October 19, 1999
Toronto, Ontario -
KINROSS GOLD CORPORATION (TSE-K; NYSE-KGC)
announced today that
results for the three months and nine months ended September 30, 1999 are as follows:
Finanacial and Production Tables - PDF format
All results are expressed in United States Dollars unless otherwise stated.
Kinross provides the following detail regarding the Company’s performance during the third quarter of
1999. Although the average spot price of gold was $259 per ounce compared to $289 in 1998, cash
flow provided from operations for the third quarter was $17.0 million, compared to $17.8 million in
1998. Gold equivalent production for the third quarter was 257,331 ounces at total cash costs of $193
per ounce.
Net loss for the three months ended September 30, 1999 was $11.4 million, five cents per share, on
revenues of $79.7 million, compared with a net loss for the third quarter of 1998 of $10.2 million, six
cents per share, on revenues of $87.0 million. Total cash costs were $193 per ounce of gold equivalent
in the quarter, down from the 1998 third quarter costs of $210 per ounce. Cash flow provided from
operations was $17.0 million, six cents per share, compared to $17.8 million, nine cents per share in
the same period of 1998.
Net loss for the nine months ended September 30, 1999 was $36.1 million, fourteen cents per share,
on revenues of $236.2 million, compared with a net loss for the first nine months of 1998 of $9.9
million, eight cents per share on revenues of $193.6 million. Total cash costs were $194 per ounce of
gold equivalent in the first nine months, down from $218 per ounce of gold equivalent in the same
period of 1998. Cash flow provided from operations for the first nine months of 1999 was $47.6 million,
sixteen cents per share, compared to $37.8 million, nineteen cents per share in the same period of
1998.
Included in the results of operations for the nine months ended September 30, 1999 are
$5.0 million, or two cents per share of unusual charges. These charges resulted from severance
obligation associated with the decision to place the Macassa mine on care and maintenance and a
contract termination fee associated with the termination of the surface mining contract at the Refugio
mine.
Gold equivalent production for the third quarter was 257,331 ounces, for a nine-month total of 759,642
ounces. The Company is on track to produce in excess of one million ounces of gold equivalent in 1999.
The Company’s gold hedging program enabled the Company to realize an average price of $300 and
$299 per ounce for the third quarter and nine months respectively, compared with average spot prices
of $259 and $273 for the third quarter and nine months respectively.
Operating Performance
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Although production was nominally lower than planned, total cash costs were slightly better than
anticipated for the first nine months of 1999. The current plan calls for higher production from the
Hoyle Pond and Refugio mines for the fourth quarter of the year, for a full year total of more than one
million ounces for the Company at sustainable low total cash costs of approximately $190 per ounce of
gold equivalent. For details of tonnes processed, grade and recovery refer to the tables presented later
in this press release.
Fort Knox Mine - Alaska
The Fort Knox mine continued to increase production during the third quarter. Third quarter production
increased by six percent over the second quarter at total cash costs of $182 per ounce, better than
planned.
With the closing of the True North acquisition, the Company is now focusing the exploration and
permitting activities in Alaska on the nearby True North and Ryan Lode properties which will provide
higher grade ore and allow the Company to increase production at the Fort Knox mine by 2001.
Hoyle Pond Mine - Ontario
As previously reported substantial changes at the Hoyle Pond operations lead to improved productivity
by the end of the second quarter. The Company is pleased to report a continual improvement in
production during the third quarter. Production increased by 36% and total cash costs improved to
$187 per ounce for the third quarter. While this is still not at an acceptable level, continued
improvement is forecast for the balance of the year such that production expectations for the full year
are approximately 135,000 ounces at a total cash cost of about $190 per ounce.
Kubaka Mine - Russia
The Kubaka mine continues to exceed planned production with lower than forecasted total cash costs.
Production at the Kubaka mine is significantly better than planned due to higher than expected mill
feed grade, greater mill throughput and lower operating costs. Total cash costs at the Kubaka mine
remained the lowest in the Company at $139 per ounce of gold equivalent for the third quarter of 1999.
Refugio Mine - Chile
Production at the Refugio mine declined 27% during the third quarter when compared to the second
quarter, but increased by 37% when compared to the third quarter of 1998. Total cash costs were
$314 per equivalent ounce, compared to $437 for the third quarter of 1998. While the nine month
performance at Refugio is disappointing, management remains confident that beginning with the fourth
quarter and going forward, sustainable, much lower production costs will be reported.
Denton-Rawhide - Nevada
Production at the Denton-Rawhide mine increased by 20% during the third quarter and total cash costs
remained better than planned at $253 per ounce of gold equivalent. For the nine months, production at
the Denton-Rawhide Mine continues to exceed plan due to higher than planned tonnes placed on the
leachpad.
Blanket - Zimbabwe
Production at the Blanket mine increased by 18% during the third quarter and total cash costs
remained on plan at $170 per ounce of gold. For the year, production is slightly lower than planned but
total cash costs remain below planned at $161 per ounce of gold.
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Hedge Position
As at September 30, 1999, the Company had sold forward 1,100,000 ounces of gold at prices ranging
from $298 to $325 per ounce. The Company uses spot deferred contracts and forward sales with
floating gold interest rates. The majority of gold borrowing costs have been fixed out to March or April
of 2000, minimizing the impact of current high gold lease rates. In addition the Company has 500,000
ounces of European style call options (exercisable only at expiry) at prices detailed in the table below.
All of the hedging facilities that the Company has established are margin free, therefore the Company
does not face any exposure to margin calls in any gold price environment.
Gold Hedge Position
As at September 30, 1999
Sold
Gold Call Average
Forward Average
Options
Strike
Year '000 oz.
price Sold '000 oz.
Price
1999
2000
2001
2002
2003
2004
Total
200
350
150
150
150
100
1,100
$298
$305
$325
$325
$325
$316
200
0
0
100
100
100
500
$283
$0
$0
$340
$340
$340
Year 2000 Update
The remediation of the Company’s operating facilities with regard to Y2K compliance has been
completed. The Fort Knox, Hoyle Pond, Kubaka, Refugio, Macassa and Blanket properties have all
completed remediation of their process control systems and these plant systems are considered Y2K
compliant.
Remediation of business information systems, and ancillary application packages has successfully been
completed at the Fort Knox, Hoyle Pond, Kubaka, Macassa and Blanket properties. Remediation at the
Refugio property is 90% complete with a planned completion date of December 1, 1999.
No issues have been identified with our critical vendors.
Y2K contingency planning is currently taking place at each site, and the plans will be updated as
circumstances change throughout the remainder of the year. The supply of electrical power to various
sites still remains a concern despite confirmations by the electrical utilities that they are ready.
Contingency plans will take this into consideration and will determine the best method to maintain
operations utilizing our standby power generators.
Total project spending estimates for the year remain in line with previous estimates.
No serious issues have been identified by the assessments, and it is the Company’s belief that there
will not be any serious operational problems caused by the Y2K “bug” and that the Company has taken
the necessary steps to resolve any Year 2000 issues. However, there can be no assurance that any one
or more such failures would not have a material adverse effect on the Company. Actual outcomes and
results could be affected by future factors including, but not limited to, availability of skilled personnel,
ability to locate software problems, critical suppliers and subcontractors meeting commitments, and
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timely actions by customers and suppliers.
Outlook
As at September 30, 1999, the Company has $122.2 million of cash and operating working capital of
$27.4 million for total working capital of $149.6 million. This combined with sustainable low cost
production, and a manageable debt repayment schedule, provides the Company with a solid platform
for future growth when opportunities present themselves.
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 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 contact:
Robert M. Buchan
Chairman and
Chief Executive Officer
Tel. (416) 365-5650
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) 365-5662
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Kinross Gold Corporation
Consolidated Balance Sheets
(expressed in millions of U.S. dollars) (unaudited)
As at September 30
1999
Assets
Current assets
Cash and cash equivalents
Bullion settlements and other accounts receivable
Inventories
Marketable securities
Mineral properties, plant and equipment
Long - term investments
Deferred charges and other assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Current portion of long - term debt
Current portion of site restoration cost accruals
As at December 31
1998
$
122.2
50.6
50.5
1.9
225.2
817.0
24.6
14.3
$ 1,081.1
153.4
55.4
54.6
1.2
264.6
809.8
25.0
15.4
$ 1,114.8
$
$
43.9
25.3
6.4
75.6
120.3
48.0
7.2
22.6
39.4
3.1
316.2
88.3
919.9
7.9
108.0
(337.4)
(21.8)
676.6
$
49.4
25.1
5.9
80.4
125.8
52.0
6.9
29.0
42.7
3.1
339.9
88.3
904.2
3.6
103.1
(296.4)
(27.9)
686.6
Long-term debt
Site restoration cost accruals
Deferred income and mining taxes
Deferred revenue and other
Debt component of convertible debentures
Redeemable retractable preferred shares
Convertible preferred shares of subsidiary company
Common shareholders' equity
Common share capital
Contributed surplus
Equity component of convertible debentures
Deficit
Foreign currency translation adjustments
$ 1,081.1
Kinross Gold Corporation
Consolidated Statements of Operations
For the nine months ended September 30
(expressed in millions of U.S. dollars except per share amounts) (unaudited)
Three months ended
September 30
$ 1,114.8
Nine months ended
September 30
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1999
Revenue
Mining revenue
Interest and other income
Expenses
Operating
General and administrative
Exploration and business development
Depreciation, depletion and amortization
$
77.1
2.6
79.7
51.3
2.6
3.1
28.0
85.0
(5.3)
-
0.1
(0.1)
(3.4)
$
1998
83.5
3.5
87.0
61.2
1.8
2.8
27.2
93.0
(6.0)
1.9
(0.4)
(0.1)
(3.8)
$
1999
227.0
9.2
236.2
156.5
7.5
7.4
82.9
254.3
(18.1)
0.1
-
(0.3)
(10.0)
$
1998
181.6
12.0
193.6
132.4
5.0
5.9
50.9
194.2
(0.6)
2.7
(0.1)
(0.3)
(7.2)
Loss before the undernoted
Gain on sale of marketable securities
Foreign exchange gain (loss) and other
Share in loss of associated companies
Interest expense on long-term liabilities
Loss before taxes and dividends on convertible
preferred shares of subsidiary company
Provision for income and mining taxes
Loss for the period before dividends on convertible
preferred shares of subsidiary company
Dividends on convertible preferred shares of subsidiary company
Net loss for the period
Increase in equity component of convertible debentures
Net loss attributable to common shares
Net loss per share
Net basic and fully diluted
Weighted average number common shares outstanding
Total outstanding and issued common shares at September 30
Kinross Gold Corporation
Consolidated Statements of Cash Flows
For the nine months ended September 30
(expressed in millions of U.S. dollars) (unaudited)
$
(8.7)
(1.0)
(8.4)
(0.1)
(28.3)
(2.7)
(5.5)
(2.1)
(9.7)
(1.7)
(11.4)
(1.7)
(13.1)
$
(8.5)
(1.7)
(10.2)
(1.5)
(11.7)
$
(31.0)
(5.1)
(36.1)
(4.9)
(41.0)
$
(7.6)
(2.3)
(9.9)
(4.4)
(14.3)
$
(0.05)
299.9
$
(0.06)
191.5
$
(0.14)
298.9
300.1
$
(0.08)
191.5
292.4
Three months ended
September 30
1999
1998
Net inflow (outflow) of cash related to the following activities:
Nine months ended
September 30
1999
1998
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Operating:
Loss for the period before dividends on convertible preferred shares
of subsidiary company
Items not affecting cash:
Depreciation, depletion and amortization
Gain on sale of marketable securities
Deferred income and mining taxes
Deferred revenue realized
Site restoration cost accruals
Other
Cash flow provided from operations
Deferred revenue - hedging gains
Site restoration expenditures
Changes in non-cash working capital items
Bullion settlements and other accounts receivable
Inventories
Marketable securities
Commodity derivative contracts
Accounts payable and accrued liabilities
Effect of exchange rate changes
Cash flow provided from operating activities
Financing:
Issuance (repurchase) of common shares, net
Convertible debentures
Repayment of debt
Dividends on convertible preferred shares of subsidiary company
Cash flow (used in) financing activities
Investing:
Additions to properties, plant and equipment
Business acquisitions, net of cash acquired
Long-term investments and other assets
Proceeds from the sale of fixed assets
Cash flow (used in) provided by investing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Kinross Gold Corporation
Consolidated Statements of Common Shareholders' Equity
For the nine months ended September 30
(expressed in millions of U.S. dollars) (unaudited)
$
(9.7)
28.0
-
-
(2.2)
0.8
0.1
17.0
-
(2.7)
0.4
0.7
-
-
1.4
(3.9)
12.9
0.5
(1.1)
2.0
(1.7)
(0.3)
(10.5)
(0.1)
0.5
-
(10.1)
2.5
119.7
$
(8.5)
27.2
(1.9)
(0.4)
(2.2)
3.1
0.5
17.8
-
(0.4)
(0.5)
(1.8)
2.2
46.0
(16.8)
2.0
48.5
(1.6)
(0.9)
(0.6)
(1.7)
(4.8)
(12.6)
-
(0.8)
-
(13.4)
30.3
134.9
$
(31.0)
82.9
(0.1)
-
(7.0)
2.3