- Safety continues to be a top priority: Our Total Reportable Injury Frequency Rate was 0.35, continuing our strong performance in this category. We did, however, experience a higher severity rate than in previous years. There is nothing more important than safety and that will continue to be our number one priority each and every day.
- Met production and cost targets for the fifth straight year: In line with our commitment to operational excellence, we delivered on our operational targets for the year with production of 2.79 million Au eq. ounces, all-in-sustaining costs of $984 per Au eq. oz. and production cost of sales of $712 per Au eq. oz.
- Solid financial track record continues: We maintained our balance sheet strength, with liquidity of $2.3 billion and no debt maturities until 2020. We generated operating cash flow of $1.1 billion for the year, a 32% increase over the previous year, and improved our adjusted net earnings by more than $180 million. While we benefitted from an improved gold price, our strong operating and financial performance in 2016 also reflected our culture of Continuous Improvement, quality over quantity and disciplined cost management.
- Exciting year ahead at our organic projects: We expect to achieve some key milestones as we build on progress at the development projects in our three regions:
- Tasiast: The Phase One expansion is progressing very well and is on schedule and on budget to reach full commercial production in Q2 2018. A feasibility study for the Phase Two expansion is expected to be completed in Q3 2017, and we expect to make a development decision at that time.
- Bald Mountain: We have doubled mineral reserves, potentially extending mine life, and confirmed our vision for the mine as a long-life asset with significant upside potential.
- Round Mountain: The Phase W feasibility study is expected to be completed in Q3 2017, following additions and upgrades to mineral resources in 2016.
- Russia: The Russia projects are now in their advanced stages. At September Northeast, near Dvoinoye, stripping has commenced. At Moroshka, which is near Kupol, mining is expected to begin in the first half of 2018.
- New exploration focus: We are intensifying our focus to extensions of known zones and mineralization at current mines, particularly Kupol and Fort Knox. At Kupol, the deposit is open at certain zones, and at Fort Knox, drilling is targeting several opportunities for resource additions. These projects, along with Bald Mountain, Tasiast and Kettle River, will be our top exploration priorities for 2017.
- Positive outlook for 2017: For the year ahead, we are forecasting another year of solid production, with costs expected to be consistent with 2016 levels. We are forecasting 2.5-2.7 million Au eq. oz. of production at an all-in sustaining costs $925-$1,025 per Au eq. oz., production cost of sales of $660-720 per Au eq. oz., and total capital expenditures are forecast to be approximately $900 million (+/- 5%). Capital expenditures will be used to advance development projects, including Tasiast, to invest back into our business.
2016 was a good year for the Company. Thank you for helping us achieve our targets.
We have started 2017 on a strong note, and I am counting on all of you to help continue our positive momentum throughout the year.
J. Paul Rollinson
President & CEO
Kinross Gold Corporation