We released our 2016 Q1 results on May 10, 2016. Here is an overview of some key highlights from Q1:
- Sites maintain Kinross’ excellent safety performance: Our Total Reportable Injury Frequency Rate was 0.30 which is consistent with past performance that has been ranked among the best of our peers. Special congratulations to our Fort Knox, Round Mountain, Kupol and Dvoinoye mines which all had zero reportable injuries this quarter, and to Maricunga, which reached 4 million hours without a LTI.
- Momentum continues with another strong quarter: 2016 is off to a solid start as we have increased production and lowered all-in sustaining cost compared with the previous quarter. We are once again on track to meet our 2016 guidance for production, all-in sustaining cost and production cost of sales.
- Highlights from Q1: Production increased at Round Mountain due to higher grades, enhanced heap leach performance and better mill recoveries; Fort Knox had a great quarter as milder winter conditions allowed for increased mining and better heap leach performance; Continuous Improvement initiatives at Tasiast significantly improved existing mill throughput; and the combined Kupol-Dvoinoye operation continued to outperform.
- Our balance sheet remains strong. After the close of the Nevada acquisition, we ended the quarter with more than $750 million in cash and cash equivalents on our balance sheet. We generated solid free cash flow of approximately $75 million in Q1 as a result of higher production and the continuing decline in cost.
- Nevada assets: We closed the acquisition of Bald Mountain and the remaining 50% of Round Mountain that we did not own on January 11, 2016. I was able to visit Bald Mountain in March and saw first-hand how excited people were about the site’s upside potential. The Bald Mountain exploration program is progressing well, as we currently have two drill rigs on site and have drilled 9,000 metres to date. Thank you to the entire Bald Mountain team for working incredibly hard over the past few months, ensuring a smooth integration process.
- Tasiast expansion: In March, we announced the decision to move forward with the Phase One expansion. The project is progressing well, with work on the expansion commencing this month. Phase One is expected to nearly double production at Tasiast and reduce production cost of sales per ounce by half, at a manageable capital cost. The project is expected to come into full production by the end of Q1 2018.
- Kettle River-Buckhorn: We now expect mining to continue until the end of this year, as test drilling in perimeter holes around the site has uncovered more ounces.
- Maricunga update: We have been assessing Maricunga’s mine plan in light of our continued focus on disciplined capital allocation and mining quality ounces over quantity. After taking into consideration Maricunga’s costs and future capital needs, as well as other capital priorities in our global portfolio, we are contemplating a potential suspension of mining activities by the end of October. We will continue to review and evaluate the mine’s estimated mineral reserve and mineral resource base, and explore further permitting needs, as we work towards a final decision. We recognize that this is a challenging and uncertain time for our Maricunga and Chile employees, and we are committed to provide updates in the timeliest manner possible going forward.
- Kinross receives global sustainability recognition: Our sustainability and environmental performance was recognized in the Dow Jones Sustainability Index’s 2016 global Sustainability Yearbook. We received the Bronze Class Sustainability Award which means that our sustainability performance scores within 10% of the top score in the mining industry world-wide.
Thank you for another strong quarter and a great start to 2016. I know that our momentum will continue throughout the rest of the year.
J. Paul Rollinson
President & CEO
Kinross Gold Corporation