Today, we released our 2019 Q1 results. We had an excellent first quarter built on strong operational performance and disciplined cost management. Our development projects are advancing well, we maintained our financial strength and solid liquidity, and are well positioned to again deliver on our annual production and cost guidance.
First Priorities
- I want to reiterate that the health and safety of our workforce is my First Priority and I want to thank all of you for doing your work the safe way, every day.
- We’ve started the year strong on safety, led by four sites without any incidents resulting in lost or restricted workdays – Kupol, Dvoinoye, Chile, and Chirano.
- Fort Knox and Round Mountain have started the year with some challenges, at least in terms of the statistics, but I am confident in the teams at both sites and know that this is everyone’s First Priority.
- Our environmental and social responsibility efforts are on track. At Paracatu, our team has been meeting with community stakeholders and relaying important information about the vigilant, comprehensive and responsible way we manage our tailings in response to increased interest following the Vale tailings disaster in Brazil.
Deliver Mine and Financial Performance
- Operational highlights: Our portfolio of mines performed well and in the first quarter produced 606,031 Au eq. oz. Our largest three mines – Paracatu, Tasiast and Kupol – all exceeded expectations. Paracatu and Tasiast achieved record quarterly production and significantly lower costs, while Kupol continued its consistently high performance and delivered yet another strong quarter.
- Financial performance: In Q1, production cost of sales was $682 per ounce and all-in sustaining cost (AISC) was $925 per ounce. We generated $230.8 million in adjusted operating cash flow and adjusted net earnings of $83.3 million, or $0.07 per share.
- Notably, cost performance was very strong at Paracatu, as the site achieved a 15% reduction in costs compared with Q4 2018 and the lowest cost of sales per ounce sold since Q4 2010. Tasiast also outperformed on costs, with a 20% decrease in cost of sales compared with the previous quarter, and achieving the lowest cost of sales per ounce sold since Q1 2011.
- Total liquidity of approximately $1.8 billion and no debt maturities until 2021.
- We continued to advance the $300 million of project financing that we are targeting for Tasiast, with participation from the International Finance Corporation, Export Development Canada and two commercial banks.
Deliver Future Value
During the quarter we advanced work on our development pipeline:
- We are targeting the second half of 2019 to complete an evaluation of lower cost alternative approaches to increase throughput at Tasiast. This includes taking into account the strong Phase One performance and increasing throughput to 30,000 tpd. The evaluation also includes opportunities for an initial incremental step to increase throughput to above 20,000 tpd at a significantly lower capital cost through de-bottlenecking, continuous improvement and further optimization of the current processing circuit.
- The Round Mountain Phase W project is nearing completion, and continues to be on schedule and on budget. Construction of the new heap leach pad is now complete, with Phase W ore currently being placed on the pads. Commissioning of the processing circuit has commenced ahead of schedule, and the vertical carbon-in-column (VCIC) plant is approximately 80% complete. Click here for a video highlighting Phase W development.
- The Bald Mountain Vantage Complex is well-advanced, and commissioning of the processing circuit commenced as scheduled at the end of Q1, with solution now being applied on the heap to build solution grade. The VCIC plant is approximately 70% complete, and the heap leach pad is approximately 90% complete, with ore being placed on completed portions of the pad.
- The Fort Knox Gilmore project is progressing on schedule to start stripping in Q3 2019, with initial ore expected in early 2020. Heap leach construction activities are proceeding well.
- The Lobo-Marte project scoping study shows encouraging results for a potential return to long-term production in Chile, with Lobo-Marte production commencing after the La Coipa Restart project mine life, where a feasibility study is on schedule to be completed in Q3 2019.
Continuous Improvement and Innovation
- Our mines continue to demonstrate that Continuous Improvement (CI) is core to Kinross’ success through a diverse pipeline of initiatives aimed at improving productivity and reducing AISC.
- CI initiatives globally have already contributed to 2019 results, including transformational projects underway at Paracatu and Tasiast, and projects focused on fueling, energy management and projects that drive down site costs.
- The Innovation Opportunity Fund continues to receive strong submissions, with two projects funded in 2019. If you have a solution or technology that can improve a mine site or Kinross, I encourage you to submit.
Our strong start to the year was a result of your hard work and all our teams working efficiently. We should all strive to maintain this high level of performance for the next three quarters of 2019 to deliver on our goals, while we continue to ensure a safe work environment.
Paul
J. Paul Rollinson
President & CEO
Kinross Gold Corporation
