Kinross reports strong 2024 second-quarter results
Press Release
TORONTO, July 31, 2024 — Kinross Gold Corporation (TSX: K, NYSE: KGC) (“Kinross” or the “Company”) today announced its results for the second quarter ended June 30, 2024.
This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on pages 30 and 31 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.
2024 second-quarter highlights:
- Guidance reaffirmed: On an attributable basis, Kinross remains on track to meet its 2024 annual guidance for production, cost of sales, all-in sustaining cost and capital expenditures.
- Production of 535,338 gold equivalent ounces (Au eq. oz.).
- Production cost of sales of $1,029 per Au eq. oz. sold and all-in sustaining cost1 of $1,387 per Au eq. oz. sold.
- Margins2 increased to $1,313 per Au eq. oz. sold, outpacing the rise in the average realized gold price.
- Operating cash flow of $604.0 million and adjusted operating cash flow1 of $478.1 million. Attributable free cash flow1 of $345.9 million.
- Reported net earnings of $210.9 million, or $0.17 per share, with adjusted net earnings1 of $174.7 million, or $0.14 per share1.
- Balance sheet strength: Kinross has improved its debt metrics, with term loan repayments of $200.0 million. Total liquidity3 is approximately $2.1 billion, including cash and cash equivalents of $480.0 million.
- Kinross’ Board of Directors declared a quarterly dividend of $0.03 per common share payable on September 6, 2024, to shareholders of record at the close of business on August 22, 2024.
- Climate Report: Kinross released its 2023 Climate Report, providing a comprehensive summary of its progress in 2023.
Operations:
- Tasiast, Paracatu and La Coipa delivered 67% of total production, with production cost of sales of $848 per Au eq. oz. sold and margins2 of $1,494 per Au eq. oz. sold.
- Sustained strong performance at Tasiast as the mine continued to be the highest-margin operation in the portfolio, generating significant free cash flow.
- Fort Knox delivered a solid quarter, increasing production substantially at lower costs compared with Q1 2024.
Development Projects and Exploration:
- At Great Bear, Kinross remains on track to release a Preliminary Economic Assessment (PEA) in September. During the quarter, Kinross drilled the deepest drill hole to date, which returned 3.8m at 9.52 g/t at a vertical depth of 1,575m, demonstrating robust mineralization at depth, well outside the current resource.
- Manh Choh achieved a significant milestone, on schedule, and poured its first gold bar on July 8, 2024. Full commissioning of the modifications at the Fort Knox mill is expected in the third quarter and the project remains on track to deliver its planned production this year.
- At Round Mountain Phase X, the exploration decline is progressing well with over 2,200 metres developed to date. Extension drilling has intersected mineralization with strong grades and widths outside of the primary exploration target.
CEO commentary:
J. Paul Rollinson, CEO, made the following comments in relation to 2024 second-quarter results:
“Kinross had another strong quarter supporting an excellent first half of the year. Our portfolio of mines performed well, delivering high-margin production, and we remain on track to meet our annual production and cost guidance for 2024.
“Quarter-over-quarter, our margins2 grew by 21% to $1,313 per gold ounce sold, outpacing the rise in gold price, and attributable free cash flow1 more than doubled to $346 million, totalling $491 million year-to-date. We are continuing to prudently manage our business with a focus on maintaining our cost profile and capital discipline while continuing to advance projects and exploration targets to drive future value. We also continue to strengthen our investment grade balance sheet and reduce debt.
“Thanks to the hard work of our team and partners in Alaska, we achieved an important milestone, on schedule, and poured the first gold bar from Manh Choh in early July. The mine remains on plan, the Fort Knox mill is performing well, and the project is expected to be fully commissioned in Q3.
“At Great Bear, the drilling campaign continued to demonstrate positive results, including intersecting high-grade mineralization in the deepest drill hole to date, outside the current resource. Permitting and engineering for both the AEX and Main Project are continuing to advance, and we are looking forward to releasing a Preliminary Economic Assessment in September.
“We are also pleased to have released our 2023 Climate Report. We are on track to achieve our target of a 30% reduction in Scope 1 and Scope 2 GHG emissions intensity by 2030.”
Summary of financial and operating results
| Three months ended | Six months ended | |||||||
| June 30, | June 30, | |||||||
| (unaudited, in millions of U.S. dollars, except ounces, per share amounts, and per ounce amounts) | 2024 | 2023 | 2024 | 2023 | ||||
| Operating Highlights | ||||||||
| Total gold equivalent ounces(a) | ||||||||
| Produced | 535,338 | 555,036 | 1,062,737 | 1,021,058 | ||||
| Sold | 520,760 | 552,969 | 1,043,160 | 1,043,299 | ||||
| Financial Highlights | ||||||||
| Metal sales | $ | 1,219.5 | $ | 1,092.3 | $ | 2,301.0 | $ | 2,021.6 |
| Production cost of sales | $ | 536.1 | $ | 497.9 | $ | 1,049.0 | $ | 981.8 |
| Depreciation, depletion and amortization | $ | 295.8 | $ | 239.3 | $ | 566.5 | $ | 451.2 |
| Operating earnings | $ | 298.3 | $ | 237.8 | $ | 491.5 | $ | 381.7 |
| Net earnings attributable to common shareholders | $ | 210.9 | $ | 151.0 | $ | 317.9 | $ | 241.2 |
| Basic earnings per share attributable to common shareholders | $ | 0.17 | $ | 0.12 | $ | 0.26 | $ | 0.20 |
| Diluted earnings per share attributable to common shareholders | $ | 0.17 | $ | 0.12 | $ | 0.26 | $ | 0.20 |
| Adjusted net earnings attributable to common shareholders(b) | $ | 174.7 | $ | 167.6 | $ | 299.6 | $ | 255.2 |
| Adjusted net earnings per share(b) | $ | 0.14 | $ | 0.14 | $ | 0.24 | $ | 0.21 |
| Net cash flow provided from operating activities | $ | 604.0 | $ | 528.6 | $ | 978.4 | $ | 787.6 |
| Adjusted operating cash flow(b) | $ | 478.1 | $ | 459.1 | $ | 903.0 | $ | 791.9 |
| Capital expenditures(c) | $ | 274.2 | $ | 281.9 | $ | 516.1 | $ | 503.1 |
| Attributable(d) capital expenditures(b) | $ | 264.5 | $ | 272.3 | $ | 496.6 | $ | 484.9 |
| Attributable(d) free cash flow(b) | $ | 345.9 | $ | 258.3 | $ | 491.2 | $ | 305.3 |
| Average realized gold price per ounce(e) | $ | 2,342 | $ | 1,976 | $ | 2,206 | $ | 1,937 |
| Production cost of sales per equivalent ounce(a) sold(f)(g) | $ | 1,029 | $ | 900 | $ | 1,006 | $ | 941 |
| Production cost of sales per ounce sold on a by-product basis(b)(g) | $ | 989 | $ | 845 | $ | 965 | $ | 885 |
| All-in sustaining cost per ounce sold on a by-product basis(b)(g) | $ | 1,357 | $ | 1,262 | $ | 1,319 | $ | 1,272 |
| All-in sustaining cost per equivalent ounce(a) sold(b)(g) | $ | 1,387 | $ | 1,296 | $ | 1,348 | $ | 1,308 |
| Attributable(d) all-in cost per ounce sold on a by-product basis(b) | $ | 1,756 | $ | 1,596 | $ | 1,685 | $ | 1,606 |
| Attributable(d) all-in cost per equivalent ounce(a) sold(b) | $ | 1,774 | $ | 1,614 | $ | 1,702 | $ | 1,624 |
| (a) “Gold equivalent ounces” include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market prices for the commodities for each period. The ratio for the second quarter and first six months of 2024 was 81.06:1 and 84.51:1, respectively (second quarter and first six months of 2023 – 81.88:1 and 82.85:1, respectively). | ||||||||
| (b) The definition and reconciliation of these non-GAAP financial measures and ratios is included on pages [x] to [x] of this report. Non-GAAP financial measures and ratios have no standardized meaning under International Financial Reporting Standards (“IFRS”) and therefore, may not be comparable to similar measures presented by other issuers. | ||||||||
| (c) “Capital expenditures” is as reported as “Additions to property, plant and equipment” on the interim condensed consolidated statements of cash flows. | ||||||||
| (d) “Attributable” includes Kinross’ 70% share of Manh Choh costs, capital expenditures and cash flow, as appropriate. | ||||||||
| (e) “Average realized gold price per ounce” is defined as gold metal sales divided by total gold ounces sold. | ||||||||
| (f) “Production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces sold. | ||||||||
| (g) As production from Manh Choh commenced in July 2024, production cost of sales and attributable all-in sustaining cost figures and ratios for Manh Choh are nil for all periods presented. As a result, production cost of sales and all-in sustaining cost figures and ratios are equal to attributable production cost of sales and attributable all-in sustaining cost figures and ratios, as applicable. | ||||||||
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