CEO Quarterly Update: 2018 Q3 Results

Today, we released our 2018 Q3 results, and below I have listed some key highlights.

Our global portfolio of mines delivered solid performance during the first nine months of this year, and most of our mines performed well during the third quarter, despite some operational headwinds. We need to continue focusing on being strong operators and keeping our costs in line.

First Priorities

  • Our safety performance continues to be strong, and I am pleased to share some excellent achievements this quarter:
    • Year-to-date, Fort Knox, Dvoinoye and Tasiast have not had any lost or restricted work days.
    • At Paracatu, the tailings dam construction team has achieved five years without a Lost-Time Injury (LTI), the equivalent of six million hours worked. Also, the Process Lab team has now achieved 31 years without a LTI.
    • The Chirano Process Department has achieved four years without an LTI.

Deliver Mine and Financial Performance

  • Operational highlights: We produced 586,260 Au eq. oz. during the third quarter. Several of our operations performed particularly well this quarter, and throughout the year. Notably, Paracatu and Chirano’s strong operating performance and our Russia and Nevada operations’ consistently solid results.
  • Financial performance: Q3 production cost of sales was $777 per ounce sold, and all-in sustaining cost was $1,049. Gold sales exceeded production with 618,463 ounces sold during the quarter, largely due to increases at Bald Mountain and Maricunga. We generated $143.2 million of adjusted cash flow, down from $320.8 million in the same period last year.
  • We are on track to meet our annual production and cost guidance for the year. Our overall portfolio of mines generated solid results in the first nine months of the year, despite some headwinds at Tasiast and Fort Knox. We have made several investments back into our business, and ended the quarter with $470 million in cash, for total liquidity of approximately $2 billion, with no debt repayments due until 2021.

Deliver Future Value

To ensure we deliver value as a Company, we need to maintain and enhance our sharp focus on costs and continue assessing our budgets and long-term planning to maximize and improve cash flow. In our challenging operating environment, prioritizing sound execution and efficiently allocating funds will be key drivers for our future success – we need to ensure we are maximizing value for our dollars in all our decisions.

During the quarter, our organic development projects continued to progress well:

  • At Tasiast Phase One, commissioning of the SAG mill was completed, as ramp-up of throughput advanced well. We continue to assess alternative throughput approaches to expand Tasiast, as discussions with the Government of Mauritania advance.
  • The Round Mountain Phase W project is on schedule and on budget, with pre-stripping advancing well and detailed engineering of all major infrastructure now complete. Phase W ore is expected to be encountered in mid-2019.
  • The Fort Knox Gilmore project is on schedule and on budget, with initial production expected in early 2020. Engineering is now essentially complete.
  • The Bald Mountain Vantage Complex project is also on schedule and on budget. Stripping and stacking on the new heap leach pad have now commenced.  
  • At our high grade Russia satellite deposits, the Moroshka project has been completed and production commenced in October, while Dvoinoye Zone 1 is proceeding as planned.  
  • Our studies in Chile – the feasibility study for the La Coipa Restart project and the scoping study for the Lobo Marte project – both remain on schedule to be completed in the second half of 2019 and the first half of 2019, respectively.

Continuous Improvement and Innovation

  • This quarter we have seen strong Continuous Improvement gains at our operations, particularly around the three main challenges they were tasked with this year:
  1. Capturing value from “drill-to-mill”
  2. Improving tire performance
  3. Enhancing our dispatch
  • Our operations have stepped up to the challenge and we have seen a variety of initiatives across Kinross capturing cost savings and productivity improvements in these categories.

We also recently celebrated our 2018 Living Our Values Awards winners at the gala’s 10-year anniversary. Congratulations to all the winners! This past October, we also marked important milestones in Russia, with the fifth anniversary of Dvoinoye and 10th anniversary of Kupol, and at Round Mountain, as it marked 15 million ounces of gold poured at site.  

As we are now half way through the fourth quarter, we need to finish the year strong and maintain our focus on safety and efficient production and costs as we navigate an increasingly complex operating environment. Our global team is committed to delivering excellence, and I thank you for your hard work.


J. Paul Rollinson
President & CEO

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