On Wednesday August 2nd, we released our 2017 Q2 results. Here is an overview of some key highlights from the past quarter:
- Sites maintain strong safety performance: At the end of Q2 2017, our Total Reportable Injury Frequency Rate was 0.36 which continues to rank among the best of our peers.
- Another strong quarter and on track for guidance: We are on track to meet annual guidance for production, all-in sustaining cost and production cost of sales due to strong performance from our diverse portfolio of mines. Thank you for the continued dedication and hard work to achieve these results.
- Operational highlights: Company-wide production increased year-over-year, while we achieved the lowest production cost of sales per ounce since 2011. Production at Round Mountain increased 24% year-over-year and the site achieved its lowest cost of sales per ounce since 2012; Bald Mountain and Paracatu increased production compared with the last quarter and year-over-year; and Kettle River-Buckhorn continued to perform well and beyond its expected mine life.
- Kettle-River Buckhorn update: The last batch of ore was hauled from Buckhorn in July. Thank you to all of our employees at Kettle River-Buckhorn – it is because of your commitment that we were able to extend mine life by two years and have the mine outperform to its last quarter of operation. We will continue our exploration efforts in the area this year.
- Paracatu curtailment: As a result of lower than average rainfall in the area, we began the temporary curtailment of mining and Plant 2 operations at Paracatu. We do not expect the curtailment to impact our corporate production guidance for the year. The curtailment is expected to be partially mitigated by tailings reprocessing initiatives at Plant 1. The Paracatu team has also been making a great effort to deal with this challenge and we continue to employ a number of initiatives to conserve water and increase water supply. The curtailment will continue until the water balance allows for production to resume, which is expected in Q4 when the rainy season begins.
- Balance sheet strength: We further strengthened our balance sheet and ended the quarter with cash and cash equivalents of approximately $1.1 billion, for total liquidity of approximately $2.5 billion. We enhanced our financial flexibility and completed a $500 million debt offering. We used the net proceeds, along with available cash on hand, to repay our term loan due August 2020 and now have no scheduled debt repayments until 2021.
- Organic development projects: We continued to advance the organic growth initiatives in each of our three regions:
- The Tasiast Phase One expansion remains on time and on budget and is expected to reach full commercial production in Q2 2018. Plant construction is now 55% complete.
- The Tasiast Phase Two and Round Mountain Phase W feasibility studies are close to completion and we expect to make a development decision in September.
- At Bald Mountain, detailed engineering work at the Vantage Complex project in the South area is progressing on schedule.
- In Russia, we have started processing ore from the September Northeast satellite deposit near Dvoinoye, while at Moroshka, decline development is on schedule, with construction of surface infrastructure now complete.
- Living Our Values Awards: Congratulations to the 2017 LOVA winners! The winners were announced in June after reviewing the thousands of nominations across the Company. You can read about the winners’ accomplishments at work and in the community in Kinross World.
- Corporate Responsibility achievements recognized: For the eighth consecutive year, Kinross has been named one of Canada’s Top 50 Corporate Citizens by Corporate Knights and was ranked as the top gold mining company. In addition, Kinross Russia was named the top gold mining company in the World Wildlife Fund’s rating of companies in the country. Also released this quarter was our 2016 CR Update Report. I invite you to read the report to see the details of our impressive corporate responsibility performance last year.
Thank you for your hard work to achieve another strong quarter. Let’s keep the momentum going for the rest of the year ahead.
J. Paul Rollinson
President & CEO
Kinross Gold Corporation