Press Release
February 15, 2001
Toronto, Ontario –
Kinross Gold Corporation (TSE-K; NYSE-KGC)
announced today the results for the three
months and year ended December 31, 2000 are as follows:
All results are expressed in United States dollars unless otherwise stated.
Consolidated Results
Fourth Quarter
Increased gold equivalent production of 254,626 ounces at a total cash cost of $181 per ounce during the fourth
quarter of 2000 resulted in higher cash flow provided from operations, when compared to the fourth quarter of 1999.
Cash flow provided from operations for the fourth quarter was $17.7 million or $0.06 per share, compared to $15.4
million or $0.05 per share for the three months ended December 31, 1999. However, $85.2 million of non-cash
writedowns of property, plant and equipment and long-term investments, necessitated by continuing low gold prices,
resulted in a net loss for the fourth quarter of 2000 of $93.2 million or $0.32 per share. This compared to $204.6 million
or $0.69 per share net loss for the three months ended December 31, 1999 when non-cash writedowns of property,
plant and equipment and long-term investments were $189.5 million. Excluding these non-cash writedowns and the
Company’s share of the Dayton Mining Corporation writedown of the Andacollo mine of $6.6 million, which is
included in the share in loss of associated companies, and the increase in interest and other income due to the
change in the accounting for written call options of $4.1 million, the net loss for the fourth quarter of 2000 would have
been $5.5 million or $0.02 per share.
Full Year
Lower gold equivalent production in 2000 resulted in lower cash flow provided from operations, when compared to
1999. Cash flow provided from operations for the year was $50.1 million or $0.17 per share, compared to $63.0 million
or $0.21 per share in 1999. After taking into account the writedowns described above, the full year net loss was
$126.1 million or $0.45 per share. This compares to a $240.7 million, or $0.83 per share loss in 1999. Excluding these
non-cash writedowns and the Company’s share of the Dayton Mining Corporation writedown of the Andacollo mine
of $6.6 million, which is included in the share in loss of associated companies, the net loss for the year would have
been $34.3 million or $0.14 per share.
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
943,798 attributable ounces of gold equivalent in 2000 compared to 1,012,408 ounces in 1999. Revenue from gold and
silver sales was $271.0 million in 2000 compared to $304.0 million in 1999. Revenue in 2000 decreased due to lower
gold and silver production as a consequence of the closure of the Macassa mine in 1999 and the sale of the Denton-
Rawhide mine at the end of the first quarter of 2000. In 2000, the Company realized $298 per ounce of gold, compared
to $300 in 1999. The average spot price for gold was $279 per ounce in 2000 compared to $279 in 1999.
Operating Performance
The 11% decrease in gold equivalent production (excluding equity accounted ounces) resulted in lower operating
costs of $189.6 million in 2000 compared to $209.4 million in 1999. On a per ounce of gold equivalent basis, total cash
costs were $202 in 2000 compared to $196 in 1999. Total cash costs per gold equivalent ounce increased primarily
due to increased diesel fuel costs, but increased throughput at Fort Knox, Hoyle Pond and Kubaka, helped
compensate for the higher prices. During the fourth quarter exceptional operating performance from the Fort Knox
mine and continued cost cutting initiatives helped reduce consolidated total cash costs to $181 per gold equivalent
ounce for the quarter.
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Consolidated Production Costs per
Equivalent Ounce of Attributable Gold Production
Three Months Ended
December 31,
2000
1999
Year Ended
December 31,
2000
1999
Cash operating costs
Royalties
Production taxes
Total cash costs
Reclamation
Depreciation, depletion and amortization
Total production costs
$
$
177 $
4
-
181
3
102
286 $
195 $
6
-
201
3
111
315 $
193
9
-
202
3
99
304
$
$
186
10
-
196
3
110
309
The following table provides a r conciliation of operating costs per the consolidated financial statements to
e
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
(millions except production in ounces and per ounce amounts)
Three Months Ended
December 31,
2000
1999
Operating costs per financial statements
Dayton operating costs
Site restoration cost accruals
Severance costs
Contract termination costs
Other
Operating costs for per ounce calculation purposes
Gold equivalent production - ounces
Total cash costs per equivalent ounce of gold
$
46.7 $
2.5
(0.9)
-
-
(2.1)
46.2 $
254,626
181
52.9 $
-
(0.8)
-
-
(1.2)
50.9 $
252,766
201
Year Ended
December 31,
2000
1999
189.6 $
9.4
(2.7)
-
-
(5.4)
190.9 $
943,798
202
209.4
-
(3.1)
(3.5)
(1.5)
(2.4)
198.9
1,012,408
196
$
Primary Operations
Fort Knox Mine
The Company acquired the Fort Knox mine, located near Fairbanks, Alaska in 1998. Gold production in 2000 was
362,959 ounces compared to 351,120 ounces in 1999. In 2000, total cash costs were $203 per ounce of gold compared
to $194 in 1999. The Fort Knox mine 2000-business plan called for 350,000 ounces of gold production at total cash
costs of $200 per ounce. Cash production costs were higher than planned primarily due to increased diesel fuel
costs, but record mill throughput and nominally higher grade compensated for most of the increased costs. The mine
had an exceptional fourth quarter of 2000 producing 112,745 ounces of gold at total cash costs of $167 per ounce.
During 2000, the Company focused on permitting activities on the nearby True North property that was acquired
along with the Ryan Lode property in 1999 pursuant to the La Teko and True North transactions. The required
permits were received in January 2001, which should allow the Company to achieve planned production targets at
True North by April 2001. Estimated gold production for 2001 for the combined operations is 450,000 ounces at total
cash costs of approximately $196 per ounce.
Hoyle Pond Mine
The Company acquired the Hoyle Pond mine, located in Timmins, Ontario, in 1993. Gold production in 2000 was
140,441 ounces compared to 136,709 ounces in 1999. In 2000, total cash costs were $209 per ounce of gold compared
to $210 in 1999. Cash production costs were $0.3 million higher than in 1999, but a 9% increase in mill throughput
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resulted in the reduction of per ounce total cash costs. The Company is pleased to report that various cost
containment plans have been successful as fourth quarter results showed a continued improvement as 36,299 ounces
of gold were produced for total cash costs of $193 per ounce. Estimated gold production for 2001 is 143,000 ounces
at total cash costs of approximately $200 per ounce.
Kubaka Mine
The Company acquired a 53% ownership interest in the Kubaka mine, located in the Magadan Oblast in eastern
Russia, in 1998. The Company’s ownership interest was increased to 54.7% in December of 1999. The Company’s
share of gold equivalent production in 2000 was 244,641 ounces compared to 254,625 in 1999. In 2000, total cash
costs were $139 per gold equivalent ounce compared to $143 in 1999. 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. In 2000, mill throughput increased by 7%,
which combined with lower cash spending compensated for the 13% decrease in the grade of the ore processed.
Estimated gold equivalent production for the Company’s ownership interest in 2001 is 214,000 ounces at total cash
costs of approximately $160 per equivalent ounce.
In 1999, the Company began an extensive drilling program looking for alternative mill feed for the Kubaka operations
beyond the then known mine life. In 2000, these efforts have identified remnant ore below the pit bottom and within
the pit wall, which have had a positive impact on the reserve estimates at the end of 2000. Details of the reserve
estimates are included later in this news release. In addition, exploration at the Birkachan property is continuing
through the winter. Subsequent to the detailed press release on January 23, 2001 concerning Birkachan exploration,
drilling results from two additional holes have shown continuity of the V3 zone in the area of Section 21. These two
intersections are approximately 110 metres up dip from the previously reported intercepts on sections 20.5 and 21.5
and are 50m step-out holes to the southwest and northeast of the V3 intercept in Hole number C-2102. The following
results are core-length intervals and assays are uncut:
Including
From
To
Interval
Grade
Best Assay
Int
Section
Hole
(m)
(m)
(m)
(gAu/t)
(gAu/t)
(m)
20.5
21.5
Refugio Mine
The Company acquired a 50% interest in the Refugio mine, located in Chile in 1998. The Company’s share of gold
equivalent production in 2000 was 85,184 ounces compared to 90,008 ounces in 1999. In 2000, total cash costs were
$300 per ounce of gold equivalent compared to $277 in 1999. In 2000, the Company c
ontinued to experience
operational problems and during the fourth quarter suspended operations. Mining operations remained on standby
during a six-week period, but resumed in mid December. Heap leaching activities continued throughout this six-week
period. The current operating plan for Refugio is to continue to mine and stack ore on the leachpad until May 31,
2001. In the event spot gold prices do not increase substantially, the Refugio operations will commence residual
leaching and the mining activities will be placed on care and maintenance. Assuming the operations commence
residual leaching in June 2001 estimated gold equivalent production attributable to Kinross’ 50% interest for 2001 is
61,000 ounces at total cash costs of approximately $260 per equivalent ounce.
Blanket Mine
The Blanket mine, located in Zimbabwe, was acquired in 1993. Gold production in 2000 was 34,571 ounces compared
to 37,755 ounces in 1999. Total cash costs were $236 per ounce of gold compared to $173 in 1999. Gold production
decreased during 2000 as the historic tailings reprocessing program was completed. During the fourth quarter an
agreement to purchase the historic tailings from a nearby producer was completed. Total cash costs per ounce of
gold increased in 2000 primarily due to inflationary pressures within Zimbabwe as the Zimbabwe dollar was held at
artificially high levels and lower production described above. Estimated production for 2001 is 47,000 ounces of gold
at total cash costs of approximately $200 per ounce.
Other Operations
In addition to its primary operating mines, the Company has two locations in various stages of residual production or
closure. Gold equivalent production from the Hayden Hill and Guanaco mines in 2000 was 25,611 ounces at average
20502
21503
263.9
272.7
274.0
278.0
10.1
5.3
11.49
25.99
55.08
82.28
1.2
1.1
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total cash costs of $264 per ounce. Residual production from these mines is expected to contribute approximately
15,000 gold equivalent ounces in 2001 at total cash costs of approximately $270 per equivalent ounce. After 2001, no
meaningful gold production is currently planned from these operations.
Operating Activities
Cash flow provided from operations in 2000 was $50.1 million compared to $63.0 million in 1999. Cash flow provided
from operations is expected to increase in 2001 at an assumed $280 spot gold price per ounce to approximately $57.0
million. The 2000 cash flow provided from operations was primarily affected by lower gold equivalent production.
Changes in working capital used $2.3 million of additional cash in 2000. As a result, cash flow from operating
activities in 2000 was $47.8 million compared to $69.5 million in 1999. Cash flow provided from operations during the
fourth quarter improved to $17.7 million compared to $15.4 million during the fourth quarter of 1999. Cash flow
provided from operations improved in the fourth quarter due to increased gold equivalent production.
Financing Activities
During 2000, the Company issued 4.1 million common shares for cash consideration of $3.2 million and repurchased
3.5 million common shares pursuant to a normal course issuer bid for $5.3 million of cash.
The debt component of convertible debentures was reduced by $4.9 million during 2000 compared to $4.4 million
during 1999. Long-term debt repayments were $26.4 million in 2000 compared to $14.7 million during 1999.
The Company paid dividends to the holders of preferred shares of Kinam, a subsidiary company, before suspending
the dividends in August 2000, totaling $3.4 million compared to $6.9 million during 1999. Included in the carrying
value of the Kinam preferred shares, as at December 31, 2000, is an accrual of $3.5 million that represents the
cumulative unpaid dividends.
As at December 31, 2000, the Company’s long-term debt consists of $20.0 million relating to the Kubaka project
financing, $5.7 million of the Kubaka subordinated debt, $71.0 million of Alaskan Industrial Revenue Bonds and
various capital leases and other indebtedness totaling $14.6 million. The current portion of the long-term debt is $31.5
million. The Kubaka project financing debt is now recourse solely to the assets of Omolon Gold Mining Inc., the
54.7% owned Russian operating company.
Investing Activities
Capital expenditures decreased by 5% in 2000 as $41.6 million was spent on capital additions compared to $44.0
million in 1999. The 2000 capital expenditures focused primarily on the Hoyle Pond, Fort Knox and Refugio
operations with 83% of total capital expenditures incurred at these three mines. Capital spending at the Hoyle Pond
mine totaled $13.8 million (1999 - $18.6 million), for exploration drilling, underground development and additions to the
underground mobile fleet. Capital spending at the Fort Knox mine totaled $17.6 million (1999 - $9.5 million), on
permitting activities and exploration drilling at the True North project, for pit dewatering and equipment fleet
additions. The Company’s share of capital spending at the Refugio mine totaled $3.2 million (1999 - $7.9 million),
primarily on a leach pad expansion. Capital expenditures were financed out of cash flow from operating activities.
Planned capital expenditures totaling $27.0 million in 2001 are expected to be funded from cash flow from operating
activities. Approximately 50% of planned capital expenditures in 2001 will be incurred on the Fort Knox mine
including the True North property.
Reserve and Resource Estimate
The following table provides the Company’s share of reserves and resources as at December 31, 2000.
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Proven and Probable Reserves
Kinross Gold Corporation's Share at December 31, 2000
Proven
KGC
Property
GOLD
Timmins - Canada:
Hoyle Pond
Pamour (1)
Fort Knox and Area - USA
Russia:
Kubaka
Aginskoe (1)
Refugio - Chile
Blanket - Zimbabwe (2)
Dayton
Total
SILVER
Russia:
Kubaka
Aginskoe (1)
Dayton
Total
(1) Development Project
54.7%
25.0%
32.1%
784
148
3,459
4,391
13.6
13.7
11.5
11.9
342,000
65,000
1,279,000
1,686,000
498
143
121
762
16.1
11.7
11.6
14.6
258,000
54,000
45,000
357,000
1,282
291
3,580
5,153
14.6
12.7
11.5
12.3
600,000
119,000
1,324,000
2,043,000
54.7%
25.0%
50.0%
100.0%
32.1%
784
148
14,948
3,017
3,459
127,552
10.9
32.4
1.0
1.7
0.7
1.0
274,000
154,000
459,000
169,000
78,000
3,954,000
498
143
16,072
953
121
52,824
15.7
23.3
0.9
4.5
0.5
1.7
251,000
107,000
480,000
138,000
2,000
2,966,000
1,282
291
31,020
3,970
3,580
180,376
12.7
27.9
0.9
2.4
0.7
1.2
525,000
261,000
939,000
307,000
80,000
6,920,000
100.0%
100.0%
100.0%
104,834
0.8
2,678,000
362
12.2
142,000
568
14,167
20,302
12.4
1.7
1.5
227,000
753,000
1,008,000
930
14,167
125,136
12.3
1.7
0.9
369,000
753,000
3,686,000
Share %
Tonnes
(000)
Grade
(g/t)
Contained
(ozs)
Tonnes
(000)
Probable
Grade
(g/t)
Contained
(ozs)
Tonnes
(000)
Total
Grade
(g/t)
Contained
(ozs)
(2) Includes 2.4 Mt at 1.04 gpt containing 80,000 ozs. of Proven Tailings
Measured and Indicated Resources (Excluding Reserves)
Kinross Gold Corporation's Share at December 31, 2000
Measured
KGC
Property
GOLD
Timmins - Canada:
Underground
Open Pit
Macassa - Canada
QR - Canada
United States:
Ft. Knox and Area (AK))
Candelaria (NV)
Delamar (ID)
Haile (SC)
Goldbanks (NV)
Kubaka - Russia
Refugio - Chile
Blanket - Zimbabwe
Angostura - Colombia
Norseman - Australia
Dayton
Total
SILVER
United States:
Candelaria (NV)
Delamar (ID)
Goldbanks (NV)
Angostura - Colombia
Dayton
Total
100.0%
100.0%
100.0%
20.9%
32.1%
-
610
-
-
7,814
8,424
-
64.7
-
-
1.5
6.1
-
1,269,000
-
-
379,000
1,648,000
9,777
2,199
26,806
9,255
9,875
57,912
144.4
36.5
1.9
6.1
5.7
28.6
45,403,000
2,579,000
1,650,000
1,814,000
1,806,000
53,252,000
9,777
2,809
26,806
9,255
17,689
66,336
144.4
42.6
1.9
6.1
3.8
25.7
45,403,000
3,848,000
1,650,000
1,814,000
2,185,000
54,900,000
(1)
100.0%
100.0%
100.0%
100.0%
54.7%
50.0%
100.0%
20.9%
100.0%
32.1%
22,103
-
610
2,642
-
-
12,140
-
-