We released our 2017 Q1 results, and will hold our Annual Shareholder Meeting on Wednesday, May 3rd, 2017. Here is an overview of some key highlights from Q1:
- Sites maintain Kinross’ excellent safety performance: At the end of Q1 2017, our Total Reportable Injury Frequency Rate was 0.34 which continues to rank among the best of our peers.
- 2017 begins with another strong quarter: Strong performance from our operations contributed to a solid first quarter. We are once again on track to meet annual guidance for production, all-in sustaining cost and production cost of sales. Thanks to everyone for the continued hard work that helped deliver these results.
- Operational highlights: Tasiast increased production by 37% and significantly decreased cost of sales per ounce year-over-year; production increased year-over-year at Round Mountain due to more ounces recovered from the heap leach pads; Bald Mountain is on track to double production in 2017 compared with 2016; and Kettle River-Buckhorn continued to perform well and beyond its expected mine life.
- Financial highlights: We generated approximately $250 million in adjusted operating cash flow, an increase of 21% compared with Q1 2016. We further strengthened our balance sheet with the divestment of Cerro Casale. With the sale, our pro forma cash position is approximately $1.1 billion, with total liquidity of approximately $2.5 billion. Our strong balance sheet gives us the financial flexibility to fund our organic development projects in each of our operating regions, which are all progressing well.
- Cerro Casale divestment: In Q1, we agreed to sell our 25% interest in Cerro Casale and our 100% interest in Quebrada Seca in Chile for $260 million in cash, a contingent payment of $40 million following a construction decision for Cerro Casale, a 1.25% royalty on 25% of gross revenues from metals sold at the properties, and a contingent water supply agreement.
- Organic development projects progressing well: We continued to advance the organic growth initiatives in each of our three regions:
- We are making excellent progress at the Tasiast Phase One expansion – it is on schedule, on budget and expected to reach full production in Q2 2018. The Phase Two feasibility study is on schedule to be completed in Q3 2017.
- At Bald Mountain, engineering work is approximately 60% complete at the Vantage Complex project in the South area.
- At Round Mountain, the Phase W feasibility study is on schedule to be completed in Q3 2017.
- In Russia, development of the September Northeast project near Dvoinoye is now complete, while at Moroshka, portal construction is now complete and construction of surface infrastructure is 50% complete.
- Enhanced employee leadership program and updated Code of Conduct: This quarter, we launched a refreshed leadership program, Leadership The Kinross Way, to help develop talent within the Company and a new guidebook, Working with Integrity – A Guide to the Kinross Code of Conduct and Ethics, which is based on the Kinross Code of Business Conduct and Ethics. The guidebook describes what ethical conduct means at Kinross and gives day-to-day examples on how the Code applies to all employees. I encourage you to take the time to learn more about both of these initiatives.
Thank you for a strong start to 2017. Let’s continue this momentum throughout the year.
J. Paul Rollinson
President & CEO, Kinross Gold Corporation