K I N R O S S
G O L D
C O R P O R AT I O N
1
First Quarter Report
For the period ended
March 31, 2000
All amounts are expressed in
United States dollars unless
otherwise stated
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MESSAGE TO SHAREHOLDERS
First Quarter
For the first quarter of 2000, cash flow provided from operations
was $12.0 million or $0.04 per share, compared to $17.3 million or
$0.06 per share for the three months ended March 31, 1999.
The net loss for the first quarter of 2000 was $7.8 million or $0.03
per share, compared to $10.0 million or $0.04 per share net loss
for the three months ended March 31, 1999.
REVENUES
Gold and Silver Sales
The Company's primary source of revenue is from the sale of its
gold and silver production. The Company produced 233,492
ounces of gold equivalent during the first quarter of 2000
compared to 255,135 ounces in the first quarter of 1999. Revenue
from gold and silver sales was $70.0 million for the first quarter of
2000 compared to $75.2 million in 1999. Production decreased
quarter over quarter since there was no production from the
Macassa mine during 2000 as it was placed on care and
maintenance during 1999. In the first quarter of 2000, the
Company realized $299 per ounce of gold, as compared to $295
per ounce in 1999. The average spot price for gold was $290 per
ounce in the first quarter of 2000 compared to $287 in 1999.
S U M M A R Y I N F O R M AT I O N
First Quarter 2000
Gold production - ounces
231,427
Gold revenues (millions)
$69.2
Average realized gold price per ounce
$299
Average gold spot prices
$290
Gold equivalent production - ounces (1) 233,492
First Quarter 1999
253,770
$74.8
$295
$287
255,135
(1) Gold to silver ratios were 56.17:1 in the first quarter of 2000 and
54.21:1 in 1999.
This Quarterly Report includes certain “Forward-Looking
Statements” within the meaning of section 21E of the United
States Securities Exchange Act of 1934, as amended. All
statements, other than statements of historical fact, included
herein, including without limitation, statements regarding
potential mineralization and reserves, exploration results and
future plans and objectives of Kinross Gold Corporation
(“Kinross”), are forward-looking statements that involve various
risks and uncertainties. There can be no assurance that such
statements will prove to be accurate and actual results and future
events could differ materially from those anticipated in such
statements. Important factors that could cause actual results to
differ materially from Kinross' expectations are disclosed under the
heading “Risk Factors” and elsewhere in Kinross' documents filed
from time to time with the Toronto Stock Exchange, the United
States Securities and Exchange Commission and other regulatory
authorities.
Operating Performance
Total operating costs increased during the first quarter of 2000
when compared to the first quarter of 1999. Cash spending
increased at Fort Knox and Hoyle Pond with a substantial
contributor being significantly increased diesel fuel prices during
the first three months. For an explanation of the increased
spending please refer to individual mine operations later in this
section. On a per ounce basis, total cash costs increased in the
first quarter of 2000 to $216 per equivalent ounce of gold
compared to $198 in 1999.
KINROSS
GOLD
CORPORATION
1
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The following table provides a reconciliation of operating costs
per the consolidated financial statements to operating costs for
per ounce calculation of total cash costs as per the Gold
Institute guidelines.
R E C O N C I L I AT I O N O F T O TA L C A S H C O S T S P E R
E Q U I VA L E N T O U N C E O F G O L D T O C O N S O L I D AT E D
F I N A N C I A L S TAT E M E N T S
For the three months ended March 31,
2000
(millions except production in ounces
and per ounce amounts)
Operating costs per financial statements
$52.6
Site restoration cost accruals
(0.7)
Other
(1.4)
Operating costs for per ounce
calculation purposes
50.5
Gold equivalent production - ounces
233,492
Total cash costs per equivalent
ounce of gold
$216
1999
implementing synergistic opportunities. In addition, the Company
is reviewing its reliance on contractors and assessing e-based
procurement.
Kubaka Mine
The Company's share of gold equivalent production in the first
quarter of 2000 was 61,573 ounces, compared to 65,953 ounces
during the first quarter of 1999. In the first quarter of 2000, total
cash costs were $150 per ounce of gold equivalent compared to
$142 in 1999. Total cash costs per ounce of gold increased due to
inclusion of the 5% export royalty in 2000. The Kubaka mine
continues to perform exceptionally well, having achieved the lowest
total cash costs per ounce of the Company's primary operations due
to the high-grade nature of the ore body and its efficient
exploitation. The 1999-2000 winter road re-supply was completed
once again on time and on budget.
Refugio Mine
The Company's share of gold equivalent production in the first
quarter of 2000 was 25,788 ounces, compared to 26,496 ounces
during the first quarter of 1999. In the first quarter of 2000, total
cash costs were $276 per ounce of gold equivalent as compared to
$253 in 1999. Cash spending was on plan, but lower than
anticipated gold production due to a shortfall of tonnes crushed in
late 1999, resulted in higher than planned unit costs in the first
quarter. However, Compañia Minera Maricunga (CMM), the Chilean
joint venture company, placed 2.5 million tonnes on the leachpad
during the quarter, its best quarterly tonnage performance to date.
In 2000, CMM continued to improve operations and replace
inefficient equipment. In the first quarter, the fourth, and final
tertiary crusher was replaced and four of five power generation
plants were overhauled.
Denton-Rawhide Mine
The Company's share of gold equivalent production in the first
quarter of 2000 was 15,396 ounces, compared to 16,338 ounces
during the first quarter of 1999. In the first quarter of 2000, total
cash costs were $247 per ounce of gold equivalent as compared to
$218 in 1999. Total cash costs increased in 2000 as a result of
longer haulage distances to the leachpad and higher maintenance
costs associated with an older mining fleet. Effective March 31,
2000, the Company sold its investment in the Denton-Rawhide
mine to Dayton Mining Corporation (“Dayton”) for approximately
144.7 million pre-consolidation common shares of Dayton.
Blanket Mine
Gold production in the first quarter of 2000 was 8,270 ounces,
compared to 9,942 ounces during the first quarter of 1999.
Gold production during the quarter was less than planned as the
tailings re-treatment production was impacted by the excess rainfall
in the region. In the first quarter of 2000 total cash costs were
KINROSS
GOLD
CORPORATION
$51.4
(0.8)
(0.1)
50.5
255,135
$198
P R I M A R Y O P E R AT I O N S
Fort Knox Mine
Gold production in the first quarter of 2000 was 77,551 ounces,
compared to 77,081 ounces during the first quarter of 1999. In the
first quarter of 2000, total cash costs were $238 per ounce of gold
compared to $211 in 1999. The Fort Knox mill processed 3.4
million tonnes during the first quarter of 2000 compared to 2.9
million in 1999. Cash spending was $2.2 million higher than the
first quarter of 1999. Increased spending was incurred due to
unplanned maintenance expenditures of $0.7 million and higher
than planned tonnes mined and milled. The balance of the year
production is expected to return to normal levels as the grade of
ore processed is expected to increase. Estimated gold production
for 2000 remains at 350,000 ounces at total cash costs of
approximately $200 per ounce. Estimated production is expected to
increase to approximately 500,000 ounces per annum at lower total
cash costs once production is achieved from the nearby satellite
deposits in 2001.
Hoyle Pond Mine
Gold production in the first quarter of 2000 was 37,714 ounces,
compared to 28,153 ounces during the first quarter of 1999. In the
first quarter of 2000, total cash costs were $222 per ounce of gold
compared to $243 in 1999. Gold production increased due to
higher-grade ore processed in 2000, 16% more tonnes processed
through the Hoyle Pond mill, and higher recoveries. The Company
is continuing to look to reduce its cash spending at the Hoyle Pond
operations since the total cash cost per ounce of gold is
unacceptably high. One initiative underway in Timmins is the
review of our operations, including the Pamour assets recently
acquired from Royal Oak Mines Inc. with the goal of assessing and
KINROSS
GOLD
CORPORATION
2
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$233 per ounce of gold as compared to $135 in 1999.
Cash spending was $0.5 million higher than planned due to lower
than planned Zimbabwean exchange rates and local inflation.
The tailings re-treatment is expected to return to scheduled
production levels in the second quarter.
LIQUIDITY AND FINANCIAL RESOURCES
Operating Activities
Cash flow provided from operations for the first quarter of 2000
was $12.0 million, compared to $17.3 million in 1999. The first
quarter cash flow provided from operations was positively
affected by higher realized gold prices but negatively affected by
higher total cash costs per ounce of gold equivalent and
decreased output.
Financing Activities
The Company issued, in the first quarter of 2000, 0.4 million
common shares pursuant to the employee share purchase plan for
$0.5 million and repurchased 2.1 million common shares
pursuant to a normal course issuer bid for $3.6 million of cash.
The debt component of convertible debentures was reduced by
$1.1 million during the first quarter of 2000 compared to $1.1
million during 1999. Long-term debt repayments totaled $4.0
million during the first quarter of 2000 compared to $1.8 million
during 1999. The long-term debt repayments during the first
quarter of 2000 were comprised of capital lease repayments of
$2.2 million and repayments of the Kubaka subordinated working
capital debt totaling $1.8 million.
The Company paid dividends to the holders of preferred shares of
Kinam totalling $1.7 million during the three months ended
March 31, 2000 and 1999, respectively.
The Company, during the first quarter of 2000, completed an $110
million operating line credit facility with a syndicate of
commercial banks. With this new operating line, the Company
will issue a new letter of credit to replace the existing letter of
credit currently in place as security for the Fort Knox Industrial
Revenue Bonds (Bonds). In accordance with the terms of the
AMAX merger, Cyprus Amax Minerals Inc. will be removed as
guarantor for the Bonds.
Investing Activities
Capital expenditures incurred in the first quarter of 2000 were
$8.4 million compared to $6.3 million in 1999. Capital
expenditures for the three months ended March 31, 2000 focused
on the Hoyle Pond mine ($4.2 million) primarily on underground
development, the Fort Knox mine ($2.1 million) primarily on
permitting activities and other mines ($2.1 million).
Commodity Price Risks
The Company has entered into gold forward sales contracts, spot
deferred forward sales contracts and written call options for some
portion of expected future production to mitigate the risk of
adverse price fluctuations. The Company does not hold these
financial instruments for speculative or trading purposes. The
Company is not subject to margin requirements on any of its
hedging lines.
The outstanding number of ounces, average expected realized
prices and maturities for the gold commodity derivative contracts
as at March 31, 2000 are as follows:
Expected
Year of
Delivery
2000
Ounces
Hedged
'000 oz.
Call
Average
Options
Strike
Sold ’000 oz. Price
-
-
Average
Price
2001
2002
2003
2004
Total
275
200
200
150
100
925
$305
$320
$318
$325
$319
-
100
100
100
300
-
$340
$340
$340
Outlook
As at March 31, 2000, the Company has $107.9 million of cash
and operating working capital of $3.8 million for total working
capital of $111.7 million. This combined with sustainable low
cost production, significant mining properties in Alaska and
Timmins and a manageable debt repayment schedule, provides
the Company with a solid platform for future growth internally
and through acquisitions.
Robert M. Buchan (signed)
Chairman and
Chief Executive Officer
May 1, 2000
KINROSS
GOLD
CORPORATION
KINROSS
GOLD
CORPORATION
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PRODUCTION DATA
GOLD PRODUCTION AND COST SUMMARY
For the three months ended March 31
2000
Fort Knox
Tonnes milled / crushed (000's) (1)
3,401.1
Grade (grams per tonne)
0.82
Recovery
87%
Gold equivalent production to dore (2)
77,551
Per Ounce:
Total cash costs
Depreciation, depletion and amortization
Site restoration cost accruals
Total production costs
Hoyle Pond
Tonnes milled/crushed (000's) (1)
Grade (grams per tonne)
Recovery
Gold equivalent production to dore (2)
Per Ounce:
Total cash costs
Depreciation, depletion and amortization
Site restoration cost accruals
Total production costs
Kubaka (3)
Tonnes milled / crushed (000's) (1)
Grade (grams per tonne)
Recovery
Gold equivalent production to dore (2)
Per Ounce:
Total cash costs
Depreciation, depletion and amortization
Site restoration cost accruals
Total production costs
Refugio
(4)
Tonnes milled / crushed (000's) (1)
Grade (grams per tonne)
Recovery
Gold equivalent production to dore (2)
Per Ounce:
Total cash costs
Depreciation, depletion and amortization
Site restoration cost accruals
Total production costs
cont’d
1999
2,937.50
0.89
89%
77,081
Denton-Rawhide (5)
Tonnes milled / crushed (000's) (1)
Grade (grams per tonne)
Recovery
Gold equivalent production to dore (2)
Per Ounce:
Total cash costs
Depreciation, depletion and amortization
Site restoration cost accruals
Total production costs
Blanket
Tonnes milled/crushed (000's) (1)
Grade (grams per tonne)
Recovery
Gold equivalent production to dore (2)
Per Ounce:
Total cash costs
Depreciation, depletion and amortization
Site restoration cost accruals
Total production costs
2000
1999
1,487.8
1.00
64%
15,396
1,522.30
0.89
64%
16,338
$238
87
3
$328
$211
125
4
$340
$247
67
6
$320
$218
80
6
$304
112.6
11.95
87%
37,714
97.2
10.30
86%
28,153
206.3
1.72
72%
8,270
307.3
1.44
70%
9,942
$222
81
1
$304
$243
103
1
$347
$233
69
1
$303
$135
52
1
$188
199.8
17.56
98%
61,573
180.0
21.71
98%
65,953
(1) Tonnes milled / crushed represents 100% of mine production.
(2) Gold equivalent to dore represents the Company's share.
(3) 54.7% ownership interest (53% in 1999).
(4) 50% ownership interest.
(5) 49% ownership interest.
$150
122
3
$275
$142
143
3
$288
2480.9
0.94
62%
25,788
2,190.00
0.93
66%
26,496
$276
46
5
$327
$253
54
5
$312
KINROSS
GOLD
CORPORATION
KINROSS
GOLD
CORPORATION
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GOLD EQUIVALENT PRODUCTION – OUNCES