Yesterday, we released our 2018 Q2 results, and below are some key highlights.
Our portfolio of mines performed well during the second quarter, as we generated solid cash flow and maintained our strong balance sheet. We completed construction at our Tasiast Phase One project and our other development projects across the Company continue to progress well.
First Priorities
- Our safety performance was particularly strong this quarter, with several key achievements and accolades:
- Tasiast has worked over a year, which is more than 10 million hours, without a lost-time injury.
- Kettle River-Buckhorn was recognized for its outstanding safety record with the prestigious Sentinels of Safety Award from the National Mining Association, the third time that the mine has won this award.
- Bald Mountain was named the safest mine in the Large Metal Mine category by the Nevada Mining Association for their strong safety performance during 2017.
- Congratulations to these sites and all of the rest of our operations. These outstanding achievements reflect the quality of our people and our core values.
- Our social responsibility and environmental performance continues to be strong and yesterday we also released our 2017 Corporate Responsibility Report.
Deliver Mine and Financial Performance
- Operational highlights: We produced more than 600,000 Au eq. oz. during the second quarter, and we remain on guidance for the year. In particular, Bald Mountain had higher year-over-year production, and cost of sales was at its lowest level since Kinross acquired the mine. Paracatu achieved its highest throughput in four years and our Russian operations continue to be consistent performers. Chirano had a good first half, along with Round Mountain.
- Financial performance: In Q2, production cost of sales was $767 per ounce and all-in sustaining cost was $1,018. We generated approximately $232 million of adjusted cash flow, roughly in line with the same period last year. We are on track to meet our cost guidance for the year, however, we need to continue to focus on keeping our costs down for the remainder of 2018. Our cash flow helped to maintain our strong balance sheet and we ended the quarter with over $900 million in cash, for total liquidity of approximately $2.5 billion and no scheduled debt repayments until 2021.
Deliver Future Value
- Our organic development projects and opportunities continue to progress well:
- Tasiast Phase One construction is now complete, first ore has gone through the SAG mill, and the project has been transferred to the Operations team. See the great progress we have made in this video: https://youtu.be/45eg8TEL-cg
- We have decided to pause activities at Phase Two and, to maintain optionality, are analyzing alternative throughput approaches to expand Tasiast as we continue to engage with the Government of Mauritania regarding our activities in the country.
- The Round Mountain Phase W expansion is progressing well and on budget, with preparations for the new infrastructure area and new heap leach advancing. Pre-stripping is proceeding well and initial ore is expected in mid-2019.
- In mid-June, we announced that the Fort Knox Gilmore expansion project will proceed. The project is expected to extend mine life at Fort Knox to 2030. Development has commenced, permits have been completed and we recently held a successful tour of the site to showcase the project to some key analysts and investors.
- The Bald Mountain Vantage Complex project is proceeding well and remains on schedule and on budget, with construction well underway. Commissioning for the heap leach pad and processing facilities are expected to commence in Q1 2019.
- In Russia, development at the Moroshka and Dvoinoye Zone 1 satellite deposits continue to make good progress with mining of ore at Moroshka expected to commence in early Q4 2018, and production at Zone 1 expected to commence in mid-2019.
- In Chile, a feasibility study for the La Coipa Restart project has been initiated, along with a scoping study for the Lobo Marte project. Both studies will assess a potential return to production in the country and the potential to share resources and leverage synergies between the projects.
Continuous Improvement and Innovation
- Congratulations to the Bald Mountain and Tasiast teams for winning Kinross’ annual CI award for their exceptional CI initiatives and culture. Continuous Improvement and Innovation is critical to the success of our business and making it more efficient, safe and cost-effective. The Innovation Opportunity Fund continues to receive submissions; I encourage you to visit the website and learn more about proposed ideas, including those that are in the testing stage.
While our portfolio of mines performed well and we have several exciting development projects underway, we need to remain diligent, safe and keep our costs down during the second half of the year. Thanks for your hard work and a strong first half, and let’s continue to operate safely while delivering a strong second half.
Paul
J. Paul Rollinson
President & CEO
Kinross Gold Corporation
