We released our 2016 Q2 results on July 27, 2016. Here is an overview of some key highlights from Q2:
- Solid safety performance: Our Total Reportable Injury Frequency Rate was 0.37, continuing our strong performance. A special congratulations to our Dvoinoye mine which had zero reportable injuries this quarter.
- Strong cash flow strengthens our balance sheet: We ended the quarter with approximately $970 million in cash and cash equivalents on our balance sheet. We added more than $200 million in free cash flow in Q2 due to solid production from our operations portfolio, an increase in the average realized gold price, ongoing savings from lower oil prices, favourable exchange rates, and our continued focus on managing operating costs and capital discipline. We remain on track to meet guidance for the year as strong production from North America, Russia and Paracatu offset the temporary production curtailments at Maricunga and Tasiast.
- Maricunga update: Operations at Maricunga resumed on July 9, 2016, with continued operations subject to ongoing regulatory proceedings in Chile. As announced in Q1, we have been assessing Maricunga’s mine plan in the context of other capital priorities in our global portfolio. We now expect to suspend mining activities in Q4 2016 with the timing subject to ongoing regulatory proceedings. This was a difficult decision and we recognize that this is a challenging time for our Maricunga and Chile employees. We will continue to provide updates going forward.
- Tasiast suspension: We expect to resume normal operations at Tasiast in August. We have resolved the expatriate work permit issue with the Government of Mauritania as part of an agreed ‘Mauritanization’ plan to increase the number of skilled local workers at Tasiast, a requirement under Mauritanian law. As a result of the suspension, the timing for commercial production of the Phase One expansion may extend slightly to Q2 2018.
- Nevada operations: Analysts and investors toured Bald Mountain and Round Mountain in June where they had the opportunity to see the compelling upside potential at both sites in person. At Bald Mountain, we are focused on developing two sets of deposits we believe can substantially increase mineral reserves and extend mine life in the near term. At Round Mountain, analysts and investors learned more about the Phase W scoping study and Process Solution Management heap leach enhancements.
- Achieving Excellence: The new operational program launched earlier this year, with a target of lowering the Company’s all-in sustaining cost by $100/oz., is now underway at most sites. Round Mountain and Paracatu began implementing the program in April, followed by Kupol and Dvoinoye. The rollout will continue at the remaining sites over the rest of the year. There have already been significant opportunities identified due to the hard work of the Achieving Excellence teams at each site.
- Kinross receives corporate responsibility recognition: For the seventh consecutive year, Kinross Gold was named one of Canada’s Best 50 Corporate Citizens by Corporate Knights magazine, placing first among gold mining companies for the second year in a row. Our 2015 Corporate Responsibility report is expected to launch in August with social, environmental and economic highlights from the last two years.
Thank you for your continued hard work throughout this quarter. We have had a lot of significant achievements over the last three months and I believe that we are well positioned for the future.
J. Paul Rollinson
President & CEO
Kinross Gold Corporation