Full-year revenue increases to $906 million and earnings per share to $0.47, production ahead of target and operating cash flow more than doubles
Toronto, Ontario, February 21, 2007 - Kinross
Gold Corporation (TSX-K; NYSE-KGC) ("Kinross", "Kinross Gold" or
the "Company"), today announced its unaudited results for the
fourth quarter and year ended December 31, 2006.
(This news release contains forward looking information that
is subject to risk factors and assumptions as set out in our
Cautionary Statement on Forward-Looking Information located on page
11 of this news release. All dollar amounts in this release are
expressed in U.S. dollars, unless otherwise noted)
Highlights
• Gold equivalent production was 362,028 ounces in the fourth
quarter of 2006 and 1,476,329 ounces for the full year, both above
target.
• Revenue was $231.4 million in the fourth quarter, a 22
percent increase over the same period last year, and the average
gold price realized was $615 per ounce of gold sold. Full-year
revenue was a record $905.6 million, a 25 percent increase over the
same period last year, and the average gold price realized was $604
per ounce of gold sold.
• Cost of sales per ounce(1) was $317 in the fourth
quarter on sales of 375,684 gold equivalent ounces, and $319 for
the full-year on sales of 1,510,836 gold equivalent ounces.
• Net earnings for the fourth quarter were $41.0 million or
$0.11 per share (diluted), compared to a net loss of $154.3 million
or $0.45 per share in the same period last year. Net earnings for
the full-year were a record $165.8 million or $0.47 per share
(diluted), compared with a net loss of $216.0 million in the same
period last year. Net earnings in the fourth quarter were reduced
by $0.01 per share (diluted) as a result of the impairment of
certain long-term investments, partially offset by a gain on asset
sales.
• Cash flow from operating activities was $91.2 million in the
fourth quarter and $292.0 million for the full-year compared to
$23.8 million and $133.7 million for the comparable periods in
2005. The cash position was $154.1 million at December 31, 2006
compared to $97.6 million at December 31, 2005 and total debt was
$89.9 million at December 31, 2006 compared to $159.3 million at
December 31, 2005.
• Capital expenditures were $65.3 million in the fourth
quarter and $202.9 million for the full-year.
• Proven and Probable Mineral Reserves at December 31, 2006
increased by 3.1 million ounces of gold, net of 2006 production, to
27.9 million ounces, a 13 percent increase over year end 2005.
These amounts do not include the effects of the Bema
acquisition.
• Production(2) for 2007 is expected to be
approximately 1.5 million gold equivalent ounces at a cost of sales
per ounce1,2 in the range of $320 to $330. Beyond 2007, gold
equivalent production2 is expected to grow to 1.6 to 1.7 million
ounces in 2008 and 1.8 to 1.9 million ounces in 2009. These amounts
do not include the effects of the Bema acquisition.
• The Bema Gold acquisition will close on February 27, 2007,
subject to customary closing conditions.
(1) Cost of sales per ounce is calculated by dividing cost
of sales as per the financial statements by the number of gold
equivalent ounces sold.
(2) Please refer to the risk factors and assumptions set out
in our Cautionary Statement on Forward-Looking Information on page
11 of this news release for information related to risks and
uncertainties associated with guidance presented in this
release.
"This past year has been outstanding for Kinross and I am proud
of the performance our employees have delivered," said Tye Burt,
President and CEO of Kinross. "This quarter, and indeed 2006, has
seen record revenues, cash flow and earnings for the Company. The
Kinross team has been completely focused in the drive to meet and
exceed our targets."
"Positive financial results were accompanied by the significant
increase in our gold reserves year-over-year. This is due to
additions from exploration and soon will be supplemented through
the planned acquisition of Bema Gold," said Burt. "Kinross'
disciplined strategy is paying off for investors."
"Looking through 2007 and beyond, we will be executing our
production and cash flow growth plan as we integrate the Bema
acquisition. Kinross has the best growth metrics among the major
gold producers as projects like the Paracatu mine expansion in
Brazil, Buckhorn mine in Washington State and Kupol mine in Russia
are completed. We will also be driving to complete our plan to
optimize value at Cerro Casale in Chile. The Kinross team is
wholly-committed to building high-quality, low-cost gold production
in a balanced geographic portfolio, all for the benefit of
shareholders."
Please download the
PDF for the full version of this news release.
Click here to download
the 2006 Annual Report (PDF).
Cautionary Statement on Forward-Looking Information
All statements, other than statements of historical fact, contained or incorporated by reference in this media release, including any information as to our future financial or operating performance, constitute “forward-looking statements” within the meaning of certain securities laws, including the “safe harbour” provisions of the Securities Act (Ontario) and the United States Private Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this media release. The words "believe", "expect", "anticipate", "plan", "intend", "continue", "budget", "estimate", "may", "will", "schedule" and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by us as of the date of this media release, are inherently subject to significant business, economic and competitive uncertainties and contingencies which give rise to the possibility that the predictions or projections expressed in such statements will not be achieved. We caution readers to not place undue reliance upon these statements as a number of known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to any material deviation from the material assumptions identified below, as well as: fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as silver, diesel fuel and electricity); changes in national and local government legislation, taxation, controls, regulations and political or economic developments in Canada, the United States, Chile, Brazil, Russia or other countries in which we do or may carry on business in the future; business opportunities that may be presented to, or pursued by, us; operating or technical difficulties in connection with mining or development activities; the speculative nature of gold exploration and development, including the risks of obtaining necessary licenses and permits; and diminishing quantities or grades of mineral reserves. In addition, there are risks and hazards associated with the business of gold exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance, or inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this media release are qualified by these cautionary statements. We refer the readers to our most recent annual information form, management discussion and analysis and other filings with the securities regulators of Canada and the United States for more details of the risks affecting Kinross.
We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable laws.
Material assumptions
These forward-looking statements are based on a number of assumptions which may prove to be incorrect, including but not limited to the various assumptions set forth in our most recent annual information form and annual report as well as: (1) there being no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, damage to equipment or otherwise during the balance of 2006; (2) permitting, development and the expansion project at Paracatu proceeding on a basis consistent with our current expectations; (3) permitting and development at Buckhorn proceeding on a basis consistent with our current expectations; (4) that a long-term lease replacing the short-term lease for the Kupol lands will be obtained from the Russian authorities on a basis consistent with our current expectations; (5) that the exchange rate between the Canadian dollar, Brazilian real, Chilean peso and the U.S. dollar will be approximately consistent with current levels; (6) certain price assumptions for gold and silver; (7) prices for natural gas, fuel oil, electricity and other key supplies remaining consistent with current levels; (8) production forecasts meet expectations for the balance of 2006; and 8) the accuracy of our current mineral reserve and mineral resource estimates. Some of the material assumptions made by Kinross involve confidential or particularly sensitive information and, accordingly, Kinross does not believe it is appropriate to disclose such assumptions for competitive or other business reasons.
The technical information about the Company’s material mineral properties contained in this media release has been prepared under the supervision of Mr. Rob Henderson an officer of the Company who is a “qualified person” within the meaning of National Instrument 43-101.
Key sensitivities
Approximately 55-60 percent of our operating costs are denominated in U.S. dollars.
A 10 percent change in foreign exchange could result in an approximate $12 impact in cost of sales per ounce.
A $10 change in the price of oil could result in an approximate $3 impact on cost of sales per ounce.