Toronto, Ontario – July 31, 2013 – Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the second quarter ended June 30, 2013.
(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page eight of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted. The comparative figures have been recast to exclude the results of Fruta del Norte and Crixás.)
Financial and operating highlights:
- Production(1): 655,381 gold equivalent ounces (Au eq. oz.), compared with 632,772 ounces in Q2 2012.
- Revenue: $968.0 million, compared with $1,005.6 million in Q2 2012.
- Production cost of sales(2): $737 per Au eq. oz., compared with $724 in Q2 2012.
- All-in sustaining cost(2): $1,072 per Au oz. sold, compared with $970 in Q2 2012.
- Attributable margin(3): $657 per Au eq. oz. sold, compared with $844 in Q2 2012.
- Adjusted operating cash flow(2): $256.7 million, or $0.22 per share, compared with $268.0 million, or $0.24 per share, in Q2 2012.
- Adjusted net earnings(2),(4): $119.5 million, or $0.10 per share, compared with $156.8 million, or $0.14 per share, in Q2 2012.
- Reported net loss (4): $2,481.9 million, or $2.17 per share, compared with net earnings of $113.9 million, or $0.10 per share, in Q2 2012.
- Non-cash impairment charge: The reported net loss for the quarter included an after-tax non-cash impairment charge of $2,289.3 million, largely as a result of lower short-term and long-term gold price assumptions. In addition, Kinross recorded a charge of $720 million relating to the previously announced decision to cease development of its Fruta del Norte (FDN) project in Ecuador, which has been classified as a discontinued operation.
- Outlook: Kinross expects to be within its 2013 forecast guidance for production (2.4-2.6 million attributable Au eq. oz.), production cost of sales ($740-$790 per Au eq. oz.), and all-in sustaining cost ($1,100-$1,200 per Au oz. sold). The Company has reduced its 2013 capital expenditure forecast to approximately $1.45 billion from $1.6 billion.
Cost review and reduction:
- In response to the recent drop in the gold price, the Company has undertaken a number of additional initiatives to reduce operating costs and capital expenditures, and maximize cash flow. Kinross has identified additional expected savings of approximately $180 million for the balance of 2013 and expects further savings this year as ongoing cost reviews are completed. The Company is also targeting significant capital spending reductions in 2014.
Development projects:
- First ore from development activities at Dvoinoye was delivered to Kupol in Q2 2013 and the Kupol plant upgrade has been successfully completed. The project remains on schedule to reach targeted production in Q4 2013.
- Due to the Company’s focus on capital reduction in the current lower gold price environment, Kinross does not now expect to make a decision on whether to proceed with a potential Tasiast mill expansion until 2015 at the earliest, regardless of the project feasibility study (FS) outcome. The FS remains on schedule for expected completion in Q1 2014.
- On June 10, 2013, the Company announced that it ceased further development at its Fruta del Norte project.
Dividend:
- To help ensure the Company maintains its strong balance sheet and liquidity position in current uncertain gold price environment, the Board of Directors has suspended the upcoming semi-annual dividend. Future decisions regarding the dividend will be based on a number of factors, including market conditions, balance sheet strength and liquidity, operational performance, and the impact of cost reduction measures.
CEO Commentary
J. Paul Rollinson, CEO, made the following comments in relation to second-quarter 2013 results:
“In the current challenging environment, Kinross continues to deliver strong operating results. Our operations had another excellent quarter, and we remain on guidance for production, cost of sales, and all-in sustaining costs. We also recorded a key
