Kinross reports Q2 2020 gold equivalent output dropped 12% y-o-y

Cash flow increased 30% and earnings more than doubled year-over-year, as balance sheet continued to strengthen

Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the second-quarter ended June 30, 2020.

2020 Q2 highlights:

  • Production 1 of 571,978 attributable gold equivalent ounces (Au eq. oz.), and sales of 584,477 Au eq. oz.
  • All Kinross mines continued production during the quarter, as the Company’s comprehensive COVID-19 response plans mitigated operational risk and continued to help protect the health and safety of employees and host communities.
  • Kinross’ three largest producing mines – Paracatu, Kupol and Tasiast – delivered 63% of total production and were the lowest cost mines in the portfolio, with an average cost of sales of $596 per Au eq. oz.
  • Reported net earnings 2 and adjusted net earnings3 both more than doubled to $195.7 million, or $0.16 per share, and $194.0 million, or $0.15 per share, respectively, compared with Q2 2019.
  • Operating cash flow of $432.8 million and adjusted operating cash flow3 of $416.9 million, a 30% and 45% increase, respectively, compared with Q2 2019.
  • Production cost of sales 1,3 of $725 per Au eq. oz. and all-in sustaining cost1,3 of $984 per Au eq. oz. sold, both of which are within the Company’s original annual 2020 guidance range.
  • Attributable margin per Au eq. oz. sold4 increased 53% to $987 per Au eq. oz. compared with Q2 2019, outpacing the 31% increase in average realized gold price to $1,712 per Au oz. compared with Q2 2019.
  • Cash and cash equivalents of $1,527.1 million and total liquidity of $2.3 billion at June 30, 2020, as both improved quarter-over-quarter. The Company also further improved its debt metrics, including its net debt to EBITDA ratio, and has no debt maturities until September 2021.
  • While the Company withdrew its full-year guidance as a precautionary measure given the global uncertainties caused by the pandemic, production, cost of sales per ounce, all-in sustaining cost per ounce and capital expenditures are on track to meet Kinross’ original 2020 guidance.
  • On June 15, 2020, Kinross announced an agreement in principle with the Government of Mauritania to enhance the parties’ partnership.
  • On July 15, 2020, Kinross announced the results of the Lobo-Marte project pre-feasibility study in Chile, which added 6.4 million Au oz.5to the Company’s mineral reserve estimates and increased its reserve life index by approximately 2.5 years6.

CEO commentary:
J. Paul Rollinson, President and CEO, made the following comments in relation to 2020 second-quarter results.

“Kinross had a strong second quarter, as we generated robust free cash flow, more than doubled earnings year-over-year, and continued to strengthen our investment grade balance sheet. Our margins increased 53% year-over-year, well above the 31% increase in the average realized gold price. Our portfolio of mines performed well and continued production during the quarter, with our three largest producing mines – Paracatu, Kupol and Tasiast – delivering the lowest costs.

“We have been able to effectively manage COVID-19 impacts on our portfolio of mines during the first half of the year, as our comprehensive pandemic response plan continued to help protect the health of our employees and communities, while supporting the successful continuation of our business. Although we prudently withdrew our full-year guidance given the potential impacts of the pandemic on our operations, we continue to work towards the safe delivery of our annual targets. I would like to thank our employees around the world for their dedication, hard work and commitment to safety during these challenging times.

“During the quarter, we announced an agreement in principle with the Government of Mauritania that enhances our partnership and will provide further stability for the long-term success of our Tasiast mine. Earlier this month, we also announced an addition of 6.4 million ounces to our gold reserve estimates with the completion of the Lobo-Marte pre-feasibility study. This high-quality asset increases our reserve life index and further enhances optionality on our long-term development project pipeline.

“For the first half of the year, more than 50% of our production came from the Americas, and more than 80% from five key assets in five diverse regions. With the recent acquisition in Russia, and taking into account our track record of exploration success, we expect these assets and regions will continue to produce for at least 10 years.”

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