Status update on regulatory filings
TORONTO, Feb. 15 /CNW/ - Kinross Gold Corporation (TSX-K; NYSE-KGC)
("Kinross" or the "Company"), the third largest primary gold producer in North
America, announced today its unaudited results for the nine months ended
September 30, 2005. As previously committed this week, Kinross has also
completed filing its restated financial statements for 2003 and 2004 and the
respective interim periods.
Kinross has previously discussed operating results in its press release
dated November 21, 2005.
(All dollar amounts in this press release are expressed in U.S. dollars,
unless otherwise noted)
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2005 nine-month summary (to September 30, 2005)
- Production on plan with 1.23 million ounces at a total cash cost(1) of
approximately $272 per ounce;
- Revenues rose 10% to $535.5 million and cash flow from operating
activities increased 6% to $109.9 million compared to the same period
last year;
- The Company reported a net loss of $(61.7) million or $(0.18) per
share, including a non-cash foreign currency impact on future tax
liabilities totaling $22.9 million and a write-down of the Aquarius
property of $36.8 million;
- Kinross increased proven and probable reserve estimates at its
Paracatu mine by 4.8 million ounces;
- Kinross had a cash position of $81.6 million and $42 million available
on its revolving credit facility.
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"This is an exceptional time for Kinross. We're now in a position to
fully capitalize on a historic point in the gold market and for our Company,"
said Tye Burt, President and Chief Executive Officer of Kinross Gold
Corporation. "I am pleased that we have turned the page on merger accounting
matters and resolved the questions related to the 2003 acquisitions. We will
be up to date in our financial reporting with the release of the restated
financial statements and our results for the first three quarters of 2005,"
said Burt. "Moving forward, our strategic objective is to maximize net asset
value and cash flow per share. To do that, we are executing a four-point plan:
(1) growth from core operations; (2) expanding our capacity for the future;
(3) attracting and retaining the best people in the industry; and (4) driving
new opportunities from exploration and acquisitions. For example, our
exploration team had great success by increasing reserves at Paracatu by an
additional 4.8 million ounces to 13.3 million ounces, making it a truly world-
class ore body."
------------------------
(1) Total cash costs per equivalent ounce of gold is a non-GAAP measure.
Please see the disclosure following the Forward Looking Statements
section at the end of this release
For the nine months ended September 30, 2005, the Company reported a net
loss of $(61.7) million or $(0.18) per share, compared to restated net
earnings of $24.9 million or $0.07 per share for the same period in 2004. The
nine-month period ended September 30, 2005 includes a non-cash foreign
currency impact on future tax liabilities totaling $22.9 million or $0.07 per
share and a write-down of the Aquarius property of $36.8 million or $0.11 per
share. The nine-month period ended September 30, 2004 has been restated to
account for the correction of a non-cash foreign currency impact on future tax
liabilities, which had a negative impact to earnings of $1.0 million.
The Company's share of gold equivalent ounces sold for the first nine
months of 2005 was similar to the corresponding period of 2004. Increased
attributable production at Paracatu, Fort Knox, Kubaka, Musselwhite, Crixas
and Refugio was offset by lower production resulting from the shutdown of New
Britannia and Lupin and lower production from La Coipa, Round Mountain and
Kettle River.
For the nine months ended September 30, 2005, Kinross revenues rose 10%
to $535.5 million from $487.6 million in the first nine months of 2004. The
higher revenue was primarily due to the higher number of gold equivalent
ounces sold and a higher realized gold price. The Company sold 1.2 million
ounces of gold at a realized price of $430 per ounce, while the average spot
gold price was $432 per ounce.
The cost of sales increase in 2005 was due to the inclusion of 100% of
Paracatu (up from 49% in 2004) and higher costs across the Company's operating
mines with the exception of Fort Knox. The higher operating costs are mainly a
result of the stronger Brazilian, Chilean and Canadian currencies against the
U.S. dollars and higher prices for energy, fuel and other supplies.
General and administrative expenses for the nine months ended September
30, 2005, were $33.8 million, $11.8 million higher than 2004. This increase
was largely as a result of the increased professional fees, due to the review
of the accounting for the acquisition of TVX and Echo Bay, severance expenses,
and the strength of the Canadian dollar.
For the nine months ended September 30, 2005, cash flow from operating
activities increased 6% to $109.9 million in 2005 compared to $103.3 million
in the same period of 2004. The increase in cash flow is primarily as a result
of the higher realized gold price. During the nine-month period ending
September 30, 2005, cash increased by $33.7 million to $81.6 million.
<<
Key financial and operating highlights
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(in millions of U.S.
dollars, except per
share amounts) Three months ended Nine months ended
(Unaudited, Canadian GAAP) September 30, September 30,
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2005 2004 2005 2004
-----------------------------------------------
Production (ounces of
gold equivalent) 406,195 412,196 1,230,272 1,229,300
Metal sales $ 181.1 $ 174.6 $ 535.5 $ 487.6
Cost of sales $ 113.1 $ 107.8 $ 337.2 $ 298.2
Impairment charges $ 36.9 $ - $ 37.5 $ -
Net earnings (loss) $ (44.4) $ 5.5 $ (61.7) $ 24.9
Net earnings (loss) per
share - basic $ (0.13) $ 0.02 $ (0.18) $ 0.07
Weighted average common
shares outstanding
- basic 345.3 346.2 345.2 346.0
Cash flow provided from
operating activities $ 49.8 $ 62.9 $ 109.9 $ 103.3
Capital expenditures $ 32.8 $ 46.8 $ 109.5 $ 107.0
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2005 full year outlook
The Company achieved its target for full year production of 1.6 million
gold equivalent ounces and expects total cash costs(1) of approximately $275 -
$280 per ounce. Cash flow from operating activities remains strong, and will
continue to be used to fund capital expenditures for the Company's growth
projects. Capital expenditures for 2005 were approximately $165 million.
Sale of non-core assets
As previously disclosed, Kinross has agreed to sell the Aquarius property
near Timmins, Ontario, to St Andrew Goldfields in return for an approximate
14 per cent ownership stake in the company. The Aquarius property is located
seven kilometers from St Andrew's Stock Gold Complex near Timmins. St Andrew
will hold the largest land position in the prolific Timmins gold camp. This
transaction results in a write-down of $36.8 million in the third quarter of
2005. Though the agreement with St Andrew was signed in the fourth quarter of
2005, the Company made the decision to sell the property in the third quarter
resulting in a write-down of its book value to the sale price.
As previously disclosed, Kinross sold part of its holding in Kinross
Forrest Ltd. during the third quarter. In the fourth quarter of 2005, Kinross
sold its Norseman property for $1.7 million. Kinross also sold its positions
in Cumberland Resources Ltd. and other equity holdings.
Other developments
Kinross maintains a no-hedging policy on gold revenues, however, the
Company does, from time to time, generate premiums through the sale of call
positions and sells gold forward for cash management purposes. The Company
limits these positions in both size and duration. At September 30, 2005, the
Company had spot deferred contracts to deliver 125,000 ounces of gold in the
fourth quarter of 2005, having a mark-to-market loss of $1.7 million based on
the spot price of gold of $473 as at that date.
As at September 30, 2005, the Company had sold call options on
100,000 ounces of gold. Mark-to-market loss on the call options sold totaled
$0.8 million for the nine months ended September 30, 2005. This amount was
recorded in third quarter earnings. At December 31, 2005, the Company had sold
255,000 ounces of call options at an average strike price of $522 per ounce.
This position has been reduced to 100,000 ounces of call options sold and is
not expected to exceed that level in the future. Kinross' no-hedging policy on
gold remains in effect.
2006 outlook
Kinross plans to produce 1.44 million ounces in 2006 at total cash
costs(1) of approximately $285 - $295 per ounce. Capital spending is expected
to be $285 million, $115 million for sustaining capital and $170 million in
capital expansions, primarily at Paracatu, Kettle River, Fort Knox and Round
Mountain.
"2006 represents the transition year in our operational profile," said
Burt. "We have closed non-core operations. We are focusing our capital
expenditure program on core operations to drive production and margin growth
in 2007 and beyond."
Planned exploration spending will increase in 2006 by approximately
30 per cent to $26.3 million. Exploration will focus on Kinross' core assets
with a goal of replacing reserves at existing locations and adding new
projects and investment opportunities.
Status update regarding regulatory filings
This press release serves as a status up-date pursuant to the alternative
information guidelines (the "Alternative Information Guidelines") of the
Ontario Securities Commission ("OSC") Policy 57-603 and Canadian Securities
Administrators Staff Notice 57-301. Kinross filed its restated financial
statements for the years ended December 31, 2003 and 2004 and the
corresponding management's discussion and analysis ("MD&As") on February 15,
2006. The statements, along with their respective MD&As will be accessible on
its website, www.kinross.com, or from SEDAR (www.sedar.com) or Edgar
(www.sec.gov).
Kinross will file within the next two days its Annual Information Form
for the year ended December 31, 2004 (and corresponding Form 40-F in the
United States) and its quarterly financial statements and MD&As for the first
three quarters of the year 2005. Once these filings are completed, Kinross
will be current with its regulatory filings and therefore, the management
cease trade order issued by the OSC on April 14, 2005 and the similar order
subsequently issued by the Nova Scotia Securities Commission prohibiting
certain directors, officers and insiders of Kinross from trading securities of
Kinross will be lifted two full business days after the date of filing. In
addition, Kinross advises that after the completion of these filings, it will
cease reporting pursuant to the Alternative Information Guidelines.
Conference call details
Kinross will host a conference call on February 16, 2006 at
2 p.m. EST / 11 a.m. PST to discuss the third quarter results announcement
followed by a question and answer session.
To access the call, please dial:
Toronto and internationally - 416-644-3414
Toll free in North America - 1-800-814-4860
Replay: (available Feb. 16 - Mar. 2, 2006)
Passcode - 21177379 followed by the number sign.
Toronto and internationally - 416-640-1917
Toll free in North America - 1-877-289-8525
The conference call will also be available on a listen-only basis via
webcast. The webcast can be accessed and will be archived at www.kinross.com.
About Kinross Gold Corporation
Kinross Gold, a world-class gold company based in Canada, has since 1993
become the third largest primary gold producer in North America and the
seventh 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. In 2006, Kinross is expected to produce 1.44 million ounces
of gold equivalent at total cash costs(1) of approximately $285 - $295 per
ounce.
Kinross enjoys manageable levels of debt and a no-hedging policy
maximizing cash flow, revenues and profit margins per ounce of gold. By
expanding existing operations, increasing exploration spending and seeking
prudent acquisitions, Kinross is generating shareholder value and growth.
Kinross' financial results for the first, second and third quarter of
2005 will be available at www.kinross.com upon filing.
Kinross maintains listings on the New York Stock Exchange (symbol:KGC)
and on the Toronto Stock Exchange (symbol:K).
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Forward Looking Statements
This press release includes certain "Forward-Looking Statements" within
the meaning of section 21E of the United States Securities Exchange Act
of 1934, as amended. All statements, other than statements of historical
fact, included herein, including without limitation, statements regarding
potential mineralization and reserves, expected production and
exploration results, expected costs and expenditures and future plans and
objectives of Kinross Gold Corporation, are forward-looking statements
that involve various risks and uncertainties. There can be no assurance
that such statements will prove to be accurate and actual results and
future events could differ materially from those anticipated in such
statements. Important factors that could cause actual results to differ
materially from Kinross' expectations are disclosed under the heading
"Risk Factors" and elsewhere in Kinross' documents filed from time to
time with the Toronto Stock Exchange, the United States Securities and
Exchange Commission and other regulatory authorities.
Total cash costs per equivalent ounce of gold is calculated in accordance
with The Gold Institute Production Cost Standard (the "Standard").
Adoption of the Standard is voluntary, but is used in order to give the
reader comparative data to our peers. Total cash costs per equivalent
ounce of gold has no standardized meaning under generally accepted
accounting principles and therefore may not be comparable to similar
measures presented by other issuers. Total cash costs per equivalent
ounce of gold is furnished to provide additional information and is a
non-GAAP measure. This measure should not be considered in isolation as a
substitute for measures of performance prepared in accordance with
generally accepted accounting principles and is not necessarily
indicative of operating expenses as determined under generally accepted
accounting principles. This measure is intended to provide investors with
information about the cash generating capabilities (realized revenue, net
of total cash costs per ounce) of the mining operations. The Company uses
this information for the same purpose and for assessing the performance
of its mining operations. Mining operations are capital intensive. The
measure total cash costs excludes capital expenditures but is reconciled
below to total operating costs for each mine. Capital expenditures
require the use of cash in the current period, and in prior periods and
are discussed in the Company's filings.
The technical information about the Company's material mineral properties
contained in this press release has been prepared under the supervision
of Mr. Rod Cooper, an officer of the Company, who is a "qualified person"
within the meaning of National Instrument 43-101.
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Revenue Analysis
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(in millions, except per
ounce amounts) Three months ended Nine months ended
(Unaudited, Canadian GAAP) September 30, September 30,
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2005 2004 2005 2004
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Gold equivalent production
- ounces 406,195 412,196 1,230,272 1,229,300
Gold sales - ounces 399,372 425,443 1,200,377 1,191,306
Gold sales - revenue $ 177.6 $ 171.3 $ 520.7 $ 479.8
Gold deferred revenue
(expense) realized (1.8) (3.8) (4.6) (10.1)
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Total gold revenue
realized $ 175.8 $ 167.5 $ 516.1 $ 469.7
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Average sales price per
ounce of gold $ 445 $ 403 $ 434 $ 402
Deferred revenue realized
per ounce of gold (5) (9) (4) (9)
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Average realized price per
ounce of gold sold $ 440 $ 394 $ 430 $ 393
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Average spot gold price
per ounce $ 440 $ 401 $ 432 $ 401
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Silver sales revenue $ 5.3 $ 7.1 $ 19.4 $ 17.9
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Total metal sales $ 181.1 $ 174.6 $ 535.5 $ 487.6
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The following table reconciles cost of sales per consolidated financial
statements to total cash costs(1) per equivalent ounce of gold presented
above.
Total Cash Cost(1) Reconciliation
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(millions except Three months ended Nine months ended
production September 30, September 30,
in ounces and per -----------------------------------------------
ounce amounts) 2005 2004 2005 2004
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Cost of sales per
financial statements $ 113.1 $ 107.8 $ 337.2 $ 298.2
Change in bullion
inventory 0.5 (8.4) 3.4 (0.5)
Operating costs not
related to gold
production (0.7) (0.7) (6.1) (3.1)
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Total cash costs for per
ounce calculation
purposes $ 112.9 $ 98.7 $ 334.5 $ 294.6
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Gold equivalent
production - ounces 406,192 412,196 1,230,272 1,229,300
Total cash costs per
equivalent ounce of gold $ 278 $ 239 $ 272 $ 240
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2005 Quarterly Operating and Financial Summary
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Three months ended
-------------------------------------
March 31, June 30, September 30,
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(in millions except ounces
and per share amounts) 2005 2005 2005
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Gold equivalent ounces -
produced(a) 410,480 413,597 406,195
Average realized gold price
($/ounce) $ 429 $ 421 $ 440
Metal sales $ 179.8 $ 174.6 $ 181.1
Net earnings (loss) $ (0.9) $ (16.4) $ (44.4)
Basic and diluted earnings
(loss) per share $ - $ (0.05) $ (0.13)
Cash flow from operating
activities $ 26.8 $ 30.6 $ 52.5
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Consolidated balance sheets
(expressed in millions of U.S. dollars) (unaudited)
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As at
-----------------------
September December
30, 2005 31, 2004
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Assets Restated
Current assets
Cash and cash equivalents $ 81.6 $ 47.9
Restricted cash 1.3 1.4
Short-term investments 2.6 5.7
Accounts receivable and other assets 28.1 40.9
Inventories 120.4 111.0
-----------------------
234.0 206.9
Property, plant and equipment 1,191.3 1,244.1
Goodwill 323.2 329.9
Long-term investments 33.1 25.7
Deferred charges and other long-term assets 40.0 27.6
-----------------------
$ 1,821.6 $ 1,834.2
-----------------------
-----------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 142.8 $ 143.2
Current portion of long-term debt 5.7 6.0
Current portion of reclamation and remediation
obligations 10.8 23.6
-----------------------
159.3 172.8
Long-term debt 151.7 116.9
Reclamation and remediation obligations 111.3 108.1
Future income and mining taxes 141.5 123.5
Other long-term liabilities 11.7 9.5
Redeemable retractable preferred shares 2.7 2.6
-----------------------
578.2 533.4
-----------------------
Commitments and Contingencies
-----------------------
Non-controlling interest 0.2 0.4
-----------------------
Convertible preferred shares of subsidiary
company 13.9 13.3
-----------------------
Common shareholders' equity
Common share capital and common share purchase
warrants 1,777.1 1,775.8
Contributed surplus 36.5 33.9
Accumulated deficit (583.1) (521.4)
Cumulative translation adjustments (1.2) (1.2)
-----------------------
1,229.3 1,287.1
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$ 1,821.6 $ 1,834.2
-----------------------
-----------------------
Total issued and outstanding common
shares (millions) 345.4 345.1
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Consolidated statements of operations
(expressed in millions of U.S. dollars, except per share amounts)
(unaudited)
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Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2005 2004 2005 2004
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Restated Restated
Revenue and other operating income
Metal sales $ 181.1 $ 174.6 $ 535.5 $ 487.6
Operating costs and expenses
Cost of sales (excluding items
shown below) 113.1 107.8 337.2 298.2
Accretion 3.1 2.2 9.0 6.6
Depreciation, depletion
and amortization 41.3 45.5 130.2 127.2
------------------- -------------------
23.6 19.1 59.1 55.6
Other operating costs 0.7 3.0 5.1 6.9
Exploration and business
development 7.3 5.7 18.6 14.6
General and administrative 12.9 6.6 33.8 22.0
Impairment charges:
Goodwill 6.7 - 6.7 -
Plant, property and equipment 30.1 - 30.1 -
Investments 0.1 - 0.7 -
Gain on disposal of assets (0.1) (0.7) (1.1) (1.4)
------------------- -------------------
Operating earnings (loss) (34.1) 4.5 (34.8) 13.5
Other income (expense) - net (9.5) (6.9) (22.4) 4.0
------------------- -------------------
Earnings (loss) before taxes
and other items (43.6) (2.4) (57.2) 17.5
Income and mining taxes
recovery (expense) (0.5) 8.0 (4.0) 8.0
Non-controlling interest (0.1) 0.1 0.1 -
Dividends on convertible
preferred shares of subsidiary (0.2) (0.2) (0.6) (0.6)
------------------- -------------------
Net earnings (loss) $ (44.4) $ 5.5 $ (61.7) $ 24.9
------------------- -------------------
------------------- -------------------
Earnings (loss) per share
Basic $ (0.13) $ 0.02 $ (0.18) $ 0.07
Diluted $ (0.13) $ 0.02 $ (0.18) $ 0.07
Weighted average number of
common shares outstanding
(millions)
Basic 345.3 346.2 345.2 346.0
Diluted 345.3 346.5 345.2 346.4
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Consolidated statements of cash flows
(expressed in millions of U.S. dollars)
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Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
------------------- -------------------
Restated Restated
Operating activities:
Net earnings (loss) $ (44.4) $ 5.5 $ (61.7) $ 24.9
Adjustments to reconcile net
earnings (loss) to net cash from
(used in) operating activities:
Depreciation, depletion and
amortization 41.3 45.5 130.2 127.2
Impairment charges:
Goodwill 6.7 - 6.7 -
Plant, property and equipment 30.1 - 30.1 -
Investments 0.1 - 0.7 -
Gain on disposal of assets (0.1) (0.7) (1.1) (1.4)
Future income and mining taxes (3.4) (11.7) (4.9) (18.8)
Deferred revenue recognized - 2.9 - 1.8
Non-controlling interest 0.1 - (0.1) -
Stock option expense 1.6 0.4 3.2 1.3
Unrealized foreign exchange
(gains) losses and other 10.8 4.0 20.1 (4.5)
Changes in operating assets
and liabilities:
Accounts receivable and
other assets 1.5 2.6 9.1 4.0
Inventories (2.9) 12.2 (14.0) (12.3)
Accounts payable and accrued
liabilities 11.1 2.2 (8.4) (18.9)
------------------- -------------------
Cash flow provided from operating
activities 52.5 62.9 109.9 103.3
------------------- -------------------
Investing:
Additions to property, plant and
equipment (32.8) (46.8) (109.5) (107.0)
(Additions) proceeds on sale of
marketable securities 0.5 10.9 0.6 0.7
(Additions) proceeds from
long-term investments and other
assets 3.8 (3.5) (14.4) (16.9)
Proceeds from the sale of
property, plant and equipment 2.4 0.2 6.3 1.0
(Additions) proceeds from
short-term investments (1.7) (5.3) 4.7 (5.3)
Decrease (increase) in
restricted cash 0.2 (0.1) 0.1 3.7
------------------- -------------------
Cash flow used in investing
activities (27.6) (44.6) (112.2) (123.8)
------------------- -------------------
Financing:
Issuance of common shares 0.4 0.6 1.5 3.6
Proceeds from issue of debt - 1.2 35.8 5.6
Repayment of debt (0.4) (0.3) (1.3) (26.3)
------------------- -------------------
Cash flow provided from (used in)
financing activities - 1.5 36.0 (17.1)
------------------- -------------------
Effect of exchange rate changes
on cash - 1.1 - 0.4
------------------- -------------------
(Decrease) increase in cash and
cash equivalents 24.9 20.9 33.7 (37.2)
Cash and cash equivalents,
beginning of period 56.7 187.7 47.9 245.8
------------------- -------------------
Cash and cash equivalents,
end of period 81.6 208.6 81.6 208.6
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%SEDAR: 00002968E
