Press Release
May 2, 2001
Toronto, Ontario –
Kinross Gold Corporation (TSE-K; NYSE-KGC)
announced today the results for the three
months ended March 31, 2001 are as follows:
All results are expressed in United States dollars unless otherwise stated.
Consolidated Results
First Quarter
The Company’s share of attributable gold equivalent production of 239,352 ounces at total cash costs of $191 per
ounce during the first quarter of 2001 resulted in higher cash flow provided from operations, when compared to the
first quarter of 2000. Cash flow provided from operations for the first quarter was $13.6 million or $0.05 per share,
compared to $12.0 million or $0.04 per share for the three months ended March 31, 2000. Increased attributable gold
equivalent production at significantly lower total cash costs per ounce more than compensated for a $22 per ounce
decrease in average realized prices for the quarter. The net loss for the first quarter of 2001 was $4.9 million or $0.02
per share compared to $7.8 million or $0.03 per share for the first quarter of 2000.
Revenues
Gold and Silver Sales
The Company’s primary source of revenue is from the sale of its gold and silver production. The Company’s share of
gold equivalent sales was 231,367 ounces during the first quarter of 2001 compared to 233,492 ounces in the first
quarter of 2000. Revenue from gold and silver sales was $64.1 million during the first quarter of 2001 compared to
$70.0 million in 2000. Revenue in 2001 decreased due to lower gold and silver sales resulting from the sale of the
Denton-Rawhide mine at the end of the first quarter of 2000, this was partially compensated by increased sales of
gold produced at the Fort Knox mine. In addition, lower average realized gold prices reduced revenues. During the
first quarter of 2001, the Company realized $277 per ounce of gold, compared to $299 in 1999. The average spot price
for gold during the first quarter of 2001was $264 per ounce compared to $290 in 2000.
Interest and Other Income
Interest and other income was $5.6 million during the first quarter of 2001 compared to $4.5 million during 2000.
Interest and other income increased due to a $3.1 million positive mark-to-market adjustment to the written call
options outstanding at March 31, 2001, which was partially offset by lower interest income due to lower cash
balances and interest rates for the quarter.
Operating Performance and Costs
Operating costs decreased by 15% during the first quarter of 2001 when compared to the first quarter of 2000, since
the operating costs no longer include the Denton-Rawhide results after the sale to Dayton Mining Inc. In addition,
cash spending at the Hoyle Pond, Kubaka and the Refugio mines was reduced substantially. The net result was
lower operating costs of $44.7 million during the first quarter of 2001 compared to $52.6 million in 1999. On a per
ounce of gold equivalent basis, total cash costs were $191 during the first quarter of 2001 compared to $216 in the
first quarter of 2000.
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Consolidated Production Cost per
Equivalent Ounce of Attributable Gold Production
Three Months Ended
March 31,
2001
2000
Cash operating costs
Royalties
Production taxes
Total cash costs
Reclamation
Depreciation, depletion and amortization
Total production costs
$
184
7
-
191
2
84
277
$
204
12
-
216
3
97
316
$
$
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 pursuant to the Gold Institute guidelines.
Reconciliation of Total Cash Costs per
Equivalent Ounce of Gold to Consolidated Financial Statements
(million except production in ounces and per ounce amounts)
Three Months Ended
March 31,
2001
2000
Operating costs per financial statements
Dayton operating costs
Site restoration cost accruals
Other
Operating costs for per ounce calculation purposes
Gold equivalent production – ounces
Total cash costs per equivalent ounce of gold
Fort Knox Mine
Gold equivalent production during the first quarter of 2001was 100,347 ounces compared to 77,551 in 2000. Total
cash costs were $186 per ounce of gold equivalent compared to $238 in 2000. Cash production costs were
unchanged when compared to the first quarter of 2000, but mining of a higher-grade portion of the Fort Knox open pit
resulted in significantly reduced per ounce unit costs. Capital expenditures in Alaska totaled $7.9 million during the
quarter. The majority of the capital expenditures focused on the new haulage road from the True North deposit to the
Fort Knox processing plant. The construction of this haulage road was substantially complete by the end of the
quarter and the Fort Knox mill commenced processing of the True North ore during April. Estimated gold production
and total cash costs per ounce for 2001 at the Fort Knox operations remain unchanged from previous estimates.
Hoyle Pond Mine
Gold equivalent production during the first quarter of 2001was 36,066 ounces compared to 37,714 in 2000. Total cash
costs were $208 per ounce of gold equivalent compared to $222 in 2000. Cash production costs were $1.4 million less
than incurred during the first quarter of 2000 demonstrating the success of the continued cost containment activities
at Hoyle Pond. Capital expenditures at Hoyle Pond totaled $3.0 million during the quarter. The majority of capital
expenditures focused on exploration and underground development. Mill recoveries dropped by 2% when compared
to the first quarter of 2000. Mill recoveries were negatively affected by an unusually high portion of refractory ore
processed during the first quarter of 2001. Mill recoveries are expected to return to normal levels for the remainder of
the year as this refractory portion of the ore becomes a smaller portion of future mill tonnages. Estimated gold
production and total cash costs per ounce for 2001 at the Hoyle Pond operations remain unchanged from previous
estimates.
$
44.7
2.1
(0.4)
(0.8)
45.6
239,352
191
$
52.6
-
(0.7)
(1.4)
50.5
233,492
216
$
$
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Kubaka Mine (54.7% Ownership Interest)
The Company’s share of gold equivalent production during the first quarter 2001 was 56,175 ounces compared to
61,573 in 2000. Total cash costs were $141 per ounce of gold equivalent compared to $150 in 2000. The Company’s
share of cash production costs was $1.7 million less than incurred during the first quarter of 2000. Mill throughput
increased by 12%, which combined with lower cash spending compensated for the 18% decrease in the grade of the
ore processed. Estimated gold production and total cash costs per ounce for 2001 at the Kubaka operations remain
unchanged from previous estimates.
Refugio Mine (50% Ownership Interest)
The Company’s share of gold equivalent production during the first quarter of 2001 was 25,827 ounces compared to
25,788 in 2000. Total cash costs were $244 per ounce of gold equivalent compared to $276 in 2000. The current
operating plan for Refugio is to continue to mine and stack ore on the leachpad until May 31, 2001. The Refugio
operations will commence residual leaching and the mining activities will be placed on care and maintenance at that
point. Estimated gold equivalent production and total cash costs per ounce for 2001 at the Refugio operations remain
unchanged from previous estimates.
Blanket Mine
Gold equivalent production during the first quarter of 2001 was 10,169 ounces compared to 8,270 in 2000. Total cash
costs were $218 per ounce of gold equivalent compared to $233 in 2000. Gold equivalent production increased in
2001 as the re-processing of the newly acquired tailings from a nearby producer commenced. Total cash costs per
ounce of gold equivalent decreased in 2001 due to higher production. Estimated gold equivalent production for 2001
at the Blanket operations remain unchanged, but total cash costs per ounce could remain at current levels if
inflationary conditions persist in Zimbabwe.
Other Expenses
General, administrative and exploration expenditures totaled $4.6 million in the first quarter a decline of 4% from $4.8
million in the first quarter of 2000. The decline represents reduced exploration expenditures as the Company focused
its exploration efforts near existing processing plants. The Company continues to focus on cost containment and is
continually looking for opportunities to reduce expenditures in all areas.
The Company’s share of losses in equity accounted subsidiaries was $0.4 million compared to an income of $1.2
million during the first quarter of 2000. The amount in 2000 includes $1.0 million of dividend income received.
Interest expense on long-term liabilities was $2.6 million and $3.3 million for the first quarter of 2001 and 2000,
respectively. Interest expense decreased due to lower interest rates and lower debt balances.
Consolidated Cash Flow
Operating Activities
Cash flow provided from operations for the first quarter of 2001 was $13.6 million compared to $12.0 million in 2000.
Increased gold equivalent production and lower cash spending positively affected the first quarter 2001 cash flow
provided from operations. In addition to cash flow provided from operations, $21.1 million was generated upon the
early settling of the Company’s forward sales program and other working capital items consumed $2.0 million. As a
result, cash flow from operating activities in the first quarter of 2001 was $32.7 million compared to $15.7 million in
2000.
Financing Activities
During the first quarter of 2001, the Company issued 0.4 million common shares (2000 – 0.4 million) pursuant to the
employee share purchase plan for $0.2 million (2000 - $0.5 million).
The debt comp onent of convertible debentures was reduced by $1.3 million during the first quarter of 2001 compared
to $1.1 million during 2000. Long-term debt repayments were $24.3 million during the first quarter of 2001 compared to
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$4.0 million during 2000. Long-term debt repayments were primarily comprised of $22.0 million of Alaskan Industrial
Revenue Bonds with the balance under various capital lease obligations.
There were no dividends paid during the first quarter of 2001 on the preferred shares of Kinam, a subsidiary
company, compared to $1.7 million during 2000. Included in the carrying value of the Kinam preferred shares, as at
March 31, 2001, is an accrual of $5.2 million that represents the cumulative unpaid dividends.
As at March 31, 2001, the Company’s long-term debt consists of $19.4 million relating to the Kubaka project
financing, $5.7 million of the Kubaka subordinated debt, $49.0 million of Alaskan Industrial Revenue Bonds and
various capital leases and other indebtedness totaling $12.9 million. The current portion of the long-term debt as at
March 31, 2001, of $33.4 million is net of $22.0 million of cash set aside for a partial early repayment of the Alaska
Industrial Revenue Bonds which was effectively made April 4, 2001.
Investing Activities
Capital expenditures increased by 37% during the first quarter of 2001 as $11.5 million was spent on capital additions
compared to $8.4 million in 2000. Capital spending at the Hoyle Pond mine totaled $3.0 million (2000 - $4.2 million), for
exploration drilling and underground development. Capital spending at the Fort Knox mine totaled $7.9 million (2000 -
$2.1 million), on permitting activities and the construction of the new access road on the True North project. Capital
spending at the remaining mines totaled $0.6 million during the first quarter compared to $2.1 million in 2000. Capital
expenditures were financed out of cash flow from operating activities.
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, 2001 are as follows:
Expected
Year
Of Delivery
2001
2002
2003
2004
Total
Outlook
As at March 31, 2001, the Company has $75.8 million of cash. The Company is continually focused on cost
containment and is aggressively looking for opportunities to reduce spending in all areas. In addition, with the
exception of the Goose Lake advanced exploration program, all exploration efforts are now focused near existing
producing assets, which should provide synergistic opportunities in the future. These initiatives, combined with the
strong operating cash flow from the current production profile and a manageable debt repayment schedule, provide
the Company with the ability to survive the low gold price environment in order to take advantage of higher prices in
the future.
This press release 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
Ounces
Hedged
'000 oz.
183
100
100
100
483
Call
Options
Sold '000 oz.
150
100
100
100
450
Average
Strike
Price
$280
$340
$340
$340
Average
Price
$275
$270
$270
$270
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and future plans and objectives of Kinross Gold Corporation (“Kinross”), are forward-looking statements that
involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate
and actual results and future events could differ materially from those anticipated in such statements. Important
factors that could cause actual results to differ materially from Kinross’ expectations are disclosed under the heading
“Risk Factors” and elsewhere in Kinross’ documents filed from time to time with the Toronto Stock Exchange, the
United States Securities and Exchange Commission and other regulatory authorities.
-30-
For additional information, e-mail
info@kinross.com
or contact:
Robert M. Buchan
Chairman and
Chief Executive Officer
Gordon A. McCreary
Vice President,
Investor Relations and
Corporate Development
Tel. (416) 365-5132
Brian W. Penny
Vice President, Finance
and Chief Financial Officer
Tel. (416) 365-5650
Tel. (416) 365-5662
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Gold Equivalent Production - Ounces
Three months ended
March 31
2001
Primary operations:
Fort Knox
Hoyle Pond
Kubaka (1)
Refugio (2)
Blanket
100,347
36,066
56,175
25,827
10,169
228,584
Other operations:
Denton-Rawhide (3)
Andacollo (3)
Hayden Hill
Guanaco
4,403
3,582
1,065
1,718
10,768
Total gold equivalent ounces
239,352
15,396
-
2,613
4,587
22,596
233,492
77,551
37,714
61,573
25,788
8,270
210,896
2000
Consolidated production costs
($ per ounce of gold equivalent)
Cash operating costs
Royalties
Total cash costs
Reclamation
Depreciation and amortization
Total production costs
184
7
191
2
84
277
204
12
216
3
97
316
(1) Represents the Companys's 54.7% ownership interest
(2) Represents the Companys's 50% ownership interest.
(3) The 49% interest in the Denton-Rawhide mine was sold to Dayton Mining Inc. ("Dayton") on March 31, 2000
for common shares of Dayton. As a result of this transaction and the sale to Dayton of certain other assets,
the Company holds an approximate 33% interest in the Denton-Rawhide and Andacollo mines from April 1,
2000. Accordingly, first quarter - 2001 production includes approximately 33% of Andacollo and
Denton-Rawhide production attributable to the Dayton ownership interest.
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Cash operating costs
($ per ounce of gold equivalent)
Three months ended
March 31
2001
Primary operations:
Fort Knox
Hoyle Pond
Kubaka
Refugio
Blanket
Other operations:
Denton-Rawhide
Andacollo
Hayden Hill
Guanaco
268
259
390
413
289
184
Total cash costs
($ per ounce of gold equivalent)
Primary operations:
Fort Knox
Hoyle Pond
Kubaka
Refugio
Blanket
Other operations:
Denton-Rawhide
Andacollo
Hayden Hill
Guanaco
268
264
289
436
296
191
247
-
258
180
235
216
186
208
141
244
218
186
238
222
150
276
233
214
247
-
248
163
230
204
186
207
120
231
218
179
238
221
114
261
233
201
2000
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Kinross Gold Corporation
Gold Production and Cost Summary
For the three months ended March 31
2001
Fort Knox
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
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
$
$
244
-
-
244
$
$
276
46
5
327
2,857.2
0.97
64%
25,827
2,480.9
0.94
64%
25,788
$
$
141
99
-
240
$
$
150
122
3
275
222.8
14.40
98%
56,175
199.8
17.56
98%
61,573
$
$
208
97
1
306
$
$
222
81
1
304
114.7
11.54
85%
36,066
112.6
11.95
87%
37,714
$
$
186
81
3
270
$