Today, I’d like to provide an update about our 2022 Q1 results and also our re-calibrated focus, driven not only by the pending divestments in Russia and Ghana, but also by the external inflationary environment.
Overall, our portfolio performed largely as planned to start the year, with lower expected production during the quarter. We are on track for stronger production and cost performance in the second half of the year, and given these expectations, we will require contributions from all sites in order to achieve our overall targets for 2022.
Operationally, we reached two key milestones: Tasiast achieved record production and is now regularly reaching throughput of 21,000 tonnes per day, and La Coipa poured its first gold bar on schedule and under budget despite the challenging global environment over the past two years. See Q1 2022 news release here for detailed results
Update on Kinross’ Global Portfolio and Guidance
During the quarter, we announced the sale of our Russian assets, which is subject to approval from the Russian government. In April, we announced the sale of Chirano, with closing targeted for the end of May. With these pending divestments, our overall portfolio has been re-balanced, with approximately 70% of our production now expected from our mines in the Americas, and a world-class asset in Mauritania.
Our adjusted guidance, excluding Russia and Chirano, maintains a substantial production outlook of 2.15 and 2.3 million gold ounces (+/- 5%) in 2022 and 2023, respectively, and is expected to drive strong free cash flow. Over the remainder of the decade, we expect to average two million ounces of annual production.
For 2022, we have taken into account current gold and oil prices and maintained our production cost of sales forecast at $830 per Au eq. oz. (+/- 5%), with all-in sustaining cost expected to be $1,150 per eq. oz. sold (+/- 5%). Our capital expenditure outlook has been lowered to $850 million (+/- 5%).
Our Company remains strong and we are well-positioned to generate value.
Q1 4PP Results
In our First Priorities, we saw positive trends in our safety performance this quarter, with our Total Reportable Injury Frequency Rate (TRIFR) trending down. However, there is room for improvement – we cannot be complacent and must maintain our vigilance to identify potential workplace hazards so that we can correct them and protect ourselves and our colleagues.
We also announced the winners of our 2021 Safety Awards, and would like to congratulate Paracatu for winning the CEO Award for Best Safety Performance and Round Mountain for winning the CTO Award for Critical Risk Management.
In the Deliver Sustainable Cash Flow section of the 4PP, we need to continue focusing on safely achieving our production and cost targets for the remainder of the year to reach our goals. Our production is expected to increase in the second half of the year primarily driven by expected higher production at Paracatu, Tasiast and La Coipa. Let’s maintain our focus on keeping costs down by leveraging factors we can control, including supply chain management and continuous improvement in our operations, to help mitigate inflationary impacts.
Our projects continue to underpin our future growth strategy and we remain in strong position to continue to Deliver Future Value:
- The Tasiast 24k project is on track to reach throughput of 24,000 t/d by mid-2023.
- We have hit the ground running at Great Bear and initial assay results in the LP Fault zone, the most significant discovery at the project to date, continue to reaffirm the significant potential of Great Bear and our view of developing a large, long-life mining complex. We plan to complete 200,000 metres of drilling this year and remain on track to declare an initial inferred resource as part of our 2022 year-end results and commence a pre-feasibility study in 2023.
- In Alaska, the Manh Choh feasibility study is progressing well and is expected to be completed by the end of 2022.
- The Lobo-Marte project continues to provide optionality as a potential large, low-cost mine. The timing and go-ahead decision will be based a variety of factors, including the end of mining of La Coipa, which we are studying to extend.
- We also expect to complete the mine plan optimization study at Round Mountain in the second half of the year. The study is assessing shallower pit wall slope angles and an optimal mine plan sequence for Phase W, Phase S and Phase X.
- Exploration activities focused on brownfield targets around current operations and we have received promising drill results at Round Mountain and our Curlew Basin project, which is near the Kettle River mill.
Continuous Improvement (CI) and Innovation will continue to be essential to productivity improvements and cost management to counteract the impacts of inflation. In January, we launched a global CI campaign focused on improving our energy practices to actively work towards our goal of achieving a 30% intensity reduction in scope 1 and scope 2 GHG emissions by 2030. We encourage everyone to approach their work with Innovation in mind and to continue to take advantage of the Innovation Opportunity Fund.
2021 Sustainability Report
Today we also published our 2021 Sustainability Report, detailing our approach to responsible mining, which is inseparable from operational success. The Report provides a fulsome and transparent summary of our progress and strong achievements over the past year in furthering our ESG strategy. We continued to perform well in major external ESG rankings and ratings, maintained a top-tier governance record, and continued to foster a safe, inclusive and diverse workplace that is representative of the communities in which we operate.
Looking forward
In light of the re-balancing of our portfolio, and external factors such as inflation, I wanted to address our re-calibrated focus on our business moving forward, as we have adjusted certain priorities:
- Maintaining balance sheet strength – we are highly focused on our capital allocation strategy and expect to maintain our return of capital to shareholders while paying down debt. We will closely monitor the gold price and inflation and their impacts on our margins.
- Focusing on operational, project and exploration excellence – continue to focus on safely meeting our production targets, maximizing margins and mitigating inflationary impacts through cost efficiencies. We are also highly focused on developing our pipeline of projects and are prioritizing brownfield exploration to drive organic growth.
- Prioritizing Environmental, Social and Governance (ESG) – at the core of who we are as a company is ESG, and our strategy and operational performance will continue to be guided by our Values and a commitment to mining responsibly.
I am excited about the future for Kinross that includes a substantial production profile, which is anchored by a strong portfolio of assets in the Americas, a growing business in Chile, and a large, top-tier development project in in Canada. Despite the recent challenges, we remain in excellent position as we move into this new phase of the company’s development.
Please continue to prioritize safety every day, as there is no task more important than your well-being. Thank you.
J. Paul Rollinson
President & CEO
Kinross Gold Corporation
