Paracatu project scope expanding
TORONTO, May 4 /CNW/ - Kinross Gold Corporation (TSX-K; NYSE-KGC)
("Kinross" or the "Company"), announced today its unaudited results for the
first quarter ended March 31, 2006.
(All dollar amounts in this press release are expressed in U.S. dollars,
unless otherwise noted)
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First Quarter Highlights
- Kinross sold 371,818 gold equivalent ounces in the first quarter of
2006. The Company remains on track to produce approximately
1.44 million gold equivalent ounces in 2006.
- Revenue was $198.3 million in the first quarter, a 10% increase over
the same period last year. The increase was mainly due to the
quarter-over-quarter increase in the average realized price of gold,
partially offset by fewer ounces sold.
- The Company realized $532 per ounce of gold sold, an increase of 24%
over the same period last year, at a cost of sales(1) of $327 per
ounce, an increase of 20% over the first quarter of 2005, primarily
as a result of higher costs at Porcupine and Musselwhite, the high
cost of producing the final low-grade stockpiles at Kubaka as well as
industry-wide cost pressures and the strengthening Canadian dollar
and Brazilian real relative to the U.S. dollar. Kinross now expects
cost per ounce of gold equivalent sold to be in the range of
$305 - $315 for 2006.
- Net earnings of $8.9 million, or $0.03 per share, compared with a net
loss of $0.9 million in the same period last year. Earnings include
an expense of $9.4 million relating primarily to non-cash foreign
currency translation losses on deferred tax liabilities.
- Cash flow from operating activities was $20.1 million in the first
quarter.
- Capital expenditures were $34.7 million for the first quarter 2006
and the cash position was $84.1 million as at March 31, 2006 compared
with $97.6 million at year end 2005.
- The Paracatu engineering study is currently being optimized and the
scope of the project is increasing with higher production and lower
operating costs than originally expected. Capital costs are expected
to be at the high end of the previously announced range of
$400 - $500 million. Details are expected to be released in mid-June
subsequent to a Board meeting to review the project and optimization
study.
- The Company moved forward with the Crown Resources transaction by
filing a registration statement with the SEC.
- Kinross added to its management team with Tim Baker joining as
Executive Vice President and Chief Operating Officer, Thomas Boehlert
joining as Executive Vice President & Chief Financial Officer and
Geoffrey Gold joining as Senior Vice President & Chief Legal Officer.
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(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.
"Kinross is making substantial progress toward realizing our potential,"
said Tye Burt, President and Chief Executive Officer of Kinross. "Our revenue
has risen more than our costs this quarter, leading to a higher cash margin.
We have seen increased costs at two of our non-operated joint ventures, but
expect that these costs will improve through the end of the year costs are
also higher at the Kubaka mine as it is winding down operations. We have also
experienced industry-wide cost pressures and the strengthening of the Canadian
and Brazilian currencies. We will continue to focus efforts on our continuous
improvement program in order to control costs. We are extremely pleased that
the scope of the Paracatu expansion is expanding beyond our original
expectations."
<<
Summary of financial and operating results
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First Quarter
-------------------------------------------------------------------------
(dollars in millions, except per
share and per ounce amounts) 2006 2005
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Gold equivalent ounces - produced(a) 362,395 410,480
Gold equivalent ounces - sold(a) 371,818 415,768
Metal sales $ 198.3 $ 179.8
Cost of sales (excludes accretion and
reclamation expense, depreciation
depletion and amortization) $ 121.5 $ 113.1
Accretion and reclamation expense $ 3.0 $ 3.3
Depreciation, depletion and amortization $ 29.2 $ 44.3
Operating earnings $ 22.4 $ -
Net earnings (loss) $ 8.9 $ (0.9)
Basic and diluted earnings (loss) per
common share $ 0.03 $ -
Cash flow from operating activities $ 20.1 $ 26.8
Realized gold price $ 532 $ 429
Cost of sales per equivalent ounce sold(b) $ 327 $ 272
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(a) Gold equivalent ounces include silver ounces converted to gold based
on the ratio of the average spot market prices for the commodities
for each year. This ratio for the first quarter of 2006 was 57.03:1,
compared with 61.31:1 for the first quarter of 2005.
(b) Cost of sales per ounce is calculated by dividing cost of sales as
per the financial statements with gold equivalent ounces sold.
Revenue from metal sales in the first quarter increased 10% quarter-over-
quarter to $198.3 million in 2006 from $179.8 million in 2005, primarily as a
result of higher realized gold prices, partially offset by fewer ounces sold.
The realized gold price in the first quarter of 2006 was $532, compared with
$429 per ounce in 2005. The average spot price for the first quarter was
$554 per ounce, compared with $427 per ounce in the same period of 2005. The
difference between realized gold price and the average spot gold price is
primarily due to a reduction in metal sales of $6.9 million resulting from the
net settlement of 155,000 gold call options during the quarter. The Company
maintains its no-gold hedging policy.
Gold equivalent ounces sold and produced were consistent with budgeted
amounts for the quarter. In the first quarter 2006, the Company sold 371,818
gold equivalent ounces, down from the 415,768 ounces sold in 2005, primarily
as a result of fewer ounces sold at Porcupine, Musselwhite and Fort Knox as
well as planned shutdowns at Kettle River and Lupin and reduced production
from Kubaka as it winds down operations. Gold equivalent production was also
lower in the quarter, but consistent with our annual production target of
1.44 million ounces.
Between the first quarter of 2005 and 2006, cost of sales increased
largely due to industry-wide factors such as increased costs of fuel, power,
labor and other production costs. Higher costs were also a result of lower
than expected grades at Porcupine and Musselwhite and the high cost of
producing the final low-grade stockpiles at Kubaka. In addition, the
strengthening of the Canadian dollar and Brazilian real against the weakening
U.S. dollar has increased costs at the Company's mines not located in the
United States. Kinross is committed to its continuous improvement program,
which looks to new systems, methods and technologies to improve costs and
efficiencies.
General and administrative expense in the first quarter of 2006 of
$10.1 million was essentially the same as the first quarter of 2005. General
and administrative expense was adversely affected by personnel costs,
increased costs in South America to prepare for the Paracatu expansion and the
strengthening Canadian dollar in 2006. General and administrative expense in
2005 was adversely affected by costs incurred for the financial statement
review.
Cash flow from operating activities during the first quarter of 2006
decreased by $6.7 million to $20.1 million, compared with the first quarter of
2005. The decrease in operating cash flow in 2006 was the result of higher
operating costs, other expenses and larger working capital requirements,
partially offset by higher gold prices.
Operations review and update
Quarter ended March 31, 2006:
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Gold equivalent ounces
-----------------------------------------------
Produced Sold
-----------------------------------------------
(in US$ millions) 2006 2005 2006 2005
-----------------------------------------------
Fort Knox 79,677 73,953 67,608 70,998
Round Mountain 85,091 95,393 94,067 92,820
La Coipa 38,627 34,024 40,066 37,988
Crixas 24,121 24,192 23,938 24,156
Paracatu 42,900 40,609 46,127 43,482
Musselwhite 16,168 21,544 16,860 20,340
Porcupine Joint Venture 30,132 52,891 32,153 50,060
Refugio(a) 32,214 2,947 31,948 3,116
Other operations(b) 13,465 64,927 15,599 58,835
Corporate and other(c) - - 3,452 13,973
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Total 362,395 410,480 371,818 415,768
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Quarter ended March 31, 2006:
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Cost of sales Cost/oz
-----------------------------------------------
(in US$ millions) 2006 2005 2006 2005
-----------------------------------------------
Fort Knox $ 21.5 $ 17.5 $ 318 $ 246
Round Mountain 27.6 24.1 $ 293 $ 260
La Coipa 11.3 12.5 $ 282 $ 329
Crixas 4.5 3.5 $ 188 $ 145
Paracatu 15.1 12.3 $ 327 $ 283
Musselwhite 7.2 6.4 $ 427 $ 315
Porcupine Joint Venture 14.1 13.3 $ 439 $ 266
Refugio(a) 10.7 0.6 $ 335 $ 193
Other operations(b) 8.6 18.4 $ 551 $ 313
Corporate and other(c) 0.9 4.5 $ 261 $ 322
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Total $ 121.5 $ 113.1 $ 327 $ 272
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(a) Refugio was included in other operations during 2005 as the mine was
recommissioned in the second half of 2005.
(b) Other operations include ounces produced and sold from Kubaka and
Kettle River.
(c) Corporate and other includes ounces sold from Lupin and New
Britannia, although production is not included since the properties
are in closure.
At the Paracatu mine in Brazil, gold equivalent production increased by
6% between 2005 and 2006 resulting from higher throughput and improved
recoveries as the mine processed softer ore which was partially offset by
lower grades. Cost of sales in 2006 increased 23% over the same quarter of
2005 primarily due to increased energy and consumable costs, and appreciation
of the Brazilian real against the U.S. dollar.
The Paracatu engineering study and investment capital plan is currently
being finalized. The project team is analyzing the project configuration and
mine plan to optimize capital spending, operating costs, production and mine
sequencing. It is expected that Board approval will be sought for the project
at a Board meeting in June. Scope of the expansion has increased including a
higher throughput rate and production profile with lower operating costs in
the first ten years of operations. The capital required to implement this two-
phased expansion is expected to be at the high end of the previously announced
capital cost guidance of $400 - $500 million. Phase one will include the
installation of a 38 foot semi-autogenous grinding mill, a ball mill and
flotation circuit. The second phase will involve reconditioning the existing
plant and expanding refining capacity.
"We are very pleased with the expansion opportunity at Paracatu as this
project will be amongst largest gold mines in the western hemisphere," said
Burt.
At Round Mountain in the United States, production declined 11% in the
first quarter of 2006 relative to the prior year due to lower throughput and
grades. Tonnes processed decreased during the quarter due to reduced loader
availability, crusher downtime and weather related delays. Cost of sales
increased by 15% due to increased commodity related costs, higher costs on
replacement parts, increased contractor costs on equipment maintenance as well
as higher royalties and taxes due to a stronger gold price.
Production at the Fort Knox mine in the United States increased 8%
reflecting an increase in tonnes processed and higher grades, partially offset
by lower recoveries. Production in the first quarter of 2005 was impacted by
slope stability issues. Cost of sales, on a per ounce basis, increased 23% due
to increases in fuel, power and other operating costs.
At the non-operated Porcupine Joint Venture in Canada, gold production in
the first quarter of 2006 was 43% lower than 2005. This decrease in production
was largely due to lower grades as mining in the higher grade Dome pit was
completed in the fourth quarter of 2005. While a decrease in average grade was
budgeted, the actual mined grade at Pamour was lower than anticipated as a
result of geological and mining factors that increased dilution. Review of the
geological model and improved mining practice will reduce dilution at Pamour.
Gold production was further impacted by an unplanned mill shutdown which
reduced mill throughput. Cost of sales increased 6% as the operation processed
a similar number of tonnes compared to the first quarter of 2005, though at
lower grades. The increase was also impacted by higher energy and commodity
costs, and a 6% increase in value of the Canadian dollar against the U.S.
dollar quarter-over-quarter.
At the non-operated La Coipa operation in Chile, gold equivalent
production increased 14% during the first quarter of 2006 mainly due to higher
gold and silver grades. The lower grades in 2005 were the result of changes to
the mine plan due to pit slope failures. Cost of sales decreased by 10%
between the first quarter of 2005 and the first quarter of 2006 due to
increased costs in the first quarter of 2005 resulting from the pit slope
failures. This was partially offset by higher power costs and a 9%
appreciation of the Chilean peso against the U.S. dollar between the first
quarter of 2005 and the first quarter of 2006.
At the non-operated Crixas mine in Brazil, gold production was comparable
during the first quarters of 2006 and 2005. Costs of sales increased quarter-
over-quarter by 29% due to the mining of additional tonnes of ore at lower
grades along with the 18% appreciation of the Brazilian real against the U.S.
dollar.
Recommissioning of the expanded facilities at the Refugio mine in Chile
was completed and the mine went into commercial production in the fourth
quarter of 2005. During the first quarter of 2006, gold equivalent production
of 32,214 ounces was as expected with a cost of sales of $10.7 million.
Gold equivalent production at the non-operated Musselwhite mine in Canada
was 25% lower due to localized ground conditions that delayed access to
higher-grade ore blocks. As a result, mill feed for the quarter was limited to
lower-grade ore from underground and stockpiles. Average grade for the quarter
was 22% lower than the first quarter of 2005. A re-engineered mining sequence
to access and mine the high-grade blocks has been completed and is currently
being reviewed. Cost of sales increased by 13% due to increased energy and
commodity costs. and a 6% appreciation in the Canadian dollar against the U.S.
dollar in the first quarter of 2006, compared with the first quarter of 2005.
At Kinross' other operations production of 13,465 gold equivalent ounces
relates primarily to residual production from stockpiles at Kubaka as the mine
is winding down. Cost of sales includes the costs for processing those
residual ounces as well as other fixed costs associated with the Kubaka
operation.
2006 Outlook
Kinross expects to meet the previously forecasted annual gold equivalent
production of 1.44 million ounces. It is expected that higher commodity and
energy costs, along with a weakened U.S. dollar will continue to negatively
impact cost of sales, now expected to be in the range of $305 - $315 per ounce
for 2006, 7% higher than previous guidance.
Exploration and business development
Exploration and business development expense for the first quarter of
2006 was $7.5 million, compared with $4.9 million for the corresponding period
in 2005, an increase of 53%. Aggregate exploration and business development is
expected to be approximately $30 million for the year. The focus of the
Company's exploration program is to replace and increase mineral reserves at
existing mines and increase mineral reserves at its development projects.
Other income (expense) - net
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in US$ millions Three months ended
March 31,
-------------------------
2006 2005
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Interest and other income $ 1.7 $ 1.9
Interest expense (2.5) (1.9)
Foreign exchange gains (losses) (9.4) 1.7
Non-hedge derivative losses (2.5) -
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Other income (expense) - net $ (12.7) $ 1.7
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Non-hedge derivative losses
At December 31, 2005, the Company had 255,000 written gold call options
outstanding that had a mark-to-market liability of $6.2 million, based on the
year end gold price of $513 per ounce. The written call options had an average
strike price of $522 per ounce. During the first quarter of 2006, net
positions on 155,000 call options were closed out with total cash payments of
$9.7 million, resulting in a realized loss of $6.9 million. The realized loss
was recorded as a reduction to metal sales. At March 31, 2006, the remaining
100,000 written call options outstanding had a strike price of $530 per ounce
with expiry dates in the second quarter of 2006 and had a mark-to-market
liability of $6.2 million. This liability will be credited to income when the
options are settled.
Foreign exchange gains (losses)
A net foreign exchange loss of $9.4 million was recorded during the first
quarter of 2006, compared with a net gain of $1.7 million for the comparative
period in 2005. The loss on foreign exchange in the first quarter of 2006 was
largely the result of the impact of strengthening Brazilian real on Brazilian
deferred tax liabilities.
Income and mining taxes
During the first quarter of 2006, the Company recorded a provision for
income and mining taxes of $0.6 million on earnings before tax of $9.7
million. During the corresponding period in 2005, the Company recorded a
provision for income and mining taxes of $2.6 million on earnings before tax
of $1.7 million.
Liquidity and Capital Resources
The following table summarizes Kinross' cash flow activity for the three
months ended March 31, 2006 and 2005:
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in US$ millions Three months ended
March 31,
-------------------------
2006 2005
-------------------------------------------------------------------------
Cash flow:
Provided from operating activities $ 20.1 $ 26.8
Used in investing activities (35.1) (38.8)
Provided from financing acitvities 0.2 16.6
Effect of exchange rate changes on cash 1.3 -
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Increase (decrease) in cash and
cash equivalents (13.5) 4.6
Cash and cash equivalents:
Beginning of period 97.6 47.9
-------------------------------------------------------------------------
End of period $ 84.1 $ 52.5
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Operating Activities
Cash flow provided by operating activities was $20.1 million in the first
quarter of 2006, compared with $26.8 million in the corresponding period in
2005. The increase in cash provided by higher revenue was offset by higher
operating costs, other expenses and larger working capital requirements during
the quarter.
Investing Activities
Net cash used in investing activities was $35.1 million in the first
quarter of 2006, versus $38.8 million during the same period in 2005. Cash
used included additions to property, plant and equipment of $34.7 million and
$38.1 million in the first quarters of 2006 and 2005, respectively. The
following table provides a breakdown of capital expenditures:
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in US$ millions Three months ended
March 31,
-------------------------
2006 2005
-------------------------------------------------------------------------
Operating Segments
Fort Knox $ 8.9 $ 10.5
Round Mountain 2.9 1.0
La Coipa 3.0 1.0
Crixas 1.7 1.4
Paracatu 8.4 3.9
Musselwhite 1.1 1.2
Porcupine Joint Venture 4.7 6.1
Refugio 2.3 12.6
Other operations 0.6 0.1
Corporate & other 1.1 0.3
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$ 34.7 $ 38.1
-------------------------------------------------------------------------
Capital expenditures in the first quarter of 2006 included costs related
to accessing the phase six ore zone at Fort Knox, development of the Pamour
pit at the Porcupine Joint Venture and costs at Paracatu related to the mine
and mill expansion.
Financing Activities
Net cash of $0.2 million was provided by financing activities in the
first quarter of 2006, versus $16.6 million in the first quarter of 2005.
Proceeds from the issue of common shares of $0.7 million were partially offset
by a $0.5 million net repayment of debt. Cash provided in the first quarter of
2005 was primarily from the net issuance of debt of $16.1 million, which
related largely to a $15.0 million increase to the LIBOR loan drawn on the
Company's revolving credit facility.
Balance Sheet
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in US$ millions As at:
-------------------------
March 31, December 31,
2006 2005
-------------------------------------------------------------------------
Cash and cash equivalents $ 84.1 $ 97.6
Current assets $ 241.9 $ 241.9
Total assets $ 1,712.2 $ 1,698.1
Current liabilities $ 171.9 $ 177.9
Total debt (includes current portion)(a) $ 173.0 $ 176.1
Total liabilities(b) $ 622.5 $ 622.0
Shareholders' equity $ 1,089.7 $ 1,076.1
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Statistics
Working capital $ 70.0 $ 64.0
Working capital ratio(c) 1.41x 1.36x
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(a) Includes long-term debt plus the current portion thereof and
preferred shares plus current portion of debt.
(b) Includes preferred shares and non-controlling interest.
(c) Current assets divided by current liabilities.
Cash during the quarter decreased by $13.5 million to $84.1 million, with
cash used in investing activities exceeding cash provided from operating and
financing activities. The Company's net working capital increased from
$64.0 million to $70.0 million during the quarter, with increases in
receivables and inventory and a decrease in current liabilities offsetting the
decrease in cash.
Crown update
On April 24, Kinross' amended F-4 registration statement in connection
with the acquisition of Crown Resources was filed with United States
Securities and Exchange Commission ("SEC"). Kinross is awaiting the completion
of the regulatory review to allow Crown to proceed with distributing the
information circular to its shareholders who will vote on the proposed merger.
Annual and special meeting and first quarter results
Kinross will hold its annual and special meeting on May 4, 2006, at
9:00 am EST at the Fairmont Royal York Hotel, Upper Canada Ballroom,
18th Floor, 100 Front Street West, Toronto, Ontario, Canada.
Annual and Special Meeting conference call details
You may listen in to the annual and special meeting and comments on the
first quarter results via conference call or listen and watch the presentation
through our website at www.kinross.com. The call and webcast will begin at
9:00 am EST, May 4, and will be on a listen-only basis.
To access the call, please dial:
Toronto and internationally - 416-644-3428
Toll free in North America - 1-800-814-4861
Replay: (available May 4 to May 18, 2006) Passcode - 21185092 followed by
the number sign
Toronto and internationally - 416-640-1917
Toll free in North America - 1-877-289-8525
The conference call and webcast will be archived on our website at
www.kinross.com. The conference call will be segmented to allow for listens to
either focus in on either the comments on the Annual and Special Meeting or
the discussion regarding the first quarter results.
First quarter Question and Answer session conference call details
Kinross will also hold a question and answer session via conference call
to address questions regarding the 2006 first quarter results at 12 noon EDT.
To access this call, please dial:
Toronto and internationally - 416-644-3428
Toll free in North America - 1-800-814-4861
Replay: (available May 4 to May 18, 2006) Passcode - 21188349 followed by
the number sign
Toronto and internationally - 416-640-1917
Toll free in North America - 1-877-289-8525
About Kinross Gold Corporation
Kinross, a world-class gold company based in Canada, has since 1993
become the fourth largest primary gold producer in North America and the
eighth largest in the world. With nine mines in stable countries including
Canada, the United States, Brazil and Chile, Kinross employs more than 4,000
people worldwide.
Kinross maintains a strong balance sheet and a no gold hedging policy.
Kinross is focused on a strategic objective to maximize net asset value and
cash flow per share through a four-point plan built on growth from core
operations; expanding capacity for the future; attracting and retaining the
best people in the industry; and driving new opportunities through exploration
and acquisition.
Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and
the New York Stock Exchange (symbol:KGC).
Cautionary Statement on Forward Looking Information Certain information
contained or incorporated by reference in this press release, including any
information as to our future financial or operating performance, constitutes
"forward-looking statements". All statements, other than statements of
historical fact, are forward-looking statements. The words "believe",
"expect", "anticipate", "plan", "intends", "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, are
inherently subject to significant business, economic and competitive
uncertainties and contingencies. 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: 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 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 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 press 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, except to the extent required by applicable laws.
The technical information about the Company's material mineral properties
contained in this press release has been prepared under the supervision of
Mr. Wes Hanson an officer of the Company who is a "qualified person" within
the meaning of National Instrument 43-101.
Supplementary information:
Revenue analysis
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First Quarter
-------------------------------------------------------------------------
(in US$ millions, except ounces
and per share amounts) 2006 2005
-------------------------------------------------------------------------
Gold equivalent ounces - sold 371,818 415,768
Gold ounces - sold 356,348 401,114
Silver ounces - sold 882,296 898,454
Average realized gold price ($/ounce) $ 532 $ 429
Gold sales - revenue $ 196.3 $ 172.2
Loss on metal derivative contracts (6.9) (0.3)
Silver sales revenue 8.9 7.9
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Total revenue $ 198.3 $ 179.8
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Reclamation analysis
-------------------------------------------------------------------------
(in US$ millions) Q1 2006 Q1 2005
-------------------------------------------------------------------------
Accretion and reclamation expenses $ 3.0 $ 3.3
Reclamation cash expenditures $ (3.1) $ (5.5)
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2006 Q1 Operating Summary
Gold
Ore equiv. Gold
pro- Reco- pro- equiv.
Mine Ownership cessed(1) Grade very(2) duction sold
--------------------------------------------------------------------------
(000
tonnes) (g/t) (%) (ounces) (ounces)
North America
--------------------------------------------------------------------------
Fort Knox 100% 3,183 0.91 85.3% 79,677 67,608
Round Mountain 50% 12,981 0.58 n/a 85,091 94,067
Porcupine 49% 997 2.17 90.3% 30,132 32,153
Musselwhite 32% 354 4.71 94.3% 16,168 16,860
--------------------------------------------------------------------------
South America
--------------------------------------------------------------------------
Paracatu 100% 4,333 0.39 78.4% 42,900 46,127
La Coipa(3) 50% 1,577 1.19 82.9% 38,627 40,066
Crixas 50% 198 7.96 95.2% 24,121 23,938
Refugio 50% 3,124 0.79 n/a 32,214 31,948
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Other
operations n/a n/a n/a 13,465 15,599
Corporate
and other n/a n/a n/a - 3,452
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Total 362,395 371,818
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Capital
Mine Cost of sales expenditure
--------------------------------------------
($ ($/ ($
millions) ounce) millions)
North America
---------------------------------------------
Fort Knox $ 21.5 $ 318 $ 8.9
Round Mountain 27.6 293 2.9
Porcupine 14.1 439 4.7
Musselwhite 7.2 427 1.1
---------------------------------------------
South America
---------------------------------------------
Paracatu 15.1 327 8.4
La Coipa(3) 11.3 282 3.0
Crixas 4.5 188 1.7
Refugio 10.7 335 2.3
---------------------------------------------
---------------------------------------------
Other
operations 8.6 551 0.6
Corporate
and other 0.9 261 1.1
---------------------------------------------
---------------------------------------------
Total $ 121.5 $ 327 $ 34.7
---------------------------------------------
1. Ore processed are to 100%, production and costs are to Kinross'
account.
2. Due to the nature of heap leach operations recovery rates cannot be
accurately measured on a quarterly basis at Round Mountain and
Refugio.
3. La Coipa silver grade was 58.18 g/t; recovery 52.7%.
Consolidated balance sheets
Unaudited (expressed in millions of U.S. dollars, except share amounts)
-------------------------------------------------------------------------
As at
-------------------------
March 31, December 31,
2006 2005
-------------------------------------------------------------------------
Assets
Current assets
Cash and cash equivalents $ 84.1 $ 97.6
Restricted cash 1.3 1.3
Accounts receivable and other assets 37.1 27.8
Inventories 119.4 115.2
-------------------------
241.9 241.9
Property, plant and equipment 1,073.8 1,064.7
Goodwill 321.2 321.2
Long-term investments 21.3 21.2
Deferred charges and other long-term assets 54.0 49.1
-------------------------
$ 1,712.2 $ 1,698.1
-------------------------
-------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 129.7 $ 132.2
Current portion of long-term debt 9.5 9.4
Current portion of reclamation and
remediation obligations 32.7 36.3
-------------------------
171.9 177.9
Long-term debt 149.2 149.9
Reclamation and remediation obligations 143.1 139.6
Future income and mining taxes 135.5 129.6
Other long-term liabilities 8.3 7.9
Redeemable retractable preferred shares - 2.7
-------------------------
608.0 607.6
-------------------------
Commitments and contingencies
Non-controlling interest 0.2 0.3
-------------------------
Convertible preferred shares of subsidiary
company 14.3 14.1
-------------------------
Common shareholders' equity
Common share capital and common share
purchase warrants 1,782.4 1,777.6
Contributed surplus 52.5 52.6
Accumulated deficit (744.0) (752.9)
Cumulative translation adjustments (1.2) (1.2)
-------------------------
1,089.7 1,076.1
-------------------------
$ 1,712.2 $ 1,698.1
-------------------------
-------------------------
Common shares
Authorized Unlimited Unlimited
Issued and outstanding 346,540,173 345,417,147
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Consolidated statements of operations
Unaudited (expressed in millions of U.S. dollars, except per share and
share amounts)
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Three months ended
March 31,
-------------------------
2006 2005
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Revenue
Metal sales $ 198.3 $ 179.8
Operating costs and expenses
Cost of sales (excludes accretion,
depreciation, depletion and amortization) 121.5 113.1
Accretion and reclamation expense 3.0 3.3
Depreciation, depletion and amortization 29.2 44.3
-------------------------
44.6 19.1
Other operating costs 4.6 3.5
Exploration and business development 7.5 4.9
General and administrative 10.1 10.2
Impairment charges:
Investments and other assets - 0.6
Gain on disposal of assets - (0.1)
-------------------------
Operating earnings 22.4 -
Other (expense) income - net (12.7) 1.7
-------------------------
Earnings before taxes and other items 9.7 1.7
Income and mining taxes expense (0.6) (2.6)
Non-controlling interest - 0.2
Dividends on convertible preferred
shares of subsidiary (0.2) (0.2)
-------------------------
Net earnings (loss) $ 8.9 $ (0.9)
-------------------------
-------------------------
Earnings (loss) per share
Basic $ 0.03 $ -
Diluted $ 0.03 $ -
Weighted average number of common
shares outstanding (millions)
Basic 345.9 345.1
Diluted 346.5 345.1
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Consolidated statements of cash flows
Unaudited (expressed in millions of U.S. dollars)
-------------------------------------------------------------------------
Three months ended
March 31,
-------------------------
2006 2005
Net inflow (outflow) of cash related
to the following activities:
Operating:
Net earnings (loss) $ 8.9 $ (0.9)
Adjustments to reconcile net earnings (loss)
to net cash provided from (used in) operating
activities
Depreciation, depletion and amortization 29.2 44.3
Impairment charges:
Investments and other assets - 0.6
Gain on disposal of assets - (0.1)
Future income and mining taxes (3.7) 0.8
Non-controlling interest - (0.2)
Stock-based compensation expense 1.4 0.8
Unrealized foreign exchange (gains) losses
and other 4.5 (3.2)
Changes in operating assets and liabilities:
Accounts receivable and other assets (9.3) 5.9
Inventories (8.3) (7.2)
Accounts payable and other liabilities (2.6) (14.0)
-------------------------
Cash flow provided from operating activities 20.1 26.8
-------------------------
Investing:
Additions to property, plant and equipment (34.7) (38.1)
Additions to long-term investments and
other assets (0.9) (4.6)
Proceeds from the sale of property,
plant and equipment 0.5 0.4
Disposals of short-term investments - 3.5
-------------------------
Cash flow used in investing activities (35.1) (38.8)
-------------------------
Financing:
Issuance of common shares 0.7 0.5
Proceeds from issuance of debt 4.8 16.4
Repayment of debt (5.3) (0.3)
-------------------------
Cash flow provided from financing activities 0.2 16.6
-------------------------
Effect of exchange rate changes on cash 1.3 -
-------------------------
(Decrease) increase in cash and cash equivalents (13.5) 4.6
Cash and cash equivalents, beginning of year 97.6 47.9
-------------------------
Cash and cash equivalents, end of year $ 84.1 $ 52.5
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%SEDAR: 00002968E
