Kinross Gold nine-month results
Kinross Gold Corp K
Shares issued 302,476,501 Oct 18 close $3.91
Tue 19 Oct 99 News Release
Mr. Robert Buchan reports
Financial results for the three months and nine months ended Sept. 30,
1999, were as follows. All results are expressed in U.S. 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 with $289 in 1998, cash flow provided from
operations for the third quarter was $17.0-million, compared with
$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 Sept. 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 with $17.8-million, nine cents per share in the same
period of 1998.
Net loss for the nine months ended Sept. 30, 1999, was $36.1-million, 14
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, 16 cents per share,
compared with $37.8-million, 19 cents per share in the same period of 1998.
Included in the results of operations for the nine months ended Sept. 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, compared with average spot prices of $259 and $273 for the third
quarter and nine months.
Operating performance
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.
Fort Knox mine -- Alaska
The Fort Knox mine continued to increase production during the third
quarter. Third quarter production increased by 6 per cent 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 per cent 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 because of 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 per cent during the third
quarter when compared with the second quarter, but increased by 37 per cent
when compared with the third quarter of 1998. Total cash costs were $314
per equivalent ounce, compared with $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 per cent 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 because of higher than planned
tonnes placed on the leachpad.
Blanket -- Zimbabwe
Production at the Blanket mine increased by 18 per cent 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.
Hedge position
As at Sept. 30, 1999, the company had sold forward 1.1 million 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).
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.
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-per-cent complete with a planned completion date of Dec. 1, 1999.
No issues have been identified with the company's 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 using the company's
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 timely actions by customers and suppliers.
Outlook
As at Sept. 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.
CONSOLIDATED STATEMENT OF OPERATIONS
Three months ended Sept. 30
(millions of U.S. dollars)
1999 1998
Revenue
Mining revenue $ 77.1 $ 83.5
Interest and
other income 2.6 3.5
--------- ---------
79.7 87.0
--------- ---------
Expenses
Operating 51.3 61.2
General and
administrative 2.6 1.8
Exploration and
business
development 3.1 2.8
Depreciation,
depletion and
amortization 28.0 27.2
--------- ---------
85.0 93.0
--------- ---------
Income (loss)
before the
undernoted (5.3) (6.0)
Gain on sale
of marketable
securities - 1.9
Foreign exchange
gain (loss)
and other 0.1 (0.4)
Share in loss
of associated
companies (0.1) (0.1)
Interest expense
on long-term
liabilities (3.4) (3.8)
--------- ---------
Income (loss) before
taxes and dividends
on convertible
preferred shares
of subsidiary
company (8.7) (8.4)
Provision for
income and
mining taxes (1.0) (0.1)
--------- ---------
Income (loss) for
the period before
dividends on
convertible
preferred shares
of subsidiary
company (9.7) (8.5)
Dividends on
convertible
preferred shares
of subsidiary
company (1.7) (1.7)
--------- ---------
Net income
(loss) for the
period (11.4) (10.2)
Increase in
equity component
of convertible
debentures (1.7) (1.5)
--------- ---------
Net loss
attributable to
common shares $ (13.1) $ (11.7)
========= =========
Net income (loss)
per share (5 cents) (6 cents)
CONSOLIDATED STATEMENT OF OPERATIONS
Nine months ended Sept. 30
(millions of U.S. dollars)
1999 1998
Revenue
Mining revenue $ 227.0 $ 181.6
Interest and
other income 9.2 12.0
--------- ---------
236.2 193.6
--------- ---------
Expenses
Operating 156.5 132.4
General and
administrative 7.5 5.0
Exploration and
business
development 7.4 5.9
Depreciation,
depletion and
amortization 82.9 50.9
--------- ---------
254.3 194.2
--------- ---------
Income (loss)
before the
undernoted (18.1) (0.6)
Gain on sale
of marketable
securities 0.1 2.7
Foreign exchange
gain (loss)
and other - (0.1)
Share in loss
of associated
companies (0.3) (0.3)
Interest expense
on long-term
liabilities (10.0) (7.2)
--------- ---------
Income (loss) before
taxes and dividends
on convertible
preferred shares
of subsidiary
company (28.3) (5.5)
Provision for
income and
mining taxes (2.7) (2.1)
--------- ---------
Income (loss) for
the period before
dividends on
convertible
preferred shares
of subsidiary
company (31.0) (7.6)
Dividends on
convertible
preferred shares
of subsidiary
company (5.1) (2.3)
--------- ---------
Net income
(loss) for the
period (36.1) (9.9)
Increase in
equity component
of convertible
debentures (4.9) (4.4)
--------- ---------
Net loss
attributable to
common shares $ (41.0) $ (14.3)
========= =========
Net income (loss)
per share (14 cents) (8 cents)
GOLD PRODUCTION AND COST SUMMARY
Three months ended Sept. 30
1999 1998
Fort Knox *
Tonnes milled/
crushed
(thousands) (1) 3,211.7 3,109.5
Grade (grams
per tonne) 1.02 0.90
Recovery 91% 91%
Gold equivalent
production
to dore (2) 97,256 86,344
Per ounce
Total cash costs $182 $194
Depreciation,
depletion and
amortization 125 133
Site restoration
cost accruals 3 3
--------- ---------
Total production
costs $ 310 $ 330
========= =========
Hoyle Pond
Tonnes milled/
crushed
(thousands) (1) 110.0 108.8
Grade (grams
per tonne) 11.72 12.18
Recovery 87% 89%
Gold equivalent
production
to dore (2) 36,260 37,915
Per ounce
Total cash costs $187 $175
Depreciation,
depletion and
amortization 79 31
Site restoration
cost accruals 1 -
--------- ---------
Total production
costs $ 267 $ 206
========= =========
Kubaka (3) *
Tonnes milled/
crushed
(thousands) (1) 204.7 195.2
Grade (grams
per tonne) 16.64 19.80
Recovery 98% 98%
Gold equivalent
production
to dore (2) 56,883 61,362
Per ounce
Total cash costs $139 $152
Depreciation,
depletion and
amortization 144 117
Site restoration
cost accruals 3 8
--------- ---------
Total production
costs $ 286 $ 277
========= =========
Refugio (4) *
Tonnes milled/
crushed
(thousands) (1) 2,433.0 1,726.0
Grade (grams
per tonne) 0.90 0.94
Recovery 64% 64%
Gold equivalent
production
to dore (2) 17,740 12,981
Per ounce
Total cash costs $314 $437
Depreciation,
depletion and
amortization 54 85
Site restoration
cost accruals 5 5
--------- ---------
Total production
costs $ 373 $ 527
========= =========
Denton-Rawhide (5)
Tonnes milled/
crushed
(thousands) (1) 1,559.5 1,423.3
Grade (grams
per tonne) 1.01 0.86
Recovery 64% 64%
Gold equivalent
production
to dore (2) 17,434 17,087
Per ounce
Total cash costs $253 $249
Depreciation,
depletion and
amortization 72 82
Site restoration
cost accruals 6 5
--------- ---------
Total production
costs $ 331 $ 336
========= =========
Blanket
Tonnes milled/
crushed
(thousands) (1) 367.2 335.0
Grade (grams
per tonne) 1.35 1.40
Recovery 63% 65%
Gold equivalent
production
to dore (2) 10,000 9,814
Per ounce
Total cash costs $170 $180
Depreciation,
depletion and
amortization 53 45
Site restoration
cost accruals - -
--------- ---------
Total production
costs $ 223 $ 225
========= =========
GOLD PRODUCTION AND COST SUMMARY
Nine months ended Sept. 30
1999 1998
Fort Knox *
Tonnes milled/
crushed
(thousands) (1) 9,139.1 4,161.0
Grade (grams
per tonne) 0.98 0.96
Recovery 91% 91%
Gold equivalent
production
to dore (2) 265,685 121,003
Per ounce
Total cash costs $189 $192
Depreciation,
depletion and
amortization 125 133
Site restoration
cost accruals 3 3
--------- ---------
Total production
costs $ 317 $ 328
========= =========
Hoyle Pond
Tonnes milled/
crushed
(thousands) (1) 295.0 315.0
Grade (grams
per tonne) 11.04 13.51
Recovery 87% 88%
Gold equivalent
production
to dore (2) 91,038 122,532
Per ounce
Total cash costs $221 $174
Depreciation,
depletion and
amortization 95 61
Site restoration
cost accruals 1 -
--------- ---------
Total production
costs $ 317 $ 235
========= =========
Kubaka (3) *
Tonnes milled/
crushed
(thousands) (1) 584.0 252.0
Grade (grams
per tonne) 19.32 20.50
Recovery 98% 98%
Gold equivalent
production
to dore (2) 188,482 82,775
Per ounce
Total cash costs $139 $160
Depreciation,
depletion and
amortization 142 114
Site restoration
cost accruals 3 7
--------- ---------
Total production
costs $ 284 $ 281
========= =========
Refugio (4) *
Tonnes milled/
crushed
(thousands) (1) 6,934.0 2,010.0
Grade (grams
per tonne) 0.93 0.96
Recovery 64% 64%
Gold equivalent
production
to dore (2) 68,617 18,044
Per ounce
Total cash costs $269 $421
Depreciation,
depletion and
amortization 54 88
Site restoration
cost accruals 5 5
--------- ---------
Total production
costs $ 328 $ 514
========= =========
Denton-Rawhide (5)
Tonnes milled/
crushed
(thousands) (1) 4,692.0 3,882.0
Grade (grams
per tonne) 0.93 0.93
Recovery 64% 64%
Gold equivalent
production
to dore (2) 48,272 52,821
Per ounce
Total cash costs $237 $234
Depreciation,
depletion and
amortization 76 79
Site restoration
cost accruals 6 4
--------- ---------
Total production
costs $ 319 $ 317
========= =========
Blanket
Tonnes milled/
crushed
(thousands) (1) 998.7 981.4
Grade (grams
per tonne) 1.35 1.34
Recovery 66% 61%
Gold equivalent
production
to dore (2) 28,409 26,907
Per ounce
Total cash costs $161 $202
Depreciation,
depletion and
amortization 56 52
Site restoration
cost accruals - -
--------- ---------
Total production
costs $ 217 $ 254
========= =========
* includes four months of 1998 production on acquisition of Amax Gold Inc.
1) Tonnes milled/crushed represents 100 per cent of mine production
2) Gold equivalent to dore represents the company's share
3) 53-per-cent ownership interest
4) 50-per-cent ownership interest
5) 49-per-cent ownership interest.
WARNING: The company relies upon litigation protection for
"forward-looking" statements.
(c) Copyright 1999 Canjex Publishing Ltd. canada-stockwatch.com
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