual cash flows, quoted market prices, applicable yield curves and credit spreads. The fair value of derivative contracts is based on quoted market prices for comparable contracts and
represents the amount the Company would have received from, or paid to, a counterparty to unwind the contract at the quoted market rates in effect at the consolidated balance sheet date and therefore derivative contracts are classified within Level
2 of the fair value hierarchy.
The following table summarizes information about derivative contracts outstanding at March 31, 2021 and December 31, 2020:
|
|
March 31, 2021
|
December 31, 2020
|
||||||||||||||
|
|
Asset / (Liability)
|
AOCI
|
Asset / (Liability)
|
AOCI
|
||||||||||||
|
Fair Value
|
Fair Value
|
|||||||||||||||
|
Currency contracts
|
||||||||||||||||
|
Foreign currency forward and collar contracts(a)
|
$
|
(11.8
|
)
|
$
|
(7.3
|
)
|
$
|
(4.3
|
)
|
$
|
(2.5
|
)
|
||||
|
|
||||||||||||||||
|
Commodity contracts
|
||||||||||||||||
|
Energy swap contracts(b)
|
25.1
|
18.9
|
7.6
|
4.7
|
||||||||||||
|
|
||||||||||||||||
|
Other contracts
|
||||||||||||||||
|
Total return swap contracts
|
(8.3
|
)
|
-
|
(11.0
|
)
|
-
|
||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Total all contracts
|
$
|
5.0
|
$
|
11.6
|
$
|
(7.7
|
)
|
$
|
2.2
|
|||||||
|
|
||||||||||||||||
|
Unrealized fair value of derivative assets
|
||||||||||||||||
|
Current
|
$
|
14.2
|
$
|
6.5
|
||||||||||||
|
Non-current
|
15.5
|
10.5
|
||||||||||||||
|
|
$
|
29.7
|
$
|
17.0
|
||||||||||||
|
Unrealized fair value of derivative liabilities
|
||||||||||||||||
|
Current
|
$
|
(18.4
|
)
|
$
|
(21.3
|
)
|
||||||||||
|
Non-current
|
(6.3
|
)
|
(3.4
|
)
|
||||||||||||
|
|
$
|
(24.7
|
)
|
$
|
(24.7
|
)
|
||||||||||
|
Total net fair value
|
$
|
5.0
|
$
|
(7.7
|
)
|
|||||||||||
(a) Of the total amount recorded in AOCI at March 31, 2021, $(5.9) million will be reclassified out of AOCI within the next 12 months
as a result of settling the contracts.
(b) Of the total amount recorded in AOCI at March 31, 2021, $8.5 million will be reclassified out of AOCI within the next 12 months
as a result of settling the contracts.
|
(b)
|
Fair value of financial assets and liabilities not measured and recognized at fair value
|
Long-term debt is measured at amortized cost. The fair value of long-term debt is primarily measured using market determined variables, and therefore is classified within
Level 2 of the fair value hierarchy. See Note 7.
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
7.
|
LONG-TERM DEBT AND CREDIT FACILITIES
|
|
|
|
||||||||||||||||||||||||||||
|
|
|
March 31, 2021
|
December 31, 2020
|
||||||||||||||||||||||||||
|
|
|
Interest Rates
|
Nominal Amount
|
Deferred Financing Costs
|
Carrying Amount(a)
|
Fair
Value(b) |
Carrying Amount(a)
|
Fair
Value(b) |
|||||||||||||||||||||
|
|
|
||||||||||||||||||||||||||||
|
Senior notes
|
(i)
|
4.50%-6.875%
|
|
$
|
1,747.8
|
$
|
(7.4
|
)
|
$
|
1,740.4
|
$
|
1,950.9
|
$
|
1,739.8
|
$
|
1,999.5
|
|||||||||||||
|
Revolving credit facility
|
(ii)
|
LIBOR plus 1.625%
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
|
Tasiast loan
|
(iii)
|
LIBOR plus 4.380%
|
200.0
|
(15.1
|
)
|
184.9
|
200.0
|
184.1
|
200.0
|
||||||||||||||||||||
|
Total long-term and current debt
|
$
|
1,947.8
|
$
|
(22.5
|
)
|
$
|
1,925.3
|
$
|
2,150.9
|
$
|
1,923.9
|
$
|
2,199.5
|
||||||||||||||||
|
Less: current portion
|
|
(500.0
|
)
|
0.2
|
(499.8
|
)
|
(503.3
|
)
|
(499.7
|
)
|
(509.3
|
)
|
|||||||||||||||||
|
Long-term debt and credit facility
|
$
|
1,447.8
|
$
|
(22.3
|
)
|
$
|
1,425.5
|
$
|
1,647.6
|
$
|
1,424.2
|
$
|
1,690.2
|
||||||||||||||||
(a) Includes transaction costs on senior notes financings.
(b) The fair value of senior notes is primarily determined using quoted market determined variables. See Note 6(b).
|
(i)
|
Senior notes
|
The Company’s $1,750.0 million of senior notes consist of $500.0 million principal amount of 5.125% notes due in September 2021, $500.0 million
principal amount of 5.950% notes due in 2024, $500.0 million principal amount of 4.50% notes due in 2027 and $250.0 million principal amount of 6.875% notes due in 2041.
On April 29, 2021, notice was sent to the noteholders of the 5.125% senior notes due September 1, 2021, of the Company’s intention to redeem all such
outstanding notes, which have an aggregate principal amount of $500.0 million outstanding, on June 1, 2021. These notes will be redeemed at a redemption price equal to their principal amount outstanding plus accrued and unpaid interest to, but not
including, June 1, 2021, in accordance with the terms of the notes.
|
(ii)
|
Revolving credit facility
|
As at March 31, 2021, the Company had utilized $7.3 million (December 31, 2020 - $7.5 million) of its $1,500.0 million revolving credit facility,
entirely for letters of credit.
Loan interest on the revolving credit facility is variable, set at LIBOR plus an interest rate margin, which is dependent on the Company’s credit
rating. Based on the Company’s credit rating at March 31, 2021, interest charges and fees are as follows:
|
Type of credit
|
|
|
Revolving credit facility
|
LIBOR plus 1.625%
|
|
Letters of credit
|
1.0833-1.625%
|
|
Standby fee applicable to unused availability
|
0.325%
|
The revolving credit facility agreement contains various covenants including limits on indebtedness, asset sales and liens. The Company is in compliance
with its financial covenant in the credit agreement at March 31, 2021.
The Company is monitoring the announced future LIBOR reference rate phase out and replacement, and will engage in discussions with applicable financial
institutions to ensure a comparable replacement pricing mechanism is agreed to where LIBOR is required as a reference rate.
|
(iii)
|
Tasiast Loan
|
On December 16, 2019, the Company completed a definitive loan agreement for up to $300.0 million for Tasiast, with the first drawdown of $200.0 million
received on April 9, 2020. The remaining $100.0 million is available to be drawn up to March 2022.
The asset recourse loan has a term of eight years, maturing in December 2027, a floating interest rate of LIBOR plus a weighted average margin of 4.38% and
a standby fee applicable to unused availability of 1.60%, with semi-annual interest payments to be made in June and December for the term of the loan, and first principal repayments due in June 2022.
As at March 31, 2021, the Company held $25.0 million in a separate bank account as required under the Tasiast loan agreement. This cash, which is subject
to fluctuations over time depending on the next scheduled principal and interest payments, is required to remain in the bank account for the duration of the loan and is therefore recorded as restricted cash in other long-term assets. See Note 5vii.
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
(iv)
|
Other
|
The maturity date for the Company’s $300.0 million Letter of Credit guarantee facility with Export Development Canada (“EDC”) was extended to June 30,
2022, effective July 1, 2020. As part of the EDC renewal, the facility was expanded to allow for use for other obligations beyond reclamation liabilities. Total fees related to letters of credit under this facility were 0.75% of the utilized
amount. As at March 31, 2021, $228.8 million (December 31, 2020 - $228.9 million) was utilized under this facility.
In addition, at March 31, 2021, the Company had $179.5 million (December 31, 2020 - $175.6 million) in letters of credit and surety bonds outstanding in
respect of its operations in Brazil, Mauritania, Ghana and Chile. These have been issued pursuant to arrangements with certain international banks and incur average fees of 0.80%.
As at March 31, 2021, $297.6 million (December 31, 2020 - $290.1 million) of surety bonds were outstanding with respect to Kinross’ properties in the United States. These
surety bonds were issued pursuant to arrangements with international insurance companies and incur fees of 0.50%.
|
(v)
|
Changes in liabilities arising from financing activities
|
|
|
Long-term debt and credit facilities
|
Lease liabilities
|
Accrued interest payable(a)
|
Total
|
||||||||||||
|
Balance as at January 1, 2021
|
$
|
1,923.9
|
$
|
74.7
|
$
|
33.7
|
$
|
2,032.3
|
||||||||
|
Changes from financing cash flows
|
||||||||||||||||
|
Interest paid
|
-
|
-
|
(23.6
|
)
|
(23.6
|
)
|
||||||||||
|
Payment of lease liabilities
|
-
|
(7.6
|
)
|
-
|
(7.6
|
)
|
||||||||||
|
|
1,923.9
|
67.1
|
10.1
|
2,001.1
|
||||||||||||
|
Other changes
|
||||||||||||||||
|
Interest expense and accretion
|
$
|
-
|
$
|
1.0
|
$
|
14.7
|
$
|
15.7
|
||||||||
|
Capitalized interest
|
-
|
-
|
15.9
|
15.9
|
||||||||||||
|
Capitalized interest paid
|
-
|
-
|
(23.9
|
)
|
(23.9
|
)
|
||||||||||
|
Additions of lease liabilities
|
-
|
4.4
|
-
|
4.4
|
||||||||||||
|
Other
|
1.4
|
0.2
|
(4.6
|
)
|
(3.0
|
)
|
||||||||||
|
|
1.4
|
5.6
|
2.1
|
9.1
|
||||||||||||
|
Balance as at March 31, 2021
|
$
|
1,925.3
|
$
|
72.7
|
$
|
12.2
|
$
|
2,010.2
|
||||||||
|
(a)
|
Included in Accounts payable and accrued liabilities.
|
|
|
Long-term debt and credit facilities
|
Lease liabilities
|
Accrued interest payable(a)
|
Total
|
||||||||||||
|
Balance as at January 1, 2020
|
$
|
1,837.4
|
$
|
54.9
|
$
|
33.3
|
$
|
1,925.6
|
||||||||
|
Changes from financing cash flows
|
||||||||||||||||
|
Debt issued
|
950.0
|
-
|
-
|
950.0
|
||||||||||||
|
Debt repayments
|
(850.0
|
)
|
-
|
-
|
(850.0
|
)
|
||||||||||
|
Interest paid
|
-
|
-
|
(63.1
|
)
|
(63.1
|
)
|
||||||||||
|
Payment of lease liabilities
|
-
|
(20.7
|
)
|
-
|
(20.7
|
)
|
||||||||||
|
|
1,937.4
|
34.2
|
(29.8
|
)
|
1,941.8
|
|||||||||||
|
Other changes
|
||||||||||||||||
|
Interest expense and accretion
|
$
|
-
|
$
|
3.0
|
$
|
86.6
|
$
|
89.6
|
||||||||
|
Capitalized interest
|
-
|
-
|
49.1
|
49.1
|
||||||||||||
|
Capitalized interest paid
|
-
|
-
|
(47.9
|
)
|
(47.9
|
)
|
||||||||||
|
Additions of lease liabilities
|
-
|
38.2
|
-
|
38.2
|
||||||||||||
|
Other
|
(13.5
|
)
|
(0.7
|
)
|
(24.3
|
)
|
(38.5
|
)
|
||||||||
|
|
(13.5
|
)
|
40.5
|
63.5
|
90.5
|
|||||||||||
|
Balance as at December 31, 2020
|
$
|
1,923.9
|
$
|
74.7
|
$
|
33.7
|
$
|
2,032.3
|
||||||||
|
(a)
|
Included in Accounts payable and accrued liabilities.
|
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
8.
|
PROVISIONS
|
|
|
Reclamation and remediation obligations (i)
|
Other
|
Total
|
|||||||||
|
Balance at January 1, 2021
|
$
|
896.1
|
$
|
28.8
|
$
|
924.9
|
||||||
|
Additions
|
-
|
11.4
|
11.4
|
|||||||||
|
Reductions
|
-
|
(2.2
|
)
|
(2.2
|
)
|
|||||||
|
Reclamation spending
|
(5.5
|
)
|
-
|
(5.5
|
)
|
|||||||
|
Accretion
|
3.6
|
-
|
3.6
|
|||||||||
|
Balance at March 31, 2021
|
$
|
894.2
|
$
|
38.0
|
$
|
932.2
|
||||||
|
|
||||||||||||
|
Current portion
|
58.3
|
15.0
|
73.3
|
|||||||||
|
Non-current portion
|
835.9
|
23.0
|
858.9
|
|||||||||
|
|
$
|
894.2
|
$
|
38.0
|
$
|
932.2
|
||||||
|
(i)
|
Reclamation and remediation obligations
|
The Company conducts its operations so as to protect the public health and the environment, and to comply with all applicable laws and regulations governing protection of the
environment. Reclamation and remediation obligations arise throughout the life of each mine. The Company estimates future reclamation costs based on the level of current mining activity and estimates of costs required to fulfill the Company’s
future obligations. The above table details the items that affect the reclamation and remediation obligations.
Regulatory authorities in certain jurisdictions require that security be provided to cover the estimated reclamation and remediation obligations. As at March 31, 2021, letters
of credit totaling $384.6 million (December 31, 2020 - $379.9 million) had been issued to various regulatory agencies to satisfy financial assurance requirements for this purpose. The letters of credit were issued against the Company's Letter of
Credit guarantee facility with EDC, the revolving credit facility, and pursuant to arrangements with certain international banks. The Company is in compliance with all applicable requirements under these facilities. As at March 31, 2021, $296.8
million (December 31, 2020 - $289.3 million) of surety bonds were outstanding as security over reclamation and remediation obligations with respect to Kinross’ properties in the United States. The surety bonds were issued pursuant to arrangements
with international insurance companies.
|
9.
|
COMMON SHARE CAPITAL
|
The authorized share capital of the Company is comprised of an unlimited number of common shares without par value. A summary of common share transactions for the three months
ended March 31, 2021 and year ended December 31, 2020 is as follows:
|
|
Three months ended March 31, 2021
|
Year ended December 31, 2020
|
||||||||||||||
|
|
Number of shares
|
Amount
|
Number of shares
|
Amount
|
||||||||||||
|
|
(000's)
|
(000's)
|
||||||||||||||
|
Common shares
|
||||||||||||||||
|
Balance at January 1,
|
1,258,320
|
$
|
4,473.7
|
1,253,766
|
$
|
14,926.2
|
||||||||||
|
Transfer to contributed surplus on reduction of stated capital(a)
|
-
|
-
|
-
|
(10,473.4
|
)
|
|||||||||||
|
Issued under share option and restricted share plans
|
2,753
|
12.5
|
4,554
|
20.9
|
||||||||||||
|
Balance at end of period
|
1,261,073
|
$
|
4,486.2
|
1,258,320
|
$
|
4,473.7
|
||||||||||
|
|
||||||||||||||||
|
Total common share capital
|
$
|
4,486.2
|
$
|
4,473.7
|
||||||||||||
|
(a)
|
Effective as of May 6, 2020, the shareholders of the Company approved a resolution to reduce the stated capital account of
the common shares, with a resulting addition to contributed surplus.
|
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
i.
|
Dividends on common shares
|
The following summarizes dividends declared and paid during the three months ended March 31, 2021:
|
|
Total
|
|||||||
|
|
Per share
|
amount
|
||||||
|
Three months ended March 31, 2021
|
$
|
0.03
|
$
|
37.8
|
||||
There were no dividends declared but unpaid at March 31, 2021. No dividends were declared or paid during the three months ended March 31, 2020.
On May 11, 2021, the Board of Directors declared a dividend of $0.03 per common share payable on June 17, 2021 to shareholders of record on June 3, 2021.
|
10.
|
SHARE-BASED PAYMENTS
|
|
i.
|
Share option plan
|
The following table summarizes information about the stock options outstanding and exercisable at March 31, 2021:
|
|
Three months ended March 31, 2021
|
|||||||
|
|
Number of options (000's)
|
Weighted average exercise price (CDN$)
|
||||||
|
Outstanding at January 1, 2021
|
5,601
|
$
|
4.68
|
|||||
|
Exercised
|
(903
|
)
|
5.35
|
|||||
|
Forfeited
|
(90
|
)
|
5.23
|
|||||
|
Outstanding at end of period
|
4,608
|
$
|
4.54
|
|||||
|
Exercisable at end of period
|
4,089
|
$
|
4.55
|
|||||
For the three months ended March 31, 2021, the weighted average market share price at the date of exercise was CDN$8.32.
|
ii.
|
Restricted share unit plans
|
(a) Restricted share units (“RSUs”)
The following table summarizes information about the RSUs outstanding at March 31, 2021:
|
|
Three months ended March 31, 2021
|
|||||||
|
|
Number of units (000's)
|
Weighted average fair value (CDN$/unit)
|
||||||
|
Outstanding at January 1, 2021
|
6,475
|
$
|
5.86
|
|||||
|
Granted
|
2,697
|
8.79
|
||||||
|
Reinvested
|
85
|
6.24
|
||||||
|
Redeemed
|
(2,522
|
)
|
5.65
|
|||||
|
Forfeited
|
(70
|
)
|
6.95
|
|||||
|
Outstanding at end of period
|
6,665
|
$
|
7.12
|
|||||
As at March 31, 2021, the Company had recognized a liability of $10.1 million (December 31, 2020 - $17.6 million) in respect of its cash-settled RSUs.
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
(b) Restricted performance share units (“RPSUs”)
The following table summarizes information about the RPSUs outstanding at March 31, 2021:
|
|
Three months ended March 31, 2021
|
|||||||
|
|
Number of units (000's)
|
Weighted average fair value (CDN$/unit)
|
||||||
|
Outstanding at January 1, 2021
|
4,459
|
$
|
5.95
|
|||||
|
Granted
|
1,312
|
8.36
|
||||||
|
Reinvested
|
18
|
6.89
|
||||||
|
Redeemed
|
(1,738
|
)
|
4.92
|
|||||
|
Forfeited
|
(98
|
)
|
5.91
|
|||||
|
Outstanding at end of period
|
3,953
|
$
|
7.21
|
|||||
|
iii.
|
Deferred share unit (“DSU”) plan
|
The number of DSUs granted by the Company was 46,408 and the weighted average fair value per unit at the date of issue was CDN$8.37 for the three months ended March 31, 2021.
There were 1,475,356 DSUs outstanding, for which the Company had recognized a liability of $9.8 million, as at March 31, 2021 (December 31, 2020 - $10.4 million).
|
iv.
|
Employee share purchase plan (“SPP”)
|
The compensation expense related to the employee SPP for the three months ended March 31, 2021 was $0.7 million (three months ended March 31, 2020 - $0.6 million).
|
11.
|
EARNINGS PER SHARE
|
Basic and diluted net earnings attributable to common shareholders of Kinross for the three months ended March 31, 2021 was $149.5 million (three months ended March 31, 2020 -
$122.7 million).
The following table details the weighted average number of outstanding common shares for the purpose of computing basic and diluted earnings per common share for the following
periods:
|
(Number of common shares in thousands)
|
Three months ended March 31,
|
|||||||
|
|
2021
|
2020
|
||||||
|
Basic weighted average shares outstanding:
|
1,259,189
|
1,254,642
|
||||||
|
Weighted average shares dilution adjustments:
|
||||||||
|
Stock options(a)
|
2,591
|
2,645
|
||||||
|
Restricted share units
|
2,605
|
3,104
|
||||||
|
Restricted performance share units
|
3,984
|
4,942
|
||||||
|
Diluted weighted average shares outstanding
|
1,268,369
|
1,265,333
|
||||||
|
|
||||||||
|
Weighted average shares dilution adjustments - exclusions:(b)
|
||||||||
|
Stock options(a)
|
-
|
664
|
||||||
|
Restricted share units
|
-
|
-
|
||||||
|
Restricted performance share units
|
-
|
-
|
||||||
|
(a)
|
Dilutive stock options were determined using the Company’s average share price for the period. For the three months ended
March 31, 2021, the average share price used was $6.93 (three months ended March 31, 2020 - $4.84).
|
|
(b)
|
These adjustments were excluded as they are anti-dilutive.
|
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
12.
|
SEGMENTED INFORMATION
|
Operating segments
The following tables set forth operating results by reportable segment for the following periods:
|
|
Operating segments
|
Non-operating segments(a)
|
||||||||||||||||||||||||||||||||||
|
Three months ended March 31, 2021:
|
Fort Knox
|
Round Mountain
|
Bald Mountain
|
Paracatu
|
Kupol
|
Tasiast
|
Chirano
|
Corporate and other(b),(c)
|
Total
|
|||||||||||||||||||||||||||
|
Revenue
|
||||||||||||||||||||||||||||||||||||
|
Metal sales
|
$
|
98.5
|
131.6
|
85.8
|
225.8
|
217.8
|
151.4
|
74.3
|
1.3
|
$
|
986.5
|
|||||||||||||||||||||||||
|
Cost of sales
|
||||||||||||||||||||||||||||||||||||
|
Production cost of sales
|
57.7
|
63.1
|
37.0
|
82.8
|
74.7
|
51.3
|
52.8
|
0.5
|
419.9
|
|||||||||||||||||||||||||||
|
Depreciation, depletion and amortization
|
22.5
|
17.0
|
40.2
|
37.7
|
18.2
|
48.3
|
21.2
|
1.9
|
207.0
|
|||||||||||||||||||||||||||
|
Total cost of sales
|
80.2
|
80.1
|
77.2
|
120.5
|
92.9
|
99.6
|
74.0
|
2.4
|
626.9
|
|||||||||||||||||||||||||||
|
Gross profit (loss)
|
$
|
18.3
|
51.5
|
8.6
|
105.3
|
124.9
|
51.8
|
0.3
|
(1.1
|
)
|
$
|
359.6
|
||||||||||||||||||||||||
|
Other operating expense
|
0.3
|
3.8
|
0.3
|
1.4
|
17.8
|
14.3
|
-
|
20.0
|
57.9
|
|||||||||||||||||||||||||||
|
Exploration and business development
|
0.1
|
0.4
|
1.2
|
0.1
|
2.2
|
0.5
|
1.9
|
19.0
|
25.4
|
|||||||||||||||||||||||||||
|
General and administrative
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
34.0
|
34.0
|
|||||||||||||||||||||||||||
|
Operating earnings (loss)
|
$
|
17.9
|
47.3
|
7.1
|
103.8
|
104.9
|
37.0
|
(1.6
|
)
|
(74.1
|
)
|
$
|
242.3
|
|||||||||||||||||||||||
|
Other income - net
|
2.3
|
|||||||||||||||||||||||||||||||||||
|
Finance income
|
1.8
|
|||||||||||||||||||||||||||||||||||
|
Finance expense
|
(19.3
|
)
|
||||||||||||||||||||||||||||||||||
|
Earnings before tax
|
$
|
227.1
|
||||||||||||||||||||||||||||||||||
|
|
Operating segments
|
Non-operating segments(a)
|
||||||||||||||||||||||||||||||||||
|
Three months ended March 31, 2021:
|
Fort Knox
|
Round Mountain
|
Bald Mountain
|
Paracatu
|
Kupol
|
Tasiast
|
Chirano
|
Corporate and other(b),(c)
|
Total
|
|||||||||||||||||||||||||||
|
Revenue
|
||||||||||||||||||||||||||||||||||||
|
Metal sales
|
$
|
80.3
|
135.7
|
66.9
|
191.8 |
192.7
|
148.7
|
61.6
|
2.1
|
$
|
879.8
|
|||||||||||||||||||||||||
|
Cost of sales
|
||||||||||||||||||||||||||||||||||||
|
Production cost of sales
|
64.6
|
56.1
|
35.7
|
87.5
|
76.9
|
51.9
|
47.8
|
0.8
|
421.3
|
|||||||||||||||||||||||||||
|
Depreciation, depletion and amortization
|
22.8
|
12.6
|
26.7
|
37.7
|
34.4
|
40.3 |
15.9
|
2.7
|
193.1
|
|||||||||||||||||||||||||||
|
Total cost of sales
|
87.4
|
68.7
|
62.4
|
125.2
|
111.3
|
92.2
|
63.7
|
3.5
|
614.4
|
|||||||||||||||||||||||||||
|
Gross profit (loss)
|
$
|
(7.1
|
) |
67.0
|
4.5
|
66.6
|
81.4
|
56.5
|
(2.1 | ) |
(1.4
|
)
|
$
|
265.4
|
||||||||||||||||||||||
|
Other operating expense
|
0.3
|
-
|
2.6
|
0.8 |
0.2
|
7.9
|
0.2 |
9.9
|
21.9
|
|||||||||||||||||||||||||||
|
Exploration and business development
|
-
|
0.3
|
0.5
|
-
|
2.1
|
0.4
|
1.8
|
14.0
|
19.1
|
|||||||||||||||||||||||||||
|
General and administrative
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
31.8
|
31.8
|
|||||||||||||||||||||||||||
|
Operating earnings (loss)
|
$
|
(7.4
|
) |
66.7
|
1.4
|
65.8
|
79.1
|
48.2
|
(4.1
|
)
|
(57.1
|
)
|
$
|
192.6
|
||||||||||||||||||||||
|
Other income - net
|
(0.6
|
) |
||||||||||||||||||||||||||||||||||
|
Finance income
|
2.0
|
|||||||||||||||||||||||||||||||||||
|
Finance expense
|
(25.7
|
)
|
||||||||||||||||||||||||||||||||||
|
Earnings before tax
|
$
|
168.3
|
||||||||||||||||||||||||||||||||||
|
|
Operating segments
|
Non-operating segments(a)
|
||||||||||||||||||||||||||||||||||
|
|
Fort Knox
|
Round Mountain
|
Bald Mountain
|
Paracatu
|
Kupol
|
Tasiast
|
Chirano
|
Corporate and other(b)
|
Total
|
|||||||||||||||||||||||||||
|
Property, plant and equipment at:
|
||||||||||||||||||||||||||||||||||||
|
March 31, 2021
|
$
|
451.9
|
789.4
|
609.1
|
1,695.6
|
265.7
|
2,303.6
|
324.0
|
1,187.8
|
$
|
7,627.1
|
|||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
Total assets at:
|
||||||||||||||||||||||||||||||||||||
|
March 31, 2021
|
$
|
748.2
|
1,046.4
|
843.6
|
2,205.2
|
856.0
|
2,730.9
|
431.6
|
1,920.5
|
$
|
10,782.4
|
|||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
Capital expenditures for three months ended March 31, 2021(d)
|
$
|
31.0
|
35.9
|
9.6
|
18.6
|
6.8
|
93.1
|
12.2
|
35.1
|
$
|
242.3
|
|||||||||||||||||||||||||
|
|
Operating segments
|
Non-operating segments(a)
|
||||||||||||||||||||||||||||||||||
|
|
Fort Knox
|
Round Mountain
|
Bald Mountain
|
Paracatu
|
Kupol
|
Tasiast
|
Chirano
|
Corporate and other(b)
|
Total
|
|||||||||||||||||||||||||||
|
Property, plant and equipment at:
|
||||||||||||||||||||||||||||||||||||
|
December 31, 2020
|
$
|
488.7
|
774.6
|
635.7
|
1,718.8
|
271.2
|
2,277.3
|
332.7
|
1,154.5
|
$
|
7,653.5
|
|||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
Total assets at:
|
||||||||||||||||||||||||||||||||||||
|
December 31, 2020
|
$
|
719.7
|
1,028.0
|
857.1
|
2,226.3
|
896.9
|
2,699.8
|
429.8
|
2,075.6
|
$
|
10,933.2
|
|||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
|
Capital expenditures for three months ended March 31, 2020(d)
|
$
|
20.8
|
48.2
|
38.9
|
9.9
|
5.8
|
92.6
|
5.4
|
5.0
|
$
|
226.6
|
|||||||||||||||||||||||||
|
(a)
|
Non-operating segments include development and pre-development properties.
|
|
(b)
|
Corporate and other includes corporate, shutdown and other non-operating assets (including Chulbatkan, Kettle
River-Buckhorn, La Coipa, Lobo-Marte, Maricunga, and Manh Choh).
|
|
(c)
|
Corporate and other includes metal sales and operating losses of Maricunga of $1.3 million and $(3.4) million,
respectively, for the three months ended March 31, 2021 ($2.1 million and $(3.2) million, respectively, for the three months ended March 31, 2020) as Maricunga continues to sell its remaining finished metals inventories after
transitioning all processing activities to care and maintenance in 2019.
|
|
(d)
|
Segment capital expenditures are presented on an accrual basis. Additions to property, plant and equipment in the interim
condensed consolidated statements of cash flows are presented on a cash basis.
|
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
|
13.
|
COMMITMENTS AND CONTINGENCIES
|
|
i.
|
Commitments
|
Leases
The Company has a number of lease agreements involving office space, buildings, vehicles and equipment. Many of the leases for equipment provide that the
Company may, after the initial lease term, renew the lease for successive yearly periods or may purchase the equipment at its fair market value. Leases for certain office facilities contain escalation clauses for increases in operating costs and
property taxes. A majority of these leases are cancelable and are renewable on a yearly basis. Total lease liabilities of $72.7 million were recorded as at March 31, 2021.
Purchase commitments
At March 31, 2021, the Company had future commitments of approximately $153.8 million for capital expenditures, which have not been accrued.
|
ii.
|
Contingencies
|
General
Estimated losses from contingencies are accrued by a charge to earnings when information available prior to the issuance of the financial statements
indicates that it is likely that a future event will confirm that an asset has been impaired or a liability incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.
Other legal matters
The Company is from time to time involved in legal proceedings, arising in the ordinary course of its business. Typically, the amount of ultimate
liability with respect to these actions will not, in the opinion of management, materially affect Kinross’ financial position, results of operations or cash flows.
Maricunga regulatory proceedings
In May 2015, Chilean environmental enforcement authority (“SMA”) commenced an administrative proceeding against CMM alleging that pumping of groundwater
to support the Maricunga operation had impacted area wetlands and, on March 18, 2016, issued a resolution alleging that CMM’s pumping was impacting the “Valle Ancho” wetland. Beginning in May 2016, the SMA issued a series of resolutions ordering
CMM to temporarily curtail pumping from its wells.
In response, CMM suspended mining and crushing activities and reduced water consumption to minimal levels. CMM contested these resolutions, but its
efforts were unsuccessful and, except for a short period of time in July 2016, CMM’s operations have remained suspended. On June 24, 2016, the SMA amended its initial sanction (the “Amended Sanction”) and effectively required CMM to cease
operations and close the mine, with water use from its wells curtailed to minimal levels. On July 9, 2016, CMM appealed the sanctions and, on August 30, 2016, submitted a request to the Environmental Tribunal that it issue an injunction suspending
the effectiveness of the Amended Sanction pending a final decision on the merits of CMM’s appeal. On September 16, 2016, the Environmental Tribunal rejected CMM’s injunction request and on August 7, 2017, upheld the SMA’s Amended Sanction and
curtailment orders on procedural grounds. On October 9, 2018, the Supreme Court affirmed the Environmental Tribunal’s ruling on procedural grounds and dismissed CMM’s appeal.
On June 2, 2016, CMM was served with two separate lawsuits filed by the Chilean State Defense Counsel (“CDE”). Both lawsuits, filed with the Environmental
Tribunal, alleged that pumping from the Maricunga groundwater wells caused environmental damage to area wetlands. One action relates to the “Pantanillo” wetland and the other action relates to the Valle Ancho wetland (described above). Hearings on
the CDE lawsuits took place in 2016 and 2017, and on November 23, 2018, the Tribunal ruled in favor of CMM in the Pantanillo case and against CMM in the Valle Ancho case. In the Valle Ancho case, the Tribunal is requiring CMM to, among other
things, submit a restoration plan to the SMA for approval. CMM has appealed the Valle Ancho ruling to the Supreme Court. The CDE has appealed to the Supreme Court in both cases and is asserting in the Valle Ancho matter that the Environmental
Tribunal erred by not ordering a complete shutdown of Maricunga’s groundwater wells. The timing of any rulings by the Supreme Court on the parties’ respective appeals remains uncertain.
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
Sunnyside litigation
The Sunnyside Mine is an inactive mine situated in the so-called Bonita Peak Mining District (“District”) near Silverton, Colorado. A subsidiary of
Kinross, Sunnyside Gold Corporation (“SGC”), was involved in operations at the mine from 1985 through 1991 and subsequently conducted various reclamation and closure activities at the mine and in the surrounding area. On August 5, 2015, while
working in another mine in the District known as the Gold King, the Environmental Protection Agency (the “EPA”) caused a release of approximately three million gallons of contaminated water into a tributary of the Animas River. In the third quarter
of 2016, the EPA listed the District, including areas impacted by SGC’s operations and closure activities, on the National Priorities List pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). SGC
challenged portions of the CERCLA listing in the United States Court of Appeals for District of Columbia Circuit, but SGC’s petition for review was denied, as was its subsequent petition for rehearing. The EPA has notified SGC that SGC is a
potentially responsible party under CERCLA and may be jointly and severally liable for cleanup of the District or cleanup costs incurred by the EPA in the District. The EPA may in the future provide similar notification to Kinross, as the EPA
contends that Kinross has liability in the District under CERCLA and other statutes. In the second quarter of 2018, the EPA issued to SGC a modified Unilateral Administrative Order for Remedial Investigation (the “Order”). In the second quarter of
2019, pursuant to the original Order, the EPA issued to SGC a Modified Statement of Work, Work Plan and Field Sampling Plan (together with the Order, the “Modified Order”). The Modified Order significantly altered and expanded upon the work set out
under the original Order. In the third quarter of 2019, after consulting with external legal counsel, SGC provided notice to the EPA that the Modified Order is legally indefensible, does not address any imminent hazard and SGC does not intend to
comply with the Modified Order. On July 26, 2019, the EPA acknowledged receipt of SGC’s notice of its intention not to comply with the Modified Order. The EPA indicated that it would undertake to complete the work ordered under the Modified Order,
and has subsequently completed some of that work. While SGC believes that it has good cause not to comply with the Modified Order, failure to comply with the Modified Order may subject SGC to significant penalties, damages and/or potential
reimbursement of the cost of remediation work undertaken by the EPA.
In the second quarter of 2016, the State of New Mexico filed a complaint naming the EPA, SGC, Kinross and others alleging violations of CERCLA, the
Resource Conservation and Recovery Act (“RCRA”), and the Clean Water Act (“CWA”) and claiming negligence, gross negligence, public nuisance and trespass. New Mexico subsequently dropped the RCRA claim. The New Mexico complaint seeks cost recovery,
damages, injunctive relief, and attorney’s fees. In the third quarter of 2016, the Navajo Nation initiated litigation against the EPA, SGC and Kinross, alleging entitlement to cost recovery under CERCLA for past and future costs incurred,
negligence, gross negligence, trespass, and public and private nuisance, and seeking reimbursement of past and future costs, compensatory, consequential and punitive damages, injunctive relief and attorneys’ fees. In the third quarter of 2017, the
State of Utah filed a complaint, which has been amended to name the EPA, SGC, Kinross and others, alleging negligence, gross negligence, public nuisance, trespass, and violation of the Utah Water Quality Act and the Utah Solid and Hazardous Waste
Act.
The Utah complaint seeks cost recovery, compensatory, consequential and punitive damages, penalties, disgorgement of profits, declaratory, injunctive and
other relief under CERCLA, attorney’s fees, and costs. In the third quarter of 2018, numerous members of the Navajo Nation initiated litigation against the EPA, SGC and Kinross, alleging negligence, gross negligence and injury, including great
spiritual and emotional distress. The complaint of the Navajo members seeks compensatory and consequential damages, interest, punitive damages, attorneys’ fees and expenses. The New Mexico, Navajo Nation, Utah and Navajo member cases have been
centralized for coordinated or consolidated pretrial proceedings in the United States District Court for the District of New Mexico. In the third quarter of 2019 (i) the EPA filed a cross claim against SGC and Kinross seeking contribution,
including contribution under CERCLA, for any damages awarded to New Mexico, the Navajo Nation, or Utah as well as cost-recovery for the EPA’s response costs and remedial expenses incurred by the EPA in the District pursuant to CERCLA or other laws;
(ii) Environmental Restoration, LLC, an EPA contractor, filed a cross claim against SGC seeking contribution under CERCLA and attorneys’ fees and expenses; and (iii) SGC filed a cross claim against the United States and certain contractors of the
United States seeking contribution and equitable indemnity and making a due process claim against the United States. In the first quarter of 2020, the Court granted the United States judgment on SGC’s due process cross claim and dismissed it. In
the first quarter of 2021, the Court granted SGC summary judgment as to the claims of the individual Navajo Nation members.
In the fourth quarter of 2020 and first quarter of 2021, SGC and Kinross reached settlements with the Navajo Nation, State of New Mexico, and the State of
Utah which settlements will result in a dismissal with prejudice of all claims by these parties against SGC and Kinross. Although these settlements are not subject to entry of a Consent Decree approving the settlements, a Consent Decree approving
the settlements has been lodged with the United States District Court for the District of New Mexico for public notice and comment for the Utah settlement and will be lodged in the near-term for the Navajo Nation and State of New Mexico
settlements. Upon expiration of the comment period, the parties will move the Court for entry of the Consent Decree.
KINROSS GOLD CORPORATION
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2021 and 2020
(Unaudited, tabular amounts in millions of United States dollars, unless otherwise noted)
In the first quarter of 2021, the Court granted SGC’s motion for summary judgment against the individual Navajo members based on a statute of repose
defense. In April 2021, the Court granted Kinross Gold Corporation and Kinross Gold U.S.A., Inc.’s motion for summary judgment against the individual Navajo members based personal jurisdiction grounds. In May 2021, the Court partially granted
Kinross Gold Corporation’s motion for summary judgment based on a lack of specific jurisdiction as to the United States’ crossclaims, but has granted the United States the right to file a motion asserting personal jurisdiction under an alternative
grounds.
Income and Other Taxes
The Company operates in numerous countries around the world and accordingly is subject to, and pays taxes under the various regimes in countries in which
it operates. These tax regimes are determined under general corporate tax laws of the country. The Company has historically filed, and continues to file, all required tax returns and to pay the taxes reasonably determined to be due. The tax rules
and regulations in many countries are complex and subject to interpretation. Changes in tax law or changes in the way that tax law is interpreted may also impact the Company’s effective tax rate as well as its business and operations.
Kinross’ tax records, transactions and filing positions may be subject to examination by the tax authorities in the countries in which the Company has
operations. The tax authorities may review the Company’s transactions in respect of the year, or multiple years, which they have chosen for examination. The tax authorities may interpret the tax implications of a transaction, in form or in fact,
differently from the interpretation reached by the Company. In circumstances where the Company and the tax authority cannot reach a consensus on the tax impact, there are processes and procedures which both parties may undertake in order to reach a
resolution, which may span many years in the future. Uncertainty in the interpretation and application of applicable tax laws, regulations or the relevant sections of Mining Conventions by the tax authorities, or the failure of relevant Governments
or tax authorities to honour tax laws, regulations or the relevant sections of Mining Conventions could adversely affect Kinross.
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, J. Paul Rollinson, President and Chief Executive Officer of Kinross Gold Corporation, certify the following:
| 1. |
Review: I have reviewed the interim financial statements and interim MD&A (together, the "interim filings") of Kinross Gold Corporation (the "issuer") for the interim period
ended March 31, 2021.
|
| 2. |
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
| 3. |
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the
interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
| 4. |
Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control
over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
|
| 5. |
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the
interim filings
|
| a. |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
| i. |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
| ii. |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods
specified in securities legislation; and
|
| b. |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the
issuer's GAAP.
|
| 5.1. |
Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission.
|
| 5.2. |
ICFR -- material weakness relating to design: N/A
|
| 5.3. |
Limitation on scope of design: N/A
|
| 6. |
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2021 and ended
on March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
|
Date: May 11, 2021
/s/ J. Paul Rollinson
_____________________
J. Paul Rollinson
President and Chief Executive Officer
President and Chief Executive Officer
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Andrea S. Freeborough, Chief Financial Officer of Kinross Gold Corporation, certify the following:
| 1. |
Review: I have reviewed the interim financial statements and interim MD&A (together, the "interim filings") of Kinross Gold Corporation (the "issuer") for the interim period
ended March 31, 2021.
|
| 2. |
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
| 3. |
Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the
interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
| 4. |
Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control
over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
|
| 5. |
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the
interim filings
|
| a. |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
| i. |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
| ii. |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods
specified in securities legislation; and
|
| b. |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the
issuer's GAAP.
|
| 5.1. |
Control framework: The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission.
|
| 5.2. |
ICFR -- material weakness relating to design: N/A
|
| 5.3. |
Limitation on scope of design: N/A
|
| 6. |
Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on January 1, 2021 and ended
on March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
|
Date: May 11, 2021
/s/ Andrea S. Freeborough
____________________
Andrea S. Freeborough
Senior Vice-President and Chief Financial Officer
Senior Vice-President and Chief Financial Officer