On May 11, we released our 2021 Q1 results. Our diversified portfolio of mines performed well to start the year, despite the continuing impacts of COVID-19.
Kinross’ ability to manage well through this pandemic has been made possible by the diligent efforts of our employees and strong support from our host governments. While it is difficult to predict what comes next, I believe there are better and brighter days ahead. For more details on our community support efforts during the pandemic, watch the video below:
Operationally, we are on track to meet our annual guidance. We have also advanced our development projects on schedule, which underpin our future growth.
In line with our values, we also announced our commitment to working toward the goals of the Paris Agreement on climate change, with the ultimate objective of reaching net-zero greenhouse gas (GHG) emissions by 2050.
Key first-quarter highlights include:
First Priorities
- We continued to prioritize health & safety over the quarter, and successfully mitigated the risks associated with the pandemic.
- While good work is being done across our sites in the area of safety, deep dive reviews are still pending at a number of our operations.
- On
April 28th, we marked the UN ‘World Day for Safety and Health at Work’ by holding a virtual ‘Stand-Up
for Safety’ meeting where we announced the winners for our 2020
Safety Awards. They are:
- CEO Award for Best Safety Performance – Kinross Chile
- CTO Award for Most Improved Performance – Kinross Paracatu
- In
line with our values, we announced that we are committing to working towards
the goals of the Paris Agreement on climate change, with the ultimate objective
of being a net-zero greenhouse gas emissions company by 2050.
- To support that objective, we are developing a strategy with tangible targets and interim goals for 2030 and the steps we plan to take to achieve those goals.
- This strategy, which we expect to finalize by year-end, is expected to be based on site-specific analysis of mining and processing technologies, renewable resources, and alternative energy sources potentially available over the life-of-mine across all of our assets, leveraging the Company’s current position as one of the lowest GHG emitters among our peers.
Delivering Sustainable Cash Flow
- Operational highlights: We produced 558,777 Au eq. oz. in the first quarter
- Our three largest producing mines – Paracatu, Kupol and Tasiast – again accounted for 60% of production and were the lowest cost mines in our portfolio.
- Paracatu and Tasiast achieved record quarterly throughput over the quarter.
- At Round Mountain, mining activities were impacted by precautionary measures taken after wall movements were detected in the north wall of the pit. While production timing and mine sequencing are expected to be impacted, we do not expect impacts to our annual guidance, long-term production outlook, or the operation’s life of mine production.
- Financial performance: Cost of sales was $756 per Au eq. oz. sold and all-in sustaining cost decreased year-over-year to $975 per Au eq. oz. ounce sold, with capital expenditures of $204 million.
- Our margins increased by 25% to $1,031 per Au eq. oz. sold, outpacing the rise in average realized gold price, compared with Q1 2020. This marks the third consecutive quarter with margins over $1,000.
- Adjusted operating cash flow was approximately $400 million, with free cash flow of approximately $76 million.
- Adjusted net earnings increased 51% to approximately $193 million, or $0.15 per share, compared with the same period last year.
- Kinross maintained its investment grade balance sheet, and we announced that we are redeeming $500 million in Senior Notes ahead of schedule, further evidence of our strong financial position.
- We ended the quarter with cash and cash equivalents of over $1 billion, and total liquidity of approximately $2.6 billion.
- On March 18th we also returned cash to our shareholders through another quarterly dividend payment.
Deliver Future Value
- The Tasiast 24k project remains on budget and on schedule to increase throughput capacity to 21,000 tonnes per day (t/d) by the end of 2021, and then to 24,000 t/d by mid-2023. The first phase of the project is now 80% complete.
- At the Udinsk development project, we continue to make good progress. The project’s pre-feasibility study is on track to be completed in Q4 2021, with first production anticipated to occur in 2025.
- The Manh Choh project in Alaska continued to advance well during the quarter, with the scoping study on schedule to be completed by the end of Q2 2021. The project feasibility study is expected to be completed by the end of 2022, with first production in 2024.
- Development also commenced at Fort Knox’s Gil satellite pits. Kinross expects to process higher-grade ore from the Gil pits at the Fort Knox mill starting in Q4 2021.
- The La Coipa Restart project is on schedule and continues to progress well, with pre-stripping now ramped up. First production is on track for mid-2022.
- The Lobo-Marte feasibility study is on schedule and is expected to be completed in Q4 2021. Potential first production is expected to commence in 2027 following permitting and after the completion of mining at La Coipa.
Continuous Improvement (CI) and Innovation
- CI initiatives globally have contributed positively to 2021 results and it is good to see that many projects are focused on improving equipment availabilities and mine efficiencies to potentially reduce costs.
- The Innovation Opportunity Fund continues to receive strong submissions. If you have a solution or technology that can improve our Company or our specific mine sites and projects, I encourage you to submit.
We performed well to start 2021, safely delivering on our goals as a result of the hard work and dedication of our global teams.
Again, I want to thank you for your ongoing efforts, and for your commitment to keeping yourselves and your colleagues safe.
Keep safe and stay well.
Paul
J.
Paul Rollinson
President & CEO
