Kinross(KGC) - 2023 Q2 - Quarterly Report

Executive Summary & Highlights Kinross Gold Corporation delivered strong Q1 2023 results, exceeding production targets and advancing key development projects while maintaining a strong financial position and commitment to ESG principles Q1 2023 Highlights Kinross Gold Corporation reported strong first-quarter 2023 results, with all sites on plan and the company on track to meet its annual production and cost guidance - The Company is on track to meet its 2023 annual guidance[9] | Metric | Q1 2023 | Q1 2022 | Change (%) | | :----------------------------------- | :------ | :------ | :--------- | | Production (Au eq. oz.) | 466,022 | 378,421 | +23% | | Sales (Au eq. oz.) | 490,330 | 373,728 | +31% | | Production cost of sales ($/Au eq. oz. sold) | $987 | $972 | +1.5% | | All-in sustaining cost ($/Au eq. oz. sold) | $1,321 | $1,231 | +7.3% | | Margins ($/Au eq. oz. sold) | $907 | $904 | +0.3% | | Operating cash flow ($ millions) | $259.0 | $97.9 | +164.6% | | Adjusted operating cash flow ($ millions) | $358.2 | $249.1 | +43.8% | | Reported net earnings ($ millions) | $90.2 | $81.3 | +10.9% | | Reported net earnings ($/share) | $0.07 | $0.06 | +16.7% | | Adjusted net earnings ($ millions) | $87.6 | $68.8 | +27.3% | | Adjusted net earnings ($/share) | $0.07 | $0.05 | +40.0% | | Cash and cash equivalents ($ millions) | $471.0 | N/A | N/A | | Total liquidity ($ billions) | $1.7 | N/A | N/A | | Quarterly dividend ($/share) | $0.03 | N/A | N/A | - Tasiast achieved two record-production months in January and March, driven by record grades, and its 24k expansion project remains on budget and on schedule to reach 24,000 tonnes per day throughput in mid-2023[9] - Paracatu was a solid contributor with higher year-over-year production at lower costs[9] - La Coipa achieved record grades and recoveries since restarting operations last year and generated strong cash flow[9] - The exploration program at Great Bear in Red Lake, Ontario, continues to make excellent progress, with drilling results confirming gold mineralization at good widths and high grades, including at depths of 1.3 kilometres[9] CEO Commentary CEO J. Paul Rollinson highlighted a strong first quarter with a 23% year-over-year production increase, driven by Tasiast, La Coipa, and Paracatu - Kinross delivered a strong first quarter with a 23% increase in year-over-year production, with Tasiast, La Coipa, and Paracatu being strong contributors[11] - Excellent progress is being made on development and exploration projects, including the Tasiast 24k project on schedule for mid-year capacity and the Tasiast solar power plant expected online by year-end[12] - The company is well-positioned to meet annual production and cost guidance, maintaining financial strength, excellent liquidity, and continuing its return of capital program[13] - Kinross published its 2022 Sustainability and ESG Report, reinforcing its commitment to responsible mining and a goal to reduce greenhouse gas emission intensity by 30% by 2030[14] ESG Performance Kinross demonstrated strong ESG performance in 2022 and Q1 2023, achieving high ratings, improving safety, and contributing significantly to host communities and environmental goals 2022 Sustainability and ESG Report Kinross published its 2022 Sustainability and ESG Report, detailing a refreshed ESG strategy focused on Workforce and Community, Natural Capital, and Climate and Energy - Kinross published its 2022 Sustainability and ESG Report on May 9, 2023, outlining a refreshed ESG strategy with three key pillars: Workforce and Community, Natural Capital, and Climate and Energy[16][75][76] - The company achieved its highest S&P ESG Global rating in 2022 (97th percentile) and maintained an 'A' position with MSCI for the third consecutive year[77] - Safety improvements included a 'Critical Risk Management Blitz' and a new Global Safety Learning Forum[81] - In 2022, Kinross generated $2.9 billion in economic benefits in host countries and advanced its Diversity, Equity and Inclusion (DEI) strategy, achieving the highest percentage of women employees (including 15% in STEM roles and 33% on the Senior Leadership Team) in five years[81] - Bald Mountain was awarded the 2022 Reclamation Award for 'Leadership in Concurrent Mine Reclamation'[16][82] Q1 2023 ESG Performance In Q1 2023, Kinross continued its strong ESG performance by establishing a Corporate Human Rights Task Force and contributing over $1.3 million in monetary and in-kind support to host communities - In Q1 2023, Kinross maintained strong ESG performance, including setting up a cross-functional Corporate Human Rights Task Force[82] - Over $1.3 million in monetary and in-kind contributions were made to host communities through site community investment strategies[82] - Close engagement with Indigenous communities continued, with discussions on long-lasting benefits for the Great Bear project and a $300,000 grant for training at Manh Choh[83] Summary of Financial and Operating Results Kinross reported significant increases in Q1 2023 production, sales, and operating cash flow, maintaining stable margins and a strong balance sheet while increasing capital expenditures for development Operating Highlights Kinross' Q1 2023 operating highlights show a significant year-over-year increase in gold equivalent ounces produced and sold, primarily driven by the ramp-up of La Coipa and higher production at Paracatu, Round Mountain, and Fort Knox | Operating Metric | Q1 2023 | Q1 2022 | YoY Change | | :----------------------------------- | :------ | :------ | :--------- | | Total gold equivalent ounces produced | 466,022 | 378,421 | +23% | | Total gold equivalent ounces sold | 490,330 | 373,728 | +31% | - The 23% year-over-year increase in production was primarily due to the ramp-up of production at La Coipa in 2022 and higher production at Paracatu, Round Mountain, and Fort Knox[20] - The increase in sales was primarily due to higher production and timing of gold equivalent ounces sold[21] Financial Highlights Kinross reported a substantial increase in revenue and operating cash flow in Q1 2023, driven by higher sales volume and a slight increase in the average realized gold price | Financial Metric | Q1 2023 ($ millions) | Q1 2022 ($ millions) | YoY Change (%) | | :----------------------------------- | :------------------- | :------------------- | :------------- | | Metal sales | $929.3 | $700.9 | +32.6% | | Production cost of sales | $483.9 | $363.1 | +33.3% | | Operating earnings | $143.9 | $102.5 | +40.4% | | Net earnings (attributable to common shareholders) | $90.2 | $81.3 | +10.9% | | Basic EPS (attributable to common shareholders) | $0.07 | $0.06 | +16.7% | | Adjusted net earnings (attributable to common shareholders) | $87.6 | $68.8 | +27.3% | | Adjusted net earnings per share | $0.07 | $0.05 | +40.0% | | Net cash flow from operating activities | $259.0 | $97.9 | +164.6% | | Adjusted operating cash flow | $358.2 | $249.1 | +43.8% | | Capital expenditures | $221.2 | $100.7 | +119.7% | | Free cash flow | $37.8 | ($2.8) | N/A | | Average realized gold price ($/ounce) | $1,894 | $1,876 | +1.0% | | Production cost of sales ($/Au eq. oz. sold) | $987 | $972 | +1.5% | | All-in sustaining cost ($/Au eq. oz. sold) | $1,321 | $1,231 | +7.3% | - Revenue increased by 33% due to higher gold equivalent ounces sold and an increase in average realized gold price[23] - Production cost of sales per Au eq. oz. sold increased slightly to $987, mainly due to higher costs at Nevada operations, partially offset by increased production[24] - Margins per Au eq. oz. sold remained stable at $907[25] - Capital expenditures increased significantly to $221.2 million, primarily due to increased capital stripping at Tasiast, Fort Knox, and Bald Mountain, and development activities at Manh Choh[31] Balance Sheet As of March 31, 2023, Kinross maintained a strong financial position with increased cash and cash equivalents and substantial total liquidity | Balance Sheet Item | March 31, 2023 ($ millions) | December 31, 2022 ($ millions) | Change ($ millions) | | :----------------------------------- | :-------------------------- | :----------------------------- | :------------------ | | Cash and cash equivalents | $471.0 | $418.1 | +$52.9 | | Total liquidity | ~$1,700.0 | N/A | N/A | - The Company had additional available credit of approximately $1.3 billion[33] Return of Capital Kinross declared a quarterly dividend of $0.03 per common share - A quarterly dividend of $0.03 per common share was declared, payable on June 15, 2023[9][37] - No share repurchases were made in Q1 2023; the company expects to repurchase shares in the second half of the year based on excess cash flow[38] Operating Results (Mine-by-Mine) Kinross' Q1 2023 mine-by-mine operating results show varied production and cost trends across sites, with strong performance at Paracatu and Tasiast despite planned shutdowns and seasonal impacts Fort Knox Fort Knox experienced lower quarter-over-quarter production due to seasonal effects on heap leach pads but saw a year-over-year increase driven by higher mill production from improved grades - Production was lower quarter-over-quarter due to seasonal effects on heap leach pads[41] - Year-over-year production increased due to higher mill production from higher grades processed[41] - Production cost of sales per ounce sold was lower year-over-year due to higher production[41] | Metric | Q1 2023 | Q1 2022 | YoY Change | | :----------------------------------- | :------ | :------ | :--------- | | Gold equivalent ounces produced | 65,387 | 54,803 | +19.3% | | Gold equivalent ounces sold | 65,404 | 52,813 | +23.8% | | Production cost of sales ($ millions) | $77.6 | $67.4 | +15.1% | | Production cost of sales/equivalent ounce sold ($/ounce) | $1,186 | $1,276 | -7.0% | Round Mountain Round Mountain's production was slightly lower quarter-over-quarter due to fewer ounces recovered from heap leach pads but increased year-over-year - Production was slightly lower quarter-over-quarter due to fewer ounces recovered from heap leach pads[42] - Production increased year-over-year due to an increase in ounces recovered from heap leach pads[42] - Cost of sales per ounce sold increased quarter-over-quarter due to lower production and lower capital development, and year-over-year due to inflationary cost pressures and lower capital development[42] | Metric | Q1 2023 | Q1 2022 | YoY Change | | :----------------------------------- | :------ | :------ | :--------- | | Gold equivalent ounces produced | 58,832 | 45,319 | +29.8% | | Gold equivalent ounces sold | 58,226 | 46,959 | +24.0% | | Production cost of sales ($ millions) | $96.5 | $52.3 | +84.5% | | Production cost of sales/equivalent ounce sold ($/ounce) | $1,657 | $1,114 | +48.7% | Bald Mountain Bald Mountain experienced a quarter-over-quarter production decrease due to fewer ounces recovered from heap leach pads and a year-over-year decrease from fewer tonnes placed and lower grades - Production decreased quarter-over-quarter mainly due to fewer ounces recovered from heap leach pads and lower tonnes placed[43] - Year-over-year production decreased due to fewer tonnes placed on heap leach pads and lower grades[43] - Cost of sales per ounce sold increased quarter-over-quarter due to lower production and year-over-year due to higher reagent costs and royalties[43] - Unprecedented winter snowfall impacted mining and stacking activities, but the site met quarterly production targets and is catching up[43] | Metric | Q1 2023 | Q1 2022 | YoY Change | | :----------------------------------- | :------ | :------ | :--------- | | Gold equivalent ounces produced | 33,828 | 36,071 | -6.2% | | Gold equivalent ounces sold | 47,283 | 41,017 | +15.3% | | Production cost of sales ($ millions) | $58.0 | $40.3 | +43.9% | | Production cost of sales/equivalent ounce sold ($/ounce) | $1,227 | $983 | +24.8% | Paracatu Paracatu's production was on plan, increasing year-over-year due to higher throughput, grades, and recoveries, but decreased quarter-over-quarter due to expected lower grades and recoveries from planned mine sequencing - Production was on plan and increased year-over-year primarily due to higher throughput, grades, and recoveries[40] - Production decreased quarter-over-quarter mainly due to expected lower grades and recoveries from planned mine sequencing[40] - Cost of sales per ounce sold was lower year-over-year due to increased production[40] | Metric | Q1 2023 | Q1 2022 | YoY Change | | :----------------------------------- | :------ | :------ | :--------- | | Gold equivalent ounces produced | 123,334 | 108,009 | +14.2% | | Gold equivalent ounces sold | 128,344 | 101,886 | +25.9% | | Production cost of sales ($ millions) | $118.0 | $106.6 | +10.7% | | Production cost of sales/equivalent ounce sold ($/ounce) | $919 | $1,046 | -12.3% | La Coipa La Coipa's production decreased quarter-over-quarter due to a planned mill shutdown for reliability, despite higher grades and strong recoveries - Production was lower quarter-over-quarter mainly due to a planned mill shutdown to increase mill reliability, resulting in lower throughput[44] - The lower throughput was partially offset by higher grades and strong recoveries[44] - Cost of sales per ounce sold increased quarter-over-quarter mainly due to lower production[44] - Production at La Coipa remains on plan for the year, with a focus on optimizing the plant and maintaining recovery outperformance[44] | Metric | Q1 2023 | Q1 2022 | YoY Change | | :----------------------------------- | :------ | :------ | :--------- | | Gold equivalent ounces produced | 53,596 | 524 | +10190.0% | | Gold equivalent ounces sold | 61,780 | - | N/A | | Production cost of sales ($ millions) | $44.9 | - | N/A | | Production cost of sales/equivalent ounce sold ($/ounce) | $727 | - | N/A | Tasiast Tasiast's production was lower quarter-over-quarter and year-over-year due to a planned shutdown for the 24k expansion project, which impacted throughput - Production was lower quarter-over-quarter and year-over-year primarily due to lower throughput from a planned shutdown in February for the Tasiast 24k project[39] - Monthly production records were achieved in January and March, partially offsetting lower throughput due to improving recoveries and record-high grades[39] - Cost of sales per ounce sold was higher quarter-over-quarter due to lower production, but lower year-over-year mainly due to lower operating waste mined[39] | Metric | Q1 2023 | Q1 2022 | YoY Change | | :----------------------------------- | :------ | :------ | :--------- | | Gold equivalent ounces produced | 131,045 | 133,695 | -2.0% | | Gold equivalent ounces sold | 128,479 | 130,195 | -1.3% | | Production cost of sales ($ millions) | $88.4 | $95.8 | -7.7% | | Production cost of sales/equivalent ounce sold ($/ounce) | $688 | $736 | -6.6% | Development Projects and Exploration Update Kinross made significant progress on key development projects like Tasiast 24k and Manh Choh, while advancing exploration at Great Bear and other sites to expand resources and future production Tasiast 24k Project & Solar Plant The Tasiast 24k project is on budget and schedule to reach 24,000 t/d throughput by mid-year, with pre-commissioning underway - The Tasiast 24k project is on budget and on schedule to reach designed throughput of 24,000 t/d by mid-year[47] - A planned shutdown in February successfully put into operation a new vibrating screen and upgraded SAG primary cyclone cluster, with pre-commissioning of the pre-classification circuit having commenced in April[47] - The 34MW Tasiast solar power plant is on schedule for completion by the end of the year, with all photovoltaic modules arrived and installation started in April[48] Great Bear Project Kinross continues to make excellent progress at the Great Bear project, drilling approximately 38,000 metres in Q1 2023, focusing on delineating the deposit at depth and adding inferred resource ounces - Approximately 38,000 metres were drilled in Q1 2023, focusing on inferred drilling half a kilometre to one kilometre below surface to delineate the deposit at depth and add inferred resource ounces[49] - Drilling results continue to support a high-grade deposit, with notable intersections including 9.6m at 10.5 g/t gold at a vertical depth of 1.3 kilometres (Hole BR-695) and 38m at 5.2 g/t gold (Hole BR-697A)[50][54] - Studies and permitting are progressing for an advanced exploration program to establish an underground decline, with potential surface construction starting as early as 2024[51] - Kinross plans to release the results of technical studies and permitting activities in the form of a preliminary economic assessment in 2024[52] Selected Great Bear Drill Results Recent drill results from the Great Bear project's LP Fault and Limb zones continue to demonstrate high-grade gold mineralization at various depths, reinforcing the potential for a large, long-life mining complex | Hole ID | From (m) | To (m) | Width (m) | True Width (m) | Au (g/t) | Target | | :------ | :------- | :----- | :-------- | :------------- | :------- | :----- | | BR-695 | 1,556.5 | 1,567.0 | 10.6 | 9.6 | 10.46 | Yuma | | BR-695 | including | 1,561.4 | 1,565.0 | 3.7 | 3.3 | 24.38 | Yuma | | BR-697A | 1,004.2 | 1,046.2 | 42.1 | 38.0 | 5.24 | Yuma | | BR-697A | including | 1,027.4 | 1,032.0 | 4.7 | 4.2 | 32.35 | Yuma | | BR-735 | 120.0 | 123.0 | 3.0 | 2.6 | 73.18 | Viggo | | DL-132 | 1,059.9 | 1,066.7 | 6.8 | 5.9 | 7.75 | Limb | - Hole BR-695, the deepest hole to date, intersected 9.6m at 10.5 g/t gold at a vertical depth of 1.3 kilometres[50][54] - Hole BR-697A intersected broad zones of mineralization, including 38m at 5.2 g/t gold with a 4.2m interval of 32.4 g/t gold at 800m depth[50][54] Manh Choh Project The 70% owned Manh Choh project remains on schedule and on budget, with early works completed and the camp operational - The 70% owned Manh Choh project remains on schedule and on budget, with the early works program successfully completed and the camp operational[61] - The permitting process is on track, and construction ramp-up is planned with a focus on safety, environment, and community relationships[61] - Initial production is expected in the second half of 2024, projected to add approximately 640,000 attributable Au eq. oz. to the Company's production profile over its approximately 4.5-year life-of-mine[62] Chile (Lobo-Marte) Kinross' activities in Chile are currently focused on La Coipa and potential mine life extensions - Activities in Chile are focused on La Coipa and potential opportunities to extend its mine life[63] - The Lobo-Marte project provides optionality as a potential large, low-cost mine upon the conclusion of mining at La Coipa[63] - The Company continues to engage with communities and government stakeholders related to Lobo-Marte[63] Curlew Basin Exploration At the Curlew Basin exploration project in Washington State, underground exploration drilling continues to confirm vein extensions and continuity within high-priority target areas, with the goal of building on the resource - Underground exploration drill results continue to confirm vein extensions and continuity within high priority target areas[64] - Exploration drilling is underway and will continue throughout the remainder of the year with the goal of building on the resource[64] - Exploration drill results received during the quarter include high-grade intersections such as 3.0m @ 37.3 g/t Au (LP) and 2.3m @ 24.2 g/t Au (K5N)[65][70] Round Mountain Phase X and Gold Hill Exploration Kinross is advancing higher-margin underground opportunities at Phase X and Gold Hill - Construction of the exploration decline at Phase X has begun, with underground development progressing for definition drilling expected in early 2024[66] - Studies and permitting for a potential underground mine at Phase X are advancing in parallel[66] - At Gold Hill, drilling commenced early this year with four drill rigs, focusing on extending the Jersey vein and testing continuity of the Mid-Atlantic vein zone[68] - Permitting for an underground decline at Gold Hill is progressing[68] Company Guidance Kinross is on track to meet its 2023 annual production guidance of 2.1 million gold equivalent ounces, with expected increases after Q1 from Tasiast, La Coipa, and seasonal impacts - The Company is on track to meet its 2023 production guidance of 2.1 million Au eq. oz. (+/- 5%)[73] - Production is expected to increase after Q1, driven by higher production at Tasiast and La Coipa, and seasonal impacts on mining at Paracatu and US heap leach operations[73] - Annual production is expected to remain stable at 2.1 million and 2.0 million attributable Au eq. oz. (+/- 5%) in 2024 and 2025, respectively[73] - Kinross is on track to meet its 2023 guidance for production cost of sales, all-in sustaining cost, and attributable capital expenditures[74] Financial Statements Kinross' Q1 2023 financial statements reflect increased metal sales, gross profit, and operating cash flow, alongside a strengthened balance sheet and higher capital expenditures for growth Interim Condensed Consolidated Balance Sheets Kinross' balance sheet as of March 31, 2023, shows an increase in total assets and equity compared to December 31, 2022 | Item | March 31, 2023 ($ millions) | December 31, 2022 ($ millions) | | :----------------------------------- | :-------------------------- | :----------------------------- | | Assets | | | | Cash and cash equivalents | $471.0 | $418.1 | | Inventories | $1,138.9 | $1,072.2 | | Total current assets | $1,940.8 | $1,852.6 | | Property, plant and equipment | $7,793.1 | $7,741.4 | | Total assets | $10,500.4 | $10,396.4 | | Liabilities | | | | Accounts payable and accrued liabilities | $479.3 | $550.0 | | Current portion of long-term debt and credit facilities | $535.3 | $36.0 | | Total current liabilities | $1,126.4 | $751.5 | | Long-term debt and credit facilities | $2,158.9 | $2,556.9 | | Total liabilities | $4,544.6 | $4,514.2 | | Equity | | | | Total common shareholders' equity | $5,887.0 | $5,823.7 | | Total equity | $5,955.8 | $5,882.2 | - Current portion of long-term debt and credit facilities increased significantly from $36.0 million to $535.3 million[97] Interim Condensed Consolidated Statements of Operations Kinross' Q1 2023 operations statement shows a substantial increase in metal sales and gross profit compared to Q1 2022 | Item | Q1 2023 ($ millions) | Q1 2022 ($ millions) | | :----------------------------------- | :------------------- | :------------------- | | Metal sales | $929.3 | $700.9 | | Production cost of sales | $483.9 | $363.1 | | Depreciation, depletion and amortization | $211.9 | $166.5 | | Total cost of sales | $695.8 | $529.6 | | Gross profit | $233.5 | $171.3 | | Operating earnings | $143.9 | $102.5 | | Earnings from continuing operations before tax | $130.2 | $76.8 | | Net earnings from continuing operations attributable to common shareholders | $90.2 | $81.3 | | Basic earnings per share from continuing operations attributable to common shareholders | $0.07 | $0.06 | - Metal sales increased by $228.4 million, or 32.6%, year-over-year[99] - Gross profit increased by $62.2 million, or 36.3%, year-over-year[99] - Net earnings from continuing operations attributable to common shareholders increased by $8.9 million, or 10.9%, year-over-year[99] Interim Condensed Consolidated Statements of Cash Flows Kinross' Q1 2023 cash flow statement shows a significant increase in net cash flow from continuing operating activities, driven by higher earnings and favorable adjustments | Item | Q1 2023 ($ millions) | Q1 2022 ($ millions) | | :----------------------------------- | :------------------- | :------------------- | | Net cash flow of continuing operations provided from operating activities | $259.0 | $97.9 | | Net cash flow of continuing operations used in investing activities | ($242.3) | ($1,153.3) | | Net cash flow of continuing operations provided from financing activities | $30.7 | $1,034.5 | | Increase in cash and cash equivalents | $52.9 | $56.7 | | Cash and cash equivalents, end of period | $471.0 | $454.2 | - Net cash flow from continuing operating activities increased by $161.1 million, or 164.6%, year-over-year[101] - Additions to property, plant and equipment increased to $221.2 million from $100.7 million in Q1 2022[101] - Proceeds from drawdown of debt were $100.0 million in Q1 2023, significantly lower than $1,097.6 million in Q1 2022[101] Reconciliation of Non-GAAP Financial Measures and Ratios This section reconciles key non-GAAP financial measures, including adjusted net earnings, free cash flow, and various cost metrics, providing a comprehensive view of Kinross' underlying financial and operating performance Adjusted Net Earnings Adjusted net earnings from continuing operations, a non-GAAP measure, increased significantly year-over-year, excluding certain non-recurring or non-operational impacts such as foreign exchange gains/losses and prior period tax adjustments | Item | Q1 2023 ($ millions) | Q1 2022 ($ millions) | | :----------------------------------- | :------------------- | :------------------- | | Net earnings from continuing operations attributable to common shareholders - as reported | $90.2 | $81.3 | | Adjusting items (net) | ($2.6) | ($12.5) | | Adjusted net earnings from continuing operations attributable to common shareholders | $87.6 | $68.8 | | Adjusted net earnings from continuing operations per share | $0.07 | $0.05 | - Adjusting items primarily include foreign exchange gains/losses, foreign exchange gains on tax basis, taxes in respect of prior periods, and reclamation expense/recovery[111] Free Cash Flow Free cash flow from continuing operations turned positive in Q1 2023, reflecting improved operating cash flow despite increased capital expenditures | Item | Q1 2023 ($ millions) | Q1 2022 ($ millions) | | :----------------------------------- | :------------------- | :------------------- | | Net cash flow of continuing operations provided from operating activities - as reported | $259.0 | $97.9 | | Less: Additions to property, plant and equipment | ($221.2) | ($100.7) | | Free cash flow from continuing operations | $37.8 | ($2.8) | - Free cash flow improved from a net outflow of $2.8 million in Q1 2022 to a net inflow of $37.8 million in Q1 2023[114] Adjusted Operating Cash Flow Adjusted operating cash flow from continuing operations significantly increased year-over-year, excluding the volatility of working capital changes | Item | Q1 2023 ($ millions) | Q1 2022 ($ millions) | | :----------------------------------- | :------------------- | :------------------- | | Net cash flow of continuing operations provided from operating activities - as reported | $259.0 | $97.9 | | Adjusting items: Total working capital changes | $99.2 | $151.2 | | Adjusted operating cash flow from continuing operations | $358.2 | $249.1 | - Adjusted operating cash flow increased by $109.1 million, or 43.8%, year-over-year[115] Production Cost of Sales per Ounce Sold (By-Product Basis) Production cost of sales per ounce sold on a by-product basis decreased year-over-year, reflecting the benefit of silver revenue as a credit against production costs | Item | Q1 2023 ($ millions, except ounces) | Q1 2022 ($ millions, except ounces) | | :----------------------------------- | :---------------------------------- | :---------------------------------- | | Production cost of sales from continuing operations - as reported | $483.9 | $363.1 | | Less: silver revenue | ($54.9) | ($4.4) | | Production cost of sales from continuing operations net of silver by-product revenue | $429.0 | $358.7 | | Gold ounces sold from continuing operations | 461,696 | 371,335 | | Production cost of sales from continuing operations per ounce sold on a by-product basis | $929 | $966 | - Production cost of sales per ounce sold on a by-product basis decreased by $37, or 3.8%, year-over-year[117] All-in Sustaining Cost & Attributable All-in Cost (By-Product Basis) All-in sustaining cost (AISC) and attributable all-in cost (AIC) per ounce sold on a by-product basis both increased year-over-year | Item | Q1 2023 ($ millions, except ounces) | Q1 2022 ($ millions, except ounces) | | :----------------------------------- | :---------------------------------- | :---------------------------------- | | Production cost of sales from continuing operations net of silver by-product revenue | $429.0 | $358.7 | | Adjusting items (sustaining) | $147.3 | $91.6 | | All-in Sustaining Cost on a by-product basis | $592.6 | $455.5 | | Adjusting items (non-sustaining) | $153.7 | $88.8 | | All-in Cost on a by-product basis - attributable | $746.3 | $544.3 | | Gold ounces sold from continuing operations | 461,696 | 371,335 | | All-in sustaining cost from continuing operations per ounce sold on a by-product basis | $1,284 | $1,227 | | Attributable all-in cost from continuing operations per ounce sold on a by-product basis | $1,616 | $1,466 | - All-in sustaining cost per ounce sold on a by-product basis increased by $57, or 4.6%, year-over-year[122] - Attributable all-in cost per ounce sold on a by-product basis increased by $150, or 10.2%, year-over-year[122] All-in Sustaining Cost & Attributable All-in Cost (Equivalent Ounce Basis) All-in sustaining cost (AISC) and attributable all-in cost (AIC) per equivalent ounce sold both increased year-over-year | Item | Q1 2023 ($ millions, except ounces) | Q1 2022 ($ millions, except ounces) | | :----------------------------------- | :---------------------------------- | :---------------------------------- | | Production cost of sales from continuing operations - as reported | $483.9 | $363.1 | | Adjusting items (sustaining) | $189.6 | $96.8 | | All-in Sustaining Cost | $647.5 | $459.9 | | Adjusting items (non-sustaining) | $153.7 | $88.8 | | All-in Cost - attributable | $801.2 | $548.7 | | Gold equivalent ounces sold from continuing operations | 490,330 | 373,728 | | All-in sustaining cost from continuing operations per equivalent ounce sold | $1,321 | $1,231 | | Attributable all-in cost from continuing operations per equivalent ounce sold | $1,634 | $1,468 | - All-in sustaining cost per equivalent ounce sold increased by $90, or 7.3%, year-over-year[125] - Attributable all-in cost per equivalent ounce sold increased by $166, or 11.3%, year-over-year[125] Capital Expenditures Classification Kinross classifies capital expenditures into sustaining and non-sustaining categories, consistent with World Gold Council standards | Item | Q1 2023 ($ millions) | Q1 2022 ($ millions) | | :----------------------------------- | :------------------- | :------------------- | | Sustaining capital expenditures | $96.5 | $41.4 | | Non-sustaining capital expenditures | $124.7 | $59.3 | | Additions to property, plant and equipment - per cash flow | $221.2 | $100.7 | - Non-sustaining capital expenditures increased by $65.4 million, or 110.3%, year-over-year, reflecting investments in major projects[128] - Key non-sustaining capital expenditures in Q1 2023 included Manh Choh ($28.7M), Bald Mountain ($19.1M), La Coipa ($23.8M), and Tasiast ($50.0M)[128] Corporate Information This section provides essential corporate details, including conference call information, annual meeting specifics, and an overview of Kinross Gold Corporation's global operations and strategic focus Conference Call Details Kinross held a conference call and audio webcast on May 10, 2023, to discuss Q1 2023 results, with replay and webcast archives available - A conference call and audio webcast were held on Wednesday, May 10, 2023, at 7:45 a.m. EDT[84] - Replay and archived webcast are available on www.kinross.com[84](index=84&type=chunk) Virtual Annual Meeting of Shareholders Kinross' Annual Meeting of Shareholders was held virtually on May 10, 2023, to provide enhanced flexibility and participation for shareholders - The Annual Meeting of Shareholders was held virtually on Wednesday, May 10, 2023, at 10:00 a.m. EDT[88] - The virtual format was chosen to provide enhanced flexibility and opportunity for shareholder participation[89] About Kinross Gold Corporation Kinross Gold Corporation is a Canadian-based global senior gold mining company with operations and projects in the United States, Brazil, Mauritania, Chile, and Canada, focusing on responsible mining, operational excellence, disciplined growth, and balance sheet strength - Kinross is a Canadian-based global senior gold mining company[92] - Operations and projects are located in the United States, Brazil, Mauritania, Chile, and Canada[92] - The company's focus is on delivering value based on responsible mining, operational excellence, disciplined growth, and balance sheet strength[92] Appendices The appendices provide detailed drill assay results and a long section map for the Great Bear project's LP Fault zone, supporting the reported exploration findings Appendix A: Recent LP Fault Zone Assay Results Appendix A provides a detailed table of recent assay results from the LP Fault zone at the Great Bear project, including drill hole IDs, depths, widths, and gold grades, supporting the high-grade nature of the mineralization - The appendix contains a full list of significant, composited assay results from 52 fully assayed drill holes at the LP Fault zone and 8 at the Limb zone[141] - Composites are generated using a 0.3 g/t minimum grade and a maximum linear internal dilution of 5.0 m[141] | Hole ID | From (m) | To (m) | Width (m) | True Width (m) | Au (g/t) | Target | | :------ | :------- | :----- | :-------- | :------------- | :------- | :----- | | BR-655 | 577.8 | 585.9 | 8.1 | 5.9 | 12.09 | Discovery | | BR-697A | 1,027.4 | 1,032.0 | 4.7 | 4.2 | 32.35 | Yuma | | BR-735 | 120.0 | 123.0 | 3.0 | 2.6 | 73.18 | Viggo | | BR-794 | 964.0 | 972.0 | 8.0 | 7.0 | 24.38 | Yauro | | DL-132 | 1,060.9 | 1,061.5 | 0.6 | 0.5 | 76.40 | Limb | Appendix B: LP Fault Zone Long Section Appendix B provides a long section of the LP Fault zone, visually representing the geological structure and drill intersections, complementing the detailed assay results in Appendix A - Appendix B provides a visual representation of the LP Fault zone[140] - It complements Appendix A by showing composites generated from drill intersections received since the February 13, 2023 news release[141] Disclosures This section outlines cautionary statements regarding forward-looking information, key sensitivities to market factors, and other important corporate disclosures Cautionary Statement on Forward-Looking Information This section provides a comprehensive cautionary statement regarding forward-looking information contained in the news release, outlining the inherent uncertainties, estimates, and assumptions that could cause actual results to differ materially from projections - All statements regarding future financial or operating performance constitute 'forward-looking information' and are based on expectations, estimates, and projections as of the news release date[144] - Forward-looking statements are subject to significant business, economic, and competitive uncertainties and contingencies, including risks related to extreme weather, labor disruptions, permitting, political developments, and market fluctuations[144][145] - Kinross disclaims any intention or obligation to update or revise any forward-looking statements, except as required by applicable law[145] Key Sensitivities This section details the sensitivity of Kinross' production cost of sales per equivalent ounce sold to changes in foreign currency exchange rates, oil prices, and gold prices, providing quantitative impacts for each variable - Approximately 70%-80% of the Company's costs are denominated in U.S. dollars[148] | Factor | Change | Impact on Production Cost of Sales per Au Eq. Oz. Sold | | :----------------------------------- | :----- | :--------------------------------------------------- | | Foreign currency exchange rates (all currencies) | 10% change | ~$20 impact | | Brazilian real exchange rate | 10% change | ~$30 impact (on Brazilian costs) | | Chilean peso exchange rate | 10% change | ~$50 impact (on Chilean costs) | | Price of oil | $10/barrel change | ~$3 impact | | Price of gold | $100 change | ~$4 impact (due to royalties) | Other Information This section clarifies the terminology used in the news release, confirms that technical information is prepared by a qualified person, and states that all dollar amounts are expressed in U.S. dollars unless otherwise noted - The terms 'we', 'us', 'our', the 'Company', or 'Kinross' refer to Kinross Gold Corporation and/or its subsidiaries[151] - Technical information about mineral properties has been prepared under the supervision of Mr. John Sims, a 'qualified person' under National Instrument 43-101[151] - All dollar amounts are expressed in U.S. dollars, unless otherwise noted[152]