Kinross Gold Corporation (TSX:K; NYSE:KGC) (“Kinross” or the
“Company”) continues to implement comprehensive and proactive
measures to respond to the COVID-19 pandemic. While the Company
cannot predict the future impact of the pandemic on its global
operations, all Kinross mines continue to operate and have not been
materially impacted to date (see Appendix A).
The Company has taken preventative actions and
put contingency plans in place at all sites that prioritize and
protect the health and safety of employees, their families and host
communities. In late January 2020, the Company created a
cross-functional COVID-19 Task Force to initiate planning and
preparation, following the advice of health authorities and expert
medical and travel advisers. Since then, numerous initiatives have
been implemented in response to the pandemic. These include:
- rigorous and extensive social distancing practices;
- remote working where possible;
- increased medical preparedness;
- banning non-essential business travel;
- continuous promotion of hygienic practices recommended by
health authorities;
- increased cleaning and disinfection, and;
- increased support to employees and communities.
Kinross continues to also work closely with host
governments and local health authorities to ensure proper protocols
are followed during the ongoing crisis.
Business continuity plans have been prepared and
implemented for each site to mitigate operational and supply chain
risk. To help mitigate operational risks, the Company has
implemented screening, isolation and quarantine procedures for all
employees arriving at Kinross’ remote camp-based sites, adjusted
rotation schedules and is limiting site access, among other
measures. In the supply chain area, mitigation measures include
initiating a process to increase stocks of key consumables to at
least three months on hand, ordering additional critical spares,
assessing potential disruptions, and identifying alternative
sources of supply.
Kinross continues to maintain a strong financial
position and liquidity. As a precautionary measure to protect
against economic and business uncertainties caused by the pandemic
and subsequent government actions, Kinross drew down $750 million
from its $1.5 billion revolving credit facility on March 20, 2020.
The Company does not currently plan to deploy the funds given its
strong financial position. As of March 31, 2020, Kinross has more
than $1 billion in cash and cash equivalents, reflecting cash flow
from operations in Q1 2020 offset by payments related to the
Chulbatkan acquisition, a tax payment in Brazil, a semi-annual
interest payment for Kinross’ senior notes, and repayment of the
amount drawn on the credit facility at December 31, 2019.
As previously planned, Kinross has submitted a
drawdown notice for $200 million on the $300 million Tasiast
project financing facility. The first funds are expected in
mid-April 2020. The financing, which was signed on December 16,
2019, is an asset recourse loan with the IFC (a member of the World
Bank Group), Export Development Canada, ING Bank and Société
Générale.
At this time, the Company has total debt of
approximately $2.5 billion, and net debt1 of less than $1.5
billion. The Company has no debt maturities until September 2021.
Despite the Company’s strong financial position, Kinross continues
to plan for the potential impact of a wide range of outcomes on its
financial position and balance sheet, including reviewing
discretionary capital expenditures.
Kinross has also continued to assess the
potential impacts of the pandemic on its 2020 production and cost
guidance. While the crisis has had no material impacts on the
Company’s operations to date, Kinross has decided to withdraw its
full-year 2020 guidance. The Company believes this is the prudent
approach given the pandemic’s significant impact on the world
economy, the implications of government-mandated constraints on
financial, commercial and business activities, and the potential
for further business disruptions and global health impacts.
Favourable fuel prices and foreign exchange rates are expected to
provide offsets to some of the incremental costs resulting from
Kinross’ contingency measures. The Company will continue to target
the safe delivery of its operating plans, notwithstanding the
potential impacts of the global crisis.
For the first quarter of 2020, the Company
expects gold sales to be slightly lower than production due to the
impacts of the global crisis on timing of sales and metal
shipments. Kinross is actively managing its metal shipments to
mitigate impacts of the suspension, or risk of suspension, of
operations at several refineries. Alternate transportation channels
have been secured and further contingency plans are being prepared.
Kinross’ preliminary Q1 2020 production, which has been impacted in
part by crisis-related contingency measures, is expected to be
approximately 560,000 Au eq. oz., with sales of approximately
540,000 Au eq. oz. Preliminary cost of sales per ounce sold
for Q1 2020 is expected to be at the higher end of the original
annual guidance range.
“During these challenging times, I would like to
thank all our employees around the world who have stepped up and
worked long hours under difficult circumstances to keep our people
safe and our sites operating. I would also like to thank our host
governments, including Mauritania and Russia, for supporting our
Company as we work to manage and respond to this
unprecedented global crisis,” said J. Paul Rollinson, President and
CEO. “We are continuously looking at implementing more
precautionary and mitigation measures across our Company to protect
our employees, their families and our host communities. We are also
focused on ensuring our business continuity plans are sound, and
that we are as prepared as possible in this rapidly evolving
crisis.”
President and CEO J. Paul Rollinson will today
participate in a fireside chat with Greg Barnes, Managing Director,
Head of Mining Research at TD Securities Inc., to discuss Kinross’
global response to the COVID-19 crisis. The link to the fireside
chat will be available at 3 p.m. ET today in the Events and
COVID-19 sections at www.kinross.com.
For more information on the Company’s COVID-19 response, visit:
https://www.kinross.com/news-and-investors/covid-19/
About Kinross Gold
Corporation
Kinross is a Canadian-based senior gold mining
company with mines and projects in the United States, Brazil,
Chile, Ghana, Mauritania, and Russia. Kinross maintains listings on
the Toronto Stock Exchange (symbol:K) and the New York Stock
Exchange (symbol:KGC).
Media Contact Louie DiazSenior
Director, Corporate Communicationsphone:
416-369-6469louie.diaz@kinross.com
Investor Relations ContactTom
Elliott
Senior Vice-President, Investor Relations and Corporate Development
phone:
416-365-3390
tom.elliott@kinross.com
Appendix A: Kinross operations and
projects (As of March 31,
2020)
Operation |
Location |
Status |
|
Government decree |
Round Mountain |
Nevada, U.S.A. |
Operating |
|
Mining considered essential as part of State of Nevada regulations
issued on March 20, 2020. |
Bald Mountain |
Nevada, U.S.A. |
Operating |
|
Mining considered essential as part of State of Nevada regulations
issued on March 20, 2020. |
Fort Knox |
Alaska, U.S.A. |
Operating |
|
Mining considered essential as part of State of Alaska declaration
on March 27, 2020. |
Paracatu |
Minas Gerais, Brazil |
Operating |
|
Brazil's Ministry of Mines and Energy has declared mining
essential. |
Tasiast |
Mauritania |
Operating |
|
Government of Mauritania and the Company have discussed their
common desire to ensure the continuation of operations. Tasiast
exempted on a case-by-case basis from government limits on domestic
people movement. |
Kupol - Dvoinoye |
Chukotka, Russia |
Operating |
|
Mines not required to close as part of five day national work
stoppage (commenced March 26, 2020). |
Chirano |
Ghana |
Operating |
|
Mining employees excluded in new act passed by Government of Ghana
on March 20, 2020 that gives power to limit movement of people in
times of disaster. |
Project |
Location |
Status |
|
Government decree |
Fort Knox Gilmore |
Alaska, U.S.A. |
Ongoing |
|
Mining considered essential as part of State of Alaska declaration
on March 27, 2020. |
Tasiast 24k |
Mauritania |
Ongoing |
|
Government of Mauritania and the Company have discussed their
common desire to ensure the continuation of operations. Tasiast
exempted on a case-by-case basis from government limits on domestic
people movement. |
Chulbatkan |
Khabarovsk, Russia |
Ongoing |
|
Mines not required to close as part of five day national work
stoppage (commenced March 26, 2020). |
La Coipa Restart |
Atacama region, Chile |
Ongoing |
|
Mining projects not required to halt as part of Government of
Chile’s declaration on March 22, 2020. |
Cautionary statement on forward-looking
information
All statements, other than statements of
historical fact, contained or incorporated by reference in this
news release including, but not limited to, any information as to
the future financial or operating performance of Kinross,
constitute “forward-looking information” or “forward-looking
statements” within the meaning of certain securities laws,
including the provisions of the Securities Act (Ontario) and the
provisions for “safe harbor” under the United States Private
Securities Litigation Reform Act of 1995 and are based on
expectations, estimates and projections as of the date of this news
release. The words “continue”, “estimate”, “expect”, “goal”,
“guidance”, “initiate”, “mitigate”, “plan”, “potential”, “target”
or variations of or similar such words and phrases or statements
that certain actions, events or results may, could, should or will
be achieved, received or taken, or will occur or result and similar
such expressions identify forward-looking statements.
Forward-looking statements are necessarily based upon a number of
estimates and assumptions that, while considered reasonable by
Kinross as of the date of such statements, are inherently subject
to significant business, economic and competitive uncertainties and
contingencies. The estimates and assumptions of Kinross referenced,
contained or incorporated by reference in this news release, which
may prove to be incorrect, include, but are not limited to,
guidance for production, production costs of sales forecasts for
the Company meeting expectations; the continued operation of the
Company’s mines; the Company’s financial position; the availability
of the Company’s Tasiast project financing; as well as the various
assumptions set forth herein and in our Management’s Discussion and
Analysis (“MD&A”) for the year ended December 31, 2019, and the
Annual Information Form dated March 30, 2020. 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: operational or financial impacts resulting
from the COVID-19 outbreak, the Company’s financial position; the
availability of the Company’s Tasiast project financing;
fluctuations in the spot and forward price of gold or certain other
commodities (such as fuel and electricity) and in currency exchange
rates; the effectiveness of preventative actions and contingency
plans put in place by the Company to respond to the COVID-19
pandemic, including, but not limited to, social distancing, a
non-essential travel ban, business continuity plans, and efforts to
mitigate supply chain disruptions; changes in national and local
government legislation or other government actions, particularly in
response to the COVID-19 outbreak; escalation of travel
restrictions on people or products; adverse changes in our credit
ratings or access to credit and capital markets; and reductions in
the ability of the Company to transport and refine doré. There can
be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of
providing information about management’s expectations and plans
relating to the future. All of the forward-looking statements made
in this news release are qualified by this cautionary statement and
those made in our other filings with the securities regulators of
Canada and the United States including, but not limited to, the
cautionary statements made in the “Risk Analysis” section of our
MD&A for the year ended December 31, 2019 and the Annual
Information Form dated March 30, 2020. These factors are not
intended to represent a complete list of the factors that could
affect Kinross. Kinross disclaims any intention or obligation to
update or revise any forward-looking statements or to explain any
material difference between subsequent actual events and such
forward-looking statements, except to the extent required by
applicable law.
Other information
Where we say “we”, “us”, “our”, the “Company”,
or “Kinross” in this news release, we mean Kinross Gold Corporation
and/or one or more or all of its subsidiaries, as may be
applicable.
Source: Kinross Gold Corporation
1 Net debt is a non-GAAP financial measure defined as “Long-term
debt and credit facilities” less “Cash and cash equivalents.”
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