CEO Quarterly Update: 2016 Q3 Results

We released 2016 Q3 results on November 2, 2016. Here is a summary of some key highlights:

  • Continued solid safety performance: Our Total Reportable Injury Frequency Rate was 0.32 which continues to put us among the best of our peers. Congratulations to Paracatu which reached four million hours without a Lost Time Injury (LTI) and the Buckhorn mine which marked five years without a LTI.
  • Q3 was another strong quarter for performance: We remain on track to deliver on our production and cost guidance for the fifth consecutive year, as our portfolio of mines continued to deliver consistent and solid operational performance. Fort Knox, Kettle River-Buckhorn and Kupol/Dvoinoye had standout results during the quarter. Chirano also performed well, increasing production by 42% and decreasing cost of sales per ounce by 26% over the previous quarter.
  • Financial strength: adjusted operating cash flow up by 55%, adjusted net earnings up by $153 million year-over-year:
    •  In Q3 we benefitted from solid production across our portfolio of mines, a higher gold price, lower oil prices, and favourable exchange rates.
    •  We maintained one of the strongest balance sheets in the business, with total liquidity of approximately $2.2 billion, and no debt maturities until 2020.
  • Development projects advancing on schedule: Our financial strength gives us the flexibility to fund our growing pipeline of high-quality organic development projects in all three regions:
    • The Tasiast Phase One expansion is progressing well with engineering 80% complete. A feasibility study for the Phase Two expansion is expected to be completed in Q3 2017.
    • Bald Mountain received a Record of Decision from the US Bureau of Land Management that allows for increased exploration and mining and provides significant flexibility for future growth and expansion. A pre-feasibility study for the promising Vantage Complex is expected to be completed in Q2 2017.
    • In Russia, two projects – September Northeast near Dvoinoye and Moroshka near Kupol – are expected to commence mining in Q1 2017 and the first half of 2018, respectively, helping to extend mine life by one year to 2021.
    • A feasibility study for Phase W at Round Mountain is expected to be completed in Q3 2017.
    • At La Coipa Phase 7, we received approval on the project DIA (Declaration of Impact to Environment) permit and are proceeding with sectoral permits. Exploration drilling is ongoing.
  • Maricunga suspension: As announced in August, we made the difficult decision to suspend mining at our Maricunga operations due to other capital priorities in our global portfolio. The suspension was implemented earlier than planned after a judicial decision in Chile caused us to substantially reduce water pumping at Maricunga, and in turn, suspend mining and crushing activities and curtail processing at the end of July 2016. We will continue to have a small dedicated presence at the site to ensure compliance with regulatory and permit requirements. Maricunga has been a part of our global portfolio for many years and on behalf of all Kinross employees I extend our sincere gratitude for their hard work and contributions.

Thank you for another excellent quarter. I know that we will continue to build on our success and momentum for the rest of the year. I look forward to updating you next on our progress when we release our fourth quarter and year-end results in February 2017.


J. Paul Rollinson
President & CEO, Kinross Gold Corporation

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