On February 10th, we released our 2015 fourth quarter and year-end results, including our outlook for 2016. It was another strong year, ending 2015 at the high end of our guidance range and with the lowest cost of sales in four years. I would like to share some of the highlights and comments:
- Achieved a new record for safety performance: We improved on our already strong safety record in 2015 with new all-time lows in both our Lost-Time Injury rate and Total Reportable Injury rate. A number of operations achieved significant safety milestones, working millions of hours without an employee sustaining an injury requiring time away from work, while others received major industry safety awards and recognition. Thanks to everyone for once again making Kinross one of the world’s safest mining companies.
- Met production and cost targets for the fourth straight year: We finished 2015 with production of 2.59 million ounces – at the upper end of our guidance range – and all-in-sustaining costs of $975 per ounce – at the low end of our guidance range. At $696/oz., our cost of sales was the lowest in the last four years. We ended the year (prior to closing the acquisition of the Nevada assets in January) with $1 billion in cash, a year-over-year increase in our cash balance despite a $110 per ounce drop in the gold price in 2015.
- Fort Knox, Round Mountain and Kupol-Dvoinoye all outperform: Special recognition is due to Fort Knox, which achieved its second highest annual production in history (400,000 ounces); Round Mountain, which had its best annual production since 2009 (200,000 ounces on a 50% basis); and Kupol-Dvoinoye, which had record mill throughput in Q4 and total production of 760,000 ounces. Continuous Improvement (CI) initiatives played a major role in our success.
- Exploration and acquisitions add to mineral reserves and mineral resources: Our 2015 year-end mineral reserves and mineral resource estimate benefitted both from exploration success (notably at La Coipa, Kupol, Dvoinoye, Tasiast and Chirano), and our acquisition of Bald Mountain and the remaining 50% of Round Mountain. Additions to our mineral reserves largely offset depletion due to 2015 mining activity, while we increased our measured and indicated mineral resources by 25%.
- Strong outlook for 2016: For 2016 we forecast record production (2.7-2.9 million ounces) and lower all-in sustaining costs ($890-990/oz.) compared with 2015. Production cost of sales is forecast to be $675-735/oz. We expect costs to be lower largely due to the impact of favourable currency exchange and lower oil prices, as well as continued cost reduction efforts across the company including CI and other initiatives.
- Bald Mountain integration proceeding well: On January 11, Kinross welcomed employees from our newest operation — Bald Mountain — as our Nevada acquisition closed. Randy Burggraff has relocated from Round Mountain to become the new Bald Mountain General Manager, and we have established a new exploration group and are establishing a CI group. Given the excellent upside potential we see at Bald Mountain, we began drilling the first week we completed the acquisition, and the site will be a major focus of our 2016 exploration program.
- Tasiast two-phased expansion studies nearing completion: We are finalizing studies on a two-phased approach for a potential expansion at Tasiast. Phase 1 would increase throughput from 8,000 tonnes per day to 12,000 tonnes per day, with the benefit of lowering production costs and generating positive near-term cash flow at a manageable capital cost. Phase 2 would add a second parallel line of processing capacity in order to fully realize the economic potential of the Tasiast orebody. We look forward to announcing the results of the studies at the end of March.
In conclusion, 2015 was a very successful year, and we enter 2016 on a strong footing, and with a positive outlook.
Looking back at the past four years, I believe we can all take pride in what we have achieved. We have set new standards for safety, consistently met our guidance, and maintained a strong balance sheet, all while producing 10 million ounces of gold. Looking forward to the next four years, we expect to maintain the same high standards of safety, operational dependability, and financial strength – all while producing another 10 million ounces of gold.
Thanks to everyone for helping us to deliver on those goals. I look forward to updating you on our progress when we release our first quarter results in May.
– Paul
J. Paul Rollinson
President & CEO
Kinross Gold Corporation
