Kinross reports strong 2020 third-quarter results

Significant increase in earnings and cash flow
Company on track to meet annual guidance for ninth consecutive year

TORONTO, Nov. 04, 2020 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the third quarter ended September 30, 2020.
( 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-Lookin g Information located on page 18 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)

2020 third-quarter highlights:

• Kinross remains on track to meet its original 2020 guidance for production , cost of sales per ounce , all-in sustaining cost per ounce and capital expenditures for the ninth consecutive year, despite impacts from the COVID-19 pandemic.

• Production ^{1 , 2} of 603,312 attributable gold equivalent ounces (Au eq. oz.), and sales of 588,559 Au eq. oz.

• Production cost of sales ^{1, 2} of $737 per Au eq. oz. and a ll-in sustaining cost ^{1, 2} of $958 per Au eq. oz. sold, both of which are within the Companys 2020 guidance range.

• Attributable margin per Au eq. oz. sold ³ increased 60% to $1,171 per Au eq. oz. compared with Q3 2019, significantly outpacing the year-over-year 30% increase in the average realized gold price ⁴ .

• Operating cash flow more than doubled to $544.1 million, and adjusted operating cash flow ² increased by 86% to $549.6 million, compared with Q3 2019.

• Reported net earnings ⁵ nearly quadrupled to $240.7 million, or $0.19 per share, and adjusted net earnings ² nearly tripled to $310.2 million, or $0.25 per share, compared with Q3 2019.

• Cash and cash equivalents of $933.5 million and total liquidity of $2.5 billion at September 30, 2020. The Company also further improved its debt metrics, including its net debt to EBITDA ratio.

• Kinross Board of Directors declared a quarterly dividend of $0.03 per common share payable on December 10, 2020 to shareholders of record at the close of business on November 25, 2020. The Company also declared a dividend on September 17, 2020 and announced plans to pay a regular quarterly dividend.

CEO c ommentary :  
J. Paul Rollinson, President and CEO, made the following c omments in relation to 2020 third -quarter results :

Kinross delivered another strong quarter, generating robust free cash flow and a significant increase in earnings. Our mines continued to perform well as our global teams have effectively managed the operational challenges caused by the COVID-19 pandemic. As a result, we are well on track to meet our annual guidance for production and costs for the ninth consecutive year.

Year-over-year, our margins grew by 60% to $1,171 per gold ounce sold, which substantially outpaced the 30% increase in the average realized gold price. We also continued to strengthen our investment grade balance sheet and ended the quarter with approximately $935 million in cash and total liquidity of $2.5 billion.

In September, we were pleased to announce an expected 20% increase in production over the next three years to 2.9 million gold equivalent ounces, along with plans for a quarterly dividend to return capital to our shareholders. We also provided a long-term production outlook which forecasts Kinross producing an average of 2.5 million gold equivalent ounces annually through to 2029.

Our robust financial position, diverse operating portfolio, attractive project pipeline and successful track record of exploration and project development provides a strong foundation from which to continue building value well into the future.

Financial results

Summary of financial and operating results

(a)    Total includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) and Peak (70%) production and costs .
(b)    The definition and reconciliation of these non-GAAP financial measures is included on pages 13 to 17 of this news release.
(c)    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 third quarter of 2020 was 78.68:1 (third quarter of 2019 86.73:1). The ratio for the first nine months of 2020 was 90.15:1 (first nine months of 2019 86.13:1).
(d)    Capital expenditures is as reported as Additions to property, plant and equipment on the interim condensed consolidated statement of cash flows and excludes Interest paid capitalized to property, plant and equipment.

The following operating and financial results are based on 2020 third-quarter gold equivalent production. Production and cost measures are on an attributable basis:

Production ¹ : Kinross produced 603,312 attributable Au eq. oz. in Q3 2020, compared with 608,033 Au eq. oz. in Q3 2019. The slight decrease was largely due to lower production at Paracatu, Maricunga and Kupol, largely offset by increases at Fort Knox and Bald Mountain.

Average realized gold price ³ : The average realized gold price in Q3 2020 increased 30% to $1,908 per ounce, compared with $1,467 per ounce in Q3 2019.

Revenue : Revenue from metal sales increased by 29% to $1,131.3 million in Q3 2020, compared with $877.1 million during the same period in 2019.

Production cost of sales ^{1 , 2} : Production cost of sales per Au eq. oz. was $737 for Q3 2020 and was in line with $735 for Q3 2019. Production cost of sales per Au oz. on a by-product basis decreased to $707 in Q3 2020, compared with $716 in Q3 2019, based on Q3 2020 attributable gold sales of 573,173 ounces and attributable silver sales of 1,210,707 ounces.

Margins: Kinross attributable margin per Au eq. oz. sold ³ increased by 60% to $1,171 for Q3 2020, compared with the Q3 2019 margin of $732, and significantly outpacing the year-over-year 30% increase in average realized gold price.

All-in sustaining cost ^{1, 2} : All-in sustaining cost per Au eq. oz. sold decreased to $958 in Q3 2020, compared with $1,028 in Q3 2019. All-in sustaining cost per Au oz. sold on a by-product basis decreased to $934 in Q3 2020, compared with $1,016 in Q3 2019. The decrease in all-in sustaining cost was primarily a result of lower capital expenditures.

Operating cash flow : Adjusted operating cash flow ² for Q3 2020 increased by 86% to $549.6 million, compared with $295.4 million for Q3 2019, primarily due to the increase in margins.

Net operating cash flow increased by 135% to $544.1 million for Q3 2020, compared with $231.7 million for Q3 2019.

Earnings : Adjusted net earnings ² nearly tripled to $310.2 million, or $0.25 per share, for Q3 2020, compared with $104.0 million, or $0.08 per share, for Q3 2019, primarily due to the increase in margins.

Reported net earnings ⁵ nearly quadrupled to $240.7 million, or $0.19 per share, for Q3 2020, compared with $60.9 million, or $0.05 per share, for Q3 2019.

Capital expenditures : Capital expenditures were $212.1 million for Q3 2020, compared with $242.6 million for Q3 2019, primarily due to decreases in spending at Bald Mountain and Tasiast.

Balance s heet and financial position

As of September 30, 2020, Kinross had cash and cash equivalents of $933.5 million, compared with $1,527.1 million at June 30, 2020. The decrease was primarily related to the full repayment of the $750 million drawn from the Companys $1.5 billion credit facility earlier in the year as a precaution against uncertainties caused by the COVID-19 pandemic and the acquisition of the Peak project. Strong free cash flow generated during Q3 2020 partially offset the cash used for the repayment and acquisition.

The Company had additional available credit of $1,565.3 million as of September 30, 2020, and total liquidity of approximately $2.5 billion. Kinross had total debt of approximately $1.9 billion, of which $500 million in senior notes are due in September 2021, which the Company intends to repay.

Kinross continues to prioritize maintaining and strengthening its investment grade balance sheet.

Operating results

The Companys comprehensive response to the COVID-19 pandemic continued to maintain the safety of its global workforce and host communities while mitigating operational impacts.

Mine-by-mine summaries for 2020 third-quarter results can be found on pages eight and 12 of this news release. Operational highlights from Q3 2020 include the following:

Americas

Fort Knox performed well during the quarter, with higher production and lower cost of sales per ounce sold compared with Q2 2020 mainly due to strong mill performance. The operation delivered higher production compared with Q3 2019 as a result of higher mill grades and mill throughput. Cost of sales per ounce sold decreased year-over-year due to increased production and mill throughput, partially offset by higher operating waste mined.

Round Mountain s production was largely in line with Q2 2020, with cost of sales per ounce sold decreasing mainly as a result of lower contractor costs. Year-over-year production decreased primarily as a result of lower mill grades, partially offset by higher ounces recovered from the heap leach pads. Cost of sales per ounce sold was lower compared with Q3 2019 mainly due to a decrease in operating waste mined and lower fuel costs.

At Bald Mountain , both production and cost of sales per ounce sold were largely consistent with Q2 2020. Production increased compared with Q3 2019 as more ounces were recovered from the Vantage Complex heap leach pad due to higher grades. Cost of sales per ounce sold increased year-over-year mainly due to higher royalty expenses driven by higher gold prices.

At Paracatu , production was lower quarter-over-quarter mainly due to a decrease in mill throughput as a result of planned maintenance and lower grades. The lower throughput, and a decrease in recoveries, contributed to the lower production year-over-year. Production is expected to improve in the fourth quarter as mining is expected to transition to higher grade ore. Cost of sales per ounce sold increased compared with Q2 2020 and Q3 2019 mainly as a result of lower ounces produced, higher contractor costs and maintenance supplies, partially offset by favourable foreign exchange movements.

Russia

At Kupol and Dvoinoye , production was largely in line with the previous quarter and was lower year-over-year mainly due to anticipated lower grades at Kupol. Cost of sales per ounce sold was lower compared with Q2 2020 and Q3 2019, primarily due to reduced mining activity at Dvoinoye. Favourable foreign exchange rates also contributed to the year-over-year decrease in cost of sales per ounce sold, which was partially offset by higher royalties associated with the increase in the average realized gold price.

West Africa

Tasiast performed well, with higher production quarter-over-quarter and year-over-year. While production in the second quarter was negatively impacted by a strike, Q3 2020 production improved as a result of record mill grades and higher mill throughput, with Tasiast achieving a record production month in August. Cost of sales per ounce sold increased compared with Q2 2020 mainly due to higher royalty expenses and increased milling supplies. Compared with Q3 2019, production increased due to higher mill grades, which was partially offset by lower mill throughput and recoveries, while cost of sales per ounce sold was largely consistent.

During the quarter, Tasiasts mining rate continued to ramp up and is now operating at near full capacity after rates were affected by the strike in Q2 2020 and COVID-19 impacts earlier in the year. As a result of lower mining rates, approximately 100k Au eq. oz. of production is expected to be deferred from 2021 to 2022. Kinross does not expect any impacts to Tasiasts life of mine production.

At Chirano , production increased compared with the previous quarter primarily due to higher mill throughput, and cost of sales per ounce sold increased due to higher milling costs. Year-over-year production was lower as a result of lower grades, and cost of sales per ounce sold increased due to higher milling costs and maintenance supplies, partially offset by lower operating waste mined.

L ong-term production outlook

On September 17, 2020, Kinross announced a growing three-year production profile, with production expected to increase by approximately half a million ounces, or 20%, to 2.9 million Au eq. oz. in 2023. The Company expects production ¹ (+/- 5%) of 2.4 million Au eq. oz. in 2021, 2.7 million Au eq. oz. in 2022, and 2.9 million Au eq. oz. in 2023.

On October 20, 2020, Kinross provided a long-term production outlook, with expected average annual production of 2.5 million Au eq. oz. ¹ to 2029. Kinross production outlook is based on long-life assets that anchor the Companys global portfolio, along with numerous growth projects in all operating regions.

Development p rojects

Alaska projects

At the Fort Knox Gilmore project, work on infrastructure and processing facilities is now substantially complete. First ore was placed on the new Barnes Creek heap leach pad in early October, as construction of the pad was completed on time and under budget during the quarter. Stripping is progressing well, and the Company expects to accelerate production at the Gilmore project to bring ounces forward as part of Kinross growing three-year production profile.

On September 30, 2020, the Company acquired a 70% interest in the open pit Peak project in Alaska for total cash consideration of $93.7 million. As the project operator, Kinross expects to process Peak ore at its Fort Knox mill. Processing ore at Fort Knox avoids mill construction at Peak and is expected to decrease execution risk, lower capital expenditures, drive attractive returns, and reduce the projects environmental footprint and permitting requirements. Blending the higher grade ore from Peak with Fort Knox ore is expected to extend mill operation at Fort Knox, reduce overall costs and increase cash flow. The project is expected to benefit the state and local communities, in particular, the Upper Tanana Athabascan Village of Tetlin.

Kinross expects to commence production at Peak in 2024, with total production of approximately 1 million Au eq. oz. over 4.5 years at average mining grades of approximately 6 g/t. Kinross plans to commence a drilling program before year end to further develop the projects resource base, and expects to complete permitting and a feasibility study by the end of 2022.

Tasiast 24k

The Tasiast 24k project is advancing well and remains on schedule to increase throughput capacity to 21,000 t/d by the end of 2021, and then to 24,000 t/d by mid-2023. The project is now approximately 45% complete, with civil and mechanical works progressing well in the processing plant, including the gravity circuit, thickener and screens. Work on power plant construction, which was previously delayed by COVID-19 impacts, is now ramping up.

Chulbatkan license Udinsk project

At the Udinsk development project the first project the Company expects to develop on the larger Chulbatkan license study work is advancing well. The 2020 drill program has ramped back up after challenges related to COVID-19 earlier in the year, and as of the end of Q3 2020, approximately 50,000 metres of drilling have been completed. All of the current estimated mineral resources at Chulbatkan are located at Udinsk, which has a footprint that represents less than 1% of the approximately 450 sq. kilometre Chulbatkan license area.

On the Chulbatkan license, a geochemistry and geophysics exploration program completed outside of Udinsk has returned positive results, with new anomalies identified. The large, prospective Chulbatkan license area provides exploration potential that is incremental to the Udinsk project.

La Coipa Restart and Lobo-Marte

The La Coipa Restart project is progressing well and is on schedule to begin pre-stripping in early 2021, with first production expected in mid-2022. An access road to the Phase 7 pit has been established and refurbishments of the fleet that was successfully transferred from Maricunga in April 2020 are progressing well. Early work on refurbishing the plant and existing infrastructure is also advancing well as the team continues to work to offset challenges to project timing caused by COVID-19 impacts. The Company continues to study opportunities to incorporate adjacent deposits with existing mineral reserves and resources into the La Coipa mine plan and potentially extend mine life.

At the Lobo-Marte project, work on permitting and the feasibility study (FS) is advancing, with the FS on schedule to be completed in Q4 2021. The Company is targeting production at Lobo-Marte to commence in 2027 after the completion of mining at La Coipa. Kinross continues to believe that Lobo-Marte offers the potential of a long-life, cornerstone asset with attractive costs.

2020 guidance
The following section of the news release represents forward-looking information and users are cautioned that actual results may vary. We refer to the risks and assumptions contained in the Cautionary Statement on Forw ard-Looking Information on page 18 of this news release.

On September 17, 2020, the Company reinstated its 2020 guidance originally announced on February 12, 2020.

Kinross is on track to meet its production ¹ guidance of 2.4 million Au eq. oz. (+/- 5%), its cost of sales per ounce ¹ guidance of $720 per Au eq. oz. sold (+/- 5%), and its all-in sustaining cost ¹ guidance of $970 per Au eq. oz. sold (+/- 5%) for 2020. The Company also remains on track to meet its capital expenditures guidance of $900 million (+/- 5%).

2019 Sustainability Report

In August 2020, Kinross released its biennial Sustainability Report (Report) detailing the Companys progress over the past two years in delivering on its commitment to responsible mining. The Report provides a transparent account of Kinross sustainability performance, including ESG activities, and an in-depth review of the Companys relationships with host communities, workforce and host governments.

Health and safety remains Kinross top priority and is exemplified by its strong safety performance. Incident frequency rates have remained among the lowest in the industry, and on par with, or better than rates in low-risk, non-industrial sectors. In line with this commitment, the Report provides comprehensive information on Kinross COVID-19 Response , which includes rigorous measures to keep its employees safe, mitigate the spread of the virus, maintain business continuity and production, and support employees and host communities.

The Company continued to deliver socio-economic value, and provided benefits to host countries with a total of $3.2 billion spent in-country in 2019 through taxes, wages, procurement and community support.

Kinross has adopted the World Gold Councils Responsible Gold Mining Principles (RGMPs), proceeded with the implementation of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and continued to advance the UN Sustainable Development Goals (SDGs). The Report follows the Global Reporting Initiative (GRI) framework, fulfills Kinross commitment as a participant in the UN Global Compact, and includes metrics from the Mining and Metals Standard of the Sustainability Accounting Standards Board (SASB).

Q 3 2020 c onference call details

In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, November 5, 2020 at 8:00 a.m. ET followed by a question-and-answer session. Please enter the p asscode: 8369428 to access the call.

Canada & US toll-free +1 (833) 968-2237; Passcode: 8369428
Outside of Canada & US +1 (825) 312-2059; Passcode: 8369428

Replay (available up to 14 days after the call):

Canada & US toll-free +1 (800) 585-8367; Passcode: 8369428
Outside of Canada & US +1 (416) 621-4642; Passcode: 8369428

You may also access the conference call on a listen-only basis via webcast at our website www.kinross.com . The audio webcast will be archived on www.kinross.com .

This news release should be read in conjunction with Kinross 2020 third-quarter unaudited Financial Statements and Managements Discussion and Analysis report at www.kinross.com . Kinross third-quarter unaudited Financial Statements and Managements Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com ) and furnished to the U.S. Securities and Exchange Commission (available at www.sec.gov ). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.

About Kinross Gold Corporation

Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange (symbol:KGC).

Media Contact
Louie Diaz
Senior Director , Corporate Communications
phone: 416-369-6469
louie.diaz@kinross.com

_________________________________________________

Investor Relations Contact
Tom Elliott                                
Senior Vice- President, Investor Relations
phone: 416-365-3390                        
tom.elliott@kinross.com

Review of o perations

Interim condensed c onsolidated balance sheets

Interim condensed c onsolidated statements of operations

Interim condensed c onsolidated statements of cash flows