Kinross reports strong 2024 third-quarter results

2024-11-05

TSX - Toronto Stock Exchange · Gold · Canada

Significant margin growth and record free cash flow, $350 million debt repayment First gold from Manh Choh, strong PEA results at Great Bear On track to meet annual guidance

TORONTO, Nov. 05, 2024 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) (“Kinross” or the “Company”) today announced its results for the third quarter ended September 30, 2024 1 . This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on pages 24 and 25 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.

2024 third-quarter highlights:

Production of 564,106 gold equivalent ounces (Au eq. oz.). Production cost of sales of $976 per Au eq. oz. sold and attributable production cost of sales 2 of $980 per Au eq. oz. sold. Attributable all-in sustaining cost 2 of $1,350 per Au eq. oz. sold. Operating cash flow of $733.5 million. Attributable free cash flow 2 record of $414.6 million and year-to-date attributable free cash flow 2 of $905.8 million. Margins 3 increased to $1,501 per Au eq. oz. sold, outpacing the rise in the average realized gold price. Reported net earnings of $355.3 million, or $0.29 per share, with adjusted net earnings 2 of $298.7 million, or $0.24 per share 2 . Balance sheet strength : Kinross continued to strengthen its balance sheet, repaying $350.0 million on its term loan in Q3 2024 and an additional $100.0 million on November 1, 2024. Kinross’ Board of Directors declared a quarterly dividend of $0.03 per common share payable on December 12, 2024, to shareholders of record at the close of business on November 28, 2024. Guidance reaffirmed 4 : Kinross remains on track to meet its 2024 annual guidance for production, cost of sales, all-in sustaining cost and capital expenditures.

Operations:

Tasiast had another excellent quarter with higher mill throughput rates and was again the lowest cost asset in the portfolio. Fort Knox delivered record grade and recovery as production commenced from Manh Choh during the quarter, resulting in a significant increase in cash flow from Fort Knox. Paracatu increased production compared with Q2 2024 as a result of higher grades, in accordance with planned mine sequencing, and strong recoveries. At Round Mountain Phase S , the heap leach pad expansion is now complete, on schedule and under budget, with solution application permits received.

Development projects and exploration:

At Great Bear , the Company released the Preliminary Economic Assessment (PEA) on September 10, 2024. The Project is expected to produce over 500,000 ounces per year at impressive margins with an all-in sustaining cost of approximately $800 per ounce during the first 8 years. For the Advanced Exploration (AEX) program, Kinross has submitted its final Closure Plan to the Ontario Ministry of Mines for its approval and is expecting to start early works construction in the near term. At Round Mountain Phase X and Curlew , exploration drilling is progressing well, with results to date showing strong grades and widths.

CEO commentary: J. Paul Rollinson, CEO, made the following comments in relation to 2024 third-quarter results:

“I am pleased to report that our portfolio of mines continued its excellent performance, and we are on track to meet our annual guidance.

“We remain heavily focused on consistent operational performance, cost control, capital discipline and delivering on planned grades to generate value for our shareholders. Our ability to hold costs in this strong gold price environment continues to benefit our margins, which grew by 14% to $1,501 per ounce sold compared with Q2 and the 6% increase in the realized gold price. We also delivered record free cash flow, which increased by 20% compared with the previous quarter.

“During the quarter, we released the PEA at Great Bear, which reaffirms our view of a high-quality, high-margin asset with robust economics, modest capital requirements and clear opportunity for resource growth. Following an invitation from the Ontario Ministry of Mines, we are pleased to have submitted our final AEX Closure Plan for approval, which is an important permitting milestone. We also completed the commissioning of our Manh Choh project resulting in a significant increase in cash flow from Fort Knox and advanced Phase X at Round Mountain.”

Summary of financial and operating results

| | | | | | | | | | | | | | | | | Three months ended | Nine months ended | | | | | | | | | | | | | September 30, | September 30, | | | | | | | | | | | (unaudited, in millions of U.S. dollars, except ounces, per share amounts, and per ounce amounts) | | 2024 | | | 2023 | | | 2024 | | | 2023 | | | Operating Highlights (a) | | | | | | | | | | | | | | Total gold equivalent ounces (b) | | | | | | | | | | | | | | Produced | | 593,699 | | | 585,449 | | | 1,656,436 | | | 1,606,507 | | | Sold | | 578,323 | | | 571,248 | | | 1,621,483 | | | 1,614,547 | | | | | | | | | | | | | | | | | Attributable gold equivalent ounces (b) | | | | | | | | | | | | | | Produced | | 564,106 | | | 585,449 | | | 1,626,843 | | | 1,606,507 | | | Sold | | 550,548 | | | 571,248 | | | 1,593,708 | | | 1,614,547 | | | | | | | | | | | | | | | | | Financial Highlights (a) | | | | | | | | | | | | | | Metal sales | $ | 1,432.0 | | $ | 1,102.4 | | $ | 3,733.0 | | $ | 3,124.0 | | | Production cost of sales | $ | 564.3 | | $ | 520.6 | | $ | 1,613.3 | | $ | 1,502.4 | | | Depreciation, depletion and amortization | $ | 296.2 | | $ | 263.9 | | $ | 862.7 | | $ | 715.1 | | | Reversal of impairment charge | $ | (74.1 | ) | $ | - | | $ | (74.1 | ) | $ | - | | | Operating earnings | $ | 547.7 | | $ | 226.2 | | $ | 1,039.2 | | $ | 607.9 | | | Net earnings attributable to common shareholders | $ | 355.3 | | $ | 109.7 | | $ | 673.2 | | $ | 350.9 | | | Basic earnings per share attributable to common shareholders | $ | 0.29 | | $ | 0.09 | | $ | 0.55 | | $ | 0.29 | | | Diluted earnings per share attributable to common shareholders | $ | 0.29 | | $ | 0.09 | | $ | 0.55 | | $ | 0.28 | | | Adjusted net earnings attributable to common shareholders (c) | $ | 298.7 | | $ | 144.6 | | $ | 598.3 | | $ | 399.8 | | | Adjusted net earnings per share (c) | $ | 0.24 | | $ | 0.12 | | $ | 0.49 | | $ | 0.33 | | | Net cash flow provided from operating activities | $ | 733.5 | | $ | 406.8 | | $ | 1,711.9 | | $ | 1,194.4 | | | Attributable adjusted operating cash flow (c) | $ | 625.0 | | $ | 472.1 | | $ | 1,529.0 | | $ | 1,267.1 | | | Capital expenditures (d) | $ | 278.7 | | $ | 283.9 | | $ | 794.8 | | $ | 787.0 | | | Attributable capital expenditures (c) | $ | 275.5 | | $ | 272.4 | | $ | 772.1 | | $ | 757.3 | | | Attributable free cash flow (c) | $ | 414.6 | | $ | 137.7 | | $ | 905.8 | | $ | 443.0 | | | Average realized gold price per ounce (e) | $ | 2,477 | | $ | 1,929 | | $ | 2,304 | | $ | 1,935 | | | Production cost of sales per equivalent ounce (b) sold (f) | $ | 976 | | $ | 911 | | $ | 995 | | $ | 931 | | | Attributable production cost of sales per equivalent ounce (b) sold (c) | $ | 980 | | $ | 911 | | $ | 997 | | $ | 931 | | | Attributable production cost of sales per ounce sold on a by-product basis (c) | $ | 956 | | $ | 860 | | $ | 962 | | $ | 876 | | | Attributable all-in sustaining cost per ounce sold on a by-product basis (c) | $ | 1,332 | | $ | 1,264 | | $ | 1,324 | | $ | 1,269 | | | Attributable all-in sustaining cost per equivalent ounce (b) sold (c) | $ | 1,350 | | $ | 1,296 | | $ | 1,349 | | $ | 1,303 | | | Attributable all-in cost per ounce sold on a by-product basis (c) | $ | 1,677 | | $ | 1,561 | | $ | 1,682 | | $ | 1,590 | | | Attributable all-in cost per equivalent ounce (b) sold (c) | $ | 1,689 | | $ | 1,579 | | $ | 1,697 | | $ | 1,608 | | | | | | | | | | | | | | | | | (a) All measures and ratios include 100% of the results from Manh Choh, except measures and ratios denoted as “attributable.” “Attributable” includes Kinross’ 70% share of Manh Choh production, sales, cash flow, capital expenditures and costs, as applicable. | | | | | | | | | | | | | | (b) “Gold equivalent ounces” include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market prices for the commodities for each period. The ratio for the third quarter and first nine months of 2024 was 84.06:1 and 84.34:1, respectively (third quarter and first nine months of 2023 – 81.82:1 and 82.50:1, respectively). | | | | | | | | | | | | | | (c) The definition and reconciliation of these non-GAAP financial measures and ratios is included on pages 15 to 20 of this news release. Non-GAAP financial measures and ratios have no standardized meaning under International Financial Reporting Standards (“IFRS”) and therefore, may not be comparable to similar measures presented by other issuers. | | | | | | | | | | | | | | (d) “Capital expenditures” is as reported as “Additions to property, plant and equipment” on the interim condensed consolidated statements of cash flows. | | | | | | | | | | | | | | (e) “Average realized gold price per ounce” is defined as gold metal sales divided by total gold ounces sold. | | | | | | | | | | | | | | (f) “Production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces sold. | | | | | | | | | | | | | | | | | | | | | | | | | | |

The following operating and financial results are based on third-quarter gold equivalent production:

Production : Kinross produced 564,106 Au eq. oz. in Q3 2024, compared with 585,449 Au eq. oz. in Q3 2023. The 4% year-over-year decrease was primarily a result of planned lower production at Paracatu due to mine sequencing and fewer ounces recovered from the heap leach pads at Round Mountain, partially offset by the commencement of production from Manh Choh.

Average realized gold price 5 : The average realized gold price in Q3 2024 was $2,477 per ounce, compared with $1,929 per ounce in Q3 2023.

Revenue : During the third quarter, revenue increased to $1,432.0 million, compared with $1,102.4 million during Q3 2023.

Production cost of sales : Production cost of sales per Au eq. oz. sold was $976 for the quarter, compared with $911 in Q3 2023.

Attributable production cost of sales per Au oz. sold on a by-product basis 2 was $956 in Q3 2024, compared with $860 in Q3 2023, based on attributable gold sales of 541,829 ounces and attributable silver sales of 732,857 ounces.

Margins 3 : Kinross’ margin per Au eq. oz. sold increased by 47% to $1,501 for Q3 2024, compared with the Q3 2023 margin of $1,018, outpacing the 28% increase in average realized gold price 5 .

Attributable all-in sustaining cost 2 : Attributable all-in sustaining cost per Au eq. oz. sold was $1,350 in Q3 2024, compared with $1,296 in Q3 2023.

In Q3 2024, attributable all-in sustaining cost per Au oz. sold on a by-product basis was $1,332, compared with $1,264 in Q3 2023.

Operating cash flow : Operating cash flow was $733.5 million for Q3 2024, compared with $406.8 million for Q3 2023.

Attributable adjusted operating cash flow 2 for Q3 2024 was $625.0 million, compared with $472.1 million for Q3 2023.

Attributable free cash flow 2 : Attributable free cash flow tripled to a record $414.6 million in Q3 2024, compared with $137.7 million in Q3 2023. Year-to-date attributable free cash flow was $905.8 million.

Earnings : Reported net earnings more than tripled to $355.3 million for Q3 2024, or $0.29 per share, compared with reported net earnings of $109.7 million, or $0.09 per share, for Q3 2023.

Adjusted net earnings 2 increased to $298.7 million, or $0.24 per share 2 , for Q3 2024, compared with $144.6 million, or $0.12 per share 2 , for Q3 2023.

Attributable capital expenditures 2 : Attributable capital expenditures were $275.5 million for Q3 2024, in line with $272.4 million for Q3 2023.

Balance sheet

The Company continued to strengthen its balance sheet by repaying $350.0 million on its term loan in the quarter and an additional $100.0 million following the quarter. As of November 5, 2024, $650.0 million has been repaid on the $1.0 billion term loan in 2024.

Kinross had cash and cash equivalents of $472.8 million as of September 30, 2024, compared with $352.4 million at December 31, 2023.

The Company has additional available credit 6 of $1.65 billion and total liquidity 7 of approximately $2.1 billion.

On October 28, 2024, the Company amended its $1,500.0 million revolving credit facility to extend the maturity by two years to October 2029, restoring a five-year term.

Dividend

As part of its quarterly dividend program, the Board of Directors declared a dividend of $0.03 per common share payable on December 12, 2024, to shareholders of record as of November 28, 2024.

Operating results

Mine-by-mine summaries for 2024 third-quarter operating results may be found on pages 9 and 13 of this news release. Highlights include the following:

Tasiast delivered another strong quarter, with production increasing compared with Q2 2024 mainly due to record mill throughput, and cost of sales per ounce sold increased due to higher royalty costs relating to higher gold prices. Production decreased compared with Q3 2023 mainly as a result of a decrease in mill grades, and cost of sales per ounce sold was slightly higher due to the lower production and higher royalty costs.

At Paracatu , production increased quarter-over-quarter mainly due to higher grades and recoveries as a result of the addition of Knelson gravity concentrators to the processing circuit, and cost of sales per ounce sold decreased mainly due to the higher production. Production was lower compared with Q3 2023 mainly due to the timing of ounces processed through the mill and lower grades according to the planned mine sequence. Cost of sales per ounce sold was higher mainly due to the planned decrease in grades and production compared with Q3 2023.

At La Coipa , production was lower quarter-over-quarter mainly due to lower mill throughput and recoveries. Cost of sales per ounce sold was higher quarter-over-quarter mainly due to the lower production. Year-over-year, production decreased as a result of lower mill throughput, and cost of sales per ounce sold increased primarily due to the lower production and higher mill maintenance costs.

At La Coipa, mill throughput is being managed while optimization initiatives are implemented. Full-year production guidance at La Coipa remains on track.

At Fort Knox , production increased significantly quarter-over-quarter and year-over-year due to the commencement of production from higher-grade Manh Choh ore. Fort Knox realized record grade and recovery, resulting in a significant increase in cash flow. Cost of sales per ounce sold decreased in both comparable periods mainly due to the increase in production.

Construction and commissioning of the Fort Knox mill modifications have been completed.

At Round Mountain , production decreased quarter-over-quarter and year-over-year mainly due to fewer ounces recovered from the heap leach pads. Cost of sales per ounce sold was in line quarter-over-quarter and was higher year-over-year mainly due to the decrease in production and higher cost ounces produced from the heap leach pads.

At Round Mountain Phase S , mining remains on track. Construction of the heap leach pad expansion is complete, on schedule and under budget, with solution application permits received.

At Bald Mountain , production was lower quarter-over-quarter due to the timing of ounces produced from the heap leach pads. Production increased year-over-year due to higher grades, partially offset by the timing of ounces recovered from the heap leach pads. Cost of sales per ounce sold was higher in both comparable periods as a result of higher cost ounces produced from the heap leach pads.

Development Projects and Exploration

Great Bear

Kinross continues to make excellent progress at the Great Bear project.

Kinross released the PEA for Great Bear on September 10, 2024. The PEA provided visibility into the potential production scale, construction capital, all-in sustaining cost and margins for both the open pit and the underground. The PEA represents a point in time estimate and is only a window into the long-term potential of the asset given the indications of continued mineralization at depth.

The PEA supports the Company’s acquisition thesis of a top-tier, high-margin operation in a stable jurisdiction with strong infrastructure. Based on mineral resources drilled to date, the PEA outlines a high-grade combined open pit and underground mine with an initial planned mine life of approximately 12 years and production cost of sales of $594 per ounce. The Project is expected to produce over 500,000 ounces per year at an all-in sustaining cost of approximately $800 per ounce during the first eight years through a conventional, modest capital 10,000 tonne per day mill 8 .

Kinross also released an updated mineral resource estimate for the project, increasing the Inferred resource estimate by 568 koz. to 3.9 Moz., which is in addition to the Measured & Indicated resource estimate of 2.7 Moz. The mineral resource estimate and PEA for the Great Bear project are available here .

For the AEX program, permitting, detailed engineering, execution planning, and procurement continue to advance. Kinross has submitted its final Closure Plan to the Ontario Ministry of Mines and approval is expected shortly. This is an important permit milestone that is required for all AEX construction activities. The Closure Plan will allow for the immediate commencement of early works construction on the site including laydown areas, temporary offices, and earthworks.

The Company is focused on progressing the AEX program to begin drilling underground to continue unlocking the full potential of the asset, with construction of the underground decline planned to commence in 2025.

For the Main Project, Kinross expects to advance engineering definition and execution planning following the selection of design partners later this year.

Following the receipt of the Tailored Impact Statement Guidelines earlier this year, the Company continues to work with the Impact Assessment Agency of Canada on advancing its Impact Statement, which is planned to be submitted later in 2025.

Kinross will also be working closely with the Ontario authorities on obtaining provincial permits, similar to the AEX permits, for the Main Project.

In 2025, Kinross intends to conduct regional exploration with the goal of identifying new open pit and underground deposits.

Round Mountain Phase X

Infill drilling on the lower zone of the primary Phase X exploration target commenced in Q3, as planned, alongside continued opportunity drilling outside the primary Phase X exploration target.

The drilling in Q3 has demonstrated strong grades and widths from within the primary Phase X target:

DX-0071: 36.6m @ 10.9 g/t Au Eq. DX-0078: 32.0m @ 7.7 g/t Au Eq. DX-0070: 20.5m @ 10.5 g/t Au Eq. DX-0074: 27.7m @ 7.7 g/t Au Eq. DX-0075: 25.3m @ 5.0 g/t Au Eq. DX-0072: 20.4m @ 5.8 g/t Au Eq.

Drilling outside of the primary exploration target also continues to indicate strong grades and widths.

These results continue to support the Company’s hypothesis of potential for higher-margin mining from a bulk underground operation.

See Appendix A for a Phase X long section.

Curlew Basin exploration

At Curlew , drilling progressed in the third quarter with three drill rigs active underground testing the Stealth (ST) and EVP Zones. Highlights from holes drilled in the quarter include (true widths):

Hole 1313 returned 9.73m @ 13.00 g/t Au from the ST Zone Hole 1458 returned 13.20m @ 5.20 g/t Au from the ST Zone Hole 1446 returned 11.20m @ 9.50 g/t Au from the EVP Zone

Drilling this year expanded mineralization in zones with favourable grade and width to support higher-margin production.

See Appendix B for a Curlew Basin long section.