Operational Excellence.
Financial Discipline.
Annual Report
2015
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KINROSS GOLD CORPORATION
25 York Street, 17th Floor
Toronto, Ontario, Canada
M5J 2V5
TSX: K
Toronto Stock
Exchange
NYSE: KGC
New York
Stock Exchange
Kinross is a global gold mining
company with exceptional and
consistent operating results driven
by a high performance culture. With
ten mines in three core regions, our
focus is delivering value based on
the core principles of operational
excellence, balance sheet strength
and responsible mining.
Our Operations
Dvoinoye
Kupol
Fort Knox
Kettle River-Buckhorn
Bald Mountain
Toronto
Round Mountain
Tasiast
Chirano
Paracatu
Maricunga
1
Letter to Shareholders
2015 Achievements
4
Corporate Governance Highlights 6
6
Directors + Senior Leadership
7
Financial Summary
Financial Review
7
Cautionary Statement on
Forward-Looking Information
74
CORPORATE INFORMATION
Shareholder Information
Contact Information
Publications
Transfer Agent and Registrar
General
Kinross Gold Corporation
25 York Street, 17th Floor
Toronto, Ontario,
Canada M5J 2V5
Website: Kinross.com
Telephone: 416-365-5123
Toll-free: 1-866-561-3636
Facsimile: 416-363-6622
Email: info@kinross.com
Investor Relations
Tom Elliott, Senior Vice-President,
Investor Relations and
Corporate Development
Telephone: 416-365-3390
Email: tom.elliott@kinross.com
Media Relations
Louie Diaz, Director,
Corporate Communications
Telephone: 416-369-6469
Email: louie.diaz@kinross.com
Shareholder Inquiries
Computershare
Investor Services Inc.
9th Floor,
100 University Avenue
Toronto, Ontario,
Canada M5J 2Y1
www.computershare.com/kinross
Toll-free: 1-800-564-6253
Toll-free facsimile: 1-888-453-0330
Computershare
Investor Services Inc.
Toronto, Ontario, Canada
Toll-free: 1-800-564-6253
Proxy Solicitation Agent
Kingsdale Shareholder Services
Toronto, Ontario, Canada
Annual Shareholders Meeting
Wednesday, May 11, 2016 at
10:00 a.m. EDT at the Glenn Gould
Studio, 250 Front Street West,
Toronto, Ontario, Canada
Trading Data
TSX
K – common
NYSE
KGC – common
Legal Counsel
Osler, Hoskin & Harcourt LLP
Toronto, Ontario, Canada
Sullivan & Cromwell LLP
New York, New York,
United States
Auditors
KPMG LLP
Toronto, Ontario, Canada
@KinrossGold
To obtain copies of Kinross’
publications, please visit our corporate
website at Kinross.com, or contact us
by email at info@kinross.com or call
1-866-561-3636.
Operational Excellence.
Financial Discipline.
Annual Report
2015
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Corporate Responsibility Report
Kinross publishes its corporate
responsibility performance data
annually and a comprehensive Global
Reporting Initiative (GRI) report every
two years. In 2016, we will be publishing
our 2015 Corporate Responsibility
Report online. This report will provide
a detailed account of our social,
environmental, and health and safety
performance for 2014 and 2015.
Corporate
Responsibility Report
2015
All figures in U.S. dollars and from continuing operations.
Endnotes can be found on page 77 of this report.
designed and produced by smith + associates
www.smithandassoc.com
Please recycle.
To Our Shareholders
Kinross delivered on a number of key fronts in 2015, responding strongly
to the challenge of weaker gold markets during the year, while building a
clear path to future value in 2016 and beyond.
We met our production and cost guidance for the fourth consecutive year,
improving performance at our key mines through continuous improvement,
minimizing the production impact of weather-related challenges at two sites, and
reducing costs and capital expenditures across the Company. Despite lower gold
prices, we generated positive cash flow and reduced debt while prioritizing balance
sheet strength and financial flexibility. At the same time, we delivered disciplined
growth, opportunistically acquiring assets in Nevada – one of the world’s best
mining jurisdictions – which are expected to add new production, increase cash
flow, and provide significant upside. We also continued to advance our internal
high-quality opportunities for growth within a manageable capital framework.
As a result, we entered 2016 forecasting a year of record production and
lower costs, with the financial strength to weather an uncertain gold market and
pursue additional value-enhancing growth opportunities such as the Phase One
Tasiast expansion.
Record production and lower costs forecast in 2016
We expect to improve on our excellent performance in 2015 with an even
stronger year in 2016.
With the addition of new ounces from our Nevada acquisition, we forecast 1 record
production of 2.7 to 2.9 million gold equivalent ounces, with production from the
Americas region increasing by 7% to represent approximately 61% of our total.
J. Paul Rollinson
President and
Chief Executive Officer
4
consecutive
years
of meeting
or outperforming
guidance targets
2015 Highlights
§ Remained among world’s safest mining
§ Acquired high-quality producing Nevada
companies with record safety performance
§ Produced 2.6 million gold equivalent ounces
(Au eq. oz.), at the high end of our guidance range,
at an all-in sustaining cost (AISC) of $975 per
ounce, at the low end of our guidance range
§ Lowest production cost of sales in four years
at $696 per ounce
§ Ended year with $1 billion in cash while repaying
$80 million in debt
§ Reduced corporate head count with expected
savings of 20%, and reduced capital expenditures
to $610 million, which was below our guidance
assets, increasing production and cash flow,
and providing clear path to upside
§ Developed two-phased expansion concept
to realize full potential of Tasiast orebody
at a manageable capital cost in a volatile gold
price environment
§ Completed pre-feasibility study at La Coipa
showing positive economics, and added
significantly to site’s mineral resource estimate
§ Contributed to 553 local community programs
and events, reaching an estimated
777,000 beneficiaries
1
Kinross Gold 2015
Our 2016 AISC is expected to be lower, compared with 2015, at $890 to $990 per
Au eq. oz., with production cost of sales also expected to be lower at $675 to
$735 per Au eq. oz. Capital expenditures are expected to be $755 million, which
includes an estimated $160 million in 2016 capex for Phase One of the Tasiast
expansion project.
2016E Gold
Equivalent Production 1, 2
2.7 – 2.9 million ounces
25%
14%
61%
• Americas
• West Africa
• Russia
Delivering disciplined growth
Nevada acquisition
In January 2016, we completed the acquisition of 100% of the Bald Mountain
gold mine and 50% of the Round Mountain gold mine in Nevada from Barrick
Gold Corporation for $610 million in cash. These high-quality assets build on
our platform in one of the world’s best mining jurisdictions and are expected to
add an average of approximately 430,000 Au eq. oz. per year over the next three
years while lowering our forecast overall costs and providing free cash flow.
Bald Mountain also encompasses a 600 sq. km highly prospective land package
in Nevada’s Carlin Trend, one of the most prolific gold producing regions in the
United States. In 2016, our exploration priority at Bald Mountain is converting a
significant amount of existing estimated mineral resources to mineral reserves
– just as we did in 2015 at Round Mountain, where we converted an estimated
440,000 ounces of mineral resources to mineral reserves, more than offsetting
depletion and adding to estimated mine life at one of our most successful
mining operations.
Tasiast expansion
Our two-phased approach to a mill expansion at Tasiast is designed to lower
production costs and generate positive near-term cash flow at a manageable
capital cost in Phase One, and then, in a potential Phase Two, to realize Tasiast’s
full economic potential by adding additional grinding capacity to further increase
production and reduce costs.
On March 30, 2016 we announced our decision to proceed with Phase One,
which is expected to increase throughput from its current 8,000 tonnes per
day (t/d) to 12,000 t/d, with estimated gold production of 409,000 ounces per
year and annual production cost of sales of $535 per ounce. Preparation for
construction is expected to begin immediately, with full production expected
by the end of Q1 2018.
We also announced details of a pre-feasibility study on a potential Phase Two
expansion based on installing additional mill throughput of 18,000 t/d for a
total combined capacity of 30,000 t/d. Total capital expenditures have been
significantly lowered compared with previous expansion study estimates, while
expected benefits remain compelling, with a 30,000 t/d Tasiast expected to be
the Company’s largest and lowest cost operation.
2
Kinross Gold 2015
3
Kinross Gold 2015
Prioritizing balance sheet strength
We ended 2015 on a strong note, adding cash to our balance sheet and repaying
debt, despite an average gold price which declined by $106 per ounce over the
course of the year.
Following the close of our Nevada acquisition on January 11, 2016, and the close
of our bought deal financing on March 4, 2016, Kinross had a robust liquidity
position of approximately $2.2 billion, consisting of approximately $700 million
in cash and cash equivalents, and $1.5 billion of available undrawn credit facilities.
OUR VALUES:
• Putting people first
• Outstanding
corporate citizenship
• High performance
culture
• Rigorous financial
discipline
Commitment to responsible mining
and corporate governance
Kinross’ long history of co-operative relations with our operating communities is
built on a strong commitment to health and safety, environmental responsibility,
meaningful stakeholder consultation, and community partnerships. In 2015,
we had 168,000 stakeholder interactions, including community members,
government representatives, and non-profit organizations at our sites.
In 2015, we were named “Canada’s Most Sustainable Mining Company” by
Maclean’s magazine, and received environmental and safety awards at a number
of our sites. Kinross was also ranked as the top gold mining company, and
second highest among all mining companies, in the Globe and Mail annual
corporate governance survey.
Our value proposition
Based on our strong fundamentals of consistent operational performance, large
gold production, financial strength, and relatively low-risk growth opportunities,
we believe that Kinross presents a compelling value opportunity. Given our
attractive trading metrics relative to our peers, we also believe that much of that
fundamental value is yet to be realized in our share price.
Looking back at the past four years, we have consistently met or outperformed
our production and cost guidance, significantly reduced our capital expenditures
while continuing to invest in our operations, prioritized balance sheet strength,
operated safely, and maintained strong relations with our host communities –
all while producing over 10 million ounces of gold. Looking forward over the
next four years, we expect to produce another 10 million ounces of gold, and
intend to maintain the same high standards of operational dependability, capital
discipline, financial strength, safety, and stakeholder engagement.
In closing, let me once again say “thank you” to our employees for consistently
delivering on these commitments – and to our shareholders for your
continued support.
2
Kinross Gold 2015
J. Paul Rollinson
President and Chief Executive Officer
Kinross Gold Corporation
3
Kinross Gold 2015
2015 Achievements
Operations – Four years of meeting or outperforming production and cost targets
743
720
696
2.6 MILLION
10% DECREASE
GOLD EQUIVALENT OUNCES PRODUCED
DECREASE IN ALL-IN SUSTAINING COST 1
(ATTRIBUTABLE) 2
Realized a 10% reduction year-over-year in
all-sustaining cost per Au eq. oz. to $973
At the high end of 2015 guidance
primarily due to reductions in sustaining capital
due to near record production at
expenditures and exploration and business
development expenditures.
Fort Knox and Round Mountain
and increased throughput at
Kupol-Dvoinoye.
3
9
.
0
6
5
.
0
3
1
0
2
4
1
0
2
5
1
0
2
PRODUCTION COST OF SALES 3
($ PER GOLD EQUIVALENT OUNCE)
At the low end of guidance
and the lowest production cost of
sales since 2011 due to favourable
exchange rates, low oil prices and
continuous improvement initiatives.
$975
All-in sustaining cost 3
per Au eq. oz.
At the low end of 2015 guidance
due to lower capital and
operating costs.
Financial
Capital
Expenditures
$1.26b
$632m
$610m
3
9
0
.
6
5
0
.
3
1
0
2
4
1
0
2
5
1
0
2
Continued trend of reduced
spending while achieving
the right balance between
disciplined capital allocation
and investing in operations.
Strategic initiatives
paid down
$80m
in debt bringing the
four-year total of
debt repayment
to $700 million.
ACQUIRED
DEVELOPED
Acquired quality Nevada assets
– 100% of Bald Mountain and
remaining 50% ownership of
Round Mountain. Provides clear
path to upside potential and
expected to add production,
lower overall costs and enhance
credit metrics.
4
Kinross Gold 2015
+765,000
Developed two-phased
expansion concept to realize
AU OZ. ADDED THROUGH EXPLORATION 3
full potential of Tasiast orebody
Our continued focus on exploration within the
at a manageable cost.
existing footprint of our mines and districts
added 765,191 Au oz. estimated measured
and indicated mineral resources at Kupol,
Chirano and Tasiast.
Cash &
cash
equivalent
$700m
Undrawn
credit
facilities
$1.5b
$2.2b
$2.2 BILLION
IN LIQUIDITY
Maintained balance sheet strength
and financial flexibility, as liquidity
position remained strong post-
Nevada acquisition and bought
deal financing in early 2016.
REDUCED
corporate head count
to achieve
20%
in expected savings
on overhead costs
5
Kinross Gold 2015
Health + safety
0.05
3 consecutive
LOST-TIME INJURY FREQUENCY RATE
PER 200,000 HOURS WORKED
years
Achieved the lowest Lost-Time Injury Rate
in the past five years.
Completed the third
consecutive year with zero
fatalities among employees
and contractors working at
our operations and projects.
Corporate responsibility
+800,000
777,000
BENEFICIARIES
PEOPLE
Our operations contributed to 687 local
We contributed to 553 local
community programs, initiatives and events
to an estimated 805,000 people through cash
community programs, initiatives
and in-kind contributions.
and events with approximately
777,000 beneficiaries from our
local population base.
+168,000
stakeholder interactions
Achieved
best safety
performance in
Kinross history
Total Reportable Injury
Frequency Rate
(Includes all employees and contractors
for 200,000 hours worked)
0.93
0.56
0.43
0.38
0.33
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
Continued company-wide trend
of improved safety performance
and remained among the top
performers in the industry.
97%
of workforce
from host countries
MORE THAN
$2 billion
spent in-country
Creating meaningful livelihoods
for our employees is one of the
most positive social impacts of our
business. Local employment is an
important objective and we are
committed to using national workers
in the countries where we operate.
The majority of the direct and
indirect economic value we
generate through metal sales is
spent in host countries through
local purchasing, taxes and wages.
33%
Board diversity
target
The Board of Directors
achieved its diversity
target with six men
and three women on
the Board in 2015.
5
Kinross Gold 2015
4
Kinross Gold 2015
100%
100%
OF TAILINGS FACILITIES INSPECTED
OF TAILINGS FACILITIES REVIEWED
Our goal is to keep our neighbours
informed about our activities
through active engagement and
dialogue. By listening to them,
we can understand both their
concerns and their vision for the
development of their community.
I addition to meeting host country regulations
Independent expert reviews
and international best practice, Kinross
conducted at all Kinross sites over the
commissions independent expert review of
the construction and operation of all tailings
past two years as part of our tailings
facilities. All of our sites have been reviewed
management standards. In 2015,
in the past two years.
we introduced a quarterly tailings
scorecard to further strengthen our
best-in-class standards.
2015 Corporate Governance Highlights
§ The Board of Directors met nine times, eight of which were independent
of management.
§ Kinross ranked 20th out of 234 Canadian companies in the Globe and Mail annual
corporate governance survey. Kinross received a score of 92 out of 100 points
and was the top ranked gold mining company and second highest among all
mining companies.
§ Scored 135 out of 150 points on the Board Shareholder Confidence Index of
the Clarkson Centre for Board Effectiveness.
§ Placed among the top 50 large cap companies in Canada on the Institutional
Shareholder Services (ISS) Governance Quickscore ranking.
§ All directors, except the CEO, were independent and all committees were
comprised solely of independent directors.
§ Achieved Board diversity target of 33% women directors.
Board of Directors
(left to right)
John E. Oliver, Independent Chair H
John A. Brough, Corporate Director A, H
John K. Carrington*, Corporate Director CGN, CR
John M.H. Huxley, Corporate Director A, CGN, H
Ave G. Lethbridge, Executive Vice-President and Chief Human
Resources and Safety Officer, Toronto Hydro Corporation A, H
(second row)
Catherine McLeod-Seltzer, Non-Executive Chair and Director,
Bear Creek Mining Corporation CGN, CR
Kelly J. Osborne, Corporate Director CGN, CR
Una M. Power, Corporate Director A, CR
J. Paul Rollinson, President and Chief Executive Officer
Senior Leadership Team
J. Paul Rollinson, President and
Chief Executive Officer
Tony Giardini, Executive Vice-President and
Chief Financial Officer
Geoffrey P. Gold, Executive Vice-President,
Corporate Development, External Affairs,
and Chief Legal Officer
Gina Jardine, Senior Vice-President,
Human Resources
Warwick Morley-Jepson, Executive
Vice-President and Chief Operating Officer
Audit and Risk Committee
A
CGN Corporate Governance and Nominating Committee
CR Corporate Responsibility and Technical Committee
H
Human Resources and Compensation Committee
On February 10, 2016, Kinross’ Board of Directors appointed Ian Atkinson to the position of Corporate Director. Mr. Atkinson
serves on the Corporate Governance and Nominating Committee and the Corporate Responsibility and Technical Committee.
* Mr. John Carrington, who has been a Kinross Board member since 2005, has decided not to stand for re-election at the
Company’s next Annual Meeting of Shareholders on May 11, 2016. Kinross’ Board of Directors and management team
would like to thank Mr. Carrington for his many contributions and his distinguished directorship on the Board.
Learn more about
Kinross governance at
kinross.com/about/governance
6
Kinross Gold 2015
7
Kinross Gold 2015
Financial Summary
(In millions except ounces, per share amounts, gold price and per ounce amounts)
Revenue
Net cash flow of continuing operations provided from
operating activities
Adjusted operating cash flow from continuing operations 3
Adjusted operating cash flow from continuing operations per share 3
Impairment charges 4
Net loss from continuing operations 4
Net loss from continuing operations attributable
to common shareholders 4
Basic
Diluted
Adjusted net earnings (loss) 3 from continuing operations
Adjusted net earnings (loss) 3 from continuing operations per share
Production cost of sales per equivalent ounce sold 3
All-in sustaining cost per gold equivalent ounce sold 3
Capital expenditures
Average realized gold price per ounce
Attributable gold equivalent ounces produced from
continuing operations 2
See endnotes on page 77 of this report.
2015
2014
2013
$ 3,052.2
$ 3,466.3
$ 3,779.5
831.6
858.1
796.6
786.6
0.69
699.0
(984.5)
(0.86)
(0.86)
(91.0)
(0.08)
696
975
610.0
1,159
1,023.8
0.89
1,251.4
(1,400.0)
(1.22)
(1.22)
131.1
0.11
720
973
631.8
1,263
1,171.8
1.03
3,169.6
(3,012.6)
(2.64)
(2.64)
321.2
0.28
743
1,082
1,262.4
1,402
2,594,652
2,710,390
2,631,092
Financial Review
Management’s Discussion and Analysis
Management’s Responsibility for Financial Statements
Independent Auditors’ Report of Registered Public Accounting Firm
Consolidated Financial Statements and Notes
Mineral Reserve and Mineral Resource Statement
Summarized Five-Year Review
Kinross Share Trading Data
MDA 1
FS 1
FS 2
FS 3
66
73
73
6
Kinross Gold 2015
7
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
This management's discussion and analysis ("MD&A"), prepared as of February 10, 2016, relates to the financial condition and results
of operations of Kinross Gold Corporation together with its wholly owned subsidiaries, as at December 31, 2015 and for the year then
ended, and is intended to supplement and complement Kinross Gold Corporation’s audited annual consolidated financial statements
for the year ended December 31, 2015 and the notes thereto (the “financial statements”). Readers are cautioned that the MD&A
contains forward-looking statements about expected future events and financial and operating performance of the Company, and
that actual events may vary from management's expectations. Readers are encouraged to read the Cautionary Statement on
Forward Looking Information included with this MD&A and to consult Kinross Gold Corporation's financial statements for 2015 and
corresponding notes to the financial statements which are available on the Company's web site at www.kinross.com and on
www.sedar.com. The financial statements and MD&A are presented in U.S. dollars. The financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board
(“IASB”). This discussion addresses matters we consider important for an understanding of our financial condition and results of
operations as at and for the year ended December 31, 2015, as well as our outlook.
This section contains forward-looking statements and should be read in conjunction with the risk factors described in "Risk Analysis".
In certain instances, references are made to relevant notes in the financial statements for additional information.
Where we say "we", "us", "our", the "Company" or "Kinross", we mean Kinross Gold Corporation or Kinross Gold Corporation and/or
one or more or all of its subsidiaries, as it may apply. Where we refer to the "industry", we mean the gold mining industry.
1. DESCRIPTION OF THE BUSINESS
Kinross is engaged in gold mining and related activities, including exploration and acquisition of gold-bearing properties, the
extraction and processing of gold-containing ore, and reclamation of gold mining properties. Kinross’ gold production and
exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Chile, Ghana and
Mauritania. Gold is produced in the form of doré, which is shipped to refineries for final processing. Kinross also produces and
sells silver.
The profitability and operating cash flow of Kinross are affected by various factors, including the amount of gold and silver produced,
the market prices of gold and silver, operating costs, interest rates, regulatory and environmental compliance, the level of
exploration activity and capital expenditures, general and administrative costs, and other discretionary costs and activities. Kinross
is also exposed to fluctuations in currency exchange rates, political risks, and varying levels of taxation that can impact profitability
and cash flow. Kinross seeks to manage the risks associated with its business operations; however, many of the factors affecting
these risks are beyond the Company’s control.
Commodity prices continue to be volatile as economies around the world continue to experience economic challenges. Volatility in
the price of gold and silver impacts the Company's revenue, while volatility in the price of input costs, such as oil, and foreign
exchange rates, particularly the Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi, and Canadian
dollar, may have an impact on the Company's operating costs and capital expenditures.
Segment profile
Each of the Company's significant operating mines is generally considered to be a separate segment. The reportable segments are
those operations whose operating results are reviewed by the chief operating decision maker to make decisions about resources to
be allocated to the segment and assess its performance.
Operating Segments
Fort Knox
Round Mountain(a)
Kettle River-Buckhorn
Kupol(b)
Paracatu
Maricunga
Tasiast
Chirano
Ownership percentage at December 31,
Operator
Location
Kinross
Kinross
Kinross
U.S.A.
U.S.A.
U.S.A.
Kinross Russian Federation
Kinross
Kinross
Kinross
Kinross
Brazil
Chile
Mauritania
Ghana
2015
100%
50%
100%
100%
100%
100%
100%
90%
2014
100%
50%
100%
100%
100%
100%
100%
90%
(a) On January 11, 2016, the Company acquired the remaining 50% interest in the Round Mountain mine from Barrick Gold
Corporation ("Barrick").
(b) The Kupol segment includes the Kupol and Dvoinoye mines.
MDA 1
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p1 (March 22, 2016 22:35:26)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Consolidated Financial and Operating Highlights
(in millions, except ounces, per share amounts and
per ounce amounts)
Operating Highlights from Continuing Operations (d)
Total gold equivalent ounces (a)
Produced (c)
Sold (c)
Attributable gold equivalent ounces (a)
Produced (c)
Sold (c)
Financial Highlights from Continuing Operations (d)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Operating loss
Net loss attributable to common shareholders
Basic loss per share attributable to common shareholders
Diluted loss per share attributable to common shareholders
Adjusted net earnings (loss) attributable to common shareholders (b)
Adjusted net earnings (loss) per share (b)
Net cash flow provided from operating activities
Adjusted operating cash flow (b)
Capital expenditures
Average realized gold price per ounce
Consolidated production cost of sales per equivalent ounce (c) sold(b)
Attributable(a) production cost of sales per equivalent ounce (c) sold(b)
Attributable(a) production cost of sales per ounce sold on a by-product basis (b)
Attributable(a) all-in sustaining cost per ounce sold on a by-product basis (b)
Attributable(a) all-in sustaining cost per equivalent ounce (c) sold (b)
Attributable(a) all-in cost per ounce sold on a by-product basis (b)
Attributable(a) all-in cost per equivalent ounce (c) sold (b)
Years ended December 31,
2015 vs. 2014
2014 vs. 2013
2015
2014
2013
Change % Change
Change
% Change
2,620,262
2,739,044
2,658,632
(118,782)
2,634,867
2,743,398
2,697,093
(108,531)
2,594,652
2,710,390
2,631,092
(115,738)
2,608,870
2,715,358
2,669,276
(106,488)
$
3,052.2
$
3,466.3
$
3,779.5
$
1,834.8
$
1,971.2
$
2,004.4
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
897.7
$
874.7
$
828.8
699.0
$
1,251.4
$
3,169.6
(742.9)
$
(1,027.2)
$
(2,635.2)
(984.5)
$
(1,400.0)
$
(3,012.6)
(0.86)
(0.86)
(91.0)
(0.08)
831.6
$
$
$
$
$
(1.22)
(1.22)
131.1
0.11
858.1
$
$
$
$
$
(2.64)
(2.64)
321.2
0.28
796.6
786.6
$
1,023.8
$
1,171.8
610.0
1,159
696
696
684
971
975
1,047
1,049
$
$
$
$
$
$
$
$
$
631.8
$
1,262.4
1,263
719
720
705
965
973
1,072
1,077
$
$
$
$
$
$
$
$
1,402
743
743
703
1,063
1,082
1,357
1,360
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(414.1)
(136.4)
23.0
(552.4)
284.3
415.5
0.36
0.36
(222.1)
(0.19)
(26.5)
(237.2)
(21.8)
(104)
(23)
(24)
(21)
6
2
(25)
(28)
(4%)
(4%)
(4%)
(4%)
(12%)
(7%)
3%
(44%)
28%
30%
30%
30%
(169%)
(173%)
(3%)
(23%)
(3%)
(8%)
(3%)
(3%)
(3%)
1%
0%
(2%)
(3%)
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
80,412
46,305
79,298
46,082
(313.2)
(33.2)
45.9
(1,918.2)
1,608.0
1,612.6
1.42
1.42
(190.1)
(0.17)
61.5
(148.0)
(630.6)
(139.0)
(24)
(23)
2
(98)
(109)
(285)
(283)
3%
2%
3%
2%
(8%)
(2%)
6%
(61%)
61%
54%
54%
54%
(59%)
(61%)
8%
(13%)
(50%)
(10%)
(3%)
(3%)
0%
(9%)
(10%)
(21%)
(21%)
(a)
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
(b)
The definition and reconciliation of these non-GAAP financial measures is included in Section 11 of this document.
(c)
"Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market prices for the commodities for
each period. The ratio for 2015 was 73.92:1 (2014 - 66.29:1 and 2013 - 59.23:1).
(d) On June 10, 2013, the Company announced its decision to cease development of Fruta del Norte ("FDN"). As a result, FDN was reclassified as a discontinued operation. On
December 17, 2014, the Company disposed of its interest in FDN.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p2 (March 22, 2016 22:35:27)
MDA 2
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Consolidated Financial Performance
2015 vs. 2014
Kinross’ attributable production decreased by 4% compared with 2014, primarily due to lower production at Tasiast as a result of a
decrease in ounces recovered from the dump leach pads and at Maricunga as a result of the extreme weather event that occurred in
March 2015. In addition, production decreased at Kettle River–Buckhorn due to a decrease in grades and at Paracatu, largely due to
lower mill throughput as a result of planned mine sequencing and lack of rainfall. These decreases were partially offset by higher
production at Round Mountain largely due to improved heap leach performance and at Fort Knox due to higher mill grades.
During 2015, metal sales declined by 12% compared with 2014 due to decreases in metal prices realized and gold equivalent ounces
sold. The average realized gold price decreased to $1,159 per ounce in 2015 from $1,263 per ounce in 2014. Gold equivalent
ounces sold in 2015 decreased to 2,634,867 ounces compared with 2,743,398 ounces in 2014, primarily due to the decrease in gold
equivalent ounces produced as described above.
Production cost of sales decreased by 7% compared with 2014, primarily due to the decrease in gold equivalent ounces sold, lower
energy costs and favourable foreign exchange movements. The decrease in costs also resulted in a 3% decrease in attributable
production cost of sales per equivalent ounce sold compared with 2014.
During 2015, depreciation, depletion and amortization increased by 3% compared with 2014, primarily due to increases in the
depreciable asset base at Round Mountain, the Kupol segment, Tasiast, Fort Knox and Chirano. These increases were partially offset
by decreases in the depreciable asset base and gold equivalent ounces sold at Kettle River-Buckhorn.
As at December 31, 2015, upon completion of its annual assessment of the carrying value of its Cash Generating Units (“CGUs”), the
Company recorded an after-tax impairment charge of $430.2 million as a result of a reduction in the Company’s short-term and
long-term gold price forecast. The impairment charge was entirely related to property plant and equipment and included a charge
of $240.2 million at Fort Knox, $147.0 million at Tasiast and $43.0 million at Round Mountain. The impairment charge at Fort Knox is
net of a tax recovery of $9.3 million. In addition, during 2015, the Company recognized impairment charges of $259.5 million related
to inventory and other assets. During 2014, the Company recorded after-tax impairment charges of $932.2 million, comprising
goodwill impairment of $145.3 million and property plant and equipment impairment of $786.9 million. The Company also recorded
inventory impairment charges of $167.6 million in 2014.
The operating loss decreased to $742.9 million in 2015 from $1,027.2 million in 2014. The change was primarily due to the decrease
in impairment charges, partially offset by lower metal sales.
During 2015, net loss from continuing operations attributable to common shareholders was $984.5 million, or $0.86 per share,
compared with $1,400.0 million, or $1.22 per share, in 2014. The change was primarily a result of the decrease in operating loss as
described above. In addition, at December 31, 2014, an impairment charge of $156.6 million related to the Company’s investment
in Cerro Casale was recorded in other income (expense). These decreases were partially offset by an increase in income tax
expense. During 2015, the Company recorded a tax expense of $141.7 million compared with $109.7 million in 2014. The $141.7
million tax expense in 2015 included a $30.3 million recovery due to impairment charges and $132.9 million of expense due to re-
measurements of deferred tax assets and liabilities, as a result of significant fluctuations in foreign exchange rates with respect to
the Brazilian real and the Russian rouble. The $109.7 million tax expense in 2014 included a $137.8 million recovery due to
impairment charges and $145.5 million of expense due to re-measurements of deferred tax assets and liabilities as a result of
income tax reforms enacted in Chile and significant fluctuations in foreign exchange rates with respect to the Brazilian real and the
Russian rouble. In addition, tax expense increased due to differences in the level of income in the Company’s operating jurisdictions
from one period to the next.
Adjusted net loss attributable to common shareholders was $91.0 million, or $0.08 per share, for 2015 compared with adjusted net
earnings attributable to common shareholders of $131.1 million, or $0.11 per share, in 2014. The decrease in adjusted net earnings
was primarily due to the decrease in margins (metal sales less production cost of sales).
During 2015, net cash flow provided from operating activities decreased by 3% compared with 2014. The decrease in cash flows was
primarily the result of the decrease in metal sales, partially offset by favourable working capital changes and lower production costs.
Adjusted operating cash flow decreased to $786.6 million in 2015 compared with $1,023.8 million in 2014, primarily due to the
decrease in metal sales.
MDA 3
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p3 (March 22, 2016 22:35:28)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Capital expenditures decreased by 3% in 2015 compared with 2014, primarily due to reduced spending at Kupol and at Tasiast,
partially offset by increased spending at Fort Knox.
Attributable all-in sustaining cost per equivalent ounce sold and per ounce sold on a by-product basis increased slightly compared
with 2014, mainly due to the decrease in attributable ounces sold and an increase in sustaining capital expenditures, largely offset
by lower production costs as described above.
Attributable all-in cost per equivalent ounce sold and per ounce sold on a by-product basis decreased compared with 2014, primarily
due to a decrease in non-sustaining capital expenditures at Tasiast, Chirano and the Kupol segment.
2014 vs. 2013
During 2014, Kinross’ attributable production increased by 3% compared with 2013, primarily due to increases in production from
the Kupol segment as a result of processing higher grade ore from Dvoinoye and at Maricunga as a result of improved heap leach
performance and increased efficiency of the Adsorption, Desorption and Recovery (“ADR”) plant, partially offset by a decrease in
production as a result of the suspension of mining at La Coipa in October 2013.
Metal sales decreased to $3,466.3 million in 2014 from $3,779.5 million in 2013 due to a decrease in metal prices realized, partially
offset by higher gold equivalent ounces sold. The average realized gold price decreased to $1,263 per ounce in 2014 from $1,402
per ounce in 2013.
Production cost of sales decreased by 2% compared with 2013, primarily due to the impact of the suspension of mining at La Coipa
and lower production costs at Chirano as a result of the transition to owner mining and reduced power costs. These decreases were
partially offset by an increase in gold equivalent ounces sold from the Kupol segment as a result of Dvoinoye commencing
commercial production in October 2013 and higher costs at Fort Knox as a result of mining lower grade ore.
Depreciation, depletion and amortization increased by 6% in 2014 compared with 2013, primarily due to increases in the
depreciable asset base and gold equivalent ounces sold from the Kupol segment as a result of Dvoinoye commencing commercial
production and an increase in the depreciable asset base and a reduction in mineral reserves at Paracatu. These increases were
partially offset by the impact of the suspension of mining at La Coipa and decreases in the depreciable asset base at Tasiast and
Maricunga.
As at December 31, 2014, the Company recorded an after-tax impairment charge of $932.2 million, upon completion of its annual
assessment of the carrying value of its CGUs. The impairment charge included goodwill impairment of $145.3 million and property
plant and equipment impairment of $786.9 million. The property plant and equipment impairment included $342.5 million for
Tasiast, $213.8 million for Chirano and $230.6 million for other CGUs, net of a tax recovery of $127.9 million and non-controlling
interest of $23.7 million. The Company also recorded inventory impairment charges of $167.6 million in 2014 and $177.6 million in
2013. During 2013, the Company recorded after-tax impairment charges aggregating $2,834.1 million, comprised of $1,334.7 million
for Tasiast, $573.6 million for Maricunga, and $925.8 million for other CGUs, net of a tax recovery of $157.9 million.
During 2014, the operating loss decreased to $1,027.2 million compared with an operating loss of $2,635.2 million in 2013. The
change was primarily due to decreases in impairment charges and exploration and business development costs, partially offset by a
decrease in metal sales and an increase in depreciation, depletion and amortization.
Net loss from continuing operations attributable to common shareholders in 2014 was $1,400.0 million, or $1.22 per share,
compared with $3,012.6 million, or $2.64 per share, in 2013. The decrease was primarily a result of the change in operating loss as
described above. In addition, at December 31, 2014, an impairment charge of $156.6 million related to the Company’s investment
in Cerro Casale was recorded in other income (expense). During 2013, the Company recognized an impairment charge of $219.0
million related to its investment in Cerro Casale. These decreases were partially offset by an increase in income tax expense. The
Company recorded a tax expense of $109.7 million in 2014 compared with $72.4 million in 2013. The $109.7 million tax expense in
2014 included a $137.8 million recovery due to impairment charges and $145.5 million of expense due to re-measurements of
deferred tax assets and liabilities as a result of income tax reforms enacted in Chile and significant fluctuations in foreign exchange
rates with respect to the Brazilian real and the Russian rouble. The $72.4 million tax expense in 2013 included a $174.6 million
recovery due to a re-measurement of deferred tax liabilities in respect of impairment charges. Excluding the impact of items that
are not reflective of the underlying operating performance of our business, the Company’s adjusted effective tax rate for 2014 was
48.8%, compared with an adjusted effective tax rate of 34.8 % for 2013. The increase in the Company’s adjusted effective tax rate
for 2014, compared with 2013, was largely due to differences in the level of income in the Company’s operating jurisdictions from
one period to the next.
MDA 4
Kinross Gold 2015
59599 2015 Q4 Rev MDA 4.pdf - p1 (March 29, 2016 18:41:47)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Adjusted net earnings attributable to common shareholders was $131.1 million, or $0.11 per share, for 2014 compared with $321.2
million, or $0.28 per share, in 2013. The decrease in adjusted net earnings attributable to common shareholders was primarily due
to the decrease in metal sales.
Net cash flow provided from operating activities increased by 8% compared with 2013, primarily due to more favourable working
capital changes and lower exploration and business development costs, partially offset by the decrease in metal sales.
During 2014, adjusted operating cash flow decreased to $1,023.8 million compared with $1,171.8 million in 2013, primarily due to
the decrease in margins, partially offset by lower exploration and business development costs.
Capital expenditures decreased to $631.8 million compared with $1,262.4 million in 2013, primarily due to reduced spending at
Tasiast, Chirano and Fort Knox.
Attributable all-in sustaining cost and all-in cost per equivalent ounce sold and per ounce sold on a by-product basis decreased in
2014 compared with 2013, primarily due to a decrease in both sustaining and non-sustaining capital expenditures and exploration
and business development costs.
Mineral Reserves1
Kinross’ total estimated proven and probable gold reserves at year-end 2015 were approximately 34.0 million ounces, which include
estimated gold reserves from the January 2016 acquisition of the Bald Mountain gold mine (“Bald Mountain”) and the remaining
50% interest in the Round Mountain gold mine. The slight decrease of 0.4 million ounces in estimated gold reserves compared to
year-end 2014 was mainly a result of depletion across the Company’s portfolio and revised pit designs at Maricunga. This was offset
in part by the January 2016 acquisition of assets in Nevada, which added 1.8 million gold ounces, including a net increase of 91
thousand gold ounces at Round Mountain on a 100% basis, and the net addition of 0.21 million estimated gold ounces at Chirano, as
gold ounces from Akoti were upgraded into mineral reserves.
Proven and probable silver reserves at year-end 2015 were estimated at approximately 41.0 million ounces, a net decrease of 3.0
million ounces compared with year-end 2014, primarily due to production depletion.
Proven and probable copper reserves at year-end 2015, which are exclusively at Cerro Casale, were estimated at approximately 1.4
billion pounds, unchanged from year-end 2014.
1 For details concerning mineral reserve and mineral resource estimates, refer to the Mineral Reserves and Mineral Resources tables and notes in the Company's news
release filed with Canadian and U.S. regulators on February 10, 2016.
MDA 5
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p5 (March 22, 2016 22:35:29)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
2.
IMPACT OF KEY ECONOMIC TRENDS
Price of Gold
Source: London Bullion Marketing Association London PM Fix, Bloomberg, GFMS, Company records
The price of gold is the largest single factor in determining profitability and cash flow from operations, therefore, the financial
performance of the Company has been, and is expected to continue to be, closely linked to the price of gold. Historically, the price
of gold has been subject to volatile price movements over short periods of time and is affected by numerous macroeconomic and
industry factors that are beyond the Company’s control. Major influences on the gold price include currency exchange rate
fluctuations and the relative strength of the U.S. dollar, the supply of and demand for gold and macroeconomic factors such as the
level of interest rates and inflation expectations. During 2015, the price of gold fluctuated between a high of $1,296 per ounce in
January to a low of $1,049 per ounce in December. The average price for the year based on the London Bullion Market Association
PM Fix was $1,160 per ounce, a $106 per ounce decrease over the 2014 average price of $1,266 per ounce. The major influences on
the gold price included the strengthening of the U.S. dollar with the U.S Federal Reserve beginning to normalize monetary policy,
volatility in global financial markets and concerns over the global economy.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p6 (March 22, 2016 22:35:30)
MDA 6
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Source: London Bullion Marketing Association London PM Fix
During 2015, the Company realized an average gold price of $1,159 per ounce compared to the average PM Fix of $1,160 per ounce.
MDA 7
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p7 (March 22, 2016 22:35:31)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Gold Supply and Demand Fundamentals
Source: GFMS Gold Survey 2015 Q4 Update
Total gold supply decreased by approximately 2.3% in 2015 relative to 2014, largely due to a reduction in producer hedging. Global
gold mine production and supply of recycled gold was relatively unchanged during the year. Mine production and recycled gold
remain the dominant sources of gold supply, and in 2015 they represented approximately 73% and 27% of total supply, respectively.
Macroeconomic factors, global central bank monetary policy and geo-political events were the main drivers of lower gold prices in
2015. Central banks have not been a source of supply to the market, but have rather been net buyers, as noted below.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p8 (March 22, 2016 22:35:32)
MDA 8
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Source: GFMS 2015 Gold Survey Q4 Update
Overall demand decreased by 2.2% in 2015 relative to 2014. Fabrication demand is estimated to have decreased by 3.2% in 2015
relative to 2014 despite lower gold prices, mainly due to disappointing demand in China, partially offset by continued growth in
India. Bar hoarding decreased by approximately 3.9% in 2015, due to lower buying levels in key Asian markets during the year.
Central banks continued to be buyers in 2015, increasing net purchases by 3.4% during the year.
MDA 9
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p9 (March 22, 2016 22:35:32)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Inflationary Cost Pressures
The Company’s profitability is subject to industry wide cost pressures on development and operating costs with respect to labour,
energy, capital expenditures and consumables in general. Since mining is generally an energy intensive activity, especially in open
pit mining, energy prices can have a significant impact on operations. The cost of fuel as a percentage of operating costs varies
amongst the Company’s mines, and overall, operations have continued to experience lower fuel costs in 2015, reflecting global oil
and fuel price decreases that have occurred since the second half of 2014. Kinross manages its exposure to energy costs by
entering, from time to time, into various hedge positions – refer to Section 6 Liquidity and Capital Resources for details.
Source: Bloomberg
In order to mitigate the impact of higher consumable prices, the Company continues to focus on continuous improvement, both by
promoting more efficient use of materials and supplies, and by pursuing more advantageous pricing, whilst increasing performance
and without compromising operational integrity.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p10 (March 22, 2016 22:35:33)
MDA 10
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Currency Fluctuations
Source: Bloomberg
At the Company’s non-U.S. mining operations and exploration activities, which are primarily located in Brazil, Chile, Ghana,
Mauritania, the Russian Federation, and Canada, a portion of operating costs and capital expenditures are denominated in their
respective local currencies. Generally, as the U.S. dollar strengthens, these currencies weaken, and as the U.S. dollar weakens, these
foreign currencies strengthen. These currencies were subject to high market volatility over the course of the year. Approximately
65% of the Company’s expected attributable production in 2016 is forecast to come from operations outside the U.S. and costs will
continue to be exposed to foreign exchange rate movements. In order to manage this risk, the Company uses currency hedges for
certain foreign currency exposures – refer to Section 6 Liquidity and Capital Resources for details.
MDA 11
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p11 (March 22, 2016 22:35:34)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
3. OUTLOOK
The forward-looking information contained in this section is subject to the risk factors and assumptions contained in the Cautionary
Statement on Forward-Looking Information included with this MD&A and the risk factors set out in Section 10 – Risk Analysis.
Operational Outlook
In 2016, Kinross expects to produce 2.7 to 2.9 million gold equivalent ounces from its operations, compared with the 2015
production of 2.59 million gold equivalent ounces. The forecast increase is mainly a result of the acquisition of Bald Mountain and
the remaining 50% interest in Round Mountain that the Company did not already own, partially offset by grade reductions at Kupol
and Chirano, and the expected closure of Kettle River-Buckhorn in the third quarter of 2016. Production guidance also takes into
consideration the potential for a temporary curtailment of mill operations at Paracatu due to a lack of rainfall in southcentral Brazil.
Based on the significant amount of rain already received in January 2016, the Company does not expect a curtailment in the first half
of 2016. Production in the second half of 2016 is expected to be higher compared with the first half of 2016 due mainly to mine
sequencing at Tasiast and the seasonal impact on the heap leach at Fort Knox, Bald Mountain and Round Mountain. The lower
production during the first half of 2016 is expected to have a corresponding impact on cost guidance.
Production cost of sales per gold equivalent ounce sold is expected to be in the range of $675 to $735 for 2016, continuing the
reduction experienced in 2015, largely as a result of favourable currency and oil movements.
The Company has forecast an all-in sustaining cost for 2016 of $890 to $990 per gold equivalent ounce sold, and per ounce sold on a
by-product basis, which is lower than the 2015 guidance.
Material assumptions used to forecast 2016 production costs are: a gold price of $1,100 per ounce, a silver price of $15 per ounce,
an oil price of $55 per barrel, and foreign exchange rates of 3.75 Brazilian real to the U.S. dollar, 1.25 Canadian dollar to the U.S.
dollar, 55 Russian roubles to the U.S. dollar, 650 Chilean pesos to the U.S. dollar, 4.00 Ghanaian cedi to the U.S. dollar, 300
Mauritanian ouguiya to the U.S. dollar, and 1.10 U.S. dollars to the Euro. Taking into account existing currency and oil hedges, a 10%
change in foreign currency exchange rates would be expected to result in an approximate $15 impact on our production cost of sales
per ounce, and specific to the Russian rouble and Brazilian real, a 10% change in the exchange rates would be expected to result in
an impact of approximately $14 and $24 on the Russian and Brazilian production cost of sales per ounce, respectively. A $10 per
barrel change in the price of oil would be expected to result in an approximate $3 impact on our production cost of sales per ounce,
and a $100 change in the price of gold would be expected to result in an approximate $3 impact on our production cost of sales per
ounce as a result of a change in royalties.
Total capital expenditures for 2016 are forecast to be approximately $595 million (including estimated capitalized interest of
approximately $25 million). Of this amount, sustaining capital expenditures are expected to be approximately $430 million.
The 2016 forecast for exploration expenditures is approximately $70 million, none of which is expected to be capitalized. 2016
overhead (general and administrative and business development expenses) is expected to be approximately $165 million or 20% less
than last year’s overhead guidance.
Other operating costs are forecast to be approximately $45 million, which includes $15 million for care and maintenance at La Coipa
and Kettle River-Buckhorn, as well as an estimated $10 million for closing costs associated with the acquisition of assets in Nevada.
Based on the Company’s assumed metal price, oil price and foreign exchange rates, income tax expenses are expected to be $nil and
taxes paid (net of recoveries) are expected to be approximately $75 million, with both increasing at 23% of any profit resulting from
changes in those underlying assumptions.
Depreciation, depletion and amortization is forecast to be approximately $375 per gold equivalent ounce sold.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p12 (March 22, 2016 22:35:35)
MDA 12
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
4. PROJECT UPDATES AND NEW DEVELOPMENTS
Tasiast expansion update
Kinross is finalizing studies on a two-phased expansion plan to realize Tasiast’s significant growth potential in the current gold price
environment. The two-phased expansion is expected to leverage existing mill infrastructure to optimize the current operation in the
near term and lower overall capital costs compared with earlier project forecasts.
Phase One of the potential expansion contemplates adding incremental grinding capacity to the operation’s existing comminution
circuit to increase mill throughput from the current 8,000 tonnes per day (“tpd”) to 12,000 tpd. Phase Two contemplates further
increasing throughput capacity with the installation of additional milling, leaching, thickening and refinery capacity.
The Company expects to complete and provide results of the Phase One feasibility study and the Phase Two pre-feasibility study in
late March 2016. The studies are progressing well, as the Company continues to focus on optimizing the potential expansion plan
and reducing capital costs. Any potential go-forward decision on the expansion will depend on a range of factors, including the gold
price environment and projections, expected economic returns and various technical and other considerations.
Kinross is also continuing to optimize the current Tasiast operation to reduce costs. During the fourth quarter of 2015, the Company
upgraded the tertiary crushing circuit, automated the secondary crusher feed, optimized grinding media, and completed a
comprehensive upgrade of conveyors. These improvements resulted in increased average throughput of 7,500 tpd in the fourth
quarter of 2015, compared with 6,800 tpd in the third quarter of 2015.
Russia projects update
The Company has completed a pre-feasibility study and is advancing the development of the Moroshka project, located
approximately four kilometres east of Kupol and within the Kupol licence area. The Company expects to commence mining in 2018
to process ore in the Kupol mill.
At the September Northeast target, located approximately 15 kilometres northwest of the Dvoinoye mine, material is currently
being fast tracked to production, expected in late 2017, through a trial mining of bulk samples approved under terms of the
exploration license.
Recent transactions
Acquisition of Bald Mountain and remaining 50% interest in Round Mountain
On November 12, 2015, the Company announced that it had entered into a definitive asset purchase agreement with Barrick to
acquire 100% of Bald Mountain, which includes a large associated land package, and the remaining 50% interest in the Round
Mountain gold mine for $610 million in cash, subject to a typical working capital adjustment. In addition to the purchase price,
Barrick will receive a contingent 2% net smelter return royalty on future gold production from Kinross' 100%-owned Bald Mountain
lands that will come into effect following the post-closing production of 10 million ounces from such lands. Approximately 40% of
the Bald Mountain land package is subject to a 50-50 exploration joint venture partnership between Kinross and Barrick, with
Kinross as the operator. On January 11, 2016, the Company completed the transaction.
The acquisition, which will be accounted for as a business combination as at January 11, 2016, represents a strategic fit with the
Company’s open-pit heap leach skill set and existing portfolio of operating assets, and enhances the production profile in the United
States.
Bald Mountain update
Bald Mountain represents a high-quality brownfield opportunity and will be a key aspect of Kinross’ 2016 exploration program, with
approximately $6.0 million of the exploration budget allocated for the site. The Company has established a new exploration team
and initiated drilling to focus on upgrading and adding to the existing estimated mineral resource base. The immediate priority is
within the footprint of the active mining areas in extensions to known deposits.
Drilling in the North area of the property will include the Top, Redbird and Saga deposits while geological reviews will be conducted
for the South area deposits including Yankee, Vantage and Gator. Drilling in the South area will commence as soon as the permitting
MDA 13
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p13 (March 22, 2016 22:35:35)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
process is completed, which is expected in mid-2016. Both the North and South areas are 100% Kinross owned.
At the Kinross-Barrick 50-50 joint venture area, the Company will perform a review of the site geoscience data in addition to
completing targeted field work with the objective of developing geological models and generating new targets. The Company will
also consider drilling some priority targets already identified by Barrick.
Other developments
Board of Directors update
The Board of Directors of Kinross has appointed Mr. Ian Atkinson as a Director. Mr. Atkinson has more than 40 years of experience
in the mining industry and was most recently the President and Chief Executive Officer, and a Director, of Centerra Gold. Mr.
Atkinson has contributed to the discovery of several major mineral deposits and been involved in a number of large global mining
projects in his career, and has also held executive management positions with Hecla Mining Company and Battle Mountain Gold.
Mr. Atkinson has extensive background in exploration, project development, and mergers and acquisitions.
Mr. John K. Carrington, who has been a Kinross Board member since 2005, has decided to retire and will not stand for re-election at
the Company’s next annual meeting of shareholders on May 11, 2016.
Kinross appointed Ms. Ave G. Lethbridge and Mr. Kelly J. Osborne to its Board of Directors, upon their election by shareholders at
the Kinross Annual and Special Meeting of Shareholders held on May 6, 2015.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p14 (March 22, 2016 22:35:36)
MDA 14
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
5. CONSOLIDATED RESULTS OF OPERATIONS
(in millions, except ounces and per ounce amounts)
Operating Statistics from Continuing Operations (c)
Total gold equivalent ounces (a)
Produced (b)
Sold (b)
Attributable gold equivalent ounces (a)
Produced (b)
Sold (b)
Gold ounces - sold
Silver ounces - sold (000's)
Years ended December 31,
2015
2014
2013
2015 vs. 2014
Change % Change
2014 vs. 2013
Change
% Change
2,620,262
2,739,044
2,658,632
(118,782)
2,634,867
2,743,398
2,697,093
(108,531)
2,594,652
2,710,390
2,631,092
(115,738)
2,608,870
2,715,358
2,669,276
(106,488)
2,562,219
2,669,278
2,545,736
(107,059)
5,378
4,923
9,021
455
(4%)
(4%)
(4%)
(4%)
(4%)
9%
80,412
46,305
79,298
46,082
123,542
(4,098)
Average realized gold price per ounce
$
1,159
$
1,263
$
1,402
$
(104)
(8%)
$
(139)
Financial Data from Continuing Operations (c)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Operating loss
Net loss attributable to common shareholders
$
3,052.2
$
3,466.3
$
3,779.5
$
(414.1)
(12%)
$
(313.2)
$
1,834.8
$
1,971.2
$
2,004.4
$
(136.4)
(7%)
$
(33.2)
$
$
897.7
699.0
$
$
874.7
1,251.4
$
$
828.8
3,169.6
$
$
23.0
(552.4)
$
$
(742.9)
(984.5)
$
$
(1,027.2)
(1,400.0)
$
$
(2,635.2)
(3,012.6)
$
$
284.3
415.5
3%
(44%)
$
$
45.9
(1,918.2)
28%
30%
$
$
1,608.0
1,612.6
3%
2%
3%
2%
5%
(45%)
(10%)
(8%)
(2%)
6%
(61%)
61%
54%
(a)
(b)
(c)
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
"Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market prices for the commodities
for each period. The ratio for 2015 was 73.92:1 (2014 - 66.29:1 and 2013 - 59.23:1).
On June 10, 2013, the Company announced its decision to cease development of FDN. As a result, FDN was reclassified as a discontinued operation. On December 17,
2014, the Company disposed of its interest in FDN.
MDA 15
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p15 (March 22, 2016 22:35:37)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Operating Earnings (Loss) by Segment
(in millions)
Operating segm ents
Fort Knox
Round Mountain
Kettle River-Buckhorn
Paracatu
Maricunga
Kupol (a)
Tasiast
Chirano
Non-operating segm ent
Corporate and Other (b)
Total
Discontinued operations
Fruta del Norte (c)
Years ended December 31,
2015 vs. 2014
2014 vs. 2013
2015
2014
2013
Change % Change (d) Change % Change
$
(180.8)
(8.9)
30.3
24.4
(60.4)
150.1
(361.2)
(70.1)
$
99.9
44.0
(45.6)
69.3
36.3
297.4
(571.4)
(365.4)
$
251.0
(106.7)
53.6
106.6
(711.6)
328.5
(1,575.4)
(344.4)
$
(280.7)
(52.9)
75.9
(44.9)
(96.7)
(147.3)
210.2
295.3
$
nm
(120%)
166%
(65%)
nm
(50%)
(151.1)
150.7
(99.2)
(37.3)
747.9
(31.1)
37% 1,004.0
(21.0)
81%
(266.3)
(742.9)
$
(591.7)
(1,027.2)
$
(636.8)
(2,635.2)
$
325.4
284.3
$
45.1
55%
$
28% 1,608.0
$
-
$
(5.2)
$
(735.9)
$
5.2
100%
$
730.7
(60%)
141%
(185%)
(35%)
105%
(9%)
64%
(6%)
7%
61%
99%
(a)
The Kupol segment includes the Kupol and Dvoinoye mines.
(b)
"Corporate and Other" includes operating costs w hich are not directly related to individual mining properties such as overhead
expenses, gains and losses on disposal of assets and investments, and other costs relating to non-operating assets (including La
Coipa, Lobo-Marte and White Gold).
(c)
On June 10, 2013, the Company announced its decision to cease development of FDN. As a result, FDN w as reclassified as a
discontinued operation. On December 17, 2014, the Company disposed of its interest in FDN.
(d)
"nm" means not meaningful.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p16 (March 22, 2016 22:35:38)
MDA 16
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Mining operations
Fort Knox (100% ownership and operator) – USA
Years ended December 31,
2015
2014
Change
% Change (c)
Operating Statistics
Tonnes ore mined (000's)
Tonnes processed (000's) (a)
Grade (grams/tonne)(b)
Recovery(b)
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Exploration and business development
Other
Segment operating earnings (loss)
22,761
38,664
0.76
82.9%
14,886
39,386
0.66
84.4%
7,875
(722)
0.10
(1.5%)
401,553
402,104
379,453
408,472
22,100
(6,368)
$
$
467.0
252.8
130.3
252.7
(168.8)
10.6
1.4
(180.8)
$
515.7
291.0
118.0
-
106.7
6.8
-
99.9
$
(48.7)
(38.2)
12.3
252.7
(275.5)
3.8
1.4
(280.7)
$
$
53%
(2%)
15%
(2%)
6%
(2%)
(9%)
(13%)
10%
100%
nm
56%
100%
nm
(a)
(b)
Includes 25,218,000 tonnes placed on the heap leach pads during 2015 (2014 - 25,848,000 tonnes).
Amount represents mill grade and recovery only. Ore placed on the heap leach pads had an average
grade of 0.27 grams per tonne during 2015 (2014 - 0.29 grams per tonne). Due to the nature of heap
leach operations, point-in-time recovery rates are not meaningful.
(c)
"nm" means not meaningful.
The Company has been operating the Fort Knox mine, located near Fairbanks, Alaska, since it was acquired in 1998.
2015 vs. 2014
During 2015, tonnes of ore mined increased by 53% compared with the same period in 2014 due to planned mine sequencing, which
involved mining activities focused on Phase 7 South, and an increase in mine fleet. T onnes of ore processed were 2% lower
compared with 2014, primarily due to a decline in tonnage placed on the heap leach pads as a result of longer haulage cycles arising
from an increase in the proportion of mined ore, rather than stockpile ore, being stacked on the pads. Mill grades were 15% higher
compared with 2014 as a result of an increase in the processing of higher grade ore from Phase 7 South. During 2015, mill
recoveries decreased by 2% compared with the same period in 2014, largely due to the metallurgical characteristics of the ore
mined. Gold equivalent ounces produced increased by 6% compared with 2014, primarily due to the higher mill grades, partially
offset by lower ounces recovered from the heap leach pads due to the decrease in the grade of ore placed on the pads. During
2015, gold equivalent ounces sold decreased by 2% compared with the same period in 2014, primarily due to the timing of
shipments as ounces produced at the end of 2013 were sold in 2014.
Metal sales were 9% lower compared with 2014 due to decreases in metal prices realized and gold equivalent ounces sold.
Production cost of sales decreased by 13% compared with 2014, primarily due to decreases in the cost of diesel and power, partially
offset by higher labour costs largely due to the increase in mine fleet. During 2015, depreciation, depletion and amortization
increased by 10% compared with the same period in 2014, primarily due to an increase in the depreciable asset base.
As at December 31, 2015, the Company recorded impairment charges of $252.7 million, comprised of $249.5 million related to
property, plant and equipment and $3.2 million related to inventory. The non-cash impairment charge related to property, plant
and equipment was primarily due to the reduction in the Company’s estimates of future metal prices. No such impairment charges
were recognized in 2014.
MDA 17
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p17 (March 22, 2016 22:35:39)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Round Mountain (50% ownership and operator; Barrick 50% ownership) – USA
Years ended December 31,
2015
2014
Change
% Change (c)
Operating Statistics
Tonnes ore mined (000's)(a)
Tonnes processed (000's)(a)
Grade (grams/tonne)(b)
Recovery(b)
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Exploration and business development
Segment operating earnings (loss)
26,134
22,084
0.93
77.4%
26,356
26,026
0.94
68.6%
(222)
(3,942)
(0.01)
8.8%
197,818
195,781
169,839
166,441
27,979
29,340
$
$
$
228.1
146.9
44.9
44.0
(7.7)
1.2
(8.9)
211.7
142.3
25.2
-
44.2
0.2
44.0
16.4
4.6
19.7
44.0
(51.9)
1.0
(52.9)
$
$
$
(1%)
(15%)
(1%)
13%
16%
18%
8%
3%
78%
100%
(117%)
nm
(120%)
(a)
Tonnes of ore mined/processed represent 100% of operations. Includes 19,368,000 tonnes
placed on the heap leach pads during 2015 (2014 - 23,098,000).
(b)
Amount represents mill grade and recovery only. Ore placed on the heap leach pads had an
average grade of 0.42 grams per tonne for 2015 (2014 - 0.36 grams per tonne). Due to the nature
of heap leach operations, point-in-time recovery rates are not meaningful.
(c)
"nm" means not meaningful.
The Company acquired its ownership interest in the Round Mountain open pit mine, located in Nye County, Nevada, with the
acquisition of Echo Bay Mines Ltd. ("Echo Bay") on January 31, 2003.
2015 vs. 2014
Tonnes of ore processed in 2015 were 15% lower compared with 2014, primarily due to planned mine sequencing. Mill recoveries
increased by 13% compared with 2014, mainly due to the characteristics of the ore processed through the mill in 2014. Gold
equivalent ounces produced increased by 16% compared with 2014, primarily due to an increase in ounces recovered from the heap
leach pads, largely a result of higher grade ore recently placed on the pads, improved solutions management, a new pH
enhancement system, and improvements made to optimize the flow of the loaded solution to the carbon columns at the ADR
facility.
Metal sales in 2015 increased by 8% compared with 2014 due to an increase in gold equivalent ounces sold, partially offset by a
decrease in metal prices realized. During 2015, production cost of sales increased by 3% compared with 2014, primarily due to
increases in gold equivalent ounces sold and reagent consumption, and higher labour costs, largely offset by a decrease in the cost
of diesel as well as cost reductions achieved as a result of the above mentioned improvements to the heap leach operations.
Depreciation, depletion and amortization increased to $44.9 million from $25.2 million in 2014, primarily due to increases in the
depreciable asset base and gold equivalent ounces sold.
As at December 31, 2015, the Company recorded impairment charges of $44.0 million, including $43.0 million related to property,
plant and equipment due to a reduction in the Company’s estimates of future metal prices. No such impairment charges were
recognized in 2014.
MDA 18
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p18 (March 22, 2016 22:35:39)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Kettle River–Buckhorn (100% ownership and operator) – USA
Years ended December 31,
2015
2014
Change
% Change (a)
Operating Statistics
Tonnes ore mined (000's)
Tonnes processed (000's)
Grade (grams/tonne)
Recovery
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Exploration and business development
Other
Segment operating earnings (loss)
(a) "nm" means not meaningful.
369
437
7.75
92.3%
347
394
9.98
93.5%
22
43
(2.23)
(1.2%)
97,368
97,576
123,382
123,262
(26,014)
(25,686)
$
$
$
113.3
81.6
12.0
-
19.7
2.0
(12.6)
30.3
156.0
83.6
50.2
53.8
(31.6)
2.8
11.2
(45.6)
(42.7)
(2.0)
(38.2)
(53.8)
51.3
(0.8)
(23.8)
75.9
$
$
$
6%
11%
(22%)
(1%)
(21%)
(21%)
(27%)
(2%)
(76%)
(100%)
162%
(29%)
nm
(166%)
The Kettle River–Buckhorn properties are located in Ferry and Okanogan Counties in the State of Washington. Kinross acquired
Kettle River through the acquisition of Echo Bay on January 31, 2003.
2015 vs. 2014
Tonnes of ore mined increased by 6% compared with 2014, primarily due to planned mine sequencing. During 2015, tonnes of ore
processed increased by 11% and grades decreased by 22% compared with 2014, primarily due to increased processing of lower
grade stockpile ore as Kettle River nears the end of its mine life. Gold equivalent ounces produced and sold decreased by 21%,
compared with 2014, largely due to the decrease in grades and timing of ounces processed through the mill, partially offset by the
increase in throughput.
During 2015, metal sales decreased by 27% compared with 2014 due to decreases in metal prices realized and gold equivalent
ounces sold. Production cost of sales decreased by 2% compared with 2014, primarily due to the decrease in gold equivalent ounces
sold and lower labour and fuel costs, largely offset by higher milling and reagent costs associated with the processing of lower grade
stockpile ore. Depreciation, depletion and amortization decreased to $12.0 million from $50.2 million in 2014, primarily due to
decreases in the depreciable asset base and gold equivalent ounces sold.
As at December 31, 2014, the Company recorded impairment charges of $53.8 million, comprised of $20.9 million related to
goodwill and $32.9 million related to property, plant and equipment. The non-cash impairment charge was primarily due to the
mine approaching the end of its life. No such impairment charges were recorded in 2015. During 2015, other costs included a $12.8
million recovery, primarily due to a reduction in the estimated costs expected to be incurred for reclamation and remediation
obligations relating to the closed Kettle-River property.
MDA 19
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p19 (March 22, 2016 22:35:40)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Paracatu (100% ownership and operator) – Brazil
Years ended December 31,
2015
2014
Change
% Change (a)
Operating Statistics
Tonnes ore mined (000's)
Tonnes processed (000's)
Grade (grams/tonne)
Recovery
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Other
Segment operating earnings
(a)
"nm" means not meaningf ul.
47,750
45,277
0.44
75.4%
53,584
51,397
0.41
74.7%
(5,834)
(6,120)
0.03
0.7%
477,662
484,732
521,026
512,327
(43,364)
(27,595)
$
$
559.8
374.3
147.5
3.3
34.7
10.3
24.4
$
644.3
418.2
154.3
-
71.8
2.5
69.3
$
(84.5)
(43.9)
(6.8)
3.3
(37.1)
7.8
(44.9)
$
$
(11%)
(12%)
7%
1%
(8%)
(5%)
(13%)
(10%)
(4%)
100%
(52%)
nm
(65%)
The Company acquired a 49% ownership interest in the Paracatu open pit mine, located in the State of Minas Gerais, Brazil, in the
acquisition of TVX Gold Inc. on January 31, 2003. On December 31, 2004, the Company purchased the remaining 51% of Paracatu
from Rio Tinto Plc.
2015 vs. 2014
During 2015, tonnes of ore mined and processed were lower by 11% and 12%, respectively, compared with 2014, primarily due to
planned mine sequencing, which involved processing, at a reduced throughput and an increased proportion of higher grade B2 ore.
In addition, mill throughput was lower as a result of the lack of rainfall in southcentral Brazil, which led to the temporary suspension
of operations at Paracatu’s Plant 1 facility and one ball mill in Plant 2 in early November 2015. On November 20, 2015, both Plants 1
and 2 resumed full operations. Grades were 7% higher compared with 2014, primarily due to planned mine sequencing. Gold
equivalent ounces produced decreased by 8% compared with 2014, primarily due to the lower mill throughput and timing of ounces
processed through the mill, partially offset by the higher grades. Gold equivalent ounces sold decreased by 5% compared with 2014,
largely due to a decrease in gold equivalent ounces produced, partially offset by timing of shipments.
Metal sales were lower by 13% in 2015 compared with 2014 due to decreases in metal prices realized and gold equivalent ounces
sold. Production cost of sales were lower by 10% compared with 2014, primarily due to the decrease in gold equivalent ounces sold,
lower power and labour costs as a result of favourable foreign exchange movements, and a decrease in grinding media and reagent
costs. Depreciation, depletion and amortization were 4% lower in 2015 compared with the same period in 2014, primarily due to
the decrease in gold equivalent ounces sold. As at December 31, 2015, the Company recorded an impairment charge of $3.3 million
to reduce the carrying value of inventory to its net realizable value. No such impairment charges were recognized in 2014.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p20 (March 22, 2016 22:35:41)
MDA 20
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Maricunga (100% ownership and operator) – Chile
Years ended December 31,
2015
2014
Change
% Change (b)
Operating Statistics (a)
Tonnes ore mined (000's)
Tonnes processed (000's)
Grade (grams/tonne)
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Other
Segment operating earnings (loss)
12,261
12,790
0.75
16,900
16,018
0.74
(4,639)
(3,228)
0.01
212,155
214,055
247,216
247,469
(35,061)
(33,414)
$
$
$
249.1
216.1
27.3
48.7
(43.0)
17.4
(60.4)
314.6
235.9
36.2
-
42.5
6.2
36.3
(65.5)
(19.8)
(8.9)
48.7
(85.5)
11.2
(96.7)
$
$
$
(27%)
(20%)
1%
(14%)
(14%)
(21%)
(8%)
(25%)
100%
nm
181%
nm
(a)
Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
(b)
"nm" means not meaningful.
Kinross acquired its original 50% interest in the Maricunga open pit mine (formerly known as the Refugio mine), located
120 kilometres northeast of Copiapó, Chile in 1998. On February 27, 2007, Kinross acquired the remaining 50% interest in
Maricunga through the acquisition of Bema Gold Corporation (“Bema”).
2015 vs. 2014
Tonnes of ore mined and processed decreased by 27% and 20%, respectively, compared with 2014, primarily due to the planned
stockpile tower replacement in February 2015 and the extreme weather event in March 2015 that caused mining and crushing
operations to be temporarily suspended until May 2015. Gold equivalent ounces produced decreased by 14% compared with 2014,
largely due to a decrease in ounces recovered from the heap leach pads, which was mainly a result of a reduction in the quantity of
ore placed on these pads due to the extreme weather event in March 2015. During 2015, g old equivalent ounces sold exceeded
production due to timing of shipments.
Metal sales decreased by 21% in 2015 compared with 2014 due to decreases in metal prices realized and gold equivalent ounces
sold. Production cost of sales decreased by 8% compared with 2014, primarily due to the decrease in gold equivalent ounces sold,
lower labour and consumable costs resulting from favourable foreign exchange movements, partially offset by increases in the cost
of power and consumption of cyanide. Depreciation, depletion and amortization were 25% lower in 2015 compared with 2014,
primarily due to the decrease in gold equivalent ounces sold.
At December 31, 2015, the Company recorded an impairment charge of $24.2 million to reduce the carrying value of inventory to its
net realizable value. In addition, a t June 30, 2015, the carrying value of inventory was written down by $24.5 million due to the
extreme weather event, which resulted in an increase in the per ounce cost to complete inventory, primarily due to additional
energy and other costs related to the return to normal production of the heap leach, and also due to the expected delay in the
recovery of ounces from the heap leach over the subsequent months as a result of fewer tonnes being placed since March 2015. No
such impairment charges were recognized during 2014. During 2015, other costs of $17.4 million were incurred, primarily related to
the March 2015 extreme weather event.
MDA 21
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p21 (March 22, 2016 22:35:42)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Kupol (100% ownership and operator) – Russian Federation (a)
Operating Statistics
Tonnes ore mined (000's) (b)
Tonnes processed (000's)
Grade (grams/tonne):
Gold
Silver
Recovery:
Gold
Silver
Gold equivalent ounces: (c)
Produced
Sold
Silver ounces:
Produced (000's)
Sold (000's)
Years ended December 31,
2015
2014
Change
% Change
1,897
1,680
13.52
100.75
95.4%
86.7%
1,742
1,665
13.51
92.91
94.9%
85.1%
155
15
0.01
7.84
0.5%
1.6%
758,563
764,613
751,101
750,998
7,462
13,615
9%
1%
0%
8%
1%
2%
1%
2%
4,700
4,730
4,273
4,331
427
399
10%
9%
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Exploration and business development
Other
$
883.2
362.8
271.3
84.7
164.4
14.5
(0.2)
$
947.5
380.5
254.7
-
312.3
14.9
-
$
(64.3)
(17.7)
16.6
84.7
(147.9)
(0.4)
(0.2)
Segment operating earnings
$
150.1
$
297.4
$
(147.3)
(7%)
(5%)
7%
100%
(47%)
(3%)
(100%)
(50%)
(a)
The Kupol segment includes the Kupol and Dvoinoye mines.
(b)
(c)
Includes 605,000 tonnes of ore mined from Dvoinoye during 2015, respectively (2014 - 439,000).
"Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent
based on a ratio of the average spot market prices for the commodities for each period. The ratio
for 2015 was 73.92:1 (2014 - 66.29:1).
The Company acquired a 75% interest in the Kupol project in Far Eastern Russia on February 27, 2007 through the acquisition of
Bema. The remaining 25% interest was acquired from the State Unitary Enterprise of the Chukotka Autonomous Okrug on April 27,
2011.
2015 vs. 2014
Tonnes of ore mined increased by 9% compared with 2014, primarily due to increased mining activity at Dvoinoye. During 2015,
gold equivalent ounces produced were slightly higher compared with the same period in 2014, largely due to an increase in the
proportion of higher grade Dvoinoye ore processed, partially offset by a less favourable gold equivalent ratio. Go ld equivalent
ounces sold increased by 2% compared with 2014 due to the increase in gold equivalent ounces produced and timing of shipments.
During 2015, metal sales decreased by 7% compared with 2014 due to a decrease in metal prices realized, partially offset by the
increase in gold equivalent ounces sold. Production cost of sales decreased by 5% compared with 2014, primarily due to lower
labour, reagent and fuel costs as a result of favourable foreign exchange movements. Depreciation, depletion and amortization
increased by 7% compared with 2014, primarily due to an increase in the depreciable asset base of the Dvoinoye mine, partially
offset by an increase in the mineral reserves of the Kupol mine at December 31, 2014. At December 31, 2015, the Company
recorded an impairment charge of $84.7 million to reduce the carrying value of inventory to its net realizable value.
MDA 22
Kinross Gold 2015
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Tasiast (100% ownership and operator) – Mauritania
Years ended December 31,
2015
2014
Change % Change
Operating Statistics
Tonnes ore mined (000's)
Tonnes processed (000's) (a)
Grade (grams/tonne) (b)
Recovery (b)
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Exploration and business development
Other
Segment operating loss
5,195
4,080
2.17
90.5%
16,647
10,584
2.16
90.9%
(11,452)
(6,504)
0.01
(0.4%)
219,045
216,040
260,485
252,668
(41,440)
(36,628)
$
$
$
249.4
220.6
80.9
259.7
(311.8)
14.1
35.3
(361.2)
319.8
252.2
66.6
505.5
(504.5)
16.0
50.9
(571.4)
(70.4)
(31.6)
14.3
(245.8)
192.7
(1.9)
(15.6)
210.2
$
$
$
(69%)
(61%)
0%
(0%)
(16%)
(14%)
(22%)
(13%)
21%
(49%)
38%
(12%)
(31%)
37%
(a)
(b)
Includes 1,538,000 tonnes placed on the dump leach pads during 2015 (2014 - 8,028,000 tonnes).
Amount represents mill grade and recovery only. Ore placed on the dump leach pads had an
average grade of 0.55 grams per tonne during 2015 (2014 - 0.66 grams per tonne). Due to the
nature of dump leach operations, point-in-time recovery rates are not meaningful.
Kinross acquired its 100% interest in the Tasiast mine on September 17, 2010 upon completing its acquisition of Red Back Mining Inc.
(“Red Back”). The Tasiast mine is an open pit operation located in north-western Mauritania and is approximately 300 kilometres
north of the capital Nouakchott.
2015 vs. 2014
During 2015, tonnes of ore mined decreased by 69% compared with 2014, primarily due to planned mine sequencing which involved
mining only from the West Branch area of the deposit. Tonnes of ore placed on the dump leach pads and the related ore grade
decreased by 81% and 17%, respectively, mainly due to reduced availability of oxide ore. Gold equivalent ounces produced
decreased by 16% compared with 2014, primarily due to lower ounces recovered from the dump leach pads.
Metal sales decreased by 22% compared with 2014 due to decreases in metal prices realized and gold equivalent ounces sold.
Production cost of sales were lower by 13% compared with 2014, primarily due to the decrease in gold equivalent ounces sold,
lower fuel costs, and reduced consumption of reagents as a result of the decrease in tonnes of ore processed. These decreases were
partially offset by an increase in maintenance costs. Depreciation, depletion and amortization increased by 21% in 2015 compared
with 2014, largely due to an increase in the depreciable asset base. During 2015, other costs of $35.3 million included severance
costs of $5.8 million.
As at December 31, 2015, the Company recorded impairment charges of $259.7 million, comprised of $147.0 million related to
property, plant and equipment, $98.0 million related to inventory and $14.7 million related to other assets. The non-cash
impairment charge related to property, plant and equipment was primarily due to the reduction in the Company’s estimates of
future metal prices. The impairment charge for inventory was recognized to reduce the carrying value of certain supplies and metal
inventory to net realizable value.
As at December 31, 2014, the Company recorded impairment charges of $505.5 million, comprised of $342.5 million related to
property, plant and equipment and $163.0 million related to inventory. The non- cash impairment charge for property, plant and
equipment was primarily due to a change in estimated future operating costs, operating cost underperformance of the existing mill
and a decision not to proceed with a 38,000 tonne per day mill expansion at that time. The impairment charge of $163.0 million
related to inventory was recorded to reduce the carrying value of inventory to its net realizable value.
MDA 23
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p23 (March 22, 2016 22:35:43)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Chirano (90% ownership and operator) – Ghana(a)
Operating Statistics
Tonnes ore mined (000's)
Tonnes processed (000's)
Grade (grams/tonne)
Recovery
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Exploration and business development
Other
Segment operating loss
Years ended December 31,
2015
2014
Change
% Change
3,046
3,492
2.51
90.6%
3,221
3,144
3.08
91.9%
(175)
348
(0.57)
(1.3%)
256,098
259,966
286,542
280,396
(30,444)
(20,430)
$
302.3
179.7
175.0
$
354.9
165.8
159.7
$
(52.6)
13.9
15.3
5.9
(58.3)
13.5
(1.7)
(70.1)
$
370.0
(340.6)
13.1
11.7
(365.4)
$
(364.1)
282.3
0.4
(13.4)
295.3
$
(5%)
11%
(19%)
(1%)
(11%)
(7%)
(15%)
8%
10%
(98%)
83%
3%
(115%)
(81%)
(a)
Operating and financial data are at 100% for all periods.
Kinross acquired its 90% interest in the Chirano mine on September 17, 2010 upon completing its acquisition of Red Back. Chirano is
located in southwestern Ghana, approximately 100 kilometres southwest of Kumasi, Ghana's second largest city. A 10% carried
interest is held by the government of Ghana.
2015 vs. 2014
Tonnes of ore mined decreased by 5% compared with 2014, primarily due to reduced mining activity at the Tano open pit and the
Akwaaba underground deposit, partially offset by an increase in mining activity at the Mamnao open pit and Paboase underground
deposit. Tonnes of ore processed were 11% higher compared with 2014, primarily due to repairs at the mill, which were completed
in June 2014, along with increased mill availability. Grades were 19% lower compared with 2014, largely due to declining
contribution from the higher grade Akwaaba underground deposit. During 2015, gold equivalent ounces produced were 11% lower
compared with 2014, primarily due to the lower grades, partially offset by an increase in tonnes processed. Gold equivalent ounces
sold in 2015 exceeded production due to timing of shipments.
Metal sales were lower by 15% compared with 2014 due to decreases in metal prices realized and gold equivalent ounces sold.
During 2015, production cost of sales increased by 8% compared with 2014, primarily due to an increase in power costs and higher
labour and underground mobile equipment maintenance costs as a result of the transition to underground self-perform mining in
the second quarter of 2014. Depreciation, depletion and amortization were 10% higher compared with 2014, largely due to an
increase in the depreciable asset base attributable to the equipment acquired to self-perform underground mining operations and a
decrease in mineral reserves at December 31, 2014.
At December 31, 2015, the Company recorded an impairment charge of $5.9 million to reduce the carrying value of inventory to its
net realizable value. As at December 31, 2014, the Company recorded impairment charges of $370.0 million, comprised of $365.4
million related to property, plant and equipment and $4.6 million related to inventory. The non-cash impairment charge for
property, plant and equipment was mainly a result of a decrease in exploration potential. The impairment charge of $4.6 million
related to inventory was recorded to reduce the carrying value of inventory to its net realizable value.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p24 (March 22, 2016 22:35:44)
MDA 24
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Discontinued operations
FDN – Ecuador
On June 10, 2013, the Company announced that it would not proceed with further development of the FDN project in Ecuador as
the Government of Ecuador and Kinross were unable to agree on certain key economic and legal terms.
On October 21, 2014, Kinross announced that it had entered into an agreement with Lundin Gold Inc. (“Lundin Gold”) to sell all of its
interest in Aurelian Resources Inc., (“Aurelian”) and the FDN project in Ecuador for $240.0 million in cash and shares. On December
17, 2014, the Company completed the sale for gross cash proceeds of $150.0 million and $90.0 million in Lundin Gold common
shares, resulting in an after-tax recovery of $238.0 million.
MDA 25
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p25 (March 22, 2016 22:35:45)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Impairment charges
(in millions)
Goodwill (i)
Property, plant and equipment (i)
Inventory and other assets (ii)
Impairment charges
2015
$
-
439.5
259.5
699.0
$
i.
Goodwill and property, plant and equipment
Years ended December 31,
2014
Change
% Change
$
$
145.3
938.5
167.6
1,251.4
(145.3)
(499.0)
91.9
(552.4)
(100%)
(53%)
55%
(44%)
$
$
At December 31, 2015, upon completion of its annual assessment of the carrying values of its CGUs, the Company recorded an after-
tax impairment charge of $430.2 million as a result of decreases in the Company’s short-term and long-term gold price estimates.
The impairment charge was entirely related to property, plant and equipment and included a charge of $240.2 million at Fort Knox,
$147.0 million at Tasiast, and $43.0 million at Round Mountain. The Fort Knox impairment charge is net of a tax recovery of $9.3
million, which was recorded within income tax expense.
At December 31, 2014, the Company recorded an after-tax impairment charge of $932.2 million, upon completion of its annual
assessment of the carrying values of its CGUs. The impairment charge included goodwill impairment of $145.3 million and property
plant and equipment impairment of $786.9 million. The property, plant and equipment impairment was net of a tax recovery of
$127.9 million, and non-controlling interest of $23.7 million.
The following table summarizes the goodwill and property, plant and equipment impairment charges, and the related tax recovery,
recognized as at December 31, 2014:
CGU
Tasiast
Chirano
Kettle River-Buckhorn
La Coipa
Lobo-Marte
White Gold
Total
Goodwill
-
$
-
20.9
124.4
-
-
$
145.3
Property, plant
and equipment
342.5
$
329.0
32.9
-
118.5
79.2
902.1
$
Tax recovery
$
-
(115.2)
-
-
-
-
$
(115.2)
Total after-tax
impairment
$
342.5
213.8
53.8
124.4
118.5
79.2
932.2
$
The impairment charge at Tasiast reflects a change in estimated future operating costs, operating cost underperformance of the
existing mill and a decision not to proceed with a 38,000 tonne per day mill expansion at that time. Chirano’s impairment charge
was related to a decrease in exploration potential.
The impairment charges at La Coipa and Lobo-Marte were a result of declines in valuations in Chile and a reduction in mineral
reserves at Lobo-Marte. The charge at Kettle River-Buckhorn was a result of the mine approaching the end of its life and the charge
at White Gold was a result of a reduction in exploration potential.
Also as a result of its annual impairment assessment at December 31, 2014, the Company recognized an impairment charge of
$156.6 million related to its investment in Cerro Casale. The impairment charge was recorded in other income (expense).
The significant estimates and assumptions used in the above mentioned impairment assessments are disclosed in Note 3 to the
financial statements.
Impairment charges recognized against property, plant and equipment may be reversed if there are changes in the assumptions or
estimates used in determining the recoverable amounts of the CGUs which indicate that a previously recognized impairment loss
may no longer exist or may have decreased.
ii.
Inventory and other assets
During 2015, the Company recognized impairment charges of $259.5 million related to inventory and other assets. The inventory
MDA 26
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p26 (March 22, 2016 22:35:46)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
impairment charge of $244.8 million was recorded to reduce the carrying value of certain metal and supplies inventory to net
realizable value. During 2014, impairment charges of $167.6 million were recorded within cost of sales to reduce the carrying value
of inventory to its net realizable value.
Exploration and business development
(in millions)
2015
2014
Change
% Change
Exploration and business development
$
108.0
$
105.6
$
2.4
2%
Years ended December 31,
During 2015, exploration and business development expenses were $108.0 million compared with $105.6 million in 2014. Of the
total exploration and business development expense, expenditures on exploration totaled $79.9 million in 2015 compared with
$79.6 million in 2014. Capitalized exploration expenses, including capitalized evaluation expenditures, totaled $11.7 million
compared with $2.1 million during 2014.
Kinross was active on more than 21 mine sites, near-mine and greenfield initiatives in 2015, with a total 339,708 metres drilled.
Kinross was active on more than 32 mine sites, near-mine and greenfield initiatives in 2014, with a total of 257,858 metres drilled.
General and administrative
(in millions)
2015
2014
Change
% Change
General and administrative
$
179.4
$
178.8
$
0.6
0%
Years ended December 31,
General and administrative costs include expenses related to the overall management of the business which are not part of direct
mine operating costs. These are costs that are incurred at corporate offices located in Canada, Brazil, the Russian Federation, Chile,
and the Canary Islands.
General and administrative costs in 2015 included $16.4 million of corporate related restructuring costs.
Other income (expense) – net
During 2015, other income (expense) decreased to an expense of $20.3 million from an expense of $215.5 million in 2014. The
discussion below details the significant changes in other income (expense) for 2015 compared with 2014.
(in millions)
Years ended December 31,
2015
2014
Change
% Change (a)
Losses on sale of other assets - net
$
(16.2)
$
(3.1)
$
(13.1)
Impairment of investments
Foreign exchange losses
Net non-hedge derivative losses
Other
Other income (expense) - net
(a) "nm" means not meaningful.
Gains (losses) on sale of other assets - net
(7.6)
(30.6)
(3.4)
37.5
(158.1)
(50.1)
(5.1)
0.9
150.5
19.5
1.7
36.6
$
(20.3)
$
(215.5)
$
195.2
During 2015, the sale of other assets resulted in a loss of $16.2 million compared with a loss of $3.1 million in 2014.
nm
95%
39%
33%
nm
91%
MDA 27
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p27 (March 22, 2016 22:35:46)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Impairment of investments
During 2015, the Company recognized impairment charges of $7.6 million on certain of its available-for-sale investments due to a
significant or prolonged decline in the fair value of the investments. As at December 31, 2014, the Company recognized an
impairment charge of $158.1 million, of which $156.6 million was related to the impairment of the Company’s investment in Cerro
Casale and $1.5 million related to the impairment of certain of its available-for-sale investments.
Foreign exchange losses
During 2015, foreign exchange losses were $30.6 million compared with losses of $50.1 million in 2014. The foreign exchange losses
of $30.6 million in 2015 were mainly due to the translation of net monetary assets denominated in foreign currencies to the U.S.
dollar, with the U.S. dollar having strengthened against the Russian rouble, Brazilian real, Chilean peso, Canadian dollar, Ghanaian
cedi and Mauritanian ouguiya at December 31, 2015 relative to December 31, 2014.
The foreign exchange losses of $50.1 million during 2014 were largely due to the translation of net monetary assets denominated in
foreign currencies to the U.S. dollar, with the U.S. dollar having strengthened against the Brazilian real, Ghanaian cedi, Chilean peso,
Russian rouble, Canadian dollar and Mauritanian ouguiya at December 31, 2014 relative to December 31, 2013.
Other
Other gains of $37.5 million recognized in 2015 included insurance recoveries of $31.7 million related to Chirano and Maricunga.
Finance expense
(in millions)
Finance expense
Years ended December 31,
2015
2014
Change
% Change
$
96.0
$
80.1
$
15.9
20%
Finance expense includes accretion on reclamation and remediation obligations and interest expense.
Finance expense increased by $15.9 million compared with 2014, largely due to an increase in interest expense. During 2015,
interest expense was $68.2 million compared with $52.0 million in 2014, with the increase primarily due to a reduction in interest
capitalized as well as additional interest recognized on the $500.0 million senior notes issued in March 2014. Interest capitalized
was $40.5 million in 2015 compared with $62.7 million in 2014, with the decrease mainly due to lower qualifying capital
expenditures.
Income and mining taxes
Kinross is subject to tax in various jurisdictions including Canada, the United States, Brazil, Chile, the Russian Federation, Mauritania,
and Ghana.
Income tax expense in 2015 was $141.7 million, compared with an income tax expense of $109.7 million in 2014. The $141.7 million
tax expense in 2015 included a $30.3 million recovery due to impairment charges and $132.9 million of expense due to re-
measurements of deferred tax assets and liabilities, as a result of significant fluctuations in foreign exchange rates with respect to
the Brazilian real and the Russian rouble. The $109.7 million tax expense in 2014 included $137.8 million of recovery due to
impairment charges and $145.5 million of expense due to re-measurements of deferred tax assets and liabilities as a result of
income tax reforms enacted in Chile and significant fluctuations in foreign exchange rates with respect to the Brazilian real and the
Russian rouble. Kinross' combined federal and provincial statutory tax rate for both 2015 and 2014 was 26.5%.
There are a number of factors that can significantly impact the Company's effective tax rate, including the geographic distribution of
income, varying rates in different jurisdictions, the non-recognition of tax assets, mining allowance, foreign currency exchange rate
movements, changes in tax laws, and the impact of specific transactions and assessments.
Due to the number of factors that can potentially impact the effective tax rate and the sensitivity of the tax provision to these
factors, as discussed above, it is expected that the Company's effective tax rate will fluctuate in future periods.
MDA 28
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p28 (March 22, 2016 22:35:47)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
6. LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes Kinross’ cash flow activity:
(in millions)
Cash flow
Of continuing operations provided from
operating activities
Of continuing operations used in investing
activities
Of continuing operations used in financing
activities
Of discontinued operations (a)
Effect of exchange rate changes on cash and cash
equivalents of continuing operations
Years ended December 31,
2015
2014
Change
% Change
$
831.6
$
858.1
$
(26.5)
(632.6)
(634.6)
2.0
(131.7)
1.0
(94.2)
139.4
(37.5)
(138.4)
(3%)
0%
(40%)
(99%)
(7.9)
(19.7)
11.8
60%
Increase in cash and cash equivalents
60.4
249.0
(188.6)
(76%)
Cash and cash equivalents, beginning of period
983.5
734.5
249.0
Cash and cash equivalents, end of period
$
1,043.9
$
983.5
$
60.4
34%
6%
(a) On June 10, 2013, the Company announced its decision to cease development of FDN. As a result, FDN was
classified as a discontinued operation. On December 17, 2014, the Company sold its interest in FDN.
Cash and cash equivalent balances increased by $60.4 million in 2015 compared with an increase of $249.0 million in 2014. Detailed
discussions regarding cash flow movements from continuing operations are noted below.
Operating Activities
2015 vs. 2014
Net cash flow provided from operating activities decreased by $26.5 million in 2015 compared with 2014. The decrease in cash flows
was largely the result of the decrease in margins, partially offset by favourable working capital changes.
Investing Activities
2015 vs. 2014
Net cash flow used in investing activities was $632.6 million in 2015 compared with $634.6 million in 2014. The primary use of cash
in 2015 was for capital expenditures of $610.0 million and additions to long-term investments and other assets of $59.7 million,
partially offset by a decrease in restricted cash of $30.8 million. The primary use of cash in 2014 was for capital expenditures of
$631.8 million and additions to long-term investments and other assets of $55.5 million, partially offset by the proceeds on disposal
of property, plant and equipment of $30.5 million.
MDA 29
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p29 (March 22, 2016 22:35:48)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
The following table presents a breakdown of capital expenditures on a cash basis:
(in millions)
Operating segments
Fort Knox
Round Mountain
Kettle River - Buckhorn
Paracatu
Maricunga
Kupol (a)
Tasiast
Chirano
Non-operating segment
Corporate and Other (b)
Total
Year ended December 31,
2015 vs. 2014
2015
2014
Change
% Change
$
140.8
$
86.0
$
54.8
48.5
0.6
112.7
24.5
55.9
161.2
30.5
35.3
44.6
6.8
112.6
29.7
91.3
181.0
42.2
37.6
3.9
(6.2)
0.1
(5.2)
(35.4)
(19.8)
(11.7)
(2.3)
$
610.0
$
631.8
$
(21.8)
64%
9%
(91%)
0%
(18%)
(39%)
(11%)
(28%)
(6%)
(3%)
(a) Includes $14.5 million of capital expenditures at Dvoinoye during 2015 (2014 - $34.1 million).
(b) "Corporate and Other" includes corporate and other non-operating assets (including La Coipa, Lobo-Marte and
White Gold).
During 2015, capital expenditures decreased by $21.8 million compared with 2014. The decrease in capital expenditures was
primarily due to decreased spending at Kupol and Tasiast, partially offset by increased spending at Fort Knox related to Phase 8.
Financing Activities
2015 vs. 2014
Net cash flow used in financing activities was $131.7 million in 2015 compared with cash used of $94.2 million in 2014. During 2015,
the Company made repayments of debt of $80.0 million on the Kupol loan, which resulted in its full repayment. During 2014, the
Company made a net repayment of debt of $67.1 million, which included repayments of $500.0 million of the term loan and $60.0
million of the Kupol loan, partially offset by net proceeds of $492.9 million received from the issuance of senior notes on March 6,
2014. In addition, total interest paid during 2015 was $91.5 million, of which $48.8 million was included in financing activities. Total
interest paid during 2014 was $82.4 million, of which $20.6 million was included in financing activities.
Cash Flow from Discontinued Operations
Net cash flow from discontinued operations decreased by $138.4 million compared with 2014. The decrease in cash flow was due to
gross cash proceeds of $150.0 million received in 2014 on completion of the sale of Aurelian and the FDN project.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p30 (March 22, 2016 22:35:49)
MDA 30
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Balance Sheet
(in millions)
Cash and cash equivalents
Current assets
Total assets
As at December 31,
2015
2014
2013
$
1,043.9
$
983.5
$
734.5
$
2,292.1
$
2,587.1
$
2,405.8
$
7,735.4
$
8,951.4
$
10,286.7
Current liabilities, including current portion of long-term debt
$
701.8
$
604.4
$
712.9
Total long-term financial liabilities (a)
Total debt, including current portion
Total liabilities
Common shareholders' equity
Non-controlling interest
Statistics
Working capital (b)
Working capital ratio (c)
$
2,452.7
$
2,779.0
$
2,757.5
$
1,981.4
$
2,058.1
$
2,119.6
$
3,802.2
$
4,059.6
$
4,196.8
$
3,889.3
$
4,843.0
$
6,014.0
$
43.9
$
48.8
$
75.9
$
1,590.3
$
1,982.7
$
1,692.9
3.27:1
4.28:1
3.37:1
(a) Includes long-term debt, provisions, and unrealized fair value of derivative liabilities.
(b) Calculated as current assets less current liabilities.
(c) Calculated as current assets divided by current liabilities.
At December 31, 2015, Kinross had cash and cash equivalents of $1.0 billion, an increase of $60.4 million from the balance as at
December 31, 2014, primarily due to net operating cash flows of $831.6 million, partially offset by cash outflows of $610.0 million
used in the purchase of property, plant and equipment, $59.7 million for additions to long-term investments and other assets, and
$80.0 million for the repayment of the Kupol loan. Current assets decreased to $2,292.1 million, mainly as a result of inventory
impairment charges, partially offset by the increase in cash and cash equivalents. Total assets decreased by $1,216.0 million to
$7,735.4 million, largely due to impairment charges related to inventory and property, plant and equipment. Current liabilities
increased to $701.8 million, largely due to the increase in the current portion of long-term debt related to the $250.0 million senior
notes due in August 2016. This was partially offset by the $80.0 million repayment of the Kupol loan during 2015. Total debt
decreased by $76.7 million to $1,981.4 million, primarily due to the repayment of the Kupol loan.
At December 31, 2014, Kinross had cash and cash equivalents of $983.5 million, an increase of $249.0 million from the balance as at
December 31, 2013, primarily due to net operating cash flows of $858.1 million and proceeds of $150.0 million received from the
sale of its interest in Aurelian and the FDN project, partially offset by cash flows of $631.8 million used in the purchase of property,
plant and equipment and the periodic repayment of $60.0 million on the Kupol loan. Current assets increased to $2,587.1 million,
primarily due to an increase in cash and cash equivalents. Total assets decreased by $1,335.3 million to $8,951.4 million, primarily
due to the recognition of impairment charges related to property, plant and equipment, goodwill, inventory and investment in
associate, partially offset by an increase in current assets and long-term investments. Current liabilities decreased to $604.4 million,
largely due to a decrease in accounts payable and accrued liabilities. Total debt decreased by $61.5 million to $2,058.1 million,
primarily due to repayments of $500.0 million of the term loan and $60.0 million of the Kupol loan, partially offset by net proceeds
of $492.9 million received from the issuance of senior notes on March 6, 2014.
As of February 9, 2016, there were 1,146.5 million common shares of the Company issued and outstanding. In addition, at the same
date, the Company had 13.3 million share purchase options outstanding under its share option plan.
MDA 31
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p31 (March 22, 2016 22:35:50)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Financings and Credit Facilities
Senior notes
On August 22, 2011, the Company completed a $1.0 billion offering of debt securities, consisting of $250.0 million principal amount
of 3.625% senior notes due 2016, $500.0 million principal amount of 5.125% senior notes due 2021 and $250.0 million principal
amount of 6.875% senior notes due 2041. Kinross received net proceeds of $980.9 million from the offering, after discount and
payment of fees and expenses related to the offering.
On March 6, 2014, the Company completed a $500.0 million offering of debt securities consisting of 5.950% senior notes due 2024.
Kinross received net proceeds of $492.9 million from the offering, after discount and payment of fees and expenses related to the
offering.
The senior notes referred to above (collectively, the “notes”) pay interest semi-annually. Except as noted below, the notes are
redeemable by the Company, in whole or part, for cash at any time prior to maturity, at a redemption price equal to the greater of
100% of the principal amount or the sum of the present value of the remaining scheduled principal and interest payments on the
notes discounted at the applicable treasury rate, as defined in the indentures, plus a premium of between 40 and 50 basis points,
plus accrued interest, if any. Within three months of maturity of the notes due in 2021 and 2024 and within six months of maturity
of the notes due in 2041, the Company can only redeem the notes in whole at 100% of the principal amount plus accrued interest, if
any. In addition, the Company is required to make an offer to repurchase the notes prior to maturity upon certain fundamental
changes at a repurchase price equal to 101% of the principal amount of the notes plus accrued and unpaid interest to the
repurchase date, if any.
Kupol loan
On December 21, 2011, the Company completed a $200.0 million non-recourse loan from a group of international financial
institutions. The non-recourse loan carried a term of five years with a maturity date of September 30, 2016, and had an annual
interest of LIBOR plus 2.5%. Semi-annual principal repayments of $30.0 million commenced in March 2013 and continued through
September 30, 2015. Principal repayments were scheduled for March 31, 2016 and September 30, 2016, in the amounts of $13.0
million and $7.0 million, respectively. On September 30, 2015, the Company prepaid the remaining $20 million, resulting in full
repayment of the loan.
Corporate revolving credit and term loan facilities
In August 2012, the Company completed a new unsecured term loan facility for $1,000.0 million. The facility was set to mature on
August 10, 2015, with the full amount having been drawn on August 22, 2012. Also, in August 2012, under the same agreement, the
Company amended the revolving credit facility increasing the available amount to $1,500.0 million and extending the maturity date
from March 2015 to August 2017.
On June 10, 2013, the Company amended its $1,500.0 million revolving credit facility and $1,000.0 million term loan to extend the
respective maturity dates and remove the minimum tangible net worth covenant. The revolving credit facility’s term was extended
by one year to August 10, 2018 from August 10, 2017, and the term loan was extended by two years to mature on August 10, 2017
from August 10, 2015.
On March 10, 2014, the Company repaid $500.0 million of the term loan, leaving a balance of $500.0 million outstanding. On July
28, 2014, the Company extended the maturity dates of the term loan and revolving credit facility by one year to August 10, 2018 and
August 10, 2019, respectively. On July 24, 2015, the Company extended the maturity dates of the term loan and revolving credit
facility by one year to August 10, 2019 and August 10, 2020, respectively. As at December 31, 2015, the Company had utilized $31.3
million (December 31, 2014 – $32.1 million) of the amended revolving credit facility. The amount utilized was entirely for letters of
credit. On January 4, 2016, the Company drew $175.0 million in cash on the revolving credit facility.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p32 (March 22, 2016 22:35:50)
MDA 32
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Loan interest for both the amended revolving credit facility and the amended term loan is variable, set at LIBOR plus an interest rate
margin which is dependent on the Company’s credit rating. Based on the Company’s credit rating at December 31, 2015, interest
charges and fees, are as follows:
Type of credit
Dollar based LIBOR loan:
Term Loan
Revolving credit facility
Letters of credit
Standby fee applicable to unused availability
LIBOR plus 1.65%
LIBOR plus 1.70%
1.13-1.70%
0.34%
When the term loan was originally arranged in August 2012, the Company entered into interest rate swaps to swap the underlying 1-
month LIBOR interest rate into a fixed rate of 0.49% for the original three year term ending August 10, 2015. During the second
quarter of 2013, the term loan maturity was extended to August 2017. Accordingly, the interest rate swaps only hedged the term
loan’s interest rate exposure until the original maturity of August 2015. Concurrent with the repayment of $500.0 million of the
term loan on March 10, 2014, the Company closed out 60% of the interest rate swaps. The remaining outstanding interest rate
swaps that hedged 80% of the remaining underlying floating rate term loan matured on August 10, 2015.
The amended revolving credit facility and unsecured term loan were arranged under one credit agreement, which contains various
covenants including limits on indebtedness, asset sales and liens. The significant financial covenant is a ratio of net debt to EBITDA,
as defined in the agreement, of no more than 3.5:1. The Company is in compliance with this covenant at December 31, 2015.
Other
On June 15, 2012, the Company entered into an amendment to increase the amount of its Letter of Credit guarantee facility with
EDC from $136.0 million to $200.0 million and to extend the maturity date to March 31, 2015. On July 17, 2014, the Company
further amended this facility to increase the amount from $200.0 million to $250.0 million. Effective March 31, 2015, the maturity
date for this facility was extended to June 30, 2016. Letters of credit guaranteed by this facility are solely for reclamation liabilities
at Fort Knox, Round Mountain, and Kettle River–Buckhorn. Fees related to letters of credit under this facility are 1.00% to 1.25%. As
at December 31, 2015, $212.7 million (December 31, 2014 - $207.2 million) was utilized under this facility.
In addition, at December 31, 2015, the Company had $33.4 million (December 31, 2014 - $49.3 million) in letters of credit
outstanding in respect of its operations in Brazil, Mauritania and Ghana. These letters of credit have been issued pursuant to
arrangements with certain international banks.
From time to time, the Company’s operations in Brazil may borrow U.S. dollars from Brazilian banks on a short-term unsecured basis
to meet working capital requirements. As at December 31, 2015 and 2014, $nil was outstanding under such borrowings.
The following table outlines the credit facility utilization and availability:
(in millions)
As at December 31,
2015
2014
Utilization of revolving credit facility
$
(31.3)
$
(32.1)
Utilization of EDC facility
Borrowings
(212.7)
(207.2)
$
(244.0)
$
(239.3)
Available under revolving credit facility
$
1,468.7
$
1,467.9
Available under EDC credit facility
37.3
42.8
Available credit
$
1,506.0
$
1,510.7
Total debt of $1,981.4 million at December 31, 2015 consists of $1,483.4 million for the senior notes and $498.0 million for the
corporate term loan facility. The current portion of this debt is $249.5 million at December 31, 2015.
MDA 33
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p33 (March 22, 2016 22:35:51)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Liquidity Outlook
As discussed in Section 4 of the MD&A, on January 11, 2016, the Company completed its acquisition of Bald Mountain and the
remaining 50% interest in Round Mountain for $610.0 million in cash. In addition, the Company expects to repay $250.0 million of
debt related to the 3.625% senior notes.
We believe that the Company’s existing cash and cash equivalents balance of $1,043.9 million, available credit of $1,506.0 million,
and expected operating cash flows based on current assumptions (noted in Section 3 of this MD&A) will be sufficient to fund
operations, our forecasted exploration and capital expenditures (noted in Section 3 of this MD&A), reclamation and remediation
obligations currently estimated for 2016 and the payments discussed above. Prior to any capital investments, consideration is given
to the cost and availability of various sources of capital resources.
With respect to longer term capital expenditure funding requirements, the Company continues to have discussions with lending
institutions that have been active in the jurisdictions in which the Company’s development projects are located. Some of the
jurisdictions in which the Company operates have seen the participation of lenders including export credit agencies, development
banks and multi-lateral agencies. The Company believes the capital from these institutions combined with traditional bank loans
and capital available through debt capital market transactions may fund a portion of the Company’s longer term capital expenditure
requirements. Another possible source of capital could be proceeds from the sale of non-core assets. These capital sources
together with operating cash flow and the Company’s active management of its operations and development activities will enable
the Company to maintain an appropriate overall liquidity position.
Contractual Obligations and Commitments
The following table summarizes our long-term financial liabilities and off-balance sheet contractual obligations as at December 31,
2015:
(in millions)
Long-term debt obligations (a)
Operating lease obligations
Purchase obligations (b)
Reclamation and remediation obligations
Interest and other fees (a)
Derivative liabilities - net
Total
Total
2016
2017
2018
2019
2020
2021 and thereafter
$
2,000.0
$
250.0
$
-
$
-
$
500.0
$
-
$
1,250.0
28.6
612.4
1,246.6
928.3
15.0
9.2
330.2
38.0
99.0
15.0
7.7
183.3
49.6
88.6
-
5.2
53.1
36.3
88.6
-
4.4
3.1
34.7
85.1
-
1.6
2.1
122.8
76.2
-
0.5
40.6
965.2
490.8
-
$
4,830.9
$
741.4
$
329.2
$
183.2
$
627.3
$
202.7
$
2,747.1
(a) Debt repayments are based on amounts due pursuant to the terms of the loan agreements. Projected interest payments on variable rate debt are based on interest rates in
effect on December 31, 2015.
(b) Includes both capital and operating commitments, of which $19.9 million relates to commitments for capital expenditures.
The Company manages its exposure to fluctuations in input commodity prices, currency exchange rates and interest rates, by
entering into derivative financial instruments from time to time, in accordance with the Company's risk management policy.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p34 (March 22, 2016 22:35:52)
MDA 34
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
The following table provides a summary of derivative contracts outstanding at December 31, 2015, all of which mature in 2016:
Foreign currency
Brazilian real forward buy contracts
(in millions of U.S. dollars)
Average price (Brazilian reais)
Chilean peso forward buy contracts
(in millions of U.S. dollars)
Average price (Chilean pesos)
Canadian dollar forward buy contracts
(in millions of U.S. dollars)
Average price (Canadian dollars)
Energy
Oil swap contracts (barrels)
Average price
2016
$
67.4
3.75
$
37.0
653.02
$
45.0
1.26
404,400
$
47.55
The following new derivative contracts were entered into during 2015:
•
•
•
•
•
$80.0 million Canadian dollars at an average rate of 1.25 with maturities in 2015 and 2016;
$62.7 million Chilean pesos at an average rate of 645.34 with maturities in 2015 and 2016;
$67.4 million Brazilian reais at an average rate of 3.75 maturing in 2016;
570,520 barrels of crude oil at an average rate of $48.74 per barrel with maturities in 2015 and 2016; and
25,168 tonnes of gasoil at an average rate of $488.59 per tonne which matured in 2015.
Subsequent to December 31, 2015, the following new derivative contracts were entered into:
•
•
$16.5 million Canadian dollars at an average rate of 1.43 maturing in 2016 and the first quarter of 2017; and
109,500 barrels of crude oil at an average rate of $37.63 per barrel maturing in 2016 and the first quarter of 2017.
When the term loan was originally arranged in August 2012, the Company entered into interest rate swaps to swap the underlying 1-
month LIBOR interest rate into a fixed rate of 0.49% for the original three year term ending August 10, 2015. During the second
quarter of 2013, the term loan maturity was extended to August 2017. Accordingly, the interest rate swaps only hedged the term
loan’s interest rate exposure until the original maturity of August 2015. Concurrent with the repayment of $500.0 million of the
term loan on March 10, 2014, the Company closed out 60% of the interest rate swaps. The remaining outstanding interest rate
swaps that hedged 80% of the remaining underlying floating rate term loan matured on August 10, 2015.
The Company enters into total return swaps (“TRS”) as economic hedges of the Company’s deferred share units (“DSUs”) and cash-
settled restricted share units (“RSUs”). Hedge accounting was not applied to the TRSs.
At December 31, 2015, 5,695,000 TRS units were outstanding. The following TRS contracts were entered into during 2015:
•
•
79,000 units at an average price of CDN$3.51 to hedge DSUs.
3,000,000 units at an average price of CDN$3.48 to hedge cash-settled RSUs.
MDA 35
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p35 (March 22, 2016 22:35:53)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Fair value of derivative instruments
The fair values of derivative instruments are noted in the table below:
(in millions)
Asset (liability)
Interest rate swaps
Foreign currency forward contracts
Energy swap contracts
Total return swap contracts
Contingencies
As at December 31,
2015
2014
$
-
$
(0.7)
(13.8)
(2.2)
1.0
(48.8)
(9.9)
(0.6)
$
(15.0)
$
(60.0)
The Company is obligated to pay $20.0 million to Barrick if a positive production decision is made relating to the Cerro Casale
project.
Other legal matters
The Company is from time to time involved in legal proceedings, arising in the ordinary course of its business. Typically, and
currently, except in the case of the actions described below, the amount of ultimate liability with respect to these actions will not, in
the opinion of management, materially affect Kinross' financial position, results of operations or cash flows.
A putative securities class action complaint was filed on February 16, 2012 (the “U.S. Complaint”), entitled Bo Young Cha v. Kinross
Gold Corporation et al., in the United States District Court for the Southern District of New York (the “Court”). The U.S. Complaint
named as defendants the Company, Tye Burt, former President and CEO, Paul Barry, former Executive Vice President and Chief
Financial Officer, Glen Masterman, former Senior Vice President, Exploration and Kenneth Thomas, former Senior Vice President,
Projects. On May 31, 2012, the Court selected the City of Austin Police Retirement System (“City of Austin”) to be lead plaintiff.
Pursuant to an order of the Court, City of Austin filed an amended Complaint on July 23, 2012 (the “Amended U.S. Complaint”). On
March 26, 2015, the parties filed settlement papers with the Court, and asked it to grant an order preliminarily approving the
settlement. The action was settled for $33 million, without admission of liability by the defendants and with the Company’s
insurance carriers directly funding the full settlement. On October 15, 2015, the Court granted final approval of the settlement.
Having received final Court approval of the settlement agreement, without any valid objections, all class members (excepting only
the six opting out, amounting to only 1,633 shares) were bound by the settlement and deemed to have released Kinross and the
other defendants from any claims related to the Amended U.S. Complaint, with all further proceedings in the action being forever
stayed. The time to appeal the final Court approval has passed.
A notice of action in a proposed class proceeding under Ontario’s Class Proceedings Act, 1992, was filed in the Ontario Superior
Court of Justice (the “Ontario Court”) on March 12, 2012, entitled Trustees of the Musicians’ Pension Fund of Canada v. Kinross Gold
Corporation et al. (the “Ontario Action”). A statement of claim in the Ontario Action was subsequently served on April 11, 2012. The
Ontario Action named as defendants the Company, Tye Burt, former President and CEO, Paul Barry, former Executive Vice President
and Chief Financial Officer, Glen Masterman, former Senior Vice President, Exploration, and Kenneth Thomas, former Senior Vice
President, Projects. On April 22, 2015, the parties advised the Ontario Court that they had agreed to a settlement of all claims in the
Ontario Action. On June 17, 2015, the Ontario Court approved the settlement. All of the claims in the Ontario Action were settled
for CDN$12.5 million, without any admission of liability by the defendants and with the Company’s insurance carriers directly
funding the full settlement. Pursuant to the settlement, the Ontario Action has been dismissed in its entirety. All class members are
bound by the settlement and are deemed to have released Kinross and the other defendants from all claims that were raised in the
Ontario Action or could have been raised in the Ontario Action.
On January 16, 2015, a notice of action in a proposed class proceeding under Ontario’s Class Proceedings Act, 1992 was filed in the
Ontario Court, entitled Frankfurt-Trust Invest Luxemburg AG v. Kinross Gold Corporation (the “Frankfurt Action”). Pursuant to the
settlement of the Ontario Action, the Frankfurt Action was dismissed in its entirety and all of the proposed class members are bound
by the releases granted in the Ontario action.
MDA 36
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p36 (March 22, 2016 22:35:54)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
7. SUMMARY OF QUARTERLY INFORMATION
(in millions, except per share amounts)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Metal sales
$
706.2
$
809.4
$
755.2
$
781.4
$
791.3
$
945.7
$
911.9
$
817.4
2015
2014
Net earnings (loss) from continuing
operations attributable to common
shareholders
Net earnings (loss) from discontinued
operations after-tax (a)
Basic earnings (loss) per share from
continuing operations attributable to
common shareholders
Diluted earnings (loss) per share from
continuing operations attributable to
common shareholders
Net cash flow of continuing operations
provided from operating activities
$
(841.9)
$
(52.7)
$
(83.2)
$
(6.7)
$
(1,473.5)
$
(4.3)
$
46.0
$
31.8
$
-
$
-
$
-
$
-
$
238.4
$
(0.8)
$
(1.9)
$
(2.2)
$
(0.73)
$
(0.05)
$
(0.07)
$
(0.01)
$
(1.29)
$
-
$
0.04
$
0.03
$
(0.73)
$
(0.05)
$
(0.07)
$
(0.01)
$
(1.29)
$
-
$
0.04
$
0.03
$
182.2
$
232.1
$
167.2
$
250.1
$
179.2
$
304.5
$
163.9
$
210.5
(a) On June 10, 2013, the Company announced its decision to cease development of FDN. As a result, FDN was classified as a discontinued operation. On
December 17, 2014, the Company sold its interest in FDN.
The Company’s results over the past several quarters have been driven primarily by fluctuations in the gold price, input costs and
changes in the gold equivalent ounces sold. Fluctuations in the silver price have also affected results.
During the fourth quarter of 2015, revenue decreased to $706.2 million on total gold equivalent ounces sold of 638,040 compared
with $791.3 million on sales of 658,730 total gold equivalent ounces during the fourth quarter of 2014. The average gold price
realized in the fourth quarter of 2015 was $1,108 per ounce compared with $1,201 per ounce in the fourth quarter of 2014.
Production cost of sales decreased to $439.4 million in the fourth quarter of 2015 compared with $469.2 million in the same period
of 2014, primarily due to decreases in gold equivalent ounces sold and a decrease in input costs at various sites.
Fluctuations in the foreign exchange rates have also affected results. Depreciation, depletion and amortization varied between each
of the above quarters largely due to changes in gold equivalent ounces sold and depreciable asset bases. In addition, changes in
mineral reserves during each of these years affected depreciation, depletion and amortization for quarters in the subsequent year.
In the fourth quarter of 2015, the Company recorded an after-tax impairment charge of $430.2 million relating to its Fort Knox,
Tasiast and Round Mountain CGUs, net of a tax recovery of $9.3 million, and inventory and other asset impairment charges of
$235.0 million. In addition, during the second quarter of 2015, the Company recognized an inventory impairment charge of $24.5
million at Maricunga.
In the fourth quarter of 2014, the Company recorded after-tax impairment charges of $932.2 million relating to several of its CGUs,
net of a tax recovery of $127.9 million and non-controlling interest of $23.7 million.
During the fourth quarter of 2014, the Company completed the sale of its FDN project for gross cash proceeds of $150.0 million and
$90.0 million of Lundin Gold common shares, resulting in an after-tax recovery of $238.0 million.
Operating cash flows increased slightly to $182.2 million in the fourth quarter of 2015, compared with $179.2 million in the same
period of 2014, primarily due to more favourable working capital changes.
MDA 37
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p37 (March 22, 2016 22:35:54)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
8. DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING
Pursuant to regulations adopted by the U.S. Securities and Exchange Commission, under the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”) and those of the Canadian Securities Administrators, Kinross' management evaluates the effectiveness of the
design and operation of the Company's disclosure controls and procedures, and internal controls over financial reporting. This
evaluation is done under the supervision of, and with the participation of, the Chief Executive Officer and the Chief Financial Officer.
As of the end of the period covered by this MD&A and the accompanying financial statements, Kinross’ management evaluated the
effectiveness of its disclosure controls and procedures and internal controls over financial reporting. In making this assessment,
management used the Internal Controls - Integrated Framework (2013) issued by the Committee of the Sponsoring Organizations of
the Treadway Commission. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that
Kinross’ disclosure controls and procedures, and internal controls over financial reporting were effective as at December 31, 2015.
There has been no change in the Company’s internal control over financial reporting during the year ended December 31, 2015 that
has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Limitations of Controls and Procedures
Kinross’ management, including the Chief Executive Officer and the Chief Financial Officer, believes that any disclosure controls and
procedures and internal controls over financial reporting, no matter how well designed and operated, can have inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance that the objectives of the control
system are met.
9. CRITICAL ACCOUNTING POLICIES, ESTIMATES AND ACCOUNTING CHANGES
Critical Accounting Policies and Estimates
Kinross’ accounting policies are described in Note 3 to the financial statements. The preparation of the Company’s financial
statements in accordance with IFRS requires management to make judgments, estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continually evaluated and
are based on management’s experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. Actual results could differ from these estimates.
The areas which require management to make significant judgments, estimates and assumptions in determining carrying values
include, but are not limited to:
Mineral Reserves and Mineral Resources
Proven and probable mineral reserves are the economically mineable parts of the Company’s measured and indicated mineral
resources demonstrated by at least a preliminary feasibility study. The Company estimates its proven and probable mineral reserves
and measured and indicated and inferred mineral resources based on information compiled by appropriately qualified persons. The
information relating to the geological data on the size, depth and shape of the ore body requires complex geological judgments to
interpret the data. The estimation of future cash flows related to proven and probable mineral reserves is based upon factors such
as estimates of foreign exchange rates, commodity prices, future capital requirements and production costs along with geological
assumptions and judgments made in estimating the size and grade of the ore body. Changes in the proven and probable mineral
reserves or measured and indicated and inferred mineral resources estimates may impact the carrying value of property, plant and
equipment, goodwill, reclamation and remediation obligations, recognition of deferred tax amounts and depreciation, depletion and
amortization.
Purchase Price Allocation
Applying the acquisition method to business combinations requires each identifiable asset and liability to be measured at its
acquisition-date fair value. The excess, if any, of the fair value of consideration over the fair value of the net identifiable assets
acquired is recognized as goodwill. The determination of the acquisition-date fair values often requires management to make
assumptions and estimates about future events. The assumptions and estimates relating to determining the fair value of property,
plant and equipment acquired generally require a high degree of judgment, and include estimates of mineral reserves acquired,
future metal prices and discount rates. Changes in any of the assumptions or estimates used in determining the fair value of
acquired assets and liabilities could affect the amounts assigned to assets, liabilities and goodwill in the purchase price allocation.
MDA 38
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p38 (March 22, 2016 22:35:55)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Depreciation, Depletion and Amortization
Plants and other facilities used directly in mining activities are depreciated using the units-of-production (“UOP”) method over a
period not to exceed the estimated life of the ore body based on recoverable ounces to be mined from proven and probable mineral
reserves. Mobile and other equipment is depreciated, net of residual value, on a straight-line basis, over the useful life of the
equipment but does not exceed the related estimated life of the mine based on proven and probable mineral reserves.
The calculation of the UOP rate, and therefore the annual depreciation, depletion and amortization expense, could be materially
affected by changes in the underlying estimates. Changes in estimates can be the result of actual future production differing from
current forecasts of future production, expansion of mineral reserves through exploration activities, differences between estimated
and actual costs of mining and differences in gold price used in the estimation of mineral reserves.
Significant judgment is involved in the determination of useful life and residual values for the computation of depreciation,
depletion and amortization and no assurance can be given that actual useful lives and residual values will not differ significantly from
current assumptions.
Impairment of Goodwill and Long-lived Assets
Goodwill is tested for impairment annually or more frequently if there is an indication of impairment. The carrying value of
property, plant and equipment is reviewed each reporting period to determine whether there is any indication of impairment. If the
carrying amount of an asset exceeds its recoverable amount, the asset is impaired and an impairment loss is recognized in the
consolidated statement of operations. The assessment of fair values, including those of the CGUs for purposes of testing goodwill,
require the use of estimates and assumptions for recoverable production, long-term commodity prices, discount rates, NAV
multiples, foreign exchange rates, future capital requirements and operating performance. Changes in any of the assumptions or
estimates used in determining the fair value of goodwill or other assets could impact the impairment analysis. Impairment charges
recognized against property, plant and equipment may be reversed if there are changes in the assumptions or estimates used in
determining the recoverable amounts of the CGUs which indicate that a previously recognized impairment loss may no longer exist
or may have decreased.
Inventories
Expenditures incurred, and depreciation, depletion and amortization of assets used in mining and processing activities are deferred
and accumulated as the cost of ore in stockpiles, ore on leach pads, in-process and finished metal inventories. These deferred
amounts are carried at the lower of average cost or net realizable value (“NRV”). Write-downs of ore in stockpiles, ore on leach
pads, in-process and finished metal inventories resulting from NRV impairments are reported as a component of current period
costs. The primary factors that influence the need to record write-downs include prevailing and long-term metal prices and
prevailing costs for production inputs such as labour, fuel and energy, materials and supplies, as well as realized ore grades and
actual production levels.
Costs are attributed to the leach pads based on current mining costs, including applicable depreciation, depletion and amortization
relating to mining operations incurred up to the point of placing the ore on the pad. Costs are removed from the leach pad based on
the average cost per recoverable ounce of gold on the leach pad as the gold is recovered. Estimates of recoverable gold on the leach
pads are calculated from the quantities of ore placed on the pads, the grade of ore placed on the leach pads and an estimated
percentage of recovery. Timing and ultimate actual recovery of gold contained on leach pads can vary significantly from the
estimates. The quantities of recoverable gold placed on the leach pads are reconciled to the quantities of gold actually recovered
(metallurgical balancing), by comparing the grades of ore placed on the leach pads to actual ounces recovered. The nature of the
leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is
constantly monitored and the engineering estimates are refined based on actual results over time. The ultimate actual recovery of
gold from a pad will not be known until the leaching process is completed.
The allocation of costs to ore in stockpiles, ore on leach pads and in-process inventories and the determination of NRV involve the
use of estimates. There is a high degree of judgment in estimating future costs, future production levels, forecasted usage of
supplies inventory, proven and probable reserves estimates, gold and silver prices, and the ultimate estimated recovery for ore on
leach pads. There can be no assurance that actual results will not differ significantly from estimates used in the determination of the
carrying value of inventories.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Provision for reclamation and remediation
The Company assesses its provision for reclamation and remediation on an annual basis or when new material information becomes
available. Mining and exploration activities are subject to various laws and regulations governing the protection of the environment.
In general, these laws and regulations are continually changing and the Company has made, and intends to make in the future,
expenditures to comply with such laws and regulations. Accounting for reclamation and remediation obligations requires
management to make estimates of the future costs the Company will incur to complete the reclamation and remediation work
required to comply with existing laws and regulations at each mining operation. Actual costs incurred may differ from those
amounts estimated. Also, future changes to environmental laws and regulations could increase the extent of reclamation and
remediation work required to be performed by the Company. Increases in future costs could materially impact the amounts charged
to operations for reclamation and remediation. The provision represents management’s best estimate of the present value of the
future reclamation and remediation obligation. The actual future expenditures may differ from the amounts currently provided.
Taxes
The Company recognizes the deferred tax benefit related to deferred income and resource tax assets to the extent recovery is
probable. Assessing the recoverability of deferred income tax assets requires management to make estimates of future taxable
profit. To the extent that future cash flows and taxable profit differ significantly from estimates, the ability of the Company to
realize the net deferred tax assets recorded at the balance sheet date could be impacted. In addition, future changes in tax laws
could limit the ability of the Company to obtain tax deductions in future periods from deferred income and resource tax assets.
In addition, the Company is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the
provision for income taxes, due to the complexity of legislation. There are many transactions and calculations for which the ultimate
tax determination is uncertain during the ordinary course of business.
Contingencies
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to
time. Contingencies can be possible assets or liabilities arising from past events which, by their nature, will only be resolved when
one or more future events not wholly within our control occur or fail to occur. The assessment of such contingencies involves the
use of significant judgment and estimates. In the event that management’s estimate of the future resolution of these matters
changes, the Company will recognize the effects of the changes in its consolidated financial statements on the date such changes
occur.
Recent Accounting Pronouncements
Revenue recognition
In May 2014, the IASB issued IFRS 15 “Revenue from Contracts with Customers” (“IFRS 15”). The standard replaces IAS 11
“Construction Contracts”, IAS 18 “Revenue”, IFRIC 13 “Customer Loyalty Programmes”, IFRIC 15 “Agreements for the Construction of
Real Estate”, IFRIC 18 “Transfer of Assets From Customers” and SIC 31 “Revenue – Barter Transactions Involving Advertising
Services”. IFRS 15 establishes principles for reporting the nature, amount, timing, and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. This standard is effective for annual periods beginning on or after January 1, 2018, and
permits early adoption. The Company is in the process of determining the impact of IFRS 15 on its consolidated financial
statements.
Financial instruments
In July 2014, the IASB issued the final version of IFRS 9 “Financial Instruments” (“IFRS 9”). This standard is effective for annual
periods beginning on or after January 1, 2018, and permits early adoption. IFRS 9 provides a revised model for recognition and
measurement and impairment of financial instruments and includes a substantially reformed approach to hedge accounting. The
Company is in the process of determining the impact of IFRS 9 on its consolidated financial statements.
Leases
In January 2016, the IASB issued IFRS 16 “Leases” (“IFRS 16”). This standard is effective for annual periods beginning on or after
January 1, 2019, and permits early adoption, provided IFRS 15, has been applied, or is applied at the same date as IFRS 16. IFRS 16
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
requires lessees to recognize assets and liabilities for most leases. The Company is in the process of determining the impact of IFRS
16 on its consolidated financial statements.
10. RISK ANALYSIS
The business of Kinross contains significant risk due to the nature of mining, exploration, and development activities. Certain
risk factors, including but not limited to those listed below, are related to the mining industry in general while others are
specific to Kinross. Included in the risk factors below are details on how Kinross seeks to mitigate these risks wherever possible. For
additional discussion of risk factors please refer to the Company's Annual Information Form for the year ended December 31, 2014,
which is available on the Company's website www.kinross.com and on www.sedar.com or is available upon request from the
Company, and to the Company’s Annual Information Form for the year ended December 31, 2015, which will be filed on SEDAR.
Gold Price and Silver Price
The profitability of Kinross' operations is significantly affected by changes in the market price of gold and silver. Gold and
silver prices fluctuate on a daily basis and are affected by numerous factors beyond the control of Kinross. The price of gold and/or
silver can be subject to volatile price movements and future serious price declines could cause continued commercial production
to be impractical. Depending on the prices of gold and silver, cash flow from mining operations may not be sufficient to cover
costs of production and capital expenditures. If, as a result of a decline in gold and/or silver prices, revenues from metal sales were
to fall below cash operating costs, production may be discontinued. The factors that may affect the price of gold and silver
include industry factors such as: industrial and jewelry demand; the level of demand for the metal as an investment; central bank
lending, sales and purchases of the metal; speculative trading; and costs of and levels of global production by producers of the
metal. Gold and silver prices may also be affected by macroeconomic factors, including: expectations of the future rate of inflation;
the strength of, and confidence in, the US dollar, the currency in which the price of the metal is generally quoted, and other
currencies; interest rates; and global or regional political or economic uncertainties.
In 2015, the Company’s average gold price realized decreased to $1,159 per ounce from $1,263 per ounce in 2014. If the world
market price of gold and/or silver continued to drop and the prices realized by Kinross on gold and/or silver sales were to decrease
further and remain at such a level for any substantial period, Kinross' profitability and cash flow would be negatively affected. In
such circumstances, Kinross may determine that it is not economically feasible to continue commercial production at some or all of
its operations or the development of some or all of its current projects, which could have an adverse impact on Kinross' financial
performance and results of operations. Kinross may curtail or suspend some or all of its exploration activities, with the result that
depleted reserves are not replaced. In addition, the market value of Kinross' gold and/or silver inventory may be reduced
and existing reserves may be reduced to the extent that ore cannot be mined and processed economically at the prevailing
prices. Furthermore, certain of Kinross' mineral projects include copper which is similarly subject to price volatility based on factors
beyond Kinross' control.
Nature of Mineral Exploration and Mining
The exploration and development of mineral deposits involves significant financial and other risks over an extended period of time
which may not be eliminated even with careful evaluation, experience and knowledge. While discovery of gold-bearing structures
may result in substantial rewards, few properties explored are ultimately developed into producing mines. Major expenditures are
required to establish reserves by drilling and to construct mining and processing facilities at a site. It is impossible to ensure that the
current or proposed exploration programs on properties in which Kinross has an interest will result in profitable commercial mining
operations.
The operations of Kinross are subject to the hazards and risks normally incident to exploration, development and production of gold
and silver, any of which could result in damage to life or property, environmental damage and possible legal liability for
such damage. The activities of Kinross may be subject to prolonged disruptions due to weather conditions depending on the
location of operations in which it has interests. Hazards, such as unusual or unexpected formations, rock bursts, pressures, cave-
ins, flooding, pit wall failures or other conditions, may be encountered in the drilling and removal of material. While Kinross may
obtain insurance against certain risks, potential claims could exceed policy limits or could be excluded from coverage. There are
also risks against which Kinross cannot or may elect not to insure. The potential costs which could be associated with any liabilities
not covered by insurance or in excess of insurance coverage or compliance with applicable laws and regulations may cause
substantial delays and require significant capital outlays, adversely affecting the future earnings and competitive position of
Kinross and, potentially, its financial viability.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Whether a gold deposit will be commercially viable depends on a number of factors, some of which include the particular attributes
of the deposit, such as its size and grade, costs and efficiency of the recovery methods that can be employed, proximity to
infrastructure, financing costs and governmental regulations, including regulations relating to prices, taxes, royalties, infrastructure,
land and water use, importing and exporting of gold and environmental protection. The effect of these factors cannot be accurately
predicted, but the combination of these factors may result in Kinross not receiving an adequate return on its invested capital.
Kinross mitigates the likelihood and potential severity of these mining risks it encounters in its day-to-day operations through
the application of high operating standards. In addition, Kinross reviews its insurance coverage at least annually to ensure that the
most complete and cost-effective coverage is obtained.
Environmental and Regulatory Risks
Kinross' mining and processing operations and exploration activities in the United States, the Russian Federation, Brazil, Chile,
Mauritania, Ghana and Canada are subject to various laws and regulations governing the protection of the environment,
exploration, development, production, exports, taxes, labour standards, occupational health, waste disposal, toxic substances, mine
safety, and other matters. New laws and regulations, amendments to existing laws and regulations, or more stringent
implementation of existing laws and regulations could have a material adverse impact on Kinross through increased costs, a
reduction in levels of production and/or a delay or prevention of the development of new mining properties. Compliance with these
laws and regulations requires significant expenditures and increases Kinross' mine development and operating costs.
Permits from various governmental authorities are necessary in order to engage in mining operations in all jurisdictions in which
Kinross operates. Such permits relate to many aspects of mining operations, including maintenance of air, water and soil quality
standards. In most jurisdictions, the requisite permits cannot be obtained prior to completion of an environmental impact
statement and, in some cases, public consultation. Further, Kinross may be required to submit for government approval a
reclamation plan, to post financial assurance for the reclamation costs of the mine site, and to pay for the reclamation of the mine
site upon the completion of mining activities. Kinross mitigates this risk by performing certain reclamation activities concurrent with
production.
Mining, like many other extractive natural resource industries, is subject to potential risks and liabilities concerning the
environmental effects associated with mineral exploration and production. The Company may be held responsible for the costs of
addressing contamination at, or arising from, current or former activities. Environmental liability may result from mining activities
conducted by others prior to Kinross' ownership of a property. In addition, Kinross may be liable to third parties for exposure to
hazardous materials. The costs associated with such responsibilities and liabilities may be substantial. To the extent Kinross is
subject to uninsured environmental liabilities, the payment of such liabilities would reduce funds otherwise available for business
activities and could have a material adverse effect on Kinross. Should Kinross be unable to fully fund the cost of remedying an
environmental problem, Kinross might be required to suspend operations or enter into interim compliance measures pending
completion of the required remedy, which could have a material adverse effect. Kinross mitigates the likelihood and potential
severity of these environmental risks it encounters in its day-to-day operations through the application of high operating standards.
Kinross is subject to various laws and regulations which, if the Company is alleged to, or does, violate, could result in regulatory or
government investigations and/or sanctions, which could adversely impact the Company’s operations. These include anti-bribery
laws (including without limitation the U.S. Foreign Corrupt Practices Act, the Canadian Corruption of Foreign Public Officials Act and
anti-bribery laws in other jurisdictions in which the Company operates), international trade sanctions (including without limitation,
in respect of Russia and Ukraine), and anti-money laundering laws and regulations. Kinross has internal policies and procedures to
mandate compliance with such laws and regulations; however, there can be no assurance that such policies and procedures will be
effective in revealing or preventing violations thereof. Various regulatory and government agencies review transactions and
practices of Kinross in connection with the enforcement of applicable laws and regulations, and Kinross regularly cooperates in
producing documents and other information sought by such authorities. Consequences of violations could range from cost and
expense to remediate, increased operating costs or changes to operations, fines or penalties for violations, expenses of
investigations and defense, and potentially cessation of operations.
In August 2013, Kinross received information regarding allegations of improper payments made to government officials and certain
internal control deficiencies at its West Africa mining operations. External legal counsel was immediately retained to conduct an
objective internal investigation into the allegations. In March and December 2014, and July 2015, Kinross received subpoenas from
the United States Securities and Exchange Commission seeking information and documents on substantially the same subjects as
had previously been raised. In December 2014, Kinross received similar requests for information from the United States Department
of Justice. The internal investigation is ongoing, and additional issues or facts could become known as the investigation continues.
On December 10, 2015, the NGOs MiningWatch Canada and the French anti-corruption association Sherpa announced that they had
MDA 42
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
filed a report with the Royal Canadian Mounted Police (“RCMP”) calling for an investigation of the Company for alleged breaches of
Canada’s anti-corruption laws at the Company’s Tasiast mine in Mauritania and its Chirano mine in Ghana. The Company has not
received a copy of the report and as of the date hereof is not aware of any resulting RCMP investigation or other actions by any
Canadian authorities. Consequences of violations could include fines or penalties, de-listing of securities from US stock exchanges
and restrictions on export licenses.
Reclamation costs
In certain jurisdictions in which the Company has operations, the Company is required to submit a reclamation plan for its applicable
operations to address post-operation reclamation obligations. The Company may incur significant costs in connection with these
reclamation activities, which may exceed the provisions the Company has made in respect of its reclamation obligations. In some
jurisdictions, reclamation bonds, letters of credit or other forms of financial assurance are required as security for these reclamation
obligations. The amount and nature of financial assurance are dependent upon a number of factors, including the Company’s
financial condition and reclamation cost estimates. Kinross may be required to replace or supplement the existing financial
assurance, or source new financial assurance with more expensive forms, which might include cash deposits, which would reduce its
cash available for operations and financing activities. There can be no assurance that Kinross will be able to maintain or add to its
current level of financial assurance. To the extent that Kinross is or becomes unable to post and maintain sufficient financial
assurance for reclamation costs, where required it could potentially result in closure of one or more of the Company’s operations,
which could have a material adverse effect on the financial condition of the Company.
Internal controls
Kinross has invested resources to document and assess its system of internal controls over financial reporting and it is continuing its
evaluation of such internal controls. Internal controls over financial reporting are procedures designed to provide reasonable
assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions
are properly recorded and reported. A control system, no matter how well designed and operated, can provide only reasonable, not
absolute, assurance with respect to the reliability of financial reporting and financial statement preparation.
Kinross is required to satisfy the requirement of Section 404 of the Sarbanes-Oxley Act, which requires an annual assessment by
management of the effectiveness of Kinross’ internal control over financial reporting and an attestation report by Kinross’
independent auditors addressing the operating effectiveness of Kinross’ internal control over financial reporting.
If Kinross fails to maintain the adequacy of its internal control over financial reporting, as such standards are modified,
supplemented, or amended from time to time, Kinross may not be able to ensure that it can conclude on an ongoing basis that it has
effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Kinross’ failure to
satisfy the requirement of Section 404 of the Sarbanes-Oxley Act on an ongoing, timely basis could result in the loss of investor
confidence in the reliability of its financial statements, which in turn could harm Kinross’ business and negatively impact the trading
price of its common shares. In addition, any failure to implement required new or improved controls, or difficulties encountered in
their implementation, could harm Kinross’ operating results or cause it to fail to meet its reporting obligations.
Although Kinross is committed to ensure ongoing compliance, Kinross cannot be certain that it will be successful in complying with
Section 404 of the Sarbanes-Oxley Act.
Indebtedness and an inability to satisfy repayment obligations
Although Kinross has been successful in repaying debt in the past, there can be no assurance that it can continue to do so. Kinross’
level of indebtedness could have important consequences for its operations and the value of its common shares including: (a)
limiting Kinross’ ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution
of Kinross’ growth strategy or other purposes; (b) limiting Kinross’ ability to use operating cash flow in other areas because of its
obligations to service debt; (c) increasing Kinross’ vulnerability to general adverse economic and industry conditions, including
increases in interest rates; (d) limiting Kinross’ ability to capitalize on business opportunities and to react to competitive pressures
and adverse changes in government regulation; and (e) limiting Kinross’ ability or increasing the costs to refinance indebtedness.
Kinross expects to obtain the funds to pay its expenses and to pay principal and interest on its debt by utilizing cash flow from
operations. Kinross’ ability to meet these payment obligations will depend on its future financial performance, which will be
affected by financial, business, economic and other factors. Kinross will not be able to control many of these factors, such as
economic conditions in the markets in which it operates. Kinross cannot be certain that its future cash flow from operations will be
sufficient to allow it to pay principal and interest on Kinross’ debt and meet its other obligations. If cash flow from operations is
MDA 43
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
insufficient or if there is a contravention of its debt covenants, Kinross may be required to refinance all or part of its existing debt,
sell assets, borrow more money or issue additional equity. There can be no assurance that Kinross will be able to refinance all or
part of its existing debt on terms that are commercially reasonable.
Mineral Reserve and Mineral Resource Estimates
The mineral reserve and mineral resource figures are estimates, and no assurance can be given that the anticipated tonnages and
grades will be achieved or that the indicated level of recovery will be realized. Market fluctuations in the price of gold may render
the mining of mineral reserves and mineral resources uneconomical and require Kinross to take a write-down of an asset or to
discontinue development or production. Moreover, short-term operating factors relating to the mineral reserves, such as the need
for orderly development of the ore body or the processing of new or different ore grades, may cause a mining operation to be
unprofitable in any particular accounting period.
Proven and probable mineral reserves at Kinross' mines and development projects were estimated as of December 31, 2015, based
upon a gold price of $1,200 per ounce of gold.
Prolonged declines in the market price of gold below this level may render mineral reserves containing relatively lower grades of
gold mineralization uneconomic to exploit and could materially reduce Kinross' mineral reserves. Should such reductions occur,
material write-downs of Kinross' investments in mining properties or the discontinuation of development or production might be
required, and there could be material delays in the development of new projects and reduced income and cash flow.
There are numerous uncertainties inherent in estimating quantities of proven and probable mineral reserves. The estimates in this
document are based on various assumptions relating to gold prices and exchange rates during the expected life of production and
the results of additional planned development work. Actual future production rates and amounts, revenues, taxes, operating
expenses, environmental and regulatory compliance expenditures, development expenditures and recovery rates may vary
substantially from those assumed in the estimates. Any significant change in these assumptions, including changes that result from
variances between projected and actual results, could result in a material downward or upward revision of current estimates.
Kinross’ future plans rely on mine development projects, which involve significant uncertainties
The Company’s ability to increase or maintain present gold and silver production levels is dependent in part on the successful
development of new mines and/or expansion of existing mining operations. Kinross is dependent on future growth from
development projects. Development projects rely on the accuracy of predicted factors including: capital and operating costs;
metallurgical recoveries; reserve estimates; and future metal prices. Development projects are also subject to accurate feasibility
studies, the acquisition of surface or land rights and the issuance of necessary governmental permits. Unforeseen circumstances,
including those related to the amount and nature of the mineralization at the development site, technological impediments to
extraction and processing, legal restrictions or governmental intervention, infrastructure limitations, environmental issues, disputes
with local communities or other events, could result in one or more of our planned developments becoming impractical or
uneconomic to complete. Any such occurrence could have an adverse impact on Kinross’ financial condition and results of
operations.
In addition, as a result of the substantial expenditures involved in development projects, developments are prone to material cost
overruns versus budget. The capital expenditures and time required to develop new mines are considerable and changes in cost or
construction schedules can significantly increase both the time and capital required to build the project. The project development
schedules are also dependent on obtaining the governmental approvals necessary for the operation of a project. The timeline to
obtain these government approvals is often beyond the control of Kinross. It is not unusual in the mining industry for new mining
operations to experience unexpected problems during the start-up phase, resulting in delays and requiring more capital than
anticipated.
Production and Cost Estimates
The Company prepares estimates of future production, operating costs and capital costs for its operations. Despite the Company’s
best efforts to budget and estimate such costs, as a result of the substantial expenditures involved in the development of mineral
projects and the fluctuation and increase of costs over time, development projects may be prone to material cost overruns. Kinross'
actual costs may vary from estimates for a variety of reasons, including: increased competition for resources and development
inputs; cost inflation affecting the mining industry in general; short term operating factors; revisions to mine plans; risks and hazards
associated with mining; natural phenomena, such as inclement weather conditions, water availability, floods, and earthquakes; and
unexpected labour shortages or strikes. Operating costs may also be affected by a variety of factors, including: ore grade metallurgy,
MDA 44
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
labour costs, cost of commodities and other inputs, general inflationary pressures and currency exchange rates. Many of these
factors are beyond Kinross’ control. No assurance can be given that Kinross’ cost estimates will be achieved. Failure to achieve
production or cost estimates or material increases in costs could have an adverse impact on Kinross’ future cash flows, profitability,
results of operations and financial condition.
Kinross’ actual production and costs may vary from estimates for a variety of reasons, including: actual ore mined varying from
estimates of grade, tonnage, dilution and metallurgical and other characteristics; short-term operating factors relating to the ore
reserves, such as the need for sequential development of ore bodies and the processing of new or different ore grades; revisions to
mine plans; difficulties with supply chain management, including the implementation and management of enterprise resource
planning software; risks and hazards associated with mining; natural phenomena, such as inclement weather conditions, floods, and
earthquakes; and unexpected labour shortages or strikes. Costs of production may also be affected by a variety of factors, including:
changing waste-to-ore ratios, ore grade metallurgy, labour costs, the cost of supplies and services (for example, power and fuel),
general inflationary pressures and currency exchange rates.
Shortages and Price Volatility of Input Commodities and Equipment
The Company is dependent on various input commodities (such as diesel fuel, electricity, natural gas, steel, concrete and cyanide)
and equipment (including parts) to conduct its mining operations and development projects. A shortage of such input commodities
or equipment or a significant increase in their cost could have a material adverse effect on the Company’s ability to carry out its
operations and therefore limit, or increase the cost of, production. The Company is also dependent on access to and supply of water
and electricity to carry out its mining operations, and such access and supply may not be readily available, especially at the
Company’s operations in Chile, Brazil and Ghana. Market prices of input commodities can be subject to volatile price movements
which can be material, occur over short periods of time and are affected by factors that are beyond the Company’s control. An
increase in the cost, or decrease in the availability, of input commodities or equipment may affect the timely conduct and cost of
Kinross’ operations and development projects. If the costs of certain input commodities consumed or otherwise used in connection
with Kinross’ operations and development projects were to increase significantly, and remain at such levels for a substantial period,
the Company may determine that it is not economically feasible to continue commercial production at some or all of its operations
or the development of some or all of its current projects, which could have an adverse impact on the Company’s financial
performance and results of operations.
Political Developments and Uncertainty in the Russian Federation
Ongoing political tensions and uncertainties as a result of the Russian Federation’s foreign policy decisions and actions in respect of
Ukraine have resulted in the imposition of economic sanctions and increased the risk that certain governments may impose further
economic, or other, sanctions or penalties on, or may take other actions against, the Russian Federation or on persons and/or
companies conducting business in the Russian Federation or may otherwise act in support of Ukraine. There can be no assurance
that sanctions or other penalties will not be imposed, or other actions will not be taken, by the Russian Federation, including in
response to existing or threatened sanctions or other penalties or actions by Canada, the United States or the European Union
and/or other governments against the Russian Federation or persons and/or companies conducting business in the Russian
Federation. The imposition of such economic sanctions or other penalties, or such other actions by the Russian Federation and/or
other governments, could have a material adverse effect on the Company’s assets and operations.
Political, Economic and Legislative Risk
The Company has mining and exploration operations in various regions of the world, including the United States, Canada, Brazil,
Chile, the Russian Federation, Mauritania and Ghana and such operations are exposed to various levels of political, economic, and
other risks and uncertainties. These risks and uncertainties vary from country to country and include, but are not limited to:
terrorism; hostage taking; thefts and illegal incursions on property (such as those which have occurred at Paracatu); extreme
fluctuations in currency exchange rates; high rates of inflation; labour unrest; the risks of civil unrest; expropriation and
nationalization; renegotiation or nullification of existing concessions, licenses, permits and contracts; illegal mining; changes to
policies and regulations impacting the mining sector; restrictions on foreign exchange and repatriation; and changing political
conditions, currency controls, and governmental regulations that favour or require the awarding of contracts to local contractors or
require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction.
Future political and economic conditions in these countries may result in these governments adopting different policies with respect
to foreign investment, and development and ownership of mineral resources. Any changes in such policies may result in changes in
laws affecting ownership of assets, foreign investment, mining exploration and development, taxation, royalties, currency exchange
rates, gold sales, environmental protection, labour relations, price controls, repatriation of income, and return of capital, which may
MDA 45
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
affect both the ability of Kinross to undertake exploration and development activities in respect of future properties in the manner
currently contemplated, as well as its ability to continue to explore, develop, and operate those properties to which it has rights
relating to exploration, development, and operation. Future governments in these countries may adopt substantially different
policies, which might extend to, as an example, expropriation of assets.
The tax regimes in these countries may be subject to differing interpretations and are subject to change from time to time. Kinross'
interpretation of taxation law as applied to its transactions and activities may not coincide with that of the tax authorities in a given
country. As a result, transactions may be challenged by tax authorities and Kinross' operations may be assessed, which could result
in significant additional taxes, penalties and interest.
The Company is subject to the considerations and risks of operating in the Russian Federation. Certain currency conversion risks
exist in the Russian economy. Russian legislation currently permits the conversion of rouble revenues into foreign currency. Any
delay or other difficulty in converting roubles into a foreign currency to make a payment or delay in or restriction on the transfer of
foreign currency could limit our ability to meet our payment and debt obligations, which could result in the loss of suppliers,
acceleration of debt obligations, etc.
Although the Company has completed the sale of all of its interest in Aurelian and the FDN project in Ecuador to Lundin Gold, certain
residual risks may remain in respect of FDN. Certain liabilities and obligations exist under the purchase agreement with Lundin Gold.
In addition, the Company has also signed a bilateral treaty with the government of Ecuador in respect of the transition of the FDN
assets to Lundin Gold. There can be no guarantee that the Company (and/or any of its directors, officers or employees) will not be
subject to any obligations or liabilities, litigation, or other claims or actions in respect of its ongoing contractual obligations, or any of
the Company’s prior activities on or in respect thereof or otherwise in Ecuador.
Licenses and Permits
The operations of Kinross require licenses and permits from various governmental authorities. However, such licenses and permits
are subject to challenge and change in various circumstances. There can be no guarantee that Kinross will be able to obtain or
maintain all necessary licenses and permits that may be required to explore and develop its properties, commence construction or
operation of mining facilities and properties under exploration or development or to maintain continued operations that
economically justify the cost. Kinross endeavors to be in compliance with these regulations and permits at all times.
Title to Properties and Community Relations
The validity of mining claims which constitute most of Kinross' property holdings may, in certain cases, be uncertain and subject to
being contested. Kinross' titles, particularly title to undeveloped properties, may be defective and open to being challenged by
governmental authorities and local communities.
Certain of Kinross’ properties may be subject to the rights or the asserted rights of various community stakeholders, including
indigenous people. The presence of community stakeholders may also impact on the Company’s ability to develop or operate its
mining properties. In certain circumstances, consultation with such stakeholders may be required and the outcome may affect the
Company’s ability to develop or operate its mining properties.
Competition
The mineral exploration and mining business is competitive in all of its phases. In the search for and the acquisition of attractive
mineral properties, Kinross competes with numerous other companies and individuals, including competitors with greater financial,
technical and other resources than Kinross. The ability of the Company to operate successfully in the future will depend not only on
its ability to develop its present properties, but also on its ability to select and acquire suitable producing properties or prospects for
mineral exploration. Kinross may be unable to compete successfully with its competitors in acquiring such properties or prospects
on terms it considers acceptable, if at all.
Joint Arrangements
Certain of the operations in which the Company has an interest are operated through joint arrangements with other mining
companies. Any failure of such other companies to meet their obligations to Kinross or to third parties could have a material
adverse effect on the joint arrangement. In addition, Kinross may be unable to exert control over strategic decisions made in
respect of such properties.
MDA 46
Kinross Gold 2015
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Disclosures About Market Risks
To determine its market risk sensitivities, Kinross uses an internally generated financial forecast model that is sensitized to various
gold prices, currency exchange rates, interest rates and energy prices. The variable with the greatest impact is the gold price, and
Kinross prepares a base case scenario and then sensitizes it by a 10% increase and decrease in the gold price. For 2016, sensitivity to
a 10% change in the gold price is estimated to have an approximate $300 million impact on pre-tax earnings. Kinross' financial
forecast covers the projected life of its mines. In each year, gold is produced according to the mine plan. Additionally, for 2016,
sensitivity to a 10% change in the silver price is estimated to have an $8 million impact on pre-tax earnings. Costs are estimated
based on current production costs plus the impact of any major changes to the operation during its life.
Interest Rate Fluctuations
Fluctuations in interest rates can affect the Company’s results of operations and cash flow. The Company’s corporate revolving
credit and term loan facilities are subject to variable interest rates.
Hedging Risks
The Company’s earnings can vary significantly with fluctuations in the market price of gold and silver. Kinross’ practice is not to
hedge metal sales. On occasion, however, the Company may assume or enter into forward sales contracts or similar instruments if
hedges are acquired in a business acquisition, if hedges are required under project financing requirements, or when deemed
advantageous by management. As at December 31, 2015, there were no gold or silver derivative financial instruments outstanding.
In addition, Kinross is not subject to margin requirements on any of its hedging lines.
Foreign Currency Exchange Risk
Currency fluctuations may affect the revenues which the Company will realize from its operations since gold is sold in the world
market in United States dollars. The costs of Kinross are incurred principally in Canadian dollars, United States dollars, Chilean
pesos, Brazilian reais, Russian roubles, Mauritanian ouguiya and Ghanaian cedis. The appreciation of non-U.S. dollar currencies
against the U.S. dollar increases the cost of gold production in U.S. dollar terms. Kinross’ results are positively affected when the
U.S. dollar strengthens against these foreign currencies and are adversely affected when the U.S. dollar weakens against these
foreign currencies. Where possible, Kinross’ cash and cash equivalents balances are primarily held in U.S. dollars. From time to
time, Kinross transacts currency hedging to reduce the risk associated with currency fluctuations. While the Chilean peso, Brazilian
real, and Russian rouble are currently convertible into Canadian and United States dollars, they may not always be convertible in the
future. The Mauritanian ouguiya and Ghanaian cedis are convertible into Canadian and United States dollars, but conversion may be
subject to regulatory and/or central bank approval.
The sensitivity of the Company’s pre-tax earnings to changes in the U.S. dollar is disclosed in Note 11 of the Company’s financial
statements for the year ended December 31, 2015.
Credit, Counterparty and Liquidity Risk
Credit risk relates to cash and cash equivalents, accounts receivable, and derivative contracts and arises from the possibility that a
counterparty to an instrument fails to perform. Counterparty risk is the risk that a third party might fail to fulfill its performance
obligations under the terms of a financial instrument. The Company is subject to counterparty risk and may be affected, in the event
that a counterparty becomes insolvent. To manage both counterparty and credit risk, the Company proactively manages its
exposure to individual counterparties. The Company only transacts with highly-rated counterparties. A limit on contingent
exposure has been established for each counterparty based on the counterparty's credit rating, and the Company monitors the
financial condition of each counterparty.
As at December 31, 2015, the Company's gross credit exposure, including cash and cash equivalents, was $1,263.4 million and at
December 31, 2014, the gross credit exposure, including cash and cash equivalents, was $1,176.0 million.
Liquidity risk is the risk that the Company may not have sufficient cash resources available to meet its payment obligations. To
manage liquidity risk, the Company maintains cash positions and has financing in place that the Company expects will be sufficient to
meet its operating and capital expenditure requirements. Potential sources for liquidity could include, but are not limited to: the
Company's current cash position, existing credit facilities, future operating cash flow, and potential private and public financing.
Additionally, the Company reviews its short-term operational forecasts regularly and long-term budgets to determine its cash
MDA 47
Kinross Gold 2015
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
requirements.
The Company has investment grade credit ratings from Fitch Ratings and Standard & Poor’s. However, there is no assurance that
these credit ratings will remain in effect for any given period of time or that any such ratings will not be revised or withdrawn
entirely by a rating agency. Real or anticipated changes in credit ratings can affect the price of the Company’s existing debt as well
as the Company’s ability to access the capital markets and the cost of such debt financing.
Kinross’ ability to access capital markets is dependent upon its credit ratings
The Company’s ability to access debt markets and the related cost of debt financing is dependent upon its credit ratings. The
Company has investment grade credit ratings from Fitch Ratings and Standard & Poor’s. On March 16, 2015, Moody’s announced a
downgrade of the Company’s senior unsecured ratings from Baa3 to Ba1 in light of the Moody’s downgrade of the Russian
Federation’s sovereign rating to Ba1 and the Company’s concentration of cash flows from its operations in the Russian Federation.
There is no assurance that these credit ratings will remain in effect for any given period of time or that any such ratings will not be
revised or withdrawn entirely by a rating agency. On January 21, 2016, Moody’s announced plans to conduct a review of its ratings
on a number of mining companies globally, including Kinross, in light of the recent downturn in the commodities markets. Real or
anticipated changes in credit ratings can affect the price of the Company’s existing debt as well as the Company’s ability to access
the capital markets and the cost of such debt financing.
Potential for Incurring Unexpected Costs or Liabilities as a Result of Acquisitions
Although the Company has conducted investigations in connection with recent acquisitions, risks remain regarding any undisclosed
or unknown liabilities associated with these acquisitions. The Company may discover that it has acquired substantial undisclosed
liabilities. The Company may have little recourse against the seller if any of the representations or warranties provided in
connection with these acquisitions proves to be inaccurate. Such liabilities could have an adverse impact on the Company's
business, financial condition, results of operations and cash flows.
Global Financial Condition
The volatility and challenges that economies continue to experience around the world continues to affect the profitability and
liquidity of businesses in many industries, which in turn has resulted in the following conditions that may have an effect on the
profitability and cash flows of the Company:
•
•
•
•
Volatility in commodity prices and foreign exchange rates;
Tightening of credit markets;
Increased counterparty risk; and
Volatility in the prices of publicly traded entities.
The volatility in commodity prices and foreign exchange rates directly impact the Company’s revenues, earnings and cash flows, as
noted above in the sections titled “Gold Price and Silver Price” and “Foreign Currency Exchange Risk”.
Although the tighter credit markets have restricted the ability of certain companies to access capital, to date this has not affected
the Company's liquidity.
The Company re-negotiated its term loan and revolving credit facility in 2015 to extend their terms to August 2019 and August 2020,
respectively, while also amending the leverage ratio covenant. As at December 31, 2015, the Company had $1,506.0 million
available under its credit facility arrangements. However, continued tightening of credit markets may affect the ability of the
Company to obtain equity or debt financing in the future on terms favourable to the Company.
The Company has not experienced any difficulties to date relating to the counterparties it transacts with. The counterparties
continue to be highly rated, and as noted above, the Company has employed measures to reduce the impact of counterparty risk.
Continued volatility in equity markets may affect the value of publicly listed companies in Kinross' equity portfolio. Should declines
in the equity values continue and are deemed to be other than temporary, impairment losses may result.
MDA 48
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p48 (March 22, 2016 22:36:03)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Market Price Risk
Kinross’ common shares are listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange (“NYSE”). The price of
Kinross’ common shares is likely to be significantly affected by short-term changes in the gold price or in its financial condition or
results of operations as reflected in its quarterly earnings reports. Other factors unrelated to the performance of Kinross that may
have an effect on the price of the Kinross common shares include the following: a reduction in analytical coverage of Kinross by
investment banks with research capabilities; increased political risk in countries where the Company operates; a drop in trading
volume and general market interest in the securities of Kinross may adversely affect an investor’s ability to liquidate an investment
and consequently an investor’s interest in acquiring a significant stake in Kinross; a failure of Kinross to meet the reporting and other
obligations under Canadian and U.S. securities laws or imposed by the exchanges could result in a delisting of the Kinross common
shares; and a substantial decline in the price of the Kinross common shares that persists for a significant period of time could cause
the Kinross common shares to be delisted from the TSX or NYSE further reducing market liquidity.
As a result of any of these factors, the market price of Kinross’ common shares at any given point in time may not accurately reflect
Kinross’ long-term value. Securities class action litigation has been brought against companies, including Kinross, following periods
of volatility or significant decline in the market price of their securities. Securities litigation could result in substantial costs and
damages and divert management’s attention and resources. Any decision resulting from any such litigation that is adverse to the
Company could have a negative impact on the Company’s financial position.
Impairment
Kinross evaluates, on at least an annual basis, the carrying amount of its CGUs to determine whether current events and
circumstances indicate that such carrying amount may no longer be recoverable. Goodwill is required to be tested annually for
impairment and Kinross performs this annual test at the end of the fourth quarter. In addition, at each reporting period end, Kinross
assesses whether there is any indication that any of its CGUs’ carrying amounts exceed their recoverable amounts, and if there is
such an indication, the Company would test for potential impairment at that time. The recoverable amounts, or fair values, of its
CGUs are based, in part, on certain factors that may be partially or totally outside of Kinross’ control. Kinross’ fair value estimates
are based on numerous assumptions, some of which may be subjective, and it is possible that actual fair value could be significantly
different than those estimates.
As at December 31, 2015, Kinross recorded an after-tax impairment charge of $430.2 million related to property plant and
equipment impairment. In the absence of any mitigating valuation factors, Kinross’ failure to achieve its valuation assumptions or
declines in the fair values of its CGUs may, over time, result in further impairment charges.
Paracatu water supply and use
Operations at Paracatu are dependent on rainfall as the primary source of process water. During the rainy season, the mine
channels surface runoff water to temporary storage ponds from where it is pumped to the process plants. Similarly, surface runoff
and rain water are stored in the tailings impoundment, which constitutes the main water reservoir for the process plants. The
objective is to capture and store as much water as possible during the rainy season to ensure adequate water supply during the dry
season.
Accordingly, prolonged periods without adequate rainfall may adversely impact operations at Paracatu. As a result, production may
fall below historic or forecast levels and Kinross may incur significant costs or experience significant delays that could have a
material effect on Kinross’ financial performance, liquidity and results of operations.
Human Resources
In order to operate successfully, Kinross must find and retain qualified employees. Kinross and other companies in the mining
industry compete for personnel and Kinross is not always able to fill positions in a timely manner. One factor that has contributed to
an increased turnover rate is the ageing workforce and it is expected that this factor will further increase the turnover rate in
upcoming years. If Kinross is unable to attract and retain qualified personnel or fails to establish adequate succession planning
strategies, Kinross’ operations could be adversely affected.
In addition, Kinross has a relatively small executive management team and in the event that the services of a number of these
executives are no longer available, Kinross and its business could be adversely affected. Kinross does not carry key-man life
insurance with respect to its executives.
MDA 49
Kinross Gold 2015
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
11. SUPPLEMENTAL INFORMATION
Reconciliation of non-GAAP financial measures
The Company has included certain non-GAAP financial measures in this document. These measures are not defined under IFRS and
should not be considered in isolation. The Company believes that these measures, together with measures determined in
accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The
inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance
measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to
other issuers.
Adjusted Net Earnings Attributable to Common Shareholders and Adjusted Net Earnings per Share
Adjusted net earnings attributable to common shareholders and adjusted net earnings per share are non-GAAP measures which
determine the performance of the Company, excluding certain impacts which the Company believes are not reflective of the
Company’s underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, reassessment
of prior year taxes and/or taxes otherwise not related to the current period, impairment charges, gains and losses and other one-
time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains and losses. Although some of
the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current
business and are not necessarily indicative of future operating results. Management believes that these measures, which are used
internally to assess performance and in planning and forecasting future operating results, provide investors with the ability to better
evaluate underlying performance, particularly since the excluded items are typically not included in public guidance. However,
adjusted net earnings and adjusted net earnings per share measures are not necessarily indicative of net earnings and earnings per
share measures as determined under IFRS.
The following table provides a reconciliation of net earnings (loss) from continuing operations to adjusted net earnings (loss) from
continuing operations for the periods presented:
(in millions, except share and per share amounts)
Net loss from continuing operations attributable to common shareholders - as reported
Adjusting items:
Foreign exchange losses
Non-hedge derivatives losses - net of tax
Losses on sale of other assets - net of tax
Foreign exchange losses on translation of tax basis and foreign exchange on deferred income
taxes within income tax expense
Impairment charges - net of tax
Change in deferred income taxes due to tax reforms enacted in Chile
Taxes in respect of prior years
Chile weather event related costs - net of tax
Impairment of investments and other - net of tax
Reclamation and remediation expense (recovery) - net of tax
Insurance recoveries - net of tax
Restructuring - net of tax
Years ended
December 31,
2015
2014
$
(984.5)
$
(1,400.0)
30.6
3.5
13.7
132.9
668.7
-
22.2
18.2
9.5
(9.6)
(18.4)
22.2
893.5
50.1
4.5
3.1
112.8
1,098.2
32.7
45.2
-
162.6
21.9
-
-
1,531.1
Adjusted net earnings (loss) from continuing operations attributable to common shareholders
$
(91.0)
$
131.1
Weighted average number of common shares outstanding - Basic
Adjusted net earnings (loss) from continuing operations per share
1,146.0
1,144.3
$
(0.08)
$
0.11
MDA 50
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p50 (March 22, 2016 22:36:05)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Adjusted Operating Cash Flow
The Company makes reference to a non-GAAP measure for adjusted operating cash flow. Adjusted operating cash flow is defined as
cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company’s regular
operating cash flow and excluding changes in working capital. Working capital can be volatile due to numerous factors, including the
timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The Company uses adjusted
operating cash flow internally as a measure of the underlying operating cash flow performance and future operating cash flow-
generating capability of the Company. However, the adjusted operating cash flow measure is not necessarily indicative of net cash
flow from operations as determined under IFRS.
The following table provides a reconciliation of adjusted cash flow from continuing operations for the periods presented:
(in millions)
Net cash flow of continuing operations provided from operating activities - as reported
Adjusting items:
Working capital changes:
Accounts receivable and other assets
Inventories
Accounts payable and other liabilities, including taxes
Years ended
December 31,
2015
2014
$
831.6
$
858.1
(91.0)
(63.5)
109.5
(45.0)
(26.9)
59.4
133.2
165.7
Adjusted operating cash flow from continuing operations
$
786.6
$
1,023.8
MDA 51
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p51 (March 22, 2016 22:36:05)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Consolidated and Attributable Production Cost of Sales per Equivalent Ounce Sold
Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of
sales as reported on the consolidated statement of operations divided by the total number of gold equivalent ounces sold. This
measure converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as attributable
production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company’s
non-gold production into gold equivalent ounces and credits it to total production.
Management uses these measures to monitor and evaluate the performance of its operating properties.
The following table provides a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for
the periods presented:
(in millions, except ounces and production cost of sales per equivalent ounce)
2015
2014
Years ended
December 31,
Production cost of sales - as reported
Less: portion attributable to Chirano non-controlling interest
Attributable production cost of sales
Gold equivalent ounces sold
Less: portion attributable to Chirano non-controlling interest
Attributable gold equivalent ounces sold
Consolidated production cost of sales per equivalent ounce sold
Attributable production cost of sales per equivalent ounce sold
$
1,834.8
$
1,971.2
(18.0)
(16.6)
$
1,816.8
$
1,954.6
2,634,867
2,743,398
(25,997)
(28,040)
2,608,870
2,715,358
$
696
$
719
$
696
$
720
59599 2015 Q4 - MD&A FINAL with folios.pdf - p52 (March 22, 2016 22:36:06)
MDA 52
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Attributable Production Cost of Sales per Ounce Sold on a By-Product Basis
Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP measure which calculates the Company’s
non-gold production as a credit against its per ounce production costs, rather than converting its non-gold production into gold
equivalent ounces and crediting it to total production, as is the case in co-product accounting. Management believes that this
measure provides investors with the ability to better evaluate Kinross’ production cost of sales per ounce on a comparable basis
with other major gold producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-
product accounting.
The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the
periods presented:
(in millions, except ounces and production cost of sales per ounce)
Production cost of sales - as reported
Less: portion attributable to Chirano non-controlling interest
Less: attributable silver revenues
Years ended
December 31,
2015
2014
$
1,834.8
$
1,971.2
(18.0)
(82.5)
(16.6)
(93.6)
Attributable production cost of sales net of silver by-product revenue
$
1,734.3
$
1,861.0
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest
Attributable gold ounces sold
2,562,219
2,669,278
(25,925)
(27,970)
2,536,294
2,641,308
Attributable production cost of sales per ounce sold on a by-product basis
$
684
$
705
MDA 53
Kinross Gold 2015
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Attributable All-In Sustaining Cost and All-In Cost per Ounce Sold on a By-Product Basis
In June 2013, the World Gold Council (“WGC”) published its guidelines for reporting all-in sustaining costs and all-in costs. The WGC
is a market development organization for the gold industry and is an association whose membership comprises leading gold mining
companies including Kinross. Although the WGC is not a mining industry regulatory organization, it worked closely with its member
companies to develop these non-GAAP measures. Adoption of the all-in sustaining cost and all-in cost metrics is voluntary and not
necessarily standard, and therefore, these measures presented by the Company may not be comparable to similar measures
presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing
measures reported by Kinross.
All-in sustaining cost includes both operating and capital costs required to sustain gold production on an ongoing basis. The value of
silver sold is deducted from the total production cost of sales as it is considered residual production. Sustaining operating costs
represent expenditures incurred at current operations that are considered necessary to maintain current production. Sustaining
capital represents capital expenditures at existing operations comprising mine development costs and ongoing replacement of mine
equipment and other capital facilities, and does not include capital expenditures for major growth projects or enhancement capital
for significant infrastructure improvements at existing operations.
All-in cost is comprised of all-in sustaining cost as well as operating expenditures incurred at locations with no current operation, or
costs related to other non-sustaining activities, and capital expenditures for major growth projects or enhancement capital for
significant infrastructure improvements at existing operations.
Attributable all-in sustaining cost and all-in cost per ounce sold on a by-product basis are calculated by adjusting total production
cost of sales, as reported on the consolidated statement of operations, as follows:
(in millions, except ounces and costs per ounce)
Production cost of sales - as reported
Less: portion attributable to Chirano non-controlling interest (a)
Less: attributable (b) silver revenues (c)
Attributable (b) production cost of sales net of silver by-product revenue
Adjusting items on an attributable (b) basis:
General and administrative (d)
Other operating expense - sustaining (e)
Reclamation and remediation - sustaining (f)
Exploration and business development - sustaining (g)
Additions to property, plant and equipment - sustaining (h)
All-in Sustaining Cost on a by-product basis - attributable (b)
Other operating expense - non-sustaining (e)
Reclamation and remediation - non-sustaining (f)
Exploration - non-sustaining (g)
Additions to property, plant and equipment - non-sustaining (h)
All-in Cost on a by-product basis - attributable (b)
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest (i)
Attributable (b) gold ounces sold
Attributable (b) all-in sustaining cost per ounce sold on a by-product basis
Attributable (b) all-in cost per ounce sold on a by-product basis
59599 2015 Q4 - MD&A FINAL with folios.pdf - p54 (March 22, 2016 22:36:08)
Years ended December 31,
2015
2014
$
1,834.8
$
1,971.2
(18.0)
(82.5)
(16.6)
(93.6)
$
1,734.3
$
1,861.0
160.6
21.5
58.0
59.0
428.5
178.8
3.9
61.8
56.7
387.0
$
2,461.9
$
2,549.2
20.8
(7.9)
47.6
132.7
36.9
17.5
48.7
179.2
$
2,655.1
$
2,831.5
2,562,219
(25,925)
2,536,294
2,669,278
(27,970)
2,641,308
$
971
$
965
$
1,047
$
1,072
MDA 54
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Attributable All-In Sustaining Cost and All-In Cost per Equivalent Ounce Sold
The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP
measures, the Company’s production of silver is converted into gold equivalent ounces and credited to total production.
Attributable all-in sustaining cost and all-in cost per equivalent ounce sold are calculated by adjusting total production cost of sales,
as reported on the consolidated statement of operations, as follows:
(in millions, except ounces and costs per equivalent ounce)
Production cost of sales - as reported
Less: portion attributable to Chirano non-controlling interest (a)
Attributable (b) production cost of sales
Adjusting items on an attributable (b) basis:
General and administrative (d)
Other operating expense - sustaining (e)
Reclamation and remediation - sustaining (f)
Exploration and business development - sustaining (g)
Additions to property, plant and equipment - sustaining (h)
All-in Sustaining Cost - attributable (b)
Other operating expense - non-sustaining (e)
Reclamation and remediation - non-sustaining (f)
Exploration - non-sustaining (g)
Additions to property, plant and equipment - non-sustaining (h)
All-in Cost - attributable (b)
Gold equivalent ounces sold
Less: portion attributable to Chirano non-controlling interest (i)
Attributable (b) gold equivalent ounces sold
Attributable (b) all-in sustaining cost per equivalent ounce sold
Attributable (b) all-in cost per equivalent ounce sold
Years ended December 31,
2015
2014
$
1,834.8
$
1,971.2
(18.0)
(16.6)
$
1,816.8
$
1,954.6
160.6
21.5
58.0
59.0
428.5
178.8
3.9
61.8
56.7
387.0
$
2,544.4
$
2,642.8
20.8
(7.9)
47.6
132.7
36.9
17.5
48.7
179.2
$
2,737.6
$
2,925.1
2,634,867
(25,997)
2,608,870
2,743,398
(28,040)
2,715,358
$
975
$
973
$
1,049
$
1,077
MDA 55
Kinross Gold 2015
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MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
(a) Portion attributable to Chirano non-controlling interest represents the non-controlling interest (10%) in the production cost of sales for
the Chirano mine.
(b) “Attributable” includes Kinross' share of Chirano (90%) production.
(c) “Attributable silver revenues” represents the attributable portion of metal sales realized from the production of the secondary or by-
product metal (i.e. silver). Revenue from the sale of silver, which is produced as a by-product of the process used to produce gold, effectively
reduces the cost of gold production.
(d) “General and administrative” expense is as reported on the consolidated statement of operations, net of certain restructuring and
transaction costs. General and administrative expenses are considered sustaining costs as they are required to be absorbed on a continuing
basis for the effective operation and governance of the Company, except to the extent incurred for specific items or activities not
representative of the underlying operating performance of our business.
(e) “Other operating expense – sustaining” is calculated as “Other operating expense” as reported on the consolidated statement of
operations, less other operating and reclamation and remediation expenses related to non-sustaining activities as well as other items not
reflective of the underlying operating performance of our business. Other operating expenses are classified as either sustaining or non-
sustaining based on the type and location of the expenditure incurred. The majority of other operating expenses that are incurred at existing
operations are considered costs necessary to sustain operations, and are therefore classified as sustaining. Other operating expenses
incurred at locations where there is no current operation or related to other non-sustaining activities are classified as non-sustaining.
(f) “Reclamation and remediation - sustaining” is calculated as current period accretion related to reclamation and remediation obligations
plus current period amortization of the corresponding reclamation and remediation assets, and is intended to reflect the periodic cost of
reclamation and remediation for currently operating mines. Reclamation and remediation costs for development projects or closed mines
are excluded from this amount and classified as non-sustaining.
(g) “Exploration and business development – sustaining” is calculated as “Exploration and business development” expenses as reported on
the consolidated statement of operations, less non-sustaining exploration expenses. Exploration expenses are classified as either
sustaining or non-sustaining based on a determination of the type and location of the exploration expenditure. Exploration expenditures
within the footprint of operating mines are considered costs required to sustain current operations and so are included in sustaining costs.
Exploration expenditures focused on new ore bodies near existing mines (i.e. brownfield), new exploration projects (i.e. greenfield) or for
other generative exploration activity not linked to existing mining operations are classified as non-sustaining. Business development
expenses are considered sustaining costs as they are required for general operations.
(h) “Additions to property, plant and equipment – sustaining” represents the majority of capital expenditures at existing operations including
capitalized exploration costs, capitalized stripping and underground mine development costs, ongoing replacement of mine equipment and
other capital facilities and other capital expenditures and is calculated as total additions to property, plant and equipment (as reported on
the consolidated statements of cash flows) net of proceeds from the disposal of certain property, plant and equipment, less capitalized
interest and non-sustaining capital. Non-sustaining capital represents capital expenditures for major growth projects as well as
enhancement capital for significant infrastructure improvements at existing operations. Non-sustaining capital expenditures during the year
ended December 31, 2015 relate to projects at Tasiast, Chirano and La Coipa.
(i) “Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces sold from the
Chirano mine.
59599 2015 Q4 - MD&A FINAL with folios.pdf - p56 (March 22, 2016 22:36:09)
MDA 56
Kinross Gold 2015
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
Cautionary Statement on Forward-Looking Information
All statements, other than statements of historical fact, contained or incorporated by reference in this MD&A 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 harbour’’ 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 MD&A. Forward-looking statements contained in
this MD&A, include, but are not limited to, those under the headings (or headings that include): “Mineral Reserve”, “Operational Outlook”, “Project Updates
and New Developments”, “Liquidity Outlook”, “Contractual Obligations and Commitments”, “Contingencies”, “Other legal matters”, and “Risk Analysis”, and
include, without limitation, statements with respect to our guidance for production; production costs of sales, all-in sustaining cost and capital expenditures;
and continuous improvement initiatives, as well as references to other possible events, the future price of gold and silver, the timing and amount of estimated
future production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, success of exploration,
development and mining activities, currency fluctuations, capital requirements, project studies, mine life extensions, restarting suspended or disrupted
operations; continuous improvement initiatives; and resolution of pending litigation. The words “anticipate”, “assumption”, “believe”, “budget”, “contemplate”,
“consideration”, “contingent”, “estimates”, ‘‘expects’’, “explore”, “feasibility”, “forecast”, “focus”, “forward”, “guidance”, “indicate”, “intend”, “initiative”,
“measures”, “model”, “objective”, “optimize”, “outlook”, “opportunity”, “phased,” “plan”, “possible”, “potential”, “pre-feasibility”, “priority”, “project”,
“projection”, “strategy”, “study”, “target”, or “trend”, 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, models and assumptions of
Kinross referenced, contained or incorporated by reference in this MD&A, which may prove to be incorrect, include, but are not limited to, the various
assumptions set forth herein and in our most recently filed Annual Information Form as well as: (1) there being no significant disruptions affecting the
operations of the Company whether due to extreme weather events (including, without limitation, excessive or lack of rainfall) and other or related natural
disasters, labour disruptions (including but not limited to following workforce reductions), supply disruptions, power disruptions, damage to equipment or
otherwise; (2) permitting, development, operations and production from the Company’s operations being consistent with Kinross’ current expectations
including, without limitation, land acquisitions and permitting for the construction and operation of the new tailings facility, water and power supply and launch
of the new tailings reprocessing facility at Paracatu; (3) political and legal developments in any jurisdiction in which the Company operates being consistent
with its current expectations including, without limitation, the impact of any escalating political tensions and uncertainty in the Russian Federation and Ukraine
or any related sanctions and any other similar restrictions or penalties imposed, or actions taken, by any government, including but not limited to potential
power rationing, tailing facility regulation and amendments to mining laws in Brazil, potential amendments to water laws and/or other water use restrictions
and regulatory actions in Chile, potential amendments to minerals and mining laws and dam safety regulation in Ghana, potential amendments to customs and
mining laws (including but not limited amendments to the VAT) in Mauritania, and potential amendments to and enforcement of tax laws in Russia (including,
but not limited to, the interpretation, implementation, application and enforcement of any such laws and amendments thereto), being consistent with Kinross’
current expectations; (4) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi and
the U.S. dollar being approximately consistent with current levels; (5) certain price assumptions for gold and silver; (6) prices for diesel, natural gas, fuel oil,
electricity and other key supplies being approximately consistent with current levels; (7) production and cost of sales forecasts for the Company meeting
expectations; (8) the accuracy of the current mineral reserve and mineral resource estimates of the Company (including but not limited to ore tonnage and ore
grade estimates); (9) labour and materials costs increasing on a basis consistent with Kinross’ current expectations; (10) the terms and conditions of the legal
and fiscal stability agreements for the Tasiast and Chirano operations being interpreted and applied in a manner consistent with their intent and Kinross’
expectations; (11) goodwill and/or asset impairment potential; and (12) access to capital markets, including but not limited to maintaining an investment grade
debt rating being consistent with the Company’s current expectations. 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: sanctions (any other similar restrictions or penalties) now or
subsequently imposed, other actions taken, by, against, in respect of or otherwise impacting any jurisdiction in which the Company is domiciled or operates
(including but not limited to the Russian Federation, Canada, the European Union and the United States), or any government or citizens of, persons or
companies domiciled in, or the Company’s business, operations or other activities in, any such jurisdiction; litigation commenced, or other claims or actions
brought, against the Company (and/or any of its directors, officers or employees) in respect of the cessation by the Company of investment in and development
of FDN and its sale, or any of the Company’s prior activities on or in respect thereof or otherwise in Ecuador; fluctuations in the currency markets; fluctuations in
the spot and forward price of gold or certain other commodities (such as fuel and electricity); changes in the discount rates applied to calculate the present
value of net future cash flows based on country-specific real weighted average cost of capital; changes in the market valuations of peer group gold producers
and the Company, and the resulting impact on market price to net asset value multiples; changes in various market variables, such as interest rates, foreign
exchange rates, gold or silver prices and lease rates, or global fuel prices, that could impact the mark-to-market value of outstanding derivative instruments and
ongoing payments/receipts under any financial obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-
to-market risk); changes in national and local government legislation, taxation (including but not limited to income tax, advance income tax, stamp tax,
withholding tax, capital tax, tariffs, value-added or sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, royalty, excise tax,
customs/import or export taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with any related fine, penalty, surcharge,
or interest imposed in connection with such taxes), controls, policies and regulations; the security of personnel and assets; political or economic developments in
Canada, the United States, Chile, Brazil, Russia, Mauritania, Ghana, or other countries in which Kinross does business or may carry on business; business
opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical
difficulties in connection with mining or development activities; employee relations; litigation or other claims against, or regulatory investigations and/or any
enforcement actions or sanctions in respect of the Company (and/or its directors, officers, or employees) including, but not limited to, securities class action
litigation in Canada and/or the United States, or any investigations, enforcement actions and/or sanctions under any applicable anti-corruption, international
sanctions and/or anti-money laundering laws and regulations in Canada, the United States or any other applicable jurisdiction; the speculative nature of gold
exploration and development including, but not limited to, the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves;
adverse changes in our credit rating; and contests over title to properties, particularly title to undeveloped properties. 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 the inability to obtain insurance, to cover these risks).
Many of these uncertainties and contingencies can directly or indirectly affect, and could cause, Kinross’ actual results to differ materially from those expressed
or implied in any forward-looking statements made by, or on behalf of, Kinross, including but not limited to resulting in an impairment charge on goodwill
and/or assets. 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 MD&A are qualified by these cautionary statements and those
MDA 57
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p57 (March 22, 2016 22:36:10)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2015
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 Factors’’ section of our most recently filed Annual Information Form and the “Risk Analysis” section of our 2015 year-end MD&A. 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.
Key Sensitivities
Approximately 70%-80% of the Company's costs are denominated in U.S. dollars.
A 10% change in foreign exchange could result in an approximate $15 impact on production cost of sales per ounce2.
Specific to the Russian rouble, a 10% change in the exchange rate would be expected to result in an approximate $14 impact on Russian production cost of sales
per ounce.
Specific to the Brazilian real, a 10% change in the exchange rate would be expected to result in an approximate $24 impact on Brazilian production cost of sales
per ounce
A $10 per barrel change in the price of oil could result in an approximate $3 impact on production cost of sales per ounce.
A $100 change in the price of gold would be expected to result in an approximate $3 impact on production cost of sales per ounce as a result of a change in
royalties.
Other information
Where we say ‘‘we’’, ‘‘us’’, ‘‘our’’, the ‘‘Company’’, or ‘‘Kinross’’ in this MD&A, we mean Kinross Gold Corporation and/or one or more or all of its subsidiaries, as
may be applicable.
The technical information about the Company’s mineral properties contained in this MD&A has been prepared under the supervision of Mr. John Sims, an officer
of the Company, who is a “qualified person” within the meaning of National Instrument 43-101. The technical information about the Company’s exploration
activities contained in this MD&A has been prepared under the supervision of Mr. Sylvain Guerard, an officer of the Company who is a “qualified person” within
the meaning of NI 43-101.
2 Refers to all of the currencies in the countries where the Company has mining operations, fluctuating simultaneously by 10% in the same direction, either appreciating or
depreciating, taking into consideration the impact of hedging and the weighting of each currency within our consolidated cost structure.
MDA 58
Kinross Gold 2015
59599 2015 Q4 - MD&A FINAL with folios.pdf - p58 (March 22, 2016 22:36:11)
MANAGEMENT’S RESPONSIBILITY FOR
FINANCIAL STATEMENTS
The consolidated financial statements, the notes thereto, and other financial information contained in the Management’s Discussion and Analysis have
been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and are the
responsibility of the management of Kinross Gold Corporation. The financial information presented elsewhere in the Management’s Discussion and
Analysis is consistent with the data that is contained in the consolidated financial statements. The consolidated financial statements, where necessary,
include amounts which are based on the best estimates and judgment of management.
In order to discharge management’s responsibility for the integrity of the financial statements, the Company maintains a system of internal accounting
controls. These controls are designed to provide reasonable assurance that the Company’s assets are safeguarded, transactions are executed and
recorded in accordance with management’s authorization, proper records are maintained and relevant and reliable financial information is produced.
These controls include maintaining quality standards in hiring and training of employees, policies and procedures manuals, a corporate code of conduct
and ensuring that there is proper accountability for performance within appropriate and well-defined areas of responsibility. The system of internal controls
is further supported by a compliance function, which is designed to ensure that we and our employees comply with securities legislation and conflict of
interest rules.
The Board of Directors is responsible for overseeing management’s performance of its responsibilities for financial reporting and internal control. The
Audit Committee, which is composed of non-executive directors, meets with management as well as the external auditors to ensure that management is
properly fulfilling its financial reporting responsibilities to the Directors who approve the consolidated financial statements. The external auditors have full
and unrestricted access to the Audit Committee to discuss the scope of their audits, the adequacy of the system of internal controls and review financial
reporting issues.
The consolidated financial statements have been audited by KPMG LLP, the independent registered public accounting firm, in accordance with Canadian
generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).
J. PAUL ROLLINSON
President and Chief Executive Officer
Toronto, Canada
February 10, 2016
TONY S. GIARDINI
Executive Vice-President and Chief Financial Officer
Toronto, Canada
February 10, 2016
FS 1
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p1 (March 22, 2016 22:37:39)
INDEPENDENT AUDITORS’ REPORT OF REGISTERED PUBLIC
ACCOUNTING FIRM
To the Shareholders of Kinross Gold Corporation
We have audited the accompanying consolidated financial statements of Kinross Gold Corporation, which comprise the consolidated balance sheets
as at December 31, 2015 and December 31, 2014, the consolidated statements of operations, comprehensive loss, cash flows and equity for the years
then ended, and notes, comprising a summary of significant accounting policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance
with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The
procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation
of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Kinross Gold
Corporation as at December 31, 2015 and December 31, 2014, and its consolidated financial performance and its consolidated cash flows for the
years then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Chartered Professional Accountants, Licensed Public Accountants
February 10, 2016
Toronto, Canada
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p2 (March 22, 2016 22:37:40)
FS 2
Kinross Gold 2015
CONSOLIDATED BALANCE SHEETS
(expressed in millions of United States dollars, except share amounts)
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable and other assets
Current income tax recoverable
Inventories
Non-current assets
Property, plant and equipment
Goodwill
Long-term investments
Investments in associate and joint venture
Other long-term assets
Deferred tax assets
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Current income tax payable
Current portion of long-term debt
Current portion of provisions
Current portion of unrealized fair value of derivative liabilities
Non-current liabilities
Long-term debt
Provisions
Other long-term liabilities
Deferred tax liabilities
Total liabilities
Equity
Common shareholders' equity
Common share capital
Contributed surplus
Accumulated deficit
Accumulated other comprehensive loss
Total common shareholders' equity
Non-controlling interest
Total equity
Commitments and contingencies
Subsequent events
Total liabilities and equity
Common shares
Authorized
Issued and outstanding
As at
December 31,
2015
December 31,
2014
$
Note 7
Note 7
Note 7
Note 7
Note 7
Note 7
Note 7
Note 9
Note 7
Note 17
$
Note 7
$
Note 12
Note 13
Note 10
Note 12
Note 13
Note 17
Note 14
$
Note 7
$
$
$
$
1,043.9
10.5
109.2
123.3
1,005.2
2,292.1
4,593.7
162.7
83.1
157.1
370.2
76.5
7,735.4
379.6
6.4
249.5
50.3
16.0
701.8
1,731.9
720.8
148.7
499.0
3,802.2
14,603.5
239.2
(10,922.1)
(31.3)
3,889.3
43.9
3,933.2
983.5
41.3
170.4
115.2
1,276.7
2,587.1
5,409.4
162.7
111.0
156.8
417.9
106.5
8,951.4
421.9
19.2
60.0
43.1
60.2
604.4
1,998.1
780.9
207.2
469.0
4,059.6
14,587.7
239.0
(9,937.6)
(46.1)
4,843.0
48.8
4,891.8
Note 19
Note 6 i, 12
$
7,735.4
$
8,951.4
Note 14
Unlimited
1,146,540,188
Unlimited
1,144,576,474
The accompanying notes are an integral part of these consolidated financial statements
Signed on behalf of the Board:
John A. Brough
Director
FS 3
Kinross Gold 2015
John M. H. Huxley
Director
59599 2015 Q4 Rev FS 3.pdf - p1 (March 29, 2016 18:42:37)
CONSOLIDATED STATEMENTS OF OPERATIONS
(expressed in millions of United States dollars, except share and per share amounts)
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Total cost of sales
Gross loss
Other operating expense
Exploration and business development
General and administrative
Operating loss
Other income (expense) - net
Equity in earnings (losses) of associate and joint venture
Finance income
Finance expense
Loss before tax
Income tax expense - net
Loss from continuing operations after tax
Earnings from discontinued operations after tax
Net loss
Net loss from continuing operations attributable to:
Non-controlling interest
Common shareholders
Net loss attributable to:
Non-controlling interest
Common shareholders
Loss per share from continuing operations attributable to common
shareholders
Basic
Diluted
Loss per share attributable to common shareholders
Basic
Diluted
Years ended
December 31,
December 31,
2015
2014
$
3,052.2
$
3,466.3
1,834.8
897.7
699.0
3,431.5
(379.3)
76.2
108.0
179.4
(742.9)
(20.3)
3.2
8.3
(96.0)
(847.7)
(141.7)
(989.4)
-
Note 8
Note 7
Note 7
Note 7
Note 17
Note 6 ii
1,971.2
874.7
1,251.4
4,097.3
(631.0)
111.8
105.6
178.8
(1,027.2)
(215.5)
(5.8)
11.2
(80.1)
(1,317.4)
(109.7)
(1,427.1)
233.5
$
(989.4)
$
(1,193.6)
$
(4.9)
$
(27.1)
$
(984.5)
$
(1,400.0)
$
(4.9)
$
(27.1)
$
(984.5)
$
(1,166.5)
$
$
(0.86)
(0.86)
$
$
(1.22)
(1.22)
$
$
(0.86)
(0.86)
$
$
(1.02)
(1.02)
Weighted average number of common shares outstanding
(millions)
Basic
Note 16
Diluted
1,146.0
1,144.3
1,146.0
1,144.3
The accompanying notes are an integral part of these consolidated financial statements
FS 4
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p4 (March 22, 2016 22:37:41)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(expressed in millions of United States dollars)
Years ended
December 31,
December 31,
2015
2014
Net loss
$
(989.4)
$
(1,193.6)
Note 7
Other comprehensive income (loss), net of tax:
Other comprehensive income (loss) to be reclassified to
profit or loss in subsequent periods:
Change in fair value of investments (a)
Reclassification to earnings for impairment charges
Accumulated other comprehensive loss related to
investments sold (b)
Changes in fair value of derivative financial instruments
designated as cash flow hedges (c)
Accumulated other comprehensive income related to
derivatives settled (d)
(28.1)
7.6
-
(38.1)
73.4
14.8
7.0
1.5
(6.1)
(40.3)
28.3
(9.6)
Total comprehensive loss
$
(974.6)
$
(1,203.2)
Comprehensive loss from continuing operations
$
(974.6)
$
(1,436.7)
Comprehensive income from discontinued operations
Total comprehensive loss
Note 6 ii
-
233.5
$
(974.6)
$
(1,203.2)
Attributable to non-controlling interest
Attributable to common shareholders
$
(4.9)
$
(27.1)
$
(969.7)
$
(1,176.1)
(a) Net of tax of $nil (2014 - $nil)
(b) Net of tax of $nil (2014 - $nil)
(c) Net of tax of $(13.1) million (2014 - $(4.9) million)
(d) Net of tax of $21.3 million (2014 - $9.1 million)
The accompanying notes are an integral part of these consolidated financial statements
FS 5
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p5 (March 22, 2016 22:37:42)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(expressed in millions of United States dollars)
Net inflow (outflow) of cash related to the following activities:
Operating:
Loss from continuing operations
Adjustments to reconcile loss from continuing operations to net cash provided from operating
activities:
Depreciation, depletion and amortization
Impairment charges
Impairment of investments
Equity in (earnings) losses of associate and joint venture
Non-hedge derivative (gains) losses - net
Share-based compensation expense
Finance expense
Deferred tax expense (recovery)
Foreign exchange losses and other
Reclamation expense (recovery)
Changes in operating assets and liabilities:
Accounts receivable and other assets
Inventories
Accounts payable and accrued liabilities
Cash flow provided from operating activities
Income taxes paid
Net cash flow of continuing operations provided from operating activities
Net cash flow of discontinued operations used in operating activities
Investing:
Additions to property, plant and equipment
Net additions to long-term investments and other assets
Net proceeds from the sale of property, plant and equipment
Decrease in restricted cash
Interest received and other
Net cash flow of continuing operations used in investing activities
Net cash flow of discontinued operations provided from investing activities
Financing:
Issuance of common shares on exercise of options
Proceeds from issuance of debt
Repayment of debt
Interest paid
Settlement of derivative instruments
Other
Net cash flow of continuing operations used in financing activities
Net cash flow of discontinued operations used in financing activities
Effect of exchange rate changes on cash and cash equivalents of continuing operations
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
The accompanying notes are an integral part of these consolidated financial statements
Years ended
December 31,
December 31,
2015
2014
$
(989.4)
$
(1,427.1)
897.7
699.0
7.6
(3.2)
(1.5)
17.1
96.0
53.0
18.2
(7.9)
91.0
63.5
27.9
969.0
(137.4)
831.6
-
(610.0)
(59.7)
2.3
30.8
4.0
(632.6)
1.0
-
22.5
(102.5)
(48.8)
-
(2.9)
(131.7)
-
(7.9)
60.4
983.5
874.7
1,251.4
158.1
5.8
5.1
26.2
80.1
(13.8)
45.8
17.5
26.9
(59.4)
52.1
1,043.4
(185.3)
858.1
(8.8)
(631.8)
(55.5)
30.5
17.7
4.5
(634.6)
148.2
0.1
913.0
(980.1)
(20.6)
(2.0)
(4.6)
(94.2)
-
(19.7)
249.0
734.5
$ 1,043.9
$ 983.5
FS 6
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p6 (March 22, 2016 22:37:43)
CONSOLIDATED STATEMENTS OF EQUITY
(expressed in millions of United States dollars)
Years ended
December 31,
December 31,
2015
2014
Common share capital and common share purchase warrants
Balance at the beginning of the period
Transfer from contributed surplus on exercise of options and restricted shares
Options exercised, including cash
Expiry of warrants
Balance at the end of the period
Contributed surplus
Balance at the beginning of the period
Share-based compensation
Transfer of fair value of exercised options and restricted shares
Expiry of warrants, net of tax
Balance at the end of the period
Accumulated deficit
Balance at the beginning of the period
Net loss attributable to common shareholders
Balance at the end of the period
Accumulated other comprehensive loss
Balance at the beginning of the period
Other comprehensive income (loss)
Balance at the end of the period
$
$
14,587.7
15.8
-
-
14,603.5
14,737.1
12.5
0.1
(162.0)
14,587.7
$
$
$
239.0
17.1
(16.9)
-
$
84.5
25.1
(17.1)
146.5
$
239.2
$
239.0
$
(9,937.6)
$
(8,771.1)
(984.5)
(1,166.5)
$
(10,922.1)
$
(9,937.6)
$
(46.1)
14.8
$
(36.5)
(9.6)
$
(31.3)
$
(46.1)
Total accumulated deficit and accumulated other comprehensive loss
$
(10,953.4)
$
(9,983.7)
Total common shareholders' equity
$
3,889.3
$
4,843.0
Non-controlling interest
Balance at the beginning of the period
Net loss attributable to non-controlling interest
Balance at the end of the period
Total equity
The accompanying notes are an integral part of these consolidated financial statements
$
48.8
$
75.9
$
(4.9)
43.9
$
(27.1)
48.8
$
3,933.2
$
4,891.8
FS 7
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p7 (March 22, 2016 22:37:44)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
1.
DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS
Kinross Gold Corporation and its subsidiaries and joint arrangements (collectively, "Kinross" or the "Company") are engaged
in gold mining and related activities, including exploration and acquisition of gold-bearing properties, extraction and
processing of gold-containing ore and reclamation of gold mining properties. Kinross Gold Corporation, the ultimate parent,
is a public company incorporated and domiciled in Canada with its registered office at 25 York Street, 17th floor, Toronto,
Ontario, Canada, M5J 2V5. Kinross' gold production and exploration activities are carried out principally in Canada, the
United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania. Gold is produced in the form of doré, which is
shipped to refineries for final processing. Kinross also produces and sells a quantity of silver. The Company is listed on the
Toronto Stock Exchange and the New York Stock Exchange.
The consolidated financial statements of the Company for the year ended December 31, 2015 were authorized for issue in
accordance with a resolution of the board of directors on February 10, 2016.
2.
BASIS OF PRESENTATION
These consolidated financial statements for the year ended December 31, 2015 (“financial statements”) have been prepared
in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board (“IASB”).
These financial statements were prepared on a going concern basis under the historical cost method except for certain
financial assets and liabilities which are measured at fair value. The significant accounting policies are presented in Note 3
and have been consistently applied in each of the periods presented. Significant accounting estimates, judgments and
assumptions used or exercised by management in the preparation of these financial statements are presented in Note 5.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p8 (March 22, 2016 22:37:45)
FS 8
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
i. Principles of consolidation
The significant mining properties and entities of Kinross are listed below. All operating activities involve gold mining and
exploration. Each of the significant entities has a December 31 year end.
Entity
Subsidiaries:
(Consolidated)
Fairbanks Gold Mining, Inc
Kinross Brasil Mineração S.A. ("KBM")
Compania Minera Maricunga
Compania Minera Mantos de Oro
Echo Bay Minerals Company
Chukotka Mining and Geological
Company
Northern Gold LLC
Selene Holdings LP
Tasiast Mauritanie Ltd. S.A.
Chirano Gold Mines Ltd. (Ghana) (a)
Interest in joint operation:
(Relative share consolidated)
Round Mountain Gold Corporation
Investment in associate:
(Equity accounted)
Compania Minera Casale
Interest in joint venture:
(Equity accounted)
Sociedad Contractual Minera Puren
Property/ Segment
Location
As at
December 31,
2015
December 31,
2014
Fort Knox
Paracatu
Maricunga and Lobo Marte
/ Maricunga and Corporate
and Other
La Coipa / Corporate and
Other
Kettle River - Buckhorn
Kupol
Dvoinoye/ Kupol
White Gold/ Corporate and
Other
Tasiast
Chirano
USA
Brazil
Chile
100%
100%
100%
100%
100%
100%
Chile
100%
100%
USA
Russian
Federation
Russian
Federation
Canada
Mauritania
Ghana
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
90%
Round Mountain
USA
50%(b)
50%
Cerro Casale/ Corporate
and Other
Chile
25%
25%
La Coipa/ Corporate and
Other
Chile
65%
65%
(a)
(b)
The Company holds a 90% interest in the Chirano Gold Mine with the Government of Ghana having the right to the remaining 10%
interest.
The Company has a joint operation interest in Round Mountain through its 50% ownership in the Smoky Valley Common Operation.
Under the joint operation agreement between the Company and Barrick Gold Corporation (“Barrick”), the Company is the operator.
The Management Committee of the joint operation represents the joint operation partners, authorizes annual programs and budgets
and approves major transactions prior to execution by site management. The joint operation owners are entitled to their pro-rata share
of production and are obliged to make their pro-rata share of contributions as requested.
On January 11, 2016, the Company acquired the remaining 50% interest in Round Mountain from Barrick. See Note 6 i.
FS 9
Kinross Gold 2015
59599 2015 Q4 Rev FS 9.pdf - p1 (March 29, 2016 18:42:35)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
(a) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when an investor is exposed, or has rights, to variable
returns from its involvement with an investee and has the ability to affect those returns through its power over the
investee. Subsidiaries are included in the consolidated financial statements from the date control is obtained until the date
control ceases. Where the Company’s interest in a subsidiary is less than 100%, the Company recognizes non-controlling
interests. All intercompany balances, transactions, income, expenses, profits and losses, including unrealized gains and
losses have been eliminated on consolidation.
(b)
Joint Arrangements
The Company conducts a portion of its business through joint arrangements where the parties are bound by contractual
arrangements establishing joint control over such arrangements and requiring unanimous consent of each of the parties
regarding those activities that significantly affect the returns of the arrangement. The Company’s interest in a joint
arrangement is classified as either a joint operation or a joint venture depending on its rights and obligations in the
arrangement. In a joint operation, the Company has rights to its share of the assets, and obligations for its share of the
liabilities, of the joint arrangement, while in a joint venture, the Company has rights to its share of the net assets of the joint
arrangement. For a joint operation, the Company recognizes in the consolidated financial statements, its share of the assets,
liabilities, revenue, and expenses of the joint arrangement, while for a joint venture, the Company recognizes in the
consolidated financial statements its investment in the joint arrangement using the equity method of accounting.
(c) Associates
Associates are entities, including unincorporated entities such as partnerships, over which the Company has significant
influence and that are neither subsidiaries nor interests in joint arrangements. Significant influence is the ability to
participate in the financial and operating policy decisions of the investee without having control or joint control over those
policies. In general, significant influence is presumed to exist when the Company has between 20% and 50% of voting
power. Significant influence may also be evidenced by factors such as the Company’s representation on the board of
directors, participation in policy-making of the investee, material transactions with the investee, interchange of managerial
personnel, or the provision of essential technical information. Associates are equity accounted for from the effective date
of commencement of significant influence to the date that the Company ceases to have significant influence.
Results of associates are equity accounted for using the results of their most recent annual financial statements or interim
financial statements, as applicable. Losses from associates are recognized in the consolidated financial statements until the
interest in the associate is written down to nil. Thereafter, losses are recognized only to the extent that the Company is
committed to providing financial support to such associates.
The carrying value of the investment in an associate represents the cost of the investment, including goodwill, a share of the
post-acquisition retained earnings and losses, accumulated other comprehensive income (“AOCI”) and any impairment
losses. At the end of each reporting period, the Company assesses whether there is any objective evidence that its
investments in associates are impaired.
ii. Functional and presentation currency
The functional and presentation currency of the Company is the United States dollar.
Transactions denominated in foreign currencies are translated into the United States dollar as follows:
• Monetary assets and liabilities are translated at the rates of exchange on the consolidated balance sheet date;
•
•
Non-monetary assets and liabilities are translated at historical exchange rates prevailing at each transaction
date;
Revenue and expenses are translated at the exchange rate at the date of the transaction, except depreciation,
depletion and amortization, which are translated at the rates of exchange applicable to the related assets, and
share-based compensation expense, which is translated at the rates of exchange applicable on the date of grant
of the share-based compensation; and
•
Exchange gains and losses on translation are included in earnings.
When the gain or loss on certain non-monetary items, such as long-term investments classified as available-for-sale, is
recognized in other comprehensive income (“OCI”), the translation differences are also recognized in OCI.
59599 2015 Q4 Rev FS 10.pdf - p1 (March 29, 2016 18:42:32)
FS 10
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
iii. Cash and cash equivalents
Cash and cash equivalents include cash and highly liquid investments with a maturity of three months or less at the date of
acquisition.
Restricted cash is cash held in banks that is not available for general corporate use.
iv. Short-term investments
Short-term investments include short-term money market instruments with terms to maturity at the date of acquisition of
between three and twelve months. The carrying value of short-term investments is equal to cost and accrued interest.
v. Long-term investments
Investments in entities that are not subsidiaries, joint operations, joint ventures or investments in associates are designated
as available-for-sale investments. These investments are measured at fair value on acquisition and at each reporting date.
Any unrealized holding gains and losses related to these investments are excluded from net earnings and are included in OCI
until an investment is sold and gains or losses are realized, or there is objective evidence that the investment is impaired.
When there is evidence that an investment is impaired, the cumulative loss that was previously recognized in OCI is
reclassified from AOCI to the consolidated statement of operations.
vi. Inventories
Inventories consisting of metal in circuit ore, metal in-process and finished metal are valued at the lower of cost or net
realizable value (“NRV”) . NRV is calculated as the difference between the estimated gold prices based on prevailing and long-
term metal prices and estimated costs to complete production into a saleable form.
Metal in circuit is comprised of ore in stockpiles and ore on heap leach pads. Ore in stockpiles is coarse ore that has been
extracted from the mine and is available for further processing. Costs are added to stockpiles based on the current mining
cost per tonne and removed at the average cost per tonne. Costs are added to ore on the heap leach pads based on current
mining costs and removed from the heap leach pads as ounces are recovered, based on the average cost per recoverable
ounce of gold on the leach pad. Ore in stockpiles not expected to be processed in the next twelve months is classified as
long-term.
The quantities of recoverable gold placed on the leach pads are reconciled by comparing the grades of ore placed on the
leach pads to the quantities of gold actually recovered (metallurgical balancing) ; however, the nature of the leaching process
inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly
monitored and the engineering estimates are refined based on actual results over time. Variances between actual and
estimated quantities resulting from changes in assumptions and estimates that do not result in write downs to NRV are
accounted for on a prospective basis. The ultimate actual recovery of gold from a leach pad will not be known until the
leaching process has concluded. In the event that the Company determines, based on engineering estimates, that a quantity
of gold contained in ore on leach pads is to be recovered over a period exceeding twelve months, that portion is classified
as long-term.
In-process inventories represent materials that are in the process of being converted to a saleable product.
Materials and supplies are valued at the lower of average cost and NRV.
Write downs of inventory are recognized in the consolidated statement of operations in the current period. The Company
reverses inventory write downs in the event that there is a subsequent increase in NRV.
vii. Borrowing costs
Borrowing costs are generally expensed as incurred except where they relate to the financing of qualifying assets that require
a substantial period of time to get ready for their intended use. Qualifying assets include the cost of developing mining
properties and constructing new facilities. Borrowing costs related to qualifying assets are capitalized up to the date when
the asset is ready for its intended use.
Where funds are borrowed specifically to finance a project, the amount capitalized represents the actual borrowing costs
incurred net of any investment income earned on the investment of those borrowings. Where the funds used to finance a
project form part of general borrowings, the amount capitalized is calculated using a weighted average of rates applicable
to relevant general borrowings of the Company during the period.
FS 11
Kinross Gold 2015
59599 2015 Q4 Rev FS 11.pdf - p1 (March 29, 2016 18:42:29)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
viii. Business combinations
A business combination is a transaction or other event in which control over one or more businesses is obtained. A business
is an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a
return in the form of dividends, lower costs or other economic benefits. A business consists of inputs and processes applied
to those inputs that have the ability to create outputs that provide a return to the Company and its shareholders. A business
need not include all of the inputs and processes that were used by the acquiree to produce outputs if the business can be
integrated with the inputs and processes of the Company to continue to produce outputs. If the integrated set of activities
and assets is in the exploration and development stage, and thus, may not have outputs, the Company considers other
factors to determine whether the set of activities and assets is a business. Those factors include, but are not limited to,
whether the set of activities and assets:
•
•
•
•
has begun planned principal activities;
has employees, intellectual property and other inputs and processes that could be applied to those inputs;
is pursuing a plan to produce outputs; and
will be able to obtain access to customers that will purchase the outputs.
Not all of the above factors need to be present for a particular integrated set of activities and assets in the development
stage to qualify as a business.
Business acquisitions are accounted for using the acquisition method whereby acquired assets and liabilities are recorded
at fair value as of the date of acquisition with the excess of the purchase consideration over such fair value being recorded
as goodwill and allocated to cash generating units (“CGUs”) . Non-controlling interest in an acquisition may be measured at
either fair value or at the non-controlling interest’s proportionate share of the fair value of the acquiree’s net identifiable
assets.
If the fair value of the net assets acquired exceeds the purchase consideration, the difference is recognized immediately as
a gain in the consolidated statement of operations.
Where a business combination is achieved in stages, previously held equity interests in the acquiree are re-measured at their
acquisition-date fair value and any resulting gain or loss is recognized in the consolidated statement of operations.
Acquisition related costs are expensed during the period in which they are incurred, except for the cost of debt or equity
instruments issued in relation to the acquisition which is included in the carrying amount of the related instrument.
Certain fair values may be estimated at the acquisition date pending confirmation or completion of the valuation process.
Where provisional values are used in accounting for a business combination, they are adjusted retrospectively in subsequent
periods. However, the measurement period will not exceed one year from the acquisition date.
If the assets acquired are not a business, the transaction is accounted for as an asset acquisition.
ix. Goodwill
Business acquisitions are accounted for using the acquisition method whereby acquired assets and liabilities are recorded
at fair value as of the date of acquisition with the excess of the acquisition amount over such fair value being recorded as
goodwill and allocated to CGUs. CGUs are the smallest identifiable group of assets, liabilities and associated goodwill that
generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Each
individual mineral property that is an operating or development stage mine is typically a CGU.
Goodwill arises principally because of the following factors: (1) the going concern value of the Company’s capacity to sustain
and grow by replacing and augmenting mineral reserves through completely new discoveries; (2) the ability to capture buyer-
specific synergies arising upon a transaction; (3) the optionality (real option value associated with the portfolio of acquired
mines as well as each individual mine) to develop additional higher-cost mineral reserves, to intensify efforts to develop the
more promising acquired properties and to reduce efforts at developing the less promising acquired properties in the future
(this optionality may result from changes in the overall economics of an individual mine or a portfolio of mines, largely driven
by changes in the gold price) ; and (4) the requirement to record a deferred tax liability for the difference between the
assigned values and the tax bases of the assets acquired and liabilities assumed in a business combination.
FS 12
Kinross Gold 2015
59599 2015 Q4 Rev FS 12.pdf - p1 (March 29, 2016 18:42:26)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
x. Exploration and evaluation (“E&E”) costs
Exploration and evaluation costs are those costs required to find a mineral property and determine commercial viability.
E&E costs include costs to establish an initial mineral resource and determine whether inferred mineral resources can be
upgraded to measured and indicated mineral resources and whether measured and indicated mineral resources can be
converted to proven and probable reserves.
E&E costs consist of:
•
•
•
•
•
gathering exploration data through topographical and geological studies;
exploratory drilling, trenching and sampling;
determining the volume and grade of the resource;
test work on geology, metallurgy, mining, geotechnical and environmental; and
conducting engineering, marketing and financial studies.
Project costs in relation to these activities are expensed as incurred until such time as the Company expects that mineral
resources will be converted to mineral reserves within a reasonable period. Thereafter, costs for the project are capitalized
prospectively as capitalized exploration and evaluation costs in property, plant and equipment.
The Company also recognizes E&E costs as assets when acquired as part of a business combination, or asset purchase. These
assets are recognized at fair value. Acquired E&E costs consist of:
•
•
fair value of the estimated potential ounces, and
exploration properties.
Acquired or capitalized E&E costs for a project are classified as such until the project demonstrates technical feasibility and
commercial viability. Upon demonstrating technical feasibility and commercial viability, and subject to an impairment
analysis, capitalized E&E costs are transferred to capitalized development costs within property, plant and equipment.
Technical feasibility and commercial viability generally coincides with the establishment of proven and probable mineral
reserves; however, this determination may be impacted by management’s assessment of certain modifying factors including:
legal, environmental, social and governmental factors.
xi. Property, plant and equipment
Property, plant and equipment are recorded at cost and carried net of accumulated depreciation, depletion and amortization
and accumulated impairment losses. The initial cost of an asset comprises its purchase price or construction cost, any costs
directly attributable to bringing the asset into operation, the estimate of reclamation and remediation and, for qualifying
assets, capitalized borrowing costs.
Costs to acquire mineral properties are capitalized and represent the property’s fair value at the time it was acquired, either
as an individual asset purchase or as part of a business combination.
Interest expense attributable to the cost of developing mining properties and to constructing new facilities is capitalized
until assets are ready for their intended use.
Acquired or capitalized exploration and evaluation costs may be included within mineral interests in development and
operating properties or pre-development properties depending upon the nature of the property to which the costs relate.
Repairs and maintenance costs are expensed as incurred. However, expenditures on major maintenance rebuilds or
overhauls are capitalized when it is probable that the expenditures will extend the productive capacity or useful life of an
asset.
(a) Asset categories
The Company categorizes property, plant and equipment based on the type of asset and/or the stage of operation or
development of the property.
Land, plant and equipment includes land, mobile and stationary equipment, and refining and processing facilities for all
properties regardless of their stage of development or operation.
FS 13
Kinross Gold 2015
59599 2015 Q4 Rev FS 13.pdf - p1 (March 29, 2016 18:42:24)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Mineral interests consist of:
•
•
Development and operating properties, which include capitalized development and stripping costs, cost of
assets under construction, exploration and evaluation costs and mineral interests for those properties
currently in operation, for which development has commenced, or for which proven and probable reserves
have been declared; and
Pre-development properties, which include exploration and evaluation costs and mineral interests for those
properties for which development has not commenced.
(b) Depreciation, depletion and amortization
For plant and other facilities, stripping costs, reclamation and remediation costs, production stage mineral interests and
plant expansion costs, the Company uses the units-of-production (“UOP”) method for determining depreciation, depletion
and amortization. The expected useful lives used in the UOP calculations are determined based on the facts and
circumstances associated with the mineral interest. The Company evaluates the proven and probable reserves at least on
an annual basis and adjusts the UOP calculation to correspond with the changes in reserves. The expected useful life used
in determining UOP does not exceed the estimated life of the ore body based on recoverable ounces to be mined from
estimated proven and probable reserves. Any changes in estimates of useful lives are accounted for prospectively from the
date of the change.
Stripping and other costs incurred in a pit expansion are capitalized and amortized using the UOP method based on
recoverable ounces to be mined from estimated proven and probable reserves contained in the pit expansion.
Land is not depreciated.
Mobile and other equipment are depreciated, net of residual value, using the straight-line method, over the estimated useful
life of the asset. Useful lives for mobile and other equipment range from 2 to 10 years, but do not exceed the related
estimated mine life based on proven and probable reserves.
The Company reviews useful lives and estimated residual values of its property, plant and equipment annually.
Acquired or capitalized exploration and evaluation costs and assets under construction are not depreciated. These assets
are depreciated when they are put into production in their intended use.
(c) Derecognition
The carrying amount of an item of property, plant and equipment is derecognized on disposal of the asset or when no future
economic benefits are expected to accrue to the Company from its continued use. Any gain or loss arising on derecognition
is included in the consolidated statement of operations in the period in which the asset is derecognized. The gain or loss is
determined as the difference between the carrying value and the net proceeds on the sale of the assets, if any, at the time
of disposal.
xii. Impairment of Goodwill and Long-lived Assets
Goodwill is tested for impairment on an annual basis as at December 31, and at any other time if events or changes in
circumstances indicate that the recoverable amount of a CGU has been reduced below its carrying amount.
The carrying value of property, plant and equipment is reviewed each reporting period to determine whether there is any
indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. In addition,
capitalized exploration and evaluation costs are assessed for impairment upon demonstrating the technical feasibility and
commercial viability of a project. For such non-current assets, the recoverable amount is determined for an individual asset
unless the asset does not generate cash inflows that are independent of those generated from other assets or groups of
assets, in which case, the individual assets are grouped together into CGUs for impairment testing purposes.
If the carrying amount of the CGU or asset exceeds its recoverable amount, an impairment is considered to exist and an
impairment loss is recognized in the consolidated statement of operations to reduce the carrying value to its recoverable
amount. The recoverable amount of a CGU or asset is the higher of its fair value less costs to sell and its value in use.
Fair value is determined as the amount that would be obtained from the sale of the asset in an arm’s length transaction
between knowledgeable and willing parties. Fair value for mineral assets is generally determined as the present value of the
estimated future cash flows expected to arise from the continued use of the asset, including any expansion prospects, and
FS 14
Kinross Gold 2015
59599 2015 Q4 Rev FS 14.pdf - p1 (March 29, 2016 18:42:21)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
its eventual disposal, using assumptions that an independent market participant may take into account. These cash flows
are discounted by an appropriate discount rate to arrive at a net present value or net asset value (“NAV”) of the asset.
Value in use is determined as the present value of the estimated future cash flows expected to arise from the continued use
of the asset in its present form and its eventual disposal. Value in use is determined by applying assumptions specific to the
Company’s continued use of the asset and does not take into account assumptions of significant future enhancements of an
asset’s performance or capacity to which the Company is not committed.
Estimates of expected future cash flows reflect estimates of future revenues, cash costs of production and capital
expenditures contained in the Company’s long-term life of mine (“LOM”) plans, which are updated for each CGU on an
annual basis. The Company’s LOM plans are based on detailed research, analysis and modeling to maximize the NAV of each
CGU. As such, these plans consider the optimal level of investment, overall production levels and sequence of extraction
taking into account all relevant characteristics of the ore body, including waste to ore ratios, ore grades, haul distances,
chemical and metallurgical properties impacting process recoveries, capacities of available extraction, haulage and
processing equipment, and other factors. Therefore, the LOM plan is an appropriate basis for forecasting production output
in each future year and the related production costs and capital expenditures. The LOM plans have been determined using
cash flow projections from financial budgets approved by senior management covering a 7 year to 27 year period.
Projected future revenues reflect the forecast future production levels at each of the Company’s CGUs as detailed in the
LOM plans. These forecasts may include the production of mineralized material that does not currently qualify for inclusion
in mineral reserve or mineral resource classification. This is consistent with the methodology used to measure value beyond
proven and probable reserves when allocating the purchase price of a business combination to acquired mining assets. The
fair value arrived at as described above, is the Company’s estimate of fair value for accounting purposes and is not a
“preliminary assessment” as defined in Canadian National Instrument 43-101 “Standards of Disclosure for Mineral Projects”.
Projected future revenues also reflect the Company’s estimates of future metals prices, which are determined based on
current prices, forward prices and forecasts of future prices prepared by industry analysts. These estimates often differ from
current price levels, but the methodology used is consistent with how a market participant would assess future long-term
metals prices. For the 2015 annual goodwill impairment analysis, estimated 2016, 2017 and long-term gold prices of $1,100,
$1,100 and $1,250 per ounce, respectively, and estimated 2016, 2017 and long-term silver prices of $16.00, $17.00 and
$18.00 per ounce, respectively, were used. For the 2014 annual goodwill impairment analysis, estimated 2015, 2016 and
long-term gold prices of $1,200, $1,300 and $1,300 per ounce, respectively, and estimated 2015, 2016 and long-term silver
prices of $18.00, $19.25 and $20.30 per ounce, respectively, were used.
The Company’s estimates of future cash costs of production and capital expenditures are based on the LOM plans for each
CGU. Costs incurred in currencies other than the US dollar are translated to US dollar equivalents based on long-term
forecasts of foreign exchange rates, on a currency by currency basis, obtained from independent sources of economic data.
Oil prices are a significant component of cash costs of production and are estimated based on the current price, forward
prices, and forecasts of future prices from third party sources. For the 2015 annual goodwill impairment analysis, estimated
2016, 2017 and long-term oil prices of $55, $55 and $65 per barrel, respectively, were used. For the 2014 annual goodwill
impairment analysis, an estimated 2015 and long-term oil price of $75 per barrel was used.
The discount rate applied to present value the net future cash flows is based on a real weighted average cost of capital by
country to account for geopolitical risk. For the 2015 annual goodwill impairment analysis, real discount rates of between
4.36% and 6.44% were used. For the 2014 annual goodwill impairment analysis, real discount rates of between 4.75% and
6.16% were used.
Since public gold companies typically trade at a market capitalization that is based on a multiple of their underlying NAV, a
market participant would generally apply a NAV multiple when estimating the fair value of a gold mining property.
Consequently, where applicable, the Company estimates the fair value of each CGU by applying a market NAV multiple to
the NAV of each CGU.
When selecting NAV multiples to arrive at fair value, the Company considered the trading prices and NAV estimates of
comparable gold mining companies as at December 31, 2015 in respect of the fair value determinations at that date, which
ranged from 0.7 to 1.1. NAV multiples observed at December 31, 2014 were in the range of 0.9 and 1.2. The selected ranges
of multiples applied to each CGU, which may be different from the ranges noted above, took into consideration, among
other factors: expected production growth in the near term; average cash costs over the life of the mine; potential remaining
mine life; and stage of development of the asset.
FS 15
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p15 (March 22, 2016 22:37:50)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
For property, plant and equipment and other long-lived assets, a previously recognized impairment loss is reversed if there
has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was
recognized.
xiii. Financial instruments and hedging activity
(a) Financial instrument classification and measurement
Financial instruments are measured on initial recognition at fair value, plus, in the case of financial instruments other than
those classified as “fair value through profit and loss”, directly attributable transaction costs. Measurement of financial
assets in subsequent periods depends on whether the financial instrument has been classified as “fair value through profit
and loss”, “available-for-sale”, “held-to-maturity”, or “loans and receivables”. Measurement of financial liabilities
subsequent to initial recognition depends on whether they are classified as fair value through profit and loss or “other
financial liabilities”.
Financial assets and financial liabilities at fair value through profit and loss include financial assets and financial liabilities
that are held for trading or designated upon initial recognition as at fair value through profit and loss. These financial
instruments are measured at fair value with changes in fair values recognized in the consolidated statement of operations.
Financial assets classified as available-for-sale are measured at fair value, with changes in fair values recognized in OCI,
except when there is objective evidence that the asset is impaired, at which point the cumulative loss that had been
previously recognized in OCI is recognized within the consolidated statement of operations. Financial assets classified as
held-to-maturity and loans and receivables are measured subsequent to initial recognition at amortized cost using the
effective interest method. Financial liabilities, other than financial liabilities classified as fair value through profit and loss,
are measured in subsequent periods at amortized cost using the effective interest method.
Cash and cash equivalents, restricted cash and short-term investments are designated as fair value through profit and loss
and are measured at fair value. Trade receivables and certain other assets are designated as loans and receivables. Long-
term investments in equity securities, where the Company cannot exert significant influence, are designated as available-for
sale. Accounts payable and accrued liabilities and long-term debt are classified as other financial liabilities.
Derivative assets and liabilities include derivative financial instruments that do not qualify as hedges, or are not designated
as hedges and are classified as fair value through profit and loss.
(b) Hedges
The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk
management objectives and strategies for undertaking hedge transactions. This process includes linking all derivatives to
specific assets and liabilities on the balance sheet or to specific firm commitments or forecasted transactions. Hedge
effectiveness is assessed based on the degree to which the cash flows from the derivative contracts are expected to offset
the cash flows of the underlying position or transaction being hedged. At the time of inception of the hedge and on an
ongoing basis, the Company assesses whether the derivatives that are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flows of hedged items.
Derivative contracts that have been designated as cash flow hedges have been entered into in order to effectively establish
prices for future production of metals, to hedge exposure to exchange rate fluctuations of foreign currency denominated
settlement of capital and operating expenditures, to establish prices for future purchases of energy or to hedge exposure to
interest rate fluctuations. Unrealized gains or losses arising from changes in the fair value of these contracts are recorded in
OCI, net of tax, and are only included in earnings when the underlying hedged transaction, identified at the contract
inception, is completed. Any ineffective portion of a hedge relationship is recognized immediately in the consolidated
statement of operations. The Company matches the realized gains or losses on contracts designated as cash flow hedges
with the hedged expenditures at the maturity of the contracts.
When derivative contracts designated as cash flow hedges have been terminated or cease to be effective prior to maturity
and no longer qualify for hedge accounting, any gains or losses recorded in OCI up until the time the contracts do not qualify
for hedge accounting, remain in OCI. Amounts recorded in OCI are recognized in the consolidated statement of operations
in the period in which the underlying hedged transaction is completed. Gains or losses arising subsequent to the derivative
contracts not qualifying for hedge accounting are recognized in the consolidated statement of operations in the period in
which they occur.
For hedges that do not qualify for hedge accounting, gains or losses are recognized in the consolidated statement of
operations in the current period.
FS 16
Kinross Gold 2015
59599 2015 Q4 Rev FS 16.pdf - p1 (March 29, 2016 18:42:18)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Impairment of financial assets
(c)
The Company assesses at each reporting date whether there is objective evidence that a financial asset or a group of
financial assets is impaired. In the case of investments classified as available-for-sale, an evaluation is made as to whether a
decline in fair value is significant or prolonged based on an analysis of indicators such as market price of the investment and
significant adverse changes in the technological, market, economic or legal environment in which the investee operates.
If an available-for-sale financial asset is impaired, an amount equal to the difference between its carrying value and its
current fair value is transferred from AOCI and recognized in the consolidated statement of operations. Reversals of
impairment charges in respect of equity instruments classified as available-for-sale are not recognized in the consolidated
statement of operations.
xiv. Share-based payments
The Company has a number of equity-settled and cash-settled share-based compensation plans under which the Company
issues either equity instruments or makes cash payments based on the value of the underlying equity instrument of the
Company. The Company’s share-based compensation plans are comprised of the following:
Share Option Plan: Stock options are generally equity-settled. The fair value of stock options at the grant date is estimated
using the Black-Scholes option pricing model. Compensation expense is recognized over the stock option vesting period
based on the number of options estimated to vest. Management estimates the number of awards likely to vest at the time
of a grant and at each reporting date up to the vesting date. Annually, the estimated forfeiture rate is adjusted for actual
forfeitures in the period. On exercise of the vested options, the shares are issued from treasury.
Restricted Share Plan: Restricted share units (“RSUs”) and Restricted performance share units (“RPSUs”) are granted under
the Restricted Share Plan. Both RSUs and RPSUs are generally equity-settled and awarded to certain employees as a
percentage of long-term incentive awards.
(a) RSUs are fair valued based on the market value of the shares at the grant date. The Company’s compensation expense
is recognized over the vesting period based on the number of units estimated to vest. Management estimates the
number of awards likely to vest on grant and at each reporting date up to the vesting date. Annually, the estimated
forfeiture rate is adjusted for actual forfeitures in the period. On vesting of RSUs, shares are generally issued from
treasury.
(b) RPSUs are subject to certain vesting requirements based on performance criteria over the vesting period established
by the Company. RPSUs are fair valued as follows: The portion of the RPSUs related to market conditions is fair valued
based on the application of a Monte Carlo pricing model at the date of grant and the portion related to non-market
conditions is fair valued based on the market value of the shares at the date of grant. The Company’s compensation
expense is recognized over the vesting period based on the number of units estimated to vest. Management estimates
the number of awards likely to vest on grant and at each reporting date up to the vesting date. Annually, the estimated
forfeiture rate is adjusted for actual forfeitures in the period. On vesting of RPSUs, shares are generally issued from
treasury.
Deferred Share Unit Plan: Deferred share units (“DSUs”) are cash-settled and accounted for as a liability at fair value which
is based on the market value of the shares at the grant date. The fair value of the liability is re-measured each period based
on the current market value of the underlying stock at period end and any changes in the liability are recorded as
compensation expense each period.
Employee Share Purchase Plan: The Company’s contribution to the employee Share Purchase Plan (“SPP”) is recorded as
compensation expense on a payroll cycle basis as the employer’s obligation to contribute is incurred. The cost of the
common shares purchased under the SPP are either based on the weighted average closing price of the last twenty trading
sessions prior to the end of the period for shares issued from treasury, or are based on the price paid for common shares
purchased in the open market.
xv. Metal sales
Metal sales includes sales of refined gold and silver and doré, which are generally physically delivered to customers in the
period in which they are produced, with their sales price based on prevailing spot market metal prices. Revenue from metal
sales is recognized when all the following conditions have been satisfied:
•
The significant risks and rewards of ownership have been transferred;
FS 17
Kinross Gold 2015
59599 2015 Q4 Rev FS 17.pdf - p1 (March 29, 2016 18:42:14)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
•
•
•
•
Neither continuing managerial involvement to the degree usually associated with ownership, nor effective control over
the goods sold, has been retained;
The amount of revenue can be measured reliably;
It is probable that the economic benefits associated with the transaction will flow to the Company; and
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
These conditions are generally met when the sales price is fixed and title has passed to the customer.
xvi. Provision for reclamation and remediation
The Company records a liability and corresponding asset for the present value of the estimated costs of legal and
constructive obligations for future site reclamation and closure where the liability is probable and a reasonable estimate can
be made of the obligation. The estimated present value of the obligation is reassessed on an annual basis or when new
material information becomes available. Increases or decreases to the obligation usually arise due to changes in legal or
regulatory requirements, the extent of environmental remediation required, methods of reclamation, cost estimates, or
discount rates. Changes to the provision for reclamation and remediation obligations related to operating mines, which are
not the result of current production of inventory, are recorded with an offsetting change to the related asset. For properties
where mining activities have ceased or are in reclamation, changes are charged directly to earnings. The present value is
determined based on current market assessments of the time value of money using discount rates specific to the country in
which the reclamation site is located and is determined as the risk-free rate of borrowing approximated by the yield on
sovereign debt for that country, with a maturity approximating the end of mine life. The periodic unwinding of the discount
is recognized in the consolidated statement of operations as a finance expense.
xvii. Income tax
The income tax expense or benefit for the period consists of two components: current and deferred. Income tax expense is
recognized in the consolidated statement of operations except to the extent it relates to a business combination or items
recognized directly in equity.
Current tax is the expected tax payable or receivable on the taxable profit or loss for the year. Current tax is calculated using
tax rates and laws that were enacted or substantively enacted at the balance sheet date in each of the jurisdictions and
includes any adjustments for taxes payable or recovery in respect of prior periods.
Deferred tax is recognized in respect of temporary differences between the carrying amount of assets and liabilities in the
consolidated balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax is
calculated based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using
tax rates that are expected to apply in the year of realization or settlement based on tax rates and laws enacted or
substantively enacted at the balance sheet date.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax liabilities are recognized
for taxable temporary differences arising on investments in subsidiaries, associates and joint ventures except where the
reversal of the temporary difference can be controlled and it is probable that the difference will not reverse in the
foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and unused
tax losses to the extent it is probable future taxable profits will be available against which they can be utilized. The carrying
amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities are not recognized on temporary differences that arise from goodwill which is not deductible for tax
purposes. Deferred tax assets and liabilities are not recognized in respect of temporary differences that arise on initial
recognition of assets and liabilities acquired other than in a business combination.
Deferred tax assets and liabilities are offset where they relate to income taxes levied by the same taxation authority and the
Corporation has the legal right and intent to offset.
xviii. Earnings (loss) per share
Earnings (loss) per share calculations are based on the weighted average number of common shares and common share
equivalents issued and outstanding during the period. Basic earnings (loss) per share amounts are calculated by dividing net
FS 18
Kinross Gold 2015
59599 2015 Q4 Rev FS 18.pdf - p1 (March 29, 2016 18:42:11)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
earnings (loss) attributable to common shareholders for the period by the weighted average number of common shares
outstanding during the period. Diluted earnings (loss) per share amounts are calculated by dividing net earnings (loss)
attributable to common shareholders for the period by the diluted weighted average shares outstanding during the period.
Diluted earnings per share is calculated using the treasury method. The treasury method, which assumes that outstanding
stock options, warrants, RSUs and RPSUs with an average exercise price below the market price of the underlying shares,
are exercised and the assumed proceeds are used to repurchase common shares of the Company at the average market
price of the common shares for the period.
4.
RECENT ACCOUNTING PRONOUNCEMENTS
Revenue recognition
In May 2014, the IASB issued IFRS 15 “Revenue from Contracts with Customers” (“IFRS 15”). The standard replaces IAS 11
“Construction Contracts”, IAS 18 “Revenue”, IFRIC 13 “Customer Loyalty Programmes”, IFRIC 15 “Agreements for the
Construction of Real Estate”, IFRIC 18 “Transfer of Assets From Customers” and SIC 31 “Revenue – Barter Transactions
Involving Advertising Services”. IFRS 15 establishes principles for reporting the nature, amount, timing, and uncertainty of
revenue and cash flows arising from an entity’s contracts with customers. This standard is effective for annual periods
beginning on or after January 1, 2018, and permits early adoption. The Company is in the process of determining the impact
of IFRS 15 on its consolidated financial statements.
Financial instruments
In July 2014, the IASB issued the final version of IFRS 9 “Financial Instruments” (“IFRS 9”). This standard is effective for
annual periods beginning on or after January 1, 2018, and permits early adoption. IFRS 9 provides a revised model for
recognition, measurement and impairment of financial instruments and includes a substantially reformed approach to hedge
accounting. The Company is in the process of determining the impact of IFRS 9 on its consolidated financial statements.
Leases
In January 2016, the IASB issued IFRS 16 “Leases” (“IFRS 16”). This standard is effective for annual periods beginning on or
after January 1, 2019, and permits early adoption, provided IFRS 15, has been applied, or is applied at the same date as IFRS
16. IFRS 16 requires lessees to recognize assets and liabilities for most leases. The Company is in the process of determining
the impact of IFRS 16 on its consolidated financial statements.
5.
SIGNIFICANT JUDGMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company’s financial statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Estimates and assumptions are continually evaluated and are based on management’s experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual
results could differ from these estimates.
i.
Significant Judgments in Applying Accounting Policies
The areas which require management to make significant judgments in applying the Company’s accounting policies in
determining carrying values include, but are not limited to:
(a) Mineral Reserves and Mineral Resources
The information relating to the geological data on the size, depth and shape of the ore body requires complex geological
judgments to interpret the data. Changes in the proven and probable mineral reserves or measured and indicated and
inferred mineral resources estimates may impact the carrying value of property, plant and equipment, goodwill, reclamation
and remediation obligations, recognition of deferred tax amounts and depreciation, depletion and amortization.
FS 19
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p19 (March 22, 2016 22:37:51)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
(b) Depreciation, depletion and amortization
Significant judgment is involved in the determination of useful life and residual values for the computation of depreciation,
depletion and amortization and no assurance can be given that actual useful lives and residual values will not differ
significantly from current assumptions.
(c) Taxes
The Company is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the
provision for income taxes, due to the complexity of legislation. There are many transactions and calculations for which the
ultimate tax determination is uncertain during the ordinary course of business.
ii.
Significant Accounting Estimates and Assumptions
The areas which require management to make significant estimates and assumptions in determining carrying values include,
but are not limited to:
(a) Mineral Reserves and Mineral Resources
Proven and probable mineral reserves are the economically mineable parts of the Company’s measured and indicated
mineral resources demonstrated by at least a preliminary feasibility study. The Company estimates its proven and probable
mineral reserves and measured and indicated and inferred mineral resources based on information compiled by
appropriately qualified persons. The estimation of future cash flows related to proven and probable mineral reserves is
based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements and
production costs along with geological assumptions and judgments made in estimating the size and grade of the ore body.
Changes in the proven and probable mineral reserves or measured and indicated and inferred mineral resources estimates
may impact the carrying value of property, plant and equipment, goodwill, reclamation and remediation obligations,
recognition of deferred tax amounts and depreciation, depletion and amortization.
(b) Purchase Price Allocation
Applying the acquisition method to business combinations requires each identifiable asset and liability to be measured at its
acquisition-date fair value. The excess, if any, of the fair value of consideration over the fair value of the net identifiable
assets acquired is recognized as goodwill. The determination of the acquisition-date fair values often requires management
to make assumptions and estimates about future events. The assumptions and estimates relating to determining the fair
value of property, plant and equipment acquired generally require a high degree of judgment, and include estimates of
mineral reserves acquired, future metal prices and discount rates. Changes in any of the assumptions or estimates used in
determining the fair value of acquired assets and liabilities could affect the amounts assigned to assets, liabilities and
goodwill in the purchase price allocation.
(c) Depreciation, depletion and amortization
Plants and other facilities used directly in mining activities are depreciated using the UOP method over a period not to exceed
the estimated life of the ore body based on recoverable ounces to be mined from proven and probable reserves. Mobile and
other equipment is depreciated, net of residual value, on a straight-line basis, over the useful life of the equipment but does
not exceed the related estimated life of the mine based on proven and probable reserves.
The calculation of the UOP rate, and therefore the annual depreciation, depletion and amortization expense, could be
materially affected by changes in the underlying estimates. Changes in estimates can be the result of actual future
production differing from current forecasts of future production, expansion of mineral reserves through exploration
activities, differences between estimated and actual costs of mining and differences in gold price used in the estimation of
mineral reserves.
(d)
Impairment of goodwill and long-lived assets
Goodwill is tested for impairment annually or more frequently if there is an indication of impairment. The carrying value of
property, plant and equipment is reviewed each reporting period to determine whether there is any indication of
impairment. If the carrying amount of an asset exceeds its recoverable amount, the asset is impaired and an impairment
loss is recognized in the consolidated statement of operations. The assessment of fair values, including those of the CGUs
for purposes of testing goodwill, require the use of estimates and assumptions for recoverable production, future and long-
FS 20
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p20 (March 22, 2016 22:37:52)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
term commodity prices, discount rates, NAV multiples, foreign exchange rates, future capital requirements and operating
performance. Changes in any of the assumptions or estimates used in determining the fair value of goodwill or other assets
could impact the impairment analysis. Impairment charges recognized against property, plant and equipment may be
reversed if there are changes in the assumptions or estimates used in determining the recoverable amounts of the CGUs
which indicate that a previously recognized impairment loss may no longer exist or may have decreased.
(e)
Inventories
Expenditures incurred, and depreciation, depletion and amortization of assets used in mining and processing activities are
deferred and accumulated as the cost of ore in stockpiles, ore on leach pads, in-process and finished metal inventories.
These deferred amounts are carried at the lower of average cost or NRV. Write-downs of ore in stockpiles, ore on leach
pads, in-process and finished metal inventories resulting from NRV impairments are reported as a component of current
period costs. The primary factors that influence the need to record write-downs include prevailing and long-term metal
prices and prevailing costs for production inputs such as labour, fuel and energy, materials and supplies, as well as realized
ore grades and actual production levels.
Costs are attributed to the leach pads based on current mining costs, including applicable depreciation, depletion and
amortization relating to mining operations incurred up to the point of placing the ore on the pad. Costs are removed from
the leach pad based on the average cost per recoverable ounce of gold on the leach pad as the gold is recovered. Estimates
of recoverable gold on the leach pads are calculated from the quantities of ore placed on the pads, the grade of ore placed
on the leach pads and an estimated percentage of recovery. Timing and ultimate actual recovery of gold contained on leach
pads can vary significantly from the estimates. The quantities of recoverable gold placed on the leach pads are reconciled
to the quantities of gold actually recovered (metallurgical balancing), by comparing the grades of ore placed on the leach
pads to actual ounces recovered. The nature of the leaching process inherently limits the ability to precisely monitor
inventory levels. As a result, the metallurgical balancing process is constantly monitored and the engineering estimates are
refined based on actual results over time. The ultimate actual recovery of gold from a pad will not be known until the
leaching process is completed.
The allocation of costs to ore in stockpiles, ore on leach pads and in-process inventories and the determination of NRV
involve the use of estimates. There is a high degree of judgment in estimating future costs, future production levels,
forecasted usage of supplies inventory, proven and probable reserves estimates, gold and silver prices, and the ultimate
estimated recovery for ore on leach pads. There can be no assurance that actual results will not differ significantly from
estimates used in the determination of the carrying value of inventories.
(f) Provision for reclamation and remediation
The Company assesses its provision for reclamation and remediation on an annual basis or when new material information
becomes available. Mining and exploration activities are subject to various laws and regulations governing the protection
of the environment. In general, these laws and regulations are continually changing and the Company has made, and intends
to make in the future, expenditures to comply with such laws and regulations. Accounting for reclamation and remediation
obligations requires management to make estimates of the future costs the Company will incur to complete the reclamation
and remediation work required to comply with existing laws and regulations at each mining operation. Actual costs incurred
may differ from those amounts estimated. Also, future changes to environmental laws and regulations could increase the
extent of reclamation and remediation work required to be performed by the Company. Increases in future costs could
materially impact the amounts charged to operations for reclamation and remediation. The provision represents
management’s best estimate of the present value of the future reclamation and remediation obligation. The actual future
expenditures may differ from the amounts currently provided.
(g) Deferred taxes
The Company recognizes the deferred tax benefit related to deferred income and resource tax assets to the extent recovery
is probable. Assessing the recoverability of deferred income tax assets requires management to make estimates of future
taxable profit. To the extent that future cash flows and taxable profit differ significantly from estimates, the ability of the
Company to realize the net deferred tax assets recorded at the balance sheet date could be impacted. In addition, future
changes in tax laws could limit the ability of the Company to obtain tax deductions in future periods from deferred income
and resource tax assets.
FS 21
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p21 (March 22, 2016 22:37:52)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
(h) Contingencies
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time
to time. Contingencies can be possible assets or liabilities arising from past events which, by their nature, will only be
resolved when one or more future events not wholly within our control occur or fail to occur. The assessment of such
contingencies involves the use of significant judgment and estimates. In the event that management’s estimate of the future
resolution of these matters changes, the Company will recognize the effects of the changes in its consolidated financial
statements on the date such changes occur.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p22 (March 22, 2016 22:37:52)
FS 22
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
6.
i.
ACQUISITIONS AND DISPOSITIONS
Acquisition of Bald Mountain and remaining 50% interest in Round Mountain
On November 12, 2015, the Company announced that it had entered into a definitive asset purchase agreement with Barrick
to acquire 100% of the Bald Mountain gold mine (“Bald Mountain”), which includes a large associated land package, and the
remaining 50% interest in the Round Mountain gold mine for $610 million in cash, subject to a working capital adjustment.
In addition to the purchase price, Barrick will receive a contingent 2% net smelter return royalty on future gold production
from Kinross’ 100%-owned Bald Mountain lands that will come into effect following the post-closing production of 10 million
ounces from such lands. Approximately 40% of the Bald Mountain land package is subject to a 50/50 exploration joint
venture partnership between Kinross and Barrick, with Kinross as the operator. On January 11, 2016, the Company
completed the transaction.
The acquisition, which will be accounted for as a business combination as at January 11, 2016, represents a strategic fit with
the Company’s open-pit heap leach skill set and existing portfolio of operating assets, and enhances the production profile
in the United States.
The following table sets forth a preliminary allocation of the purchase price to assets and liabilities acquired, based on
preliminary estimates of fair value. As the Company gained control of Round Mountain in the transaction, in accordance
with IFRS, the assets and liabilities set out below represent 100% of the value of Round Mountain in addition to 100% of
Bald Mountain. Final valuations of assets and liabilities are not yet complete due to the timing of the acquisition and the
inherent complexity associated with the valuations. The preliminary allocation is subject to adjustment with the final
allocation to be completed later in 2016.
Preliminary Purchase Price Allocation
Net working capital
Property, plant and equipment (including mineral interests)
Other long-term assets
Provisions
Other long-term liabilities
Net assets
Less: Fair value of previously held interest in Round Mountain
Cash consideration
$
$
$
182.8
725.9
19.7
(178.3)
(0.1)
750.0
140.0
610.0
ii.
Disposition of interest in Fruta del Norte
On December 17, 2014, the Company completed the sale of its interest in Aurelian Resources Inc. (“Aurelian”) and the Fruta
del Norte project in Ecuador to Lundin Gold Inc., a member of the Lundin Group of Companies, for gross cash proceeds of
$150.0 million and $90.0 million in Lundin Gold Inc. common shares, resulting in an after-tax recovery of $238.0 million.
Prior to the disposition, the Company’s interest in Aurelian was classified as a discontinued operation. For the year ended
December 31, 2014 the Company recognized after tax earnings of $233.5 million from the discontinued operation, including
the recovery on sale of Aurelian of $238.0 million.
FS 23
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p23 (March 22, 2016 22:37:52)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
7.
CONSOLIDATED FINANCIAL STATEMENT DETAILS
Consolidated Balance Sheets
i.
Cash and cash equivalents:
Cash on hand and balances with banks
Short-term deposits
Restricted cash:
Restricted cash (a)
December 31,
2015
December 31,
2014
$
$
460.3
583.6
1,043.9
503.2
480.3
983.5
$
$
December 31,
2015
December 31,
2014
$
10.5
$
41.3
(a) As at December 31, 2015, restricted cash relates to loan escrow judicial deposits and environmental indemnities related to Chirano and
certain other sites. As at December 31, 2014, restricted cash relates to the Kupol loan (see Note 12 (iii)), loan escrow judicial deposits and
environmental indemnities related to Chirano and certain other sites.
ii.
Accounts receivable and other assets:
Trade receivables
Prepaid expenses
VAT receivable
Deposits
Other
December 31,
December 31,
2015
2014
$
$
4.4
17.0
53.4
11.8
22.6
109.2
4.8
32.3
72.5
36.3
24.5
170.4
$
$
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p24 (March 22, 2016 22:37:52)
FS 24
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
iii.
Inventories:
Ore in stockpiles (a)
Ore on leach pads (b)
In-process
Finished metal
Materials and supplies
Long-term portion of ore in stockpiles and ore on leach pads (a),(b)
December 31,
2015
December 31,
2014
$
195.7
$
197.1
250.0
85.5
24.4
607.2
1,162.8
304.9
81.2
48.8
788.7
1,420.7
$
(157.6)
1,005.2
$
(144.0)
1,276.7
(a) Ore in stockpiles relates to the Company’s operating mines. Ore in stockpiles includes low-grade material not scheduled for processing
within the next twelve months which is included in other long-term assets on the consolidated balance sheet. See Note 7 vii.
(b) Ore on leach pads relates to the Company's Maricunga, Tasiast, Fort Knox, and 50% owned Round Mountain mines. Based on current
mine plans, the Company expects to place the last tonne of ore on its leach pads at Maricunga in 2018, Tasiast in 2016, Fort Knox in
2020, and 50% owned Round Mountain in 2019. Ore on leach pads includes material not scheduled for processing within the next twelve
months which is included in other long-term assets on the consolidated balance sheet. See Note 7 vii.
(c) During the years ended December 31, 2015 and 2014, inventory impairment charges were recorded within cost of sales to reduce the
carrying value of inventory to its net realizable value. See Note 8 ii.
FS 25
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p25 (March 22, 2016 22:37:53)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
iv.
Property, plant and equipment:
Cost
Balance at January 1, 2015
Additions
Capitalized interest
Disposals
Other
Balance at December 31, 2015
Mineral Interests (a)
Land, plant and
equipment
Development and
operating
properties
Pre-development
properties
Total
$
7,020.1
349.3
16.9
(71.0)
16.9
7,332.2
$
7,462.2
175.9
23.6
(3.6)
(6.7)
7,651.4
$
168.8
-
-
(4.7)
0.2
164.3
$
14,651.1
525.2
40.5
(79.3)
10.4
15,147.9
Accumulated depreciation, depletion,
amortization and impairment
Balance at January 1, 2015
Depreciation, depletion and amortization
Impairment charge (b)
Disposals
Other
Balance at December 31, 2015
$
(4,191.8)
(484.5)
$
(4,970.7)
(446.4)
$
(79.2)
-
$
(9,241.7)
(930.9)
(220.8)
59.9
2.1
(4,835.1)
(218.7)
-
(3.9)
(5,639.7)
-
-
(0.2)
(79.4)
(439.5)
59.9
(2.0)
(10,554.2)
Net book value
$
2,497.1
$
2,011.7
$
84.9
$
4,593.7
Amount included above as at December 31, 2015:
Assets under construction
Assets not being depreciated (c)
$
201.9
$
121.2
$
-
$
323.1
$
361.1
$
322.1
$
84.9
$
768.1
(a) At December 31, 2015, the significant development and operating properties include Fort Knox, 50% owned Round Mountain,
Paracatu, Maricunga, Kupol, Kettle River-Buckhorn, Tasiast, Chirano, and Lobo-Marte. Included in pre-development properties are
White Gold and other exploration properties.
(b) At December 31, 2015, an impairment charge was recorded against property, plant and equipment at Fort Knox, 50% owned Round
Mountain, and Tasiast. See Note 8 i.
(c) Assets not being depreciated relate to land, capitalized exploration and evaluation costs, assets under construction, which relate to
expansion projects, and other assets that are in various stages of being readied for use.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p26 (March 22, 2016 22:37:53)
FS 26
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Cost
Balance at January 1, 2014
Additions
Capitalized interest
Disposals (b)
Other
Balance at December 31, 2014
Accumulated depreciation, depletion,
amortization and impairment
Balance at January 1, 2014
Depreciation, depletion and amortization
Impairment charge (c)
Disposals (b)
Other
Balance at December 31, 2014
Mineral Interests(a)
Land, plant and
equipment
Development and
operating
properties
Pre-development
properties
Total
$
6,699.3
352.7
26.9
$
8,172.3
272.8
35.8
$
177.4
-
-
$
15,049.0
625.5
62.7
(77.8)
19.0
7,020.1
(998.5)
(20.2)
7,462.2
(8.6)
-
168.8
(1,084.9)
(1.2)
14,651.1
$
(3,589.9)
$
(4,876.4)
$
-
$
(8,466.3)
(422.8)
(218.9)
43.2
(3.4)
(4,191.8)
(453.3)
(640.4)
998.5
0.9
(4,970.7)
-
(79.2)
-
-
(79.2)
(876.1)
(938.5)
1,041.7
(2.5)
(9,241.7)
Net book value
$
2,828.3
$
2,491.5
$
89.6
$
5,409.4
Amount included above as at December 31, 2014:
Assets under construction
Assets not being depreciated (d)
$
320.2
$
88.8
$
-
$
409.0
$
476.4
$
287.2
$
89.6
$
853.2
(a) At December 31, 2014, the significant development and operating properties include Fort Knox, 50% owned Round Mountain,
Paracatu, Maricunga, Kupol, Kettle River-Buckhorn, Tasiast, Chirano, and Lobo-Marte. Included in pre-development properties are
White Gold and other exploration properties.
(b) On December 17, 2014, the Company disposed of its interest in FDN for gross proceeds of $240.0 million. See Note 6 ii.
(c) At December 31, 2014, an impairment charge was recorded against property, plant and equipment at Tasiast, Chirano, Kettle River-
Buckhorn, Lobo-Marte, and White Gold. See Note 8 i.
(d) Assets not being depreciated relate to land, capitalized exploration and evaluation costs, assets under construction, which relate to
expansion projects, and other assets that are in various stages of being readied for use.
Capitalized interest primarily relates to capital expenditures at Fort Knox, 50% owned Round Mountain, Paracatu, Kupol and
La Coipa and had a weighted average borrowing rate of 4.7% and 4.6% during the years ended December 31, 2015 and 2014,
respectively.
At December 31, 2015, $215.6 million of exploration and evaluation (“E&E”) assets were included in mineral interests
(December 31, 2014 – $207.9 million). The Company disposed of $4.0 million of E&E assets during the year ended December
31, 2015 (year ended December 31, 2014 – $8.6 million). During the years ended December 31, 2015 and 2014, the Company
acquired no E&E assets and transferred no E&E assets to capitalized development. During the year ended December 31,
2015, the Company capitalized $11.7 million of E&E costs (year ended December 31, 2014 – $5.6 million). During the year
ended December 31, 2015, $8.4 million (year ended December 31, 2014 – $7.4 million), of E&E expenditures were expensed
by the Company and included in operating cash flows. The Company recognized property, plant and equipment impairment
charges related to E&E assets for the year ended December 31, 2015 of $nil (year ended December 31, 2014 – $379.1
million).
FS 27
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p27 (March 22, 2016 22:37:53)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
v.
Goodwill:
The goodwill allocated to the Company's CGUs and included in the respective operating segment assets is shown in the table
below:
Round
Mountain Paracatu
La Coipa
Kettle River-
Buckhorn
Kupol
Maricunga
Tasiast
Chirano
Other
Operations (a)
Total
Cost
Balance at January 1, 2015
Acquisitions
Disposals
$ 145.9
$ 164.9
$ 190.3
$ 20.9
$ 827.2 $ 396.1
$ 4,620.4
$ 918.6 $ 278.2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 7,562.5
-
-
Balance at December 31, 2015
$ 145.9
$ 164.9
$ 190.3
$ 20.9
$ 827.2 $ 396.1
$ 4,620.4
$ 918.6 $ 278.2
$ 7,562.5
Accumulated impairment
Balance at January 1, 2015
Impairment loss
Disposals
$ (145.9) $ (164.9) $ (190.3) $ (20.9) $ (668.4) $ (396.1) $ (4,620.4) $ (918.6) $ (274.3) $ (7,399.8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at December 31, 2015
$ (145.9) $ (164.9) $ (190.3) $ (20.9) $ (668.4) $ (396.1) $ (4,620.4) $ (918.6) $ (274.3) $ (7,399.8)
Carrying amount at December 31, 2015
$ -
$ -
$ -
$ - $ 158.8
$ - $ -
$ - $ 3.9 $ 162.7
Cost
Balance at January 1, 2014
Acquisitions
Disposals
Round
Mountain Paracatu
La Coipa
Kettle River-
Buckhorn
Kupol
Maricunga
Tasiast
Chirano
Other
Operations (a)
Total
$ 145.9
-
-
$ 164.9
-
-
$ 190.3
-
-
$ 20.9
-
-
$ 827.2 $ 396.1
$ 4,620.4
- - -
- - -
$ 918.6 $ 278.2
$ 7,562.5
- - -
- - -
Balance at December 31, 2014
$ 145.9
$ 164.9
$ 190.3
$ 20.9
$ 827.2 $ 396.1
$ 4,620.4
$ 918.6 $ 278.2
$ 7,562.5
Accumulated impairment
Balance at January 1, 2014
Impairment loss (b)
Disposals
$ (145.9) $ (164.9) $ (65.9)
$ - $ (668.4) $ (396.1) $ (4,620.4) $ (918.6) $ (274.3) $ (7,254.5)
-
-
- (124.4) (20.9)
-
-
-
- - -
- - -
- - (145.3)
- - -
Balance at December 31, 2014
$ (145.9) $ (164.9) $ (190.3) $ (20.9) $ (668.4) $ (396.1) $ (4,620.4) $ (918.6) $ (274.3) $ (7,399.8)
Carrying amount at December 31, 2014
$ -
$ -
$ -
$ - $ 158.8
$ - $ -
$ - $ 3.9 $ 162.7
(a) At December 31, 2015 and 2014, other operations includes goodwill related to Jiboia.
(b) At December 31, 2014, as part of the annual impairment test for goodwill, it was determined that the carrying amounts of La Coipa
and Kettle River-Buckhorn exceeded their recoverable amounts. See Note 8 i.
vi.
Long-term investments:
Unrealized gains and losses on investments classified as available-for-sale are recorded in AOCI as follows:
December 31, 2015
December 31, 2014
Investments in an unrealized gain position
Investments in an unrealized loss position
10.4
72.7
83.1
$
1.4
(20.1)
(18.7)
$ 103.6 $ 3.9
7.4 (2.1)
1.8
$
$
111.0
$
$
Fair value
$
Gains (losses) in
AOCI
Fair value
Gains (losses) in
AOCI
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p28 (March 22, 2016 22:37:53)
FS 28
Kinross Gold 2015
December 31,
2015
December 31,
2014
$
$
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
vii.
Other long-term assets:
Long-term portion of ore in stockpiles and ore on leach pads (a)
Deferred charges, net of amortization
Long-term receivables
Advances for the purchase of capital equipment
Other
(a) Ore in stockpiles and on leach pads represents low-grade material not scheduled for processing within the next twelve months. At
December 31, 2015, long-term ore in stockpiles was at the Company’s Fort Knox, Kupol, Tasiast, Chirano and Paracatu mines, and long-
term ore on leach pads was at the Company’s Fort Knox and 50% owned Round Mountain mines.
$
$
viii.
Accounts payable and accrued liabilities:
Trade payables
Accrued liabilities
Employee related accrued liabilities
ix.
Accumulated other comprehensive income (loss):
Balance at December 31, 2013
Other comprehensive income (loss) before tax
Tax
Balance at December 31, 2014
Other comprehensive income (loss) before tax
Tax
Balance at December 31, 2015
December 31,
2015
December 31,
2014
$
$
$
$
Long-term
Investments
$
Derivative
Contracts
$
Total
$
(0.6)
2.4
-
1.8
$
$
$
(20.5)
-
(18.7)
$
43.5
(8.2)
(12.6)
$
23.0
(8.2)
(31.3)
$
157.6
7.9
161.7
6.7
36.3
370.2
75.2
206.2
98.2
379.6
(35.9)
(7.8)
(4.2)
(47.9)
144.0
6.5
209.0
20.7
37.7
417.9
86.9
223.2
111.8
421.9
(36.5)
(5.4)
(4.2)
(46.1)
FS 29
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p29 (March 22, 2016 22:37:54)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Consolidated Statements of Operations
x.
Other income (expense) – net:
Losses on sale of other assets - net
Impairment of investments (a)
Foreign exchange losses
Net non-hedge derivative losses
Other (b)
Years ended December 31,
2015
2014
$
(16.2)
(7.6)
(30.6)
(3.4)
$
(3.1)
(158.1)
(50.1)
(5.1)
$
37.5
(20.3)
$
0.9
(215.5)
(a) During the year ended December 31, 2014, the Company recognized an impairment charge of $156.6 million related to its investment
in Cerro Casale as a result of the impairment assessment disclosed in Note 8 i. The Company also recognized impairment losses on
certain of its available-for-sale investments during the years ended December 31, 2015 and 2014.
(b) During the year ended December 31, 2015, the Company received $31.7 million in insurance claims.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p30 (March 22, 2016 22:37:54)
FS 30
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
xi.
Equity in earnings (losses) of associate and joint venture:
Cerro Casale (a)(b)
Puren (a)(c)
Years ended December 31,
2015
2014
$
(3.0)
$
(5.4)
$
6.2
3.2
$
(0.4)
(5.8)
(a) Represents Kinross’ share of the net earnings (loss) and other comprehensive income (loss).
(b) The Company holds a 25% interest in Cerro Casale which is classified as an investment in associate and accounted for under the
equity method. See Note 9.
(c) Puren is classified as a joint venture and is accounted for under the equity method.
xii.
Finance expense:
Accretion on reclamation and remediation obligations
Interest expense, including accretion on debt (a)
Years ended December 31,
2015
2014
$
(27.8)
$
(28.1)
$
(68.2)
(96.0)
$
(52.0)
(80.1)
(a) During the years ended December 31, 2015 and 2014, $40.5 million and $62.7 million, respectively, of interest was capitalized to
property, plant and equipment. See Note 7 iv.
Total interest paid, including interest capitalized, during the year ended December 31, 2015 was $91.5 million (year ended
December 31, 2014 - $82.4 million).
xiii.
Employee benefits expenses:
The following employee benefits expenses are included in production cost of sales, general and administrative, and
exploration and business development expenses:
Years ended December 31,
2015
2014
$
$
611.5
20.8
15.5
647.8
659.5
32.3
30.2
722.0
$
$
Salaries, short-term incentives, and other benefits
Share-based payments
Other
FS 31
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p31 (March 22, 2016 22:37:54)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
8.
IMPAIRMENT
Goodwill (i)
Property, plant and equipment (i)
Inventory and other assets (ii)
Years ended December 31,
2015
2014
$
-
$
439.5
259.5
699.0
$
$
145.3
938.5
167.6
1,251.4
i.
Goodwill and property, plant and equipment
At December 31, 2015, upon completion of its annual assessment of the carrying values of its CGUs, the Company recorded
an impairment charge of $439.5 million as a result of decreases in the Company’s short-term and long-term gold price
estimates. The impairment charge was entirely related to property, plant and equipment and included a charge of $249.5
million at Fort Knox, $147.0 million at Tasiast, and $43.0 million at Round Mountain. As a result of the impairment charge
related to the Fort Knox CGU, a tax recovery of $9.3 million was recorded within income tax expense.
As at December 31, 2015, the carrying amounts of Tasiast, Fort Knox, and Round Mountain were $827.9 million, $349.1
million, and $140.0 million, respectively.
At December 31, 2014, the Company recorded an impairment charge of $1,083.8 million, upon completion of its annual
assessment of the carrying values of its CGUs. The impairment charge included goodwill impairment of $145.3 million and
property plant and equipment impairment of $938.5 million. As a result of the impairment charge related to property, plant
and equipment, a tax recovery of $127.9 million was recorded within tax expense.
The following table summarizes the 2014 impairment charges by CGU:
CGU
Tasiast
Chirano
Kettle River - Buckhorn
La Coipa
Lobo-Marte
White Gold
Total
Goodwill
-
$
-
20.9
124.4
-
-
145.3
$
Property, plant and
equipment
Total
$
$
342.5
365.4
32.9
-
118.5
79.2
938.5
342.5
365.4
53.8
124.4
118.5
79.2
1,083.8
$
$
As at December 31, 2014 the carrying amounts of Tasiast, Chirano, Kettle River-Buckhorn, La Coipa, Lobo-Marte and White
Gold were $1,017.5 million, $458.9 million, ($79.2) million, ($54.8) million, $118.8 million and $44.3 million respectively.
The carrying amounts for Kettle River-Buckhorn and La Coipa were negative as a result of reclamation and remediation
obligations.
The impairment charge at Tasiast reflected a change in estimated future operating costs, operating cost underperformance
of the existing mill and a decision not to proceed with a 38,000 tonne per day mill expansion at that time. Chirano’s
impairment charge was related to a decrease in exploration potential. The impairment charges at La Coipa and Lobo-Marte
were a result of declines in valuations in Chile and a reduction in mineral reserves at Lobo-Marte. The charge at Kettle River-
Buckhorn was a result of the mine approaching the end of its life and the charge at White Gold was a result of a reduction
in exploration potential.
Also as a result of its annual impairment assessment at December 31, 2014, the Company recognized an impairment charge
of $156.6 million related to its investment in Cerro Casale. The impairment charge was recorded in other income (expense).
FS 32
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p32 (March 22, 2016 22:37:54)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Key assumptions and sensitivity
The significant estimates and assumptions used in the Company’s annual impairment assessments are disclosed in Note 3
to the financial statements. The Company performed a sensitivity analysis on all key assumptions and determined that no
reasonably possible change in any of the key assumptions would cause the carrying value of any CGU carrying goodwill to
exceed its recoverable amount.
ii.
Inventory and other assets
During 2015, the Company recognized impairment charges of $259.5 million related to inventory and other assets. The
inventory impairment charge of $244.8 million was recorded to reduce the carrying value of certain metal and supplies
inventory to net realizable value. During 2014, impairment charges of $167.6 million were recorded within cost of sales to
reduce the carrying value of inventory to net realizable value.
FS 33
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p33 (March 22, 2016 22:37:54)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
9.
INVESTMENTS IN ASSOCIATE AND JOINT VENTURE
The investments in associate and joint venture are accounted for under the equity method and had the following carrying
values:
December 31,
2015
December 31,
2014
Cerro Casale
Puren
$
$
138.3
18.8
157.1
139.7
17.1
156.8
$
$
There are no publicly quoted market prices for Cerro Casale and Puren.
Summarized financial information, reflecting fair value adjustments made by the Company, for Cerro Casale on a 100%
basis are as follows:
Balance Sheet
As at December 31,
2015
2014
$
$
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Ownership interest
Impairment charge (a)
Carrying amount of the investment
Revenue
Expense
Net loss and total comprehensive loss
Equity in losses of Cerro Casale
0.4
2,061.1
2,061.5
5.9
-
5.9
2,055.6
25%
513.9
(375.6)
3.5
2,066.3
2,069.8
8.6
-
8.6
2,061.2
25%
515.3
(375.6)
$
$
$
138.3
$
139.7
Statement of Operations
For the years ended December 31,
2015
$
-
12.0
12.0
3.0
$
$
2014
$
-
21.6
21.6
5.4
$
$
(a) During the year ended December 31, 2014, the Company recognized an impairment charge of $156.6 million related to its investment
in Cerro Casale as a result of the impairment assessment disclosed in Note 8 i.
A contingent liability related to the Company’s investment in Cerro Casale is disclosed in Note 19.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p34 (March 22, 2016 22:37:55)
FS 34
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
10.
FAIR VALUE MEASUREMENT
Recurring fair value measurement:
(a)
Carrying values for financial instruments, including cash and cash equivalents, short-term investments, accounts receivable,
and accounts payable and accrued liabilities approximate fair values due to their short-term maturities.
Fair value estimates for derivative contracts are based on quoted market prices for comparable contracts and represent the
amount the Company would have received from, or paid to, a counterparty to unwind the contract at the market rates in
effect at the consolidated balance sheet date.
The Company categorizes each of its fair value measurements in accordance with a fair value hierarchy. The fair value
hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs
are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices in markets
that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are
observable for the asset or liability (for example, interest rate and yield curves observable at commonly quoted intervals,
forward pricing curves used to value currency and commodity contracts and volatility measurements used to value option
contracts), or inputs that are derived principally from or corroborated by observable market data or other means. Level 3
inputs are unobservable (supported by little or no market activity). The fair value hierarchy gives the highest priority to Level
1 inputs and the lowest priority to Level 3 inputs.
For financial instruments that are recognized at fair value on a recurring basis, the Company determines whether transfers
have occurred between levels in the hierarchy by re-assessing their classification (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
Assets (liabilities) measured at fair value on a recurring basis as at December 31, 2015 include:
Available-for-sale investments
Derivative contracts:
Foreign currency forward contracts
Energy swap contracts
Total return swap contracts
Level 1
$
83.1
Level 2
$
-
Level 3
$
-
Aggregate Fair
Value
$
83.1
(13.8)
-
(2.2)
-
-
1.0
$ 83.1 $ (15.0)
-
-
-
$
-
(13.8)
(2.2)
1.0
$ 68.1
During the year ended December 31, 2015, there were no transfers between Level 1 and Level 2 fair value measurements,
and no transfers into or out of Level 3 fair value measurements.
The valuation techniques that are used to measure fair value are as follows:
Available-for-sale investments:
The fair value of available-for-sale investments is determined based on a market approach reflecting the closing price of
each particular security at the consolidated balance sheet date. The closing price is a quoted market price obtained from the
exchange that is the principal active market for the particular security, and therefore available-for-sale investments are
classified within Level 1 of the fair value hierarchy.
Derivative contracts:
The Company’s derivative contracts are valued using pricing models and the Company generally uses similar models to value
similar instruments. Such pricing models require a variety of inputs, including contractual cash flows, market prices,
applicable yield curves and credit spreads. The fair value of derivative contracts is based on quoted market prices for
comparable contracts and represents the amount the Company would have received from, or paid to, a counterparty to
unwind the contract at the quoted market rates in effect at the consolidated balance sheet date and therefore derivative
contracts are classified within Level 2 of the fair value hierarchy.
FS 35
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p35 (March 22, 2016 22:37:55)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
The following table summarizes information about derivative contracts outstanding at December 31, 2015 and 2014:
December 31, 2015
December 31, 2014
Interest rate contracts
Interest rate swaps (i)
Currency contracts
Foreign currency forward contracts (a) (ii)
Commodity contracts
Energy swap contracts (b) (iii)
Other contracts
Total return swap contracts (iv)
Asset / (Liability)
Asset / (Liability)
Fair Value
AOCI
Fair Value
AOCI
$ - $ - $ (0.7) $ (0.9)
(13.8)
(10.9)
(48.8) (39.1)
(2.2)
1.0
(1.7)
(9.9)
-
(0.6)
(7.9)
-
Total all contracts
$ (15.0) $ (12.6) $ (60.0) $ (47.9)
Unrealized fair value of derivative assets
Current
Non-current
Unrealized fair value of derivative liabilities
Current
Non-current
Total net fair value
1.0
-
$ 1.0
(16.0)
-
$ (16.0)
$ (15.0)
0.2
-
$ 0.2
(60.2)
-
$ (60.2)
$ (60.0)
(a) Of the total amount recorded in AOCI at December 31, 2015, $(10.9) million will be reclassified to net earnings within the next 12
months as a result of settling the contracts.
(b) Of the total amount recorded in AOCI at December 31, 2015, $(1.7) million will be reclassified to net earnings within the next 12
months as a result of settling the contracts.
(i)
Interest rate swaps
When the floating rate term loan was originally arranged in August 2012 (see Note 12(i)), the Company entered into interest
rate swaps to swap the underlying 1-month LIBOR interest rate into a fixed rate of 0.49% for the original three year term
ending August 10, 2015. Concurrent with the repayment of $500.0 million of the term loan on March 10, 2014, the Company
closed out 60% of the interest rate swaps. The remaining outstanding interest rate swaps that hedged 80% of the remaining
underlying floating rate term loan matured on August 10, 2015.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p36 (March 22, 2016 22:37:55)
FS 36
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
(ii)
Foreign currency forward contracts
The following table provides a summary of foreign currency forward contracts outstanding at December 31, 2015,
maturing in 2016:
Foreign currency
Brazilian real forward buy contracts
(in millions of U.S. dollars)
Average price (Brazilian reais)
Chilean peso forward buy contracts
(in millions of U.S. dollars)
Average price (Chilean pesos)
Canadian dollar forward buy contracts
(in millions of U.S. dollars)
Average price (Canadian dollars)
2016
$
67.4
3.75
$
37.0
653.02
$
45.0
1.26
During 2015, the following new forward buy derivative contracts were entered into:
•
•
•
$80.0 million Canadian dollars at an average rate of 1.25 with maturities in 2015 and 2016;
$62.7 million Chilean pesos at an average rate of 645.34 with maturities in 2015 and 2016; and
$67.4 million Brazilian reais at an average rate of 3.75 maturing in 2016.
At December 31, 2015, the unrealized gain or loss on the derivative contracts recorded in AOCI is as follows:
•
•
•
•
Brazilian real forward buy contracts – unrealized loss of $4.7 million (December 31, 2014 – $14.4 million loss);
Chilean peso forward buy contracts - unrealized loss of $2.3 million (December 31, 2014 – $2.3 million loss);
Canadian dollar forward buy contracts – unrealized loss of $3.9 million (December 31, 2014 – $3.1 million loss); and
Russian rouble forward buy contracts – unrealized loss of $nil (December 31, 2014 – $19.3 million loss).
(iii)
Energy swap contracts
The Company is exposed to changes in energy prices through its consumption of diesel and other fuels, and the price of
electricity in some electricity supply contracts. The Company entered into energy swap contracts that protect against the
risk of fuel price increases. Fuel is consumed in the operation of mobile equipment and electricity generation.
The following table provides a summary of energy swap contracts outstanding at December 31, 2015, maturing in 2016:
Energy
Oil swap contracts (barrels)
Average price
2016
404,400
$
47.55
FS 37
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p37 (March 22, 2016 22:37:55)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
During 2015, the following new commodity derivative contracts were entered into:
•
•
570,520 barrels of crude oil at an average rate of $48.74 per barrel with maturities in 2015 and 2016; and
25,168 tonnes of gasoil at an average rate of $488.59 per tonne which matured in 2015.
At December 31, 2015, the unrealized gain or loss on these derivative contracts recorded in AOCI is as follows:
• Oil swap contracts – unrealized loss of $1.7 million (December 31, 2014 – $6.1 million loss);
(iv)
Total return swap contracts
The Company enters into total return swaps (“TRS”) as economic hedges of the Company’s DSUs and cash-settled RSUs.
Under the terms of the TRS, a bank has the right to purchase Kinross shares in the marketplace as a hedge against the returns
in the TRS. At December 31, 2015, 5,695,000 TRS units were outstanding. The following TRS contracts were entered into
during the year ended December 31, 2015:
•
•
79,000 units at an average price of CDN$3.51 to hedge DSUs.
3,000,000 units at an average price of CDN$3.48 to hedge cash-settled RSUs.
At December 31, 2015, 97% of the DSUs were economically hedged (December 31, 2014 – 88%) and 95% of cash-settled
RSUs were economically hedged (December 31, 2014 – 61%), although hedge accounting was not applied.
Non-recurring fair value measurement:
(b)
During the year ended December 31, 2015, property, plant and equipment related to certain CGUs were written down to
their recoverable amounts. Certain assumptions used in the calculation of these recoverable amounts are categorized as
Level 3 in the fair value hierarchy. See Note 3 (xii) and Note 8 i.
Fair value of financial assets and liabilities not measured and recognized at fair value:
(c)
Long-term debt is measured at amortized cost. The fair value of long-term debt is primarily measured using market
determined variables, and therefore was classified within Level 2 of the fair value hierarchy. See Note 12.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p38 (March 22, 2016 22:37:55)
FS 38
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
11.
CAPITAL AND FINANCIAL RISK MANAGEMENT
The Company manages its capital to ensure that it will be able to continue to meet its financial and operational strategies
and obligations, while maximizing the return to shareholders through the optimization of debt and equity financing. The
Board of Directors has established a number of quantitative measures related to the management of capital. Management
continuously monitors its capital position and periodically reports to the Board of Directors.
The Company’s operations are sensitive to changes in commodity prices, foreign exchange and interest rates. The Company
manages its exposure to changes in currency exchange rates and energy by periodically entering into derivative contracts in
accordance with the formal risk management policy approved by the Company’s Board of Directors. The Company’s practice
is to not hedge metal sales. However, in certain circumstances the Company may use derivative contracts to hedge against
the risk of falling prices for a portion of its forecasted metal sales. The Company may also assume derivative contracts as
part of a business acquisition or they may be required under financing arrangements.
All of the Company’s hedges are cash flow hedges. The Company applies hedge accounting whenever hedging relationships
exist and have been documented.
i.
Capital management
The Company’s objectives when managing capital are to:
•
Ensure the Company has sufficient cash available to support the mining, exploration, and other areas of the business in
any gold price environment;
Ensure the Company has the capital and capacity to support a long-term growth strategy;
Provide investors with a superior rate of return on their invested capital;
Ensure compliance with all bank covenant ratios; and
•
•
•
• Minimize counterparty credit risk.
Kinross adjusts its capital structure based on changes in forecasted economic conditions and based on its long-term
strategic business plan. Kinross has the ability to adjust its capital structure by issuing new equity, drawing on existing
credit facilities, issuing new debt, and by selling or acquiring assets. Kinross can also control how much capital is returned
to shareholders through dividends and share buybacks.
The Company is not subject to any externally imposed capital requirements.
The Company’s quantitative capital management objectives are largely driven by the requirements under its debt
agreements as well as a target total debt to total debt and common shareholders’ equity ratio as noted in the table below:
Long-term debt
Current portion of long-term debt
Total debt
Common shareholders' equity
Total debt / total debt and common shareholders' equity ratio
Company target
ii.
Gold and silver price risk management
December 31,
2015
December 31,
2014
$
1,731.9 $
249.5
1,981.4
3,889.3
33.8%
0 – 30%
1,998.1
60.0
2,058.1
4,843.0
29.8%
0 – 30%
The Company’s practice is to not hedge metal sales. However, in certain circumstances the Company may use derivative
contracts to hedge against the risk of falling prices for a portion of its forecasted metal sales. The Company may also
assume derivative contracts as part of a business acquisition or they may be required under financing arrangements.
No derivatives to hedge metal sales were outstanding in 2014 and 2015.
FS 39
Kinross Gold 2015
59599 2015 Q4 Rev FS 39.pdf - p1 (March 29, 2016 18:42:08)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
iii.
Currency risk management
The Company is primarily exposed to currency fluctuations relative to the U.S. dollar on expenditures that are denominated
in Canadian dollars, Brazilian reais, Chilean pesos, Russian roubles, Mauritanian ouguiya and Ghanaian cedi. This risk is
reduced, from time to time, through the use of foreign currency forward contracts to lock in the exchange rates on future
non-U.S. denominated currency cash outflows. The Company has entered into forward contracts to purchase Canadian
dollars, Brazilian reais and Chilean pesos as part of this risk management strategy. The Company is also exposed to the
impact of currency fluctuations on its monetary assets and liabilities. The Company may from time to time manage the
exposure on the net monetary items.
At December 31, 2015, with other variables unchanged, the following represents the effect of movements in foreign
exchange rates on the Company's net working capital, on earnings before taxes from a 10% change in the exchange rate of
the U.S. dollar against the Canadian dollar, Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi
and other.
10% strengthening in
U.S. dollar
10% weakening in
U.S. dollar
Effect on earnings
before taxes, gain
(loss)(a)
Effect on earnings
before taxes, gain
(loss)(a)
1.4
7.3
0.3
(1.6)
0.3
1.3
(1.8)
-
(1.7)
(8.9)
(0.3)
1.9
(0.4)
(1.5)
2.2
-
Foreign currency
net working capital
(15.5)
(80.2)
(3.1)
17.1
(3.3)
(13.9)
20.2
(0.1)
Canadian dollars
Brazilian reais
Chilean pesos
Russian roubles
Euros
Mauritanian ouguiya
Ghanaian cedi
Other (b)
(a)
As described in Note 3 (ii), the Company translates its monetary assets and liabilities into U.S. dollars at the rates of exchange at the
consolidated balance sheet dates. Gains and losses on translation of foreign currencies are included in earnings.
(b)
Includes British pounds, Australian dollars and South African rand.
At December 31, 2015, with other variables unchanged, the following represents the effect of the Company's foreign
currency forward contracts on OCI before taxes from a 10% change in the exchange rate of the U.S. dollar against the
Canadian dollar, Brazilian real and Chilean peso.
10% strengthening in U.S.
dollar
10% weakening in U.S.
dollar
Effect on OCI before
taxes, gain (loss) (a)
Effect on OCI before taxes,
gain (loss) (a)
$
$
$
(3.7)
(5.2)
(2.9)
$
$
$
4.5
6.3
3.6
Canadian dollars
Brazilian reais
Chilean pesos
(a)
Upon maturity of these contracts, the amounts in OCI before taxes will reverse against hedged items the contracts relate to, which
may be to earnings or property, plant and equipment.
59599 2015 Q4 Rev FS 40.pdf - p1 (March 29, 2016 18:42:05)
FS 40
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
iv.
Energy price risk
The Company is exposed to changes in energy prices through its consumption of diesel and other fuels, and the price of
electricity in some electricity supply contracts. The Company entered into energy swap contracts that protect against the
risk of fuel price increases. Fuel is consumed in the operation of mobile equipment and electricity generation.
At December 31, 2015, with other variables unchanged, the following represents the effect of the Company's energy swap
contracts on OCI before taxes from a 10% change in oil prices.
10% increase in price
10% decrease in price
Effect on OCI before
taxes, gain (loss) (a)
Effect on OCI before taxes,
gain (loss) (a)
$
1.7
$
(1.7)
Upon maturity of these contracts, the amounts in OCI before taxes will reverse against hedged items the contracts relate to, which
will be to earnings.
Oil
(a)
v.
Liquidity risk
The Company manages liquidity risk by maintaining adequate cash and cash equivalent balances (December 31, 2015 -
$1,043.9 million in aggregate) , by utilizing its lines of credit and by monitoring developments in the capital markets. The
Company continuously monitors and reviews both actual and forecasted cash flows. The contractual cash flow requirements
for financial liabilities at December 31, 2015 are as follows:
Long-term debt (a)
Derivative liabilities - net
Total
Within 1 year
2 to 3 years
4 to 5 years
More than 5 years
$
$
2,901.1
15.0
$
$
342.1
15.0
$
$
166.1
-
$
$
652.1
-
$
$
1,740.8
-
(a)
Includes long-term debt, including the current portion, interest and the full face value of the senior notes.
vi.
Credit risk management
Credit risk relates to cash and cash equivalents, accounts receivable and derivative contracts and arises from the possibility
that any counterparty to an instrument fails to perform. The Company only transacts with highly-rated counterparties and a
limit on contingent exposure has been established for any counterparty based on that counterparty's credit rating. As at
December 31, 2015, the Company’s maximum exposure to credit risk was the carrying value of cash and cash equivalents,
accounts receivable and derivative contracts.
FS 41
Kinross Gold 2015
59599 2015 Q4 Rev FS 41.pdf - p1 (March 29, 2016 18:42:01)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
12.
LONG-TERM DEBT AND CREDIT FACILITIES
December 31, 2015
December 31, 2014
Interest
Rates
Nominal
Amount
Deferred
Financing
Costs
Carrying
Amount (a)
Fair
Value (b)
Carrying
Amount (a)
Fair
Value (b)
Corporate term loan facility
Senior notes
Kupol loan
Less: current portion
Long-term debt
(i)
(ii)
(iii)
Variable
3.625%-
6.875%
Variable
$
500.0
$
(2.0)
$
498.0
$
498.0
$
498.0
$
498.0
1,494.2
-
1,994.2
(249.9)
1,744.3
$
(10.8)
-
(12.8)
0.4
(12.4)
$
1,483.4
1,035.3
-
-
1,981.4
(249.5)
1,731.9
$
1,533.3
(250.4)
1,282.9
$
1,480.8
79.3
2,058.1
(60.0)
1,998.1
$
1,416.9
79.3
1,994.2
(60.0)
1,934.2
$
(a) Includes transaction costs on debt financings.
(b) The fair value of debt is primarily determined using quoted market determined variables. See Note 10 (c).
Scheduled debt repayments
Corporate term loan facility
Senior notes
$ - $ - $ - $ 500.0
250.0
$ -
- - - -
Total debt payable
$ 250.0
$ - $ - $ 500.0
$ -
2016
2017
2018
2019
2020
(i)
Corporate revolving credit and term loan facilities
Total
2021 and
thereafter
$ - $ 500.0
$ 1,500.0
$ 2,000.0
1,250.0
$ 1,250.0
In August 2012, the Company completed a new unsecured term loan facility for $1,000.0 million. The facility was set to
mature on August 10, 2015, with the full amount having been drawn on August 22, 2012. Also, in August 2012, under the
same agreement, the Company amended the revolving credit facility, increasing the available amount to $1,500.0 million
and extending the maturity date from March 2015 to August 2017.
On June 10, 2013, the Company amended its $1,500.0 million revolving credit facility and $1,000.0 million term loan to
extend the respective maturity dates and remove the minimum tangible net worth covenant. The revolving credit facility’s
term was extended by one year to August 10, 2018 from August 10, 2017, and the term loan was extended by two years to
mature on August 10, 2017 from August 10, 2015.
On March 10, 2014, the Company repaid $500.0 million of the term loan, leaving a balance of $500.0 million outstanding.
On July 28, 2014, the Company extended the maturity dates of the term loan and revolving credit facility by one year to
August 10, 2018 and August 10, 2019, respectively.
On July 24, 2015, the Company amended its $1,500 million revolving credit facility and $500 million term loan to extend the
respective maturity dates. The revolving credit facility’s term was extended by one year to August 10, 2020 from August 10,
2019, and the term loan was extended by one year to August 10, 2019 from August 10, 2018. As at December 31, 2015, the
Company had utilized $31.3 million (December 31, 2014 – $32.1 million) of the amended revolving credit facility. The
amount utilized was entirely for letters of credit. On January 4, 2016, the Company drew $175.0 million in cash on the
revolving credit facility.
Loan interest for both the amended revolving credit facility and the amended term loan is variable, set at LIBOR plus an
interest rate margin which is dependent on the Company’s credit rating. Based on the Company’s credit rating at December
31, 2015, interest charges and fees are as follows:
Type of credit
Dollar based LIBOR loan:
Term Loan
Revolving credit facility
Letters of credit
Standby fee applicable to unused availability
LIBOR plus 1.65%
LIBOR plus 1.70%
1.13-1.70%
0.34%
FS 42
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p42 (March 22, 2016 22:37:56)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
When the term loan was originally arranged in August 2012, the Company entered into interest rate swaps to swap the
underlying 1-month LIBOR interest rate into a fixed rate of 0.49% for the original three year term ending August 10,
2015. During the second quarter of 2013, the term loan maturity was extended to August 2017. Accordingly, the interest
rate swaps only hedged the term loan’s interest rate exposure until the original maturity of August 2015. Concurrent with
the repayment of $500.0 million of the term loan on March 10, 2014, the Company closed out 60% of the interest rate swaps.
The remaining outstanding interest rate swaps that hedged 80% of the remaining underlying floating rate term loan matured
on August 10, 2015.
The amended revolving credit facility and amended unsecured term loan were arranged under one credit agreement, which
contains various covenants including limits on indebtedness, asset sales and liens. The significant financial covenant is a
ratio of net debt to EBITDA, as defined in the agreement, of no more than 3.5:1. The Company is in compliance with this
covenant at December 31, 2015.
(ii)
Senior notes
On August 22, 2011, the Company completed a $1.0 billion offering of debt securities consisting of $250.0 million principal
amount of 3.625% senior notes due 2016, $500.0 million principal amount of 5.125% senior notes due 2021 and $250.0
million principal amount of 6.875% senior notes due 2041. Kinross received net proceeds of $980.9 million from the offering,
after discount and payment of fees and expenses related to the offering.
On March 6, 2014, the Company completed a $500.0 million offering of debt securities consisting of 5.950% senior notes
due 2024. Kinross received net proceeds of $492.9 million from the offering, after discount and payment of fees and
expenses related to the offering.
The senior notes referred to above (collectively, the “notes”) pay interest semi-annually. Except as noted below, the notes
are redeemable by the Company, in whole or part, for cash at any time prior to maturity, at a redemption price equal to the
greater of 100% of the principal amount or the sum of the present value of the remaining scheduled principal and interest
payments on the notes discounted at the applicable treasury rate, as defined in the indentures, plus a premium of between
40 and 50 basis points, plus accrued interest, if any. Within three months of maturity of the notes due in 2021 and 2024 and
within six months of maturity of the notes due in 2041, the Company can only redeem the notes in whole at 100% of the
principal amount plus accrued interest, if any. In addition, the Company is required to make an offer to repurchase the
notes prior to maturity upon certain fundamental changes at a repurchase price equal to 101% of the principal amount of
the notes plus accrued and unpaid interest to the repurchase date, if any.
(iii)
Kupol loan
On December 21, 2011, the Company completed a $200.0 million non-recourse loan from a group of international financial
institutions. The non-recourse loan carried a term of five years with a maturity date of September 30, 2016 and had an
annual interest rate of LIBOR plus 2.5%. Semi-annual principal repayments of $30.0 million commenced in March 2013 and
continued through September 30, 2015. Principal repayments were scheduled for March 31, 2016 and September 30, 2016
in the amounts of $13.0 million and $7.0 million, respectively. On September 30, 2015, the Company prepaid the remaining
$20.0 million, resulting in full repayment of the loan.
(iv)
Other
On June 15, 2012, the Company entered into an amendment to increase the amount of its Letter of Credit guarantee facility
with Export Development Canada (“EDC”) from $136.0 million to $200.0 million and to extend the maturity date to March
31, 2015. On July 17, 2014, the Company further amended this facility to increase the amount from $200.0 million to $250.0
million. Effective March 31, 2015, the maturity date for this facility was extended to June 30, 2016. Letters of credit
guaranteed by this facility are solely for reclamation liabilities at Fort Knox, Round Mountain, and Kettle River–Buckhorn.
Fees related to letters of credit under this facility are 1.00% to 1.25%. As at December 31, 2015, $212.7 million (December
31, 2014 - $207.2 million) was utilized under this facility.
In addition, at December 31, 2015, the Company had $33.4 million (December 31, 2014 - $49.3 million) in letters of credit
outstanding in respect of its operations in Brazil, Mauritania and Ghana. These letters of credit have been issued pursuant
to arrangements with certain international banks.
FS 43
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p43 (March 22, 2016 22:37:56)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
From time to time, the Company’s operations in Brazil may borrow US dollars from Brazilian banks on a short-term unsecured
basis to meet working capital requirements. As at December 31, 2015 and 2014, $nil was outstanding under such
borrowings.
13.
PROVISIONS
Balance at January 1, 2015
Additions
Reductions
Reclamation spending
Accretion
Reclamation recovery
Balance at December 31, 2015
Current portion
Non-current portion
Reclamation and
remediation
obligations (i)
Other
Total
$
$
$
773.6
41.8
(101.0)
(14.0)
27.8
(7.9)
720.3
50.4
11.3
(10.9)
-
-
-
50.8
824.0
53.1
(111.9)
(14.0)
27.8
(7.9)
771.1
$
$
$
38.0 12.3 50.3
682.3 38.5 720.8
$ 720.3 $ 50.8 $ 771.1
(i)
Reclamation and remediation obligations
The Company conducts its operations so as to protect the public health and the environment, and to comply with all
applicable laws and regulations governing protection of the environment. Reclamation and remediation obligations arise
throughout the life of each mine. The Company estimates future reclamation costs based on the level of current mining
activity and estimates of costs required to fulfill the Company’s future obligations. The above table details the items that
affect the reclamation and remediation obligations.
Included in other operating costs for the year ended December 31, 2015 is a $7.9 million recovery (year ended December
31, 2014 – $17.5 million expense) reflecting revised estimated fair values of costs that support the reclamation and
remediation obligations for properties that have been closed. The majority of the expenditures are expected to occur
between 2016 and 2041. The discount rates used in estimating the site restoration cost obligation were between 0.6% and
11.2% for the year ended December 31, 2015 (year ended December 31, 2014 – 0.3% and 8.1%), and the inflation rate used
was between 1.1% and 7.8% for the year ended December 31, 2015 (year ended December 31, 2014 – 2.0% and 11.2%).
Regulatory authorities in certain jurisdictions require that security be provided to cover the estimated reclamation and
remediation obligations. As at December 31, 2015,
letters of credit totaling $249.5 million (December 31,
2014 – $243.6 million) had been issued to various regulatory agencies to satisfy financial assurance requirements for this
purpose. The letters of credit were issued against the Company's Letter of Credit guarantee facility with EDC, the corporate
revolving credit facility, and pursuant to arrangements with certain international banks. The Company is in compliance with
all applicable requirements under these facilities.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p44 (March 22, 2016 22:37:57)
FS 44
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
14.
COMMON SHARE CAPITAL AND COMMON SHARE PURCHASE WARRANTS
The authorized share capital of the Company is comprised of an unlimited number of common shares without par value. A
summary of common share transactions for the years ended December 31, 2015 and 2014 is as follows:
Year ended
Year ended
December 31, 2015
December 31, 2014
Common shares
Balance at January 1,
Under share option and restricted share plans
Under Red Back options
Balance at end of period
Common share purchase warrants
Balance at January 1,
Expiry of warrants
Balance at end of period
Total common share capital
i.
Common share purchase warrants
Number of shares
Amount ($)
Number of shares
(000's)
Amount ($)
(000's)
1,144,576
1,964
-
1,146,540
$
$
14,587.7
15.8
-
14,603.5
1,143,428
1,112
36
1,144,576
$
$
14,575.1
12.0
0.6
14,587.7
-
-
-
-
$
-
$
-
$
14,603.5
25,759
(25,759)
$
162.0
(162.0)
-
$
-
$
14,587.7
The Company’s U.S. dollar denominated common share purchase warrants expired on September 17, 2014.
FS 45
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p45 (March 22, 2016 22:37:57)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
15.
SHARE-BASED PAYMENTS
Share-based compensation recorded during the years ended December 31, 2015 and 2014 was as follows:
Share option plan expense (i)
Restricted share unit plan expense, including restricted performance shares (ii)
Deferred share units expense (iii)
Employer portion of employee share purchase plan (iv)
Total share-based compensation
(i)
Share option plan
Years ended December 31,
2015
2014
$ 6.0
15.6
1.0
2.1
$ 24.7
$
$
7.3
22.4
1.8
2.6
34.1
The Company has a share option plan for officers, employees, and contractors enabling them to purchase common shares.
Under the share option plan, the aggregate number of shares reserved for issuance may not exceed the lower of 31.1 million
common shares or 10% of the total number of outstanding common shares at any time. Each option granted under the plan
before February 16, 2011 is for a maximum of five years. Each option granted under the plan on or after February 16, 2011
is for a maximum term of seven years. One-third of the options granted are exercisable each year commencing one year
after the date of grant. The exercise price is determined by the Company's Board of Directors at the time the option is
granted, and may not be less than the closing market price of the common shares on the last trading day prior to the grant
date of the option. The stock options outstanding at December 31, 2015 expire at various dates to 2022. The number of
common shares available for the granting of options as at December 31, 2015 was 12.1 million.
The following table summarizes the status of the share option plan and changes during the years ended December 31, 2015
and 2014:
2015
2014
Number of options
(000's)
Weighted average
exercise price
(CDN$/option)
Number of options
(000's)
Weighted average
exercise price
(CDN$/option)
Balance at January 1
Granted
Exercised
Forfeited
Expired
Outstanding at end of period
14,175
3,599
-
(890)
(3,371)
13,513
10.66
3.69
-
7.85
16.35
7.57
14,342
3,295
(36)
(967)
(2,459)
14,175
$
$
$
$
12.09
5.82
3.76
10.40
12.71
10.66
For the year ended December 31, 2014, the weighted average share price at the date of exercise was CDN$5.48.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p46 (March 22, 2016 22:37:57)
FS 46
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
The following table summarizes information about the stock options outstanding and exercisable at December 31, 2015:
Options outstanding
Options exercisable
Exercise price range in
CDN$:
Number of
options
Weighted
average
exercise
price
Weighted
average
remaining
contractual
life
Number of
options
Weighted
average
exercise
price
Weighted
average
remaining
contractual
life
(000’s)
(CDN$)
(years)
(000’s)
(CDN$)
(years)
$ 2.96 $ 4.22
3,407
$
3.69
4.23 9.53
9.54 14.31
14.32 16.25
6,640
2,275
1,191
13,513
6.92
10.74
16.25
7.57
$
5.97
4.37
2.73
1.87
4.28
39
$
3.55
3,959
2,275
1,191
7,464
7.30
10.74
16.25
9.76
$
3.21
4.17
2.73
1.87
3.36
The following weighted average assumptions were used in computing the fair value of stock options using the Black-Scholes
option pricing model granted during the years ended December 31, 2015 and 2014:
2015
2014
Weighted average share price (CDN$)
Expected dividend yield
Expected volatility
Risk-free interest rate
Expected option life (in years)
Weighted average fair value per stock option granted (CDN$)
$
3.69
0.0%
43.3%
0.6%
4.5
1.34
$ 5.82
0.0%
39.9%
1.6%
4.5
$ 2.05
$
The expected volatility used in the Black-Scholes option pricing model is based primarily on the historical volatility of the
Company’s shares.
(ii)
Restricted Share Plan
The Company has a Restricted Share Plan whereby RSUs and RPSUs may be granted to employees, officers and contractors
of the Company. The current maximum number of common shares issuable under this plan is 16.0 million.
(a) Restricted share units
RSUs are generally exercisable into one common share entitling the holder to acquire the common share for no additional
consideration. RSUs vest over a three year period.
The following table summarizes information about the RSUs outstanding at December 31, 2015 and 2014:
Balance at January 1
Granted
Redeemed
Forfeited
Outstanding at end of period
2015
2014
Number of units
(000's)
Weighted average
fair value
(CDN$/unit)
Number of units
(000's)
Weighted average
fair value
(CDN$/unit)
6,657
$
6.47
4,626
$
9.08
6,586
(2,850)
(1,352)
9,041
3.62
7.18
$
4.87
4.41
4,492
(1,898)
(563)
6,657
5.42
10.12
$
7.21
6.47
As at December 31, 2015, the Company had recognized a liability of $4.8 million (December 31, 2014 - $3.5 million) in respect
of its cash-settled RSUs.
FS 47
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p47 (March 22, 2016 22:37:57)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
(b) Restricted performance share units
The RPSUs are subject to certain vesting requirements and vest at the end of three years. The vesting requirements are
based on certain performance criteria over the vesting period established by the Company.
The following table summarizes information about the RPSUs outstanding at December 31, 2015 and 2014:
2015
2014
Balance at January 1
Granted
Redeemed
Forfeited
Outstanding at end of period
(iii)
Deferred share unit plan
Number of units
(000's)
2,425
2,723
(318)
(517)
4,313
$
Weighted average
fair value
(CDN$/unit)
7.12
3.57
9.24
5.83
4.88
$
Number of units
(000's)
1,390
1,517
(97)
(385)
2,425
$
Weighted average
fair value
(CDN$/unit)
9.60
5.39
14.51
7.42
7.12
$
The Company has a DSU plan for its outside directors which provides that each outside director receives, on the last date in
each quarter a number of DSUs having a value equal to a minimum of 50% of the compensation of the outside director for
the current quarter. Each outside director can elect to receive a greater percentage of their compensation in DSUs. The
number of DSUs granted to an outside director is based on the closing price of the Company's common shares on the Toronto
Stock Exchange on the last date of each quarter. At such time as an outside director ceases to be a director, the Company
will make a cash payment to the outside director, equal to the market value of a Kinross common share on the date of
departure, multiplied by the number of DSUs held on that date.
The number of DSUs granted by the Company and the weighted average fair value per unit issued for the years ended
December 31, 2015 and 2014 are as follows:
DSUs granted (000's)
Weighted average grant-date fair value (CDN$/ unit)
Years ended December 31,
2015
446
2014
489
$ 2.60
$ 3.91
There were 1,233,925 DSUs outstanding, for which the Company had recognized a liability of $2.2 million, as at December
31, 2015 (December 31, 2014 - $3.6 million).
(iv)
Employee share purchase plan
The Company has an employee SPP whereby certain employees of the Company have the opportunity to contribute up to a
maximum of 10% of their annual base salary to purchase common shares. Since 2004, the Company has made contributions
equal to 50% of the employees' contributions.
The compensation expense related to the employee SPP for the year ended December 31, 2015 was $2.1 million (year ended
December 31, 2014 – $2.6 million).
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p48 (March 22, 2016 22:37:57)
FS 48
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
16.
EARNINGS (LOSS) PER SHARE
Basic and diluted net loss from continuing operations attributable to common shareholders of Kinross for the year ended
December 31, 2015 was $984.5 million (year ended December 31, 2014 – $1,400.0 million). Basic and diluted net loss
attributable to common shareholders of Kinross for the year ended December 31, 2015 was $984.5 million (year ended
December 31, 2014 – $1,166.5 million).
Loss per share has been calculated using the weighted average number of common shares and common share equivalents
issued and outstanding during the period. Stock options are reflected in diluted earnings per share by application of the
treasury method. The following table details the weighted average number of outstanding common shares for the purpose
of computing basic and diluted loss per common share for the following periods:
(Number of common shares in thousands)
Basic weighted average shares outstanding:
Weighted average shares dilution adjustments:
Stock options (a)
Restricted shares
Restricted performance shares
Diluted weighted average shares outstanding
Weighted average shares dilution adjustments - exclusions: (b)
Stock options (a)
Restricted shares
Restricted performance shares
Years ended December 31,
2015
2014
1,146,043
1,144,287
-
-
-
1,146,043
13,064
3,971
3,940
-
-
-
1,144,287
15,728
6,311
2,486
(a) Dilutive stock options were determined using the Company’s average share price for the year. For the years ended December 31,
2015 and 2014, the average share price used was $2.27 and $3.89, respectively.
(b) These adjustments were excluded, as they are anti-dilutive.
FS 49
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p49 (March 22, 2016 22:37:58)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
17.
INCOME TAX EXPENSE
The following table shows the components of the current and deferred tax expense:
Current tax expense
Current period
Adjustment for prior period
Deferred tax expense
Origination and reversal of temporary differences
Impact of changes in tax rate
Change in unrecognized deductible temporary differences
Recognition of previously unrecognized tax losses
Years ended December 31,
2015
2014
$
$
$
135.0
(46.2)
64.8
(0.3)
(9.4)
(2.2)
141.7
$
160.7
(37.2)
(306.6)
2.0
293.7
(2.9)
109.7
The reconciliation of the combined Canadian federal and provincial statutory income tax rate to the effective tax rate is as
follows:
Combined statutory income tax rate
Increase (decrease) resulting from:
Mining taxes
Resource allowance and depletion
Difference in foreign tax rates and foreign exchange on deferred income taxes
within income tax expense
Benefit of losses not recognized
Recognition of tax attributes not previously benefited
Under (over) provided in prior periods
Income not subject to tax
Effect of non-deductible impairment
Enacted rate change
Accounting expenses disallowed for tax
Taxes on repatriation of foreign earnings
Recovery on expiry of warrants
Other
Effective tax rate
i.
Deferred income tax
The following table summarizes the components of deferred income tax:
Deferred tax assets
Accrued expenses and other
Property, plant and equipment
Reclamation and remediation obligations
Inventory capitalization
Non-capital loss carryforwards
Deferred tax liabilities
Accrued expenses and other
Property, plant and equipment
Inventory capitalization
Deferred tax liabilities - net
2015
2014
26.5%
26.5%
0.4%
0.1%
(17.2%)
(5.0%)
(20.3%)
3.3%
10.7%
(0.3%)
0.0%
(12.6%)
(1.4%)
0.0%
(0.9%)
(16.7%)
0.3%
0.5%
(11.5%)
(3.9%)
0.7%
(2.0%)
4.3%
(19.5%)
(0.2%)
(3.2%)
(1.6%)
1.2%
0.1%
(8.3%)
December 31,
2015
December 31,
2014
$
$
82.6
10.3
94.8
8.7
-
196.4
1.2
567.6
50.1
422.5
$
$
8.7
53.1
205.3
8.0
4.9
280.0
11.3
578.4
52.8
362.5
For balance sheet disclosure purposes, deferred tax assets and liabilities have been offset where they relate to income
taxes levied by the same taxation authority and the Company has the legal right and intent to offset.
FS 50
Kinross Gold 2015
59599 2015 Q4 Rev FS 50.pdf - p1 (March 29, 2016 18:41:58)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Movement in net deferred tax liabilities:
Balance at the beginning of the period
Recognized in profit/loss
Recognized in OCI
Other
Balance at the end of the period
December 31,
2015
December 31,
2014
$
$
362.5
$
53.0
8.2
(1.2)
422.5
$
370.2
(13.8)
3.4
2.7
362.5
ii.
Unrecognized deferred tax assets and liabilities
The aggregate amount of taxable temporary differences associated with investments in subsidiaries, for which deferred
tax liabilities have not been recognized, as at December 31, 2015 is $6.0 billion (December 31, 2014 – $6.0 billion).
Deferred tax assets have not been recognized in respect of the following items:
Deductible temporary differences
Tax losses
December 31,
2015
December 31,
2014
$
$
731.4
436.4
750.7
215.2
The tax losses not recognized expire as per the amount and years noted below. The deductible temporary differences do
not expire under current tax legislation. Deferred tax assets have not been recognized in respect of these items because it
is not probable that future taxable profit will be available against which the Company can utilize the benefits therefrom.
iii.
Non-capital losses (not recognized)
The following table summarizes the Company’s non-capital losses that can be applied against future taxable profit:
Country
Canada
United States (a)
Chile
Barbados
Mauritania
Other
Type
Amount
Expiry Date
Net operating losses
$ 624.0
Net operating losses
Net operating losses
Net operating losses
Net operating losses
Net operating losses
42.8
103.7
885.4
11.4
64.9
2016 - 2035
2016 - 2035
No expiry
2016 - 2024
2016-2020
2025
(a) Utilization of the United States loss carry forwards will be limited in any year as a result of the previous changes in ownership.
FS 51
Kinross Gold 2015
59599 2015 Q4 Rev FS 51.pdf - p1 (March 29, 2016 18:41:54)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
18.
SEGMENTED INFORMATION
The Company operates primarily in the gold mining industry and its major product is gold. Its activities include gold
production, acquisition, exploration and development of gold properties. The Company’s primary mining operations are in
the United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania.
The reportable segments are those operations whose operating results are reviewed by the chief operating decision maker
to make decisions about resources to be allocated to the segment and assess its performance provided those operations
pass certain quantitative thresholds. Operations whose revenues, earnings or losses, or assets exceed 10% of the total
consolidated revenue, earnings or losses or assets are reportable segments.
In order to determine reportable operating segments, management reviews various factors, including geographical location
and managerial structure. It was determined by management that a reportable operating segment generally consists of an
individual mining property managed by a single general manager and management team.
The Kupol segment includes the Kupol and Dvoinoye mines. These mines have been aggregated into one reportable segment
as they have integrated cost structures, due to the processing of Dvoinoye ore at the Kupol mill, and other shared
infrastructure such as the purchasing function.
The Corporate and Other segment includes corporate, Cerro Casale, shutdown and other non-operating assets (including La
Coipa, Lobo-Marte and White Gold). These entities have been aggregated into one reportable segment as they do not
generate revenues for the Company. Non-mining and other operations are also reported in Corporate and other.
Certain properties that are in development or have not reached commercial production levels are considered reportable
segments because they have reached quantitative thresholds. These have been identified as non-operating segments.
Finance income, finance expense, other income (expense) - net, and equity in earnings (losses) of associate and joint venture
are managed on a consolidated basis and are not allocated to operating segments.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p52 (March 22, 2016 22:37:58)
FS 52
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
i.
Operating segments
The following tables set forth operating results by reportable segment for the following periods:
Year ended December 31, 2015:
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Total cost of sales
Gross profit (loss)
Other operating expense
Exploration and business development
General and administrative
Operating earnings (loss)
Other income (expense) - net
Equity in earnings (losses) of associate and joint venture
Finance income
Finance expense
Loss from continuing operations before tax
Year ended December 31, 2014:
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Total cost of sales
Gross profit (loss)
Other operating expense
Exploration and business development
General and administrative
Operating earnings (loss)
Other income (expense) - net
Equity in earnings (losses) of associate and joint venture
Finance income
Finance expense
Loss from continuing operations before tax
Earnings from discontinued operations (c)
Operating segments
Fort Knox
Round
Mountain
Paracatu
Maricunga
Kupol
Kettle River-
Buckhorn
Tasiast
Chirano
Non-operating
segments (a)
Corporate and
other (b)
Total
$
467.0
228.1
559.8
249.1
883.2
113.3
249.4
302.3
-
$
3,052.2
252.8
130.3
252.7
635.8
(168.8)
1.4
$
10.6
-
$
(180.8)
146.9
44.9
44.0
235.8
(7.7)
-
1.2
-
(8.9)
374.3
147.5
3.3
525.1
34.7
10.3
-
-
24.4
216.1
27.3
48.7
292.1
(43.0)
17.4
-
-
(60.4)
362.8
271.3
84.7
718.8
164.4
(0.2)
14.5
-
150.1
81.6
12.0
-
93.6
19.7
(12.6)
2.0
-
30.3
220.6
80.9
259.7
561.2
(311.8)
35.3
14.1
-
(361.2)
179.7
175.0
5.9
360.6
(58.3)
(1.7)
13.5
-
(70.1)
-
8.5
-
8.5
(8.5)
26.3
52.1
179.4
(266.3)
1,834.8
897.7
699.0
3,431.5
(379.3)
76.2
$
108.0
$
179.4
(742.9)
(20.3)
3.2
8.3
(96.0)
$
(847.7)
Operating segments
Non-operating
segments (a)
Fort Knox
Round
Mountain
Paracatu
Maricunga
Kupol
Kettle River-
Buckhorn
Tasiast
Chirano
Corporate and
other (b)
Total
$
515.7
211.7
644.3
314.6
947.5
156.0
319.8
354.9
1.8
$
3,466.3
291.0
118.0
-
409.0
106.7
-
$
6.8
-
99.9
$
142.3
25.2
-
167.5
44.2
-
0.2
-
44.0
418.2
154.3
-
572.5
71.8
2.5
-
-
69.3
235.9
36.2
-
272.1
42.5
6.2
-
-
36.3
380.5
254.7
-
635.2
312.3
-
14.9
-
297.4
83.6
50.2
53.8
187.6
(31.6)
11.2
2.8
-
(45.6)
252.2
66.6
505.5
824.3
(504.5)
50.9
16.0
-
165.8
159.7
370.0
695.5
(340.6)
11.7
13.1
-
(571.4)
(365.4)
1.7
9.8
322.1
333.6
(331.8)
29.3
51.8
178.8
(591.7)
1,971.2
874.7
1,251.4
4,097.3
(631.0)
111.8
$
105.6
$
178.8
(1,027.2)
(215.5)
(5.8)
11.2
(80.1)
$
(1,317.4)
$
233.5
FS 53
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p53 (March 22, 2016 22:37:59)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Property, plant and equipment at:
December 31, 2015
Total assets at:
December 31, 2015
Operating segments
Fort Knox
Round
Mountain
Paracatu
Maricunga
Kupol
Kettle River-
Buckhorn
Tasiast
Chirano
Non-operating
segments (a)
Corporate and
other (b)
Total
$
244.9
161.4
1,693.0
139.0
753.0
2.5
736.3
489.2
374.4
$
4,593.7
$
480.5
229.5
1,935.9
373.3
1,566.3
26.6
1,010.1
645.6
1,467.6
$
7,735.4
Capital expenditures for year ended December 31, 2015 (d)
$
145.0
50.0
109.0
31.2
56.7
0.5
165.4
32.0
35.1
$
624.9
Property, plant and equipment at:
December 31, 2014
Total assets at:
December 31, 2014
Fort Knox
Round
Mountain
Paracatu
Maricunga
Kupol
Kettle River-
Buckhorn
Tasiast
Chirano
Operating segments
Non-operating
segments (a)
Corporate and
other (b)
Total
$
467.0
189.1
1,806.2
138.0
990.2
11.7
809.5
634.4
363.3
$
5,409.4
$
703.3
262.0
2,058.7
416.4
1,956.6
38.9
1,465.4
796.9
1,253.2
$
8,951.4
Capital expenditures for year ended December 31, 2014 (d)
$
85.2
44.3
105.0
29.7
87.9
6.4
147.7
61.1
38.4
$
605.7
(a) Non-operating segments include development properties.
(b) Corporate and other includes corporate, Cerro Casale, shutdown and other non-operating assets (including La Coipa, Lobo-Marte and
White Gold).
(c) On December 17, 2014, the Company sold its interest in Aurelian Resources Inc. and the FDN Project. See Note 6 ii.
(d) Segment capital expenditures are presented on an accrual basis. Additions to property, plant and equipment in the consolidated
statements of cash flows are presented on a cash basis.
ii.
Geographic segments
The following table shows metal sales and property, plant and equipment by geographic region:
Metal sales
Property, plant and equipment
Years ended December 31,
2015
2014
As at December 31,
2015
2014
Geographic information (a)
United States
Russian Federation
Brazil
Chile
Mauritania
Ghana
Canada
Total
$
$
$
$
808.4
883.2
559.8
249.1
249.4
302.3
-
3,052.2
883.4
947.5
644.3
316.4
319.8
354.9
-
3,466.3
412.9
786.1
1,693.0
387.8
743.0
498.4
72.5
4,593.7
672.2
990.2
1,810.2
391.3
814.8
643.6
87.1
5,409.4
$
$
$
$
(a) Geographic location is determined based on location of the mining assets.
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p54 (March 22, 2016 22:37:59)
FS 54
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
iii.
Significant customers
The following table represents sales to individual customers exceeding 10% of annual metal sales for the following periods:
For the year ended
December 31, 2015:
Customer
Fort Knox
Round
Mountain
Paracatu
La Coipa Maricunga
Kupol
Kettle
River-
Buckhorn
Tasiast
Chirano
Total
1
2
3
$
-
89.6
78.0
-
15.6
46.5
-
94.7
43.4
-
-
-
-
30.2
50.4
% of total metal sales
-
677.7
170.5 34.9
-
83.5
23.6 45.6
-
- $
80.6
61.9
$
677.7
599.6
349.4
1,626.7
53.3%
For the year ended
December 31, 2014:
Fort Knox
Round
Mountain
Paracatu
La Coipa Maricunga
Kupol
Kettle
River-
Buckhorn
Tasiast
Chirano
Total
Customer
1
2
3
% of total metal sales
$ 83.2
-
158.7
19.4
-
22.5
115.8
-
82.0
1.7
-
-
262.9
-
14.5
430.1
517.4
61.1
-
59.3
-
19.3 72.3
-
49.6 $
-
54.6
$
1,083.1
517.4
423.9
2,024.4
58.4%
The Company is not economically dependent on a limited number of customers for the sale of its product because gold can
be sold through numerous commodity market traders worldwide.
19.
COMMITMENTS AND CONTINGENCIES
i.
Commitments
Operating leases
The Company has a number of operating lease agreements involving office space and equipment. The operating leases for
equipment provide that the Company may, after the initial lease term, renew the lease for successive yearly periods or
may purchase the equipment at its fair market value. The operating leases for certain office facilities contain escalation
clauses for increases in operating costs and property taxes. A majority of these leases are cancelable and are renewable on
a yearly basis. Future minimum lease payments required to meet obligations that have initial or remaining non-cancelable
lease terms in excess of one year are $9.2 million, $7.7 million, $5.2 million, $4.4 million and $1.6 million for each year
from 2016 to 2020, respectively, and $0.5 million thereafter.
Purchase commitments
At December 31, 2015, the Company had future commitments of approximately $19.9 million (December 31, 2014 – $43.3
million) for capital expenditures.
ii.
Contingencies
General
Estimated losses from contingencies are accrued by a charge to earnings when information available prior to the issuance
of the financial statements indicates that it is likely that a future event will confirm that an asset has been impaired or a
liability incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.
FS 55
Kinross Gold 2015
59599 2015 Q4 Rev FS 55.pdf - p1 (March 29, 2016 18:41:51)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Cerro Casale contingency
The Company is obligated to pay $20.0 million to Barrick if a positive production decision is made relating to the Cerro Casale
project.
Other legal matters
The Company is from time to time involved in legal proceedings, arising in the ordinary course of its business. Typically, and
currently, except in the case of the actions described below, the amount of ultimate liability with respect to these actions
will not, in the opinion of management, materially affect Kinross' financial position, results of operations or cash flows.
A putative securities class action complaint was filed on February 16, 2012 (the “U.S. Complaint”), entitled Bo Young Cha v.
Kinross Gold Corporation et al., in the United States District Court for the Southern District of New York (the “Court”). The
U.S. Complaint named as defendants the Company, Tye Burt, former President and CEO, Paul Barry, former Executive Vice
President and Chief Financial Officer, Glen Masterman, former Senior Vice President, Exploration and Kenneth Thomas,
former Senior Vice President, Projects. On May 31, 2012, the Court selected the City of Austin Police Retirement System
(“City of Austin”) to be lead plaintiff. Pursuant to an order of the Court, City of Austin filed an amended Complaint on July
23, 2012 (the “Amended U.S. Complaint”). On March 26, 2015, the parties filed settlement papers with the Court, and
asked it to grant an order preliminarily approving the settlement. The action was settled for $33 million, without admission
of liability by the defendants and with the Company’s insurance carriers directly funding the full settlement. On October 15,
2015, the Court granted final approval of the settlement. Having received final Court approval of the settlement agreement,
without any valid objections, all class members (excepting only the six opting out, amounting to only 1,633 shares) were
bound by the settlement and deemed to have released Kinross and the other defendants from any claims related to the
Amended U.S. Complaint, with all further proceedings in the action being forever stayed. The time to appeal the final Court
approval has passed.
A notice of action in a proposed class proceeding under Ontario’s Class Proceedings Act, 1992, was filed in the Ontario
Superior Court of Justice (the “Ontario Court”) on March 12, 2012, entitled Trustees of the Musicians’ Pension Fund of
Canada v. Kinross Gold Corporation et al. (the “Ontario Action”). A statement of claim in the Ontario Action was subsequently
served on April 11, 2012. The Ontario Action named as defendants the Company, Tye Burt, former President and CEO, Paul
Barry, former Executive Vice President and Chief Financial Officer, Glen Masterman, former Senior Vice President,
Exploration, and Kenneth Thomas, former Senior Vice President, Projects. On April 22, 2015, the parties advised the Ontario
Court that they had agreed to a settlement of all claims in the Ontario Action. On June 17, 2015, the Ontario Court approved
the settlement. All of the claims in the Ontario Action were settled for CDN$12.5 million, without any admission of liability
by the defendants and with the Company’s insurance carriers directly funding the full settlement. Pursuant to the
settlement, the Ontario Action has been dismissed in its entirety. All class members are bound by the settlement and are
deemed to have released Kinross and the other defendants from all claims that were raised in the Ontario Action or could
have been raised in the Ontario Action.
On January 16, 2015, a notice of action in a proposed class proceeding under Ontario’s Class Proceedings Act, 1992 was filed
in the Ontario Court, entitled Frankfurt-Trust Invest Luxemburg AG v. Kinross Gold Corporation (the “Frankfurt Action”).
Pursuant to the settlement of the Ontario Action, the Frankfurt Action was dismissed in its entirety and all of the proposed
class members are bound by the releases granted in the Ontario action.
Income taxes
The Company operates in numerous countries around the world and accordingly is subject to, and pays, annual income taxes
under the various regimes in countries in which it operates. These tax regimes are determined under general corporate
income tax laws of the country. The Company has historically filed, and continues to file, all required income tax returns
and to pay the taxes reasonably determined to be due. The tax rules and regulations in many countries are complex and
subject to interpretation. Changes in tax law or changes in the way that tax law is interpreted may also impact the Company’s
effective tax rate as well as its business and operations. From time to time the Company will undergo a review of its historic
tax returns and in connection with such reviews disputes can arise with the taxing authorities over the Company’s
interpretation of the country’s income tax rules.
FS 56
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p56 (March 22, 2016 22:37:59)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
20.
RELATED PARTY TRANSACTIONS
There were no material related party transactions in 2015 and 2014 other than compensation of key management personnel.
The Company received dividends of $4.6 million from Puren during the year ended December 31, 2015 (year ended
December 31, 2014 – $nil).
Key management personnel
Compensation of key management personnel of the Company is as follows:
Years ended December 31,
2015
2014
Cash compensation - Salaries, short-term incentives, and other benefits
Long-term incentives, including share-based payments
Termination and post-retirement benefits
Total compensation paid to key management personnel
$
$
8.0
10.6
3.5
22.1
9.4
11.8
4.8
26.0
$
$
Key management personnel are defined as the Senior Leadership Team and members of the Board of Directors.
21.
CONSOLIDATING FINANCIAL STATEMENTS
The obligations of the Company under the senior notes are guaranteed by the following 100% owned subsidiaries of the
Company (the “guarantor subsidiaries”): Round Mountain Gold Corporation, Kinross Brasil Mineração S.A., BGO (Bermuda)
Ltd., Crown Resources Corporation, Fairbanks Gold Mining, Inc., Melba Creek Mining, Inc., Compania Minera Mantos de Oro,
Compania Minera Maricunga, Red Back Mining Inc., and Red Back Mining Mauritania No. 2 Ltd. All guarantees by the
guarantor subsidiaries are joint and several, and full and unconditional; subject to certain customary release provisions
contained in the indenture governing the senior notes. On December 17, 2014, the Company sold all of its interest in Aurelian
Resources Inc., previously a guarantor of the notes. As a result, Aurelian Resources Inc. was released in December 2014 as a
guarantor, in accordance with release provisions of the Indenture.
The following tables contain separate financial information related to the guarantor subsidiaries as set out in the
consolidating balance sheets as at December 31, 2015 and December 31, 2014 and the consolidating statements of
operations, statements of comprehensive loss and statements of cash flows for the years ended December 31, 2015 and
2014. For purposes of this information, the financial statements of Kinross Gold Corporation and of the guarantor
subsidiaries reflect investments in subsidiary companies on an equity accounting basis.
FS 57
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p57 (March 22, 2016 22:37:59)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Consolidating balance sheet as at December 31, 2015
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable and other assets
Intercompany receivables
Current income tax recoverable
Inventories
Non-current assets
Property, plant and equipment
Goodw ill
Long-term investments
Investments in associate and joint venture
Intercompany investments
Other long-term assets
Long-term intercompany receivables
Deferred tax assets
Total assets
Liabilities
Current liabilities
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustm ents
Total
Guarantors
Guarantors
Non-
guarantors
Elim inations Consolidated
$
113.8
$
171.0
$
-
$
284.8
$
759.1
$
-
$
1,043.9
-
6.3
541.2
-
1.5
662.8
29.3
-
82.7
-
3,306.1
10.2
3,056.2
-
3.0
33.7
1,045.4
75.0
397.0
1,725.1
2,527.4
-
-
79.3
172.3
138.2
260.0
7.3
-
-
3.0
40.0
7.5
69.2
-
-
(203.2)
1,383.4
4,737.9
(6,121.3)
-
-
75.0
398.5
48.3
606.7
-
-
(203.2)
2,184.7
6,228.7
(6,121.3)
-
-
-
-
(2,884.3)
-
2,556.7
-
82.7
79.3
594.1
148.4
(181.7)
3,134.5
-
7.3
2,037.0
162.7
0.4
77.8
-
-
-
-
10,064.1
(10,658.2)
221.8
5,438.6
69.2
-
(8,573.1)
-
10.5
109.2
-
123.3
1,005.2
2,292.1
4,593.7
162.7
83.1
157.1
-
370.2
-
76.5
$
7,147.3
$
4,909.6
$
(3,269.2)
$
8,787.7
$
24,300.3
$
(25,352.6)
$
7,735.4
Accounts payable and accrued liabilities
$
65.9
$
137.6
$
-
$
203.5
$
176.1
$
-
$
379.6
Intercompany payables
Current income tax payable
Current portion of long-term debt
Current portion of provisions
Current portion of unrealized fair value of derivative liabilities
Non-current liabilities
Long-term debt
Provisions
Other long-term liabilities
Long-term intercompany payables
Deferred tax liabilities
Total liabilities
Equity
Common shareholders' equity
Common share capital
Contributed surplus
Accumulated deficit
Accumulated other comprehensive loss
Total com m on shareholders' equity
Non-controlling interest
Total equity
196.6
-
249.5
-
3.8
515.8
1,731.9
9.9
-
1,000.4
-
3,258.0
593.7
(203.2)
3.0
-
25.1
10.3
-
-
-
-
587.1
3.0
249.5
25.1
14.1
5,534.2
(6,121.3)
3.4
-
25.2
1.9
-
-
-
-
769.7
(203.2)
1,082.3
5,740.8
(6,121.3)
-
467.7
81.2
437.6
269.1
-
-
-
(181.7)
-
2,025.3
(384.9)
1,731.9
477.6
81.2
1,256.3
269.1
4,898.4
-
243.2
67.5
7,316.8
229.9
-
-
-
(8,573.1)
-
13,598.2
(14,694.4)
-
6.4
249.5
50.3
16.0
701.8
1,731.9
720.8
148.7
-
499.0
3,802.2
$
14,603.5
$
1,894.2
$
(1,894.2)
$
14,603.5
$
17,964.8
$
(17,964.8)
$
14,603.5
239.2
(10,922.1)
(31.3)
3,889.3
-
3,889.3
59.6
947.2
(16.7)
(59.6)
(947.2)
16.7
239.2
3,237.1
(3,237.1)
239.2
(10,922.1)
(10,525.3)
10,525.3
(10,922.1)
(31.3)
(18.4)
18.4
2,884.3
(2,884.3)
3,889.3
10,658.2
(10,658.2)
-
-
-
43.9
-
2,884.3
(2,884.3)
3,889.3
10,702.1
(10,658.2)
(31.3)
3,889.3
43.9
3,933.2
Total liabilities and equity
$
7,147.3
$
4,909.6
$
(3,269.2)
$
8,787.7
$
24,300.3
$
(25,352.6)
$
7,735.4
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p58 (March 22, 2016 22:38:00)
FS 58
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Consolidating balance sheet as at December 31, 2014
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable and other assets
Intercompany receivables
Current income tax recoverable
Inventories
Non-current assets
Property, plant and equipment
Goodw ill
Long-term investments
Investments in associate and joint venture
Intercompany investments
Other long-term assets
Long-term intercompany receivables
Deferred tax assets
Total assets
Liabilities
Current liabilities
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustm ents
Total
Guarantors
Non-
guarantors
Elim inations Consolidated
$
315.1
$
131.0
$
-
$
446.1
$
537.4
$
-
$
983.5
-
6.5
3.5
50.8
-
-
3.5
57.3
37.8
113.1
-
-
492.4
1,038.3
(190.1)
1,340.6
4,852.3
(6,192.9)
-
3.7
76.3
458.1
-
-
76.3
461.8
38.9
814.9
-
-
817.7
1,758.0
(190.1)
2,385.6
6,394.4
(6,192.9)
20.6
-
109.4
-
2,891.6
-
0.1
17.2
-
-
-
-
4,705.7
(1,029.5)
(2,703.0)
6.5
2,403.3
-
186.4
2,610.7
6.7
-
(1,744.8)
3,269.2
-
6.7
2,912.2
2,497.2
-
109.5
17.2
973.2
192.9
162.7
1.5
139.6
7,954.0
225.0
4,599.3
99.8
-
-
-
-
(8,927.2)
-
(7,868.5)
-
$
8,063.2
$
6,441.2
$
(4,637.9)
$
9,866.5
$
22,073.5
$
(22,988.6)
$
8,951.4
41.3
170.4
-
115.2
1,276.7
2,587.1
5,409.4
162.7
111.0
156.8
-
417.9
-
106.5
-
19.2
60.0
43.1
60.2
Accounts payable and accrued liabilities
$
74.7
$
160.1
$
-
$
234.8
$
187.1
$
-
$
421.9
Intercompany payables
Current income tax payable
Current portion of long-term debt
Current portion of provisions
Current portion of unrealized fair value of derivative liabilities
Non-current liabilities
Long-term debt
Provisions
Other long-term liabilities
Long-term intercompany payables
Deferred tax liabilities
Total liabilities
Equity
Common shareholders' equity
Common share capital
Contributed surplus
Accumulated deficit
Accumulated other comprehensive loss
Total com m on shareholders' equity
Non-controlling interest
Total equity
201.4
598.1
(190.1)
609.4
5,646.2
(6,255.6)
5.5
-
23.4
26.8
-
-
-
-
5.5
-
23.4
49.8
13.7
60.0
19.7
10.4
-
-
-
-
813.9
(190.1)
922.9
5,937.1
(6,255.6)
604.4
-
506.6
125.2
2,109.3
183.2
3,738.2
-
-
-
(1,744.8)
-
(1,934.9)
1,978.8
517.8
134.4
1,286.4
183.2
5,023.5
19.3
263.1
72.8
6,519.4
285.8
-
-
-
(7,805.8)
-
13,097.5
(14,061.4)
1,998.1
780.9
207.2
-
469.0
4,059.6
-
-
-
23.0
299.1
1,978.8
11.2
9.2
921.9
-
3,220.2
$
14,587.7
$
3,221.0
$
(3,221.0)
$
14,587.7
$
16,431.8
$
(16,431.8)
$
14,587.7
239.0
(9,937.6)
(46.1)
4,843.0
-
82.8
(582.0)
(18.8)
(82.8)
582.0
18.8
2,703.0
(2,703.0)
-
-
239.0
(9,937.6)
(46.1)
4,843.0
-
4,843.0
2,703.0
(2,703.0)
4,843.0
2,401.1
(9,878.4)
(27.3)
8,927.2
48.8
8,976.0
(2,401.1)
9,878.4
27.3
(8,927.2)
-
(8,927.2)
239.0
(9,937.6)
(46.1)
4,843.0
48.8
4,891.8
Total liabilities and equity
$
8,063.2
$
6,441.2
$
(4,637.9)
$
9,866.5
$
22,073.5
$
(22,988.6)
$
8,951.4
FS 59
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p59 (March 22, 2016 22:38:00)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Consolidating statement of operations for the year ended December 31, 2015
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Total cost of sales
Gross profit (loss)
Other operating expense
Exploration and business development
General and administrative
Operating loss
Other income (expense) - net
Equity in earnings (losses) of associate, joint venture and
intercompany investments
Finance income
Finance expense
Earnings (loss) before tax
Income tax recovery (expense) - net
Earnings (loss) from continuing operations after tax
Earnings (loss) from discontinued operations after tax
Net (loss) earnings
Net (loss) earnings from continuing operations attributable to:
Non-controlling interest
Common shareholders
Net (loss) earnings attributable to:
Non-controlling interest
Common shareholders
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustm ents
Total
Guarantors
Non-
guarantors
Elim inations
Consolidated
$
1,603.8
$
1,470.4
$
(1,457.8)
$
1,616.4
$
1,435.8
$
-
$
3,052.2
1,572.5
6.8
-
1,579.3
24.5
4.6
20.8
127.8
(128.7)
246.3
(1,076.3)
41.0
(65.0)
(982.7)
(1.8)
(984.5)
-
987.4
350.5
348.6
1,686.5
(216.1)
44.8
19.9
2.9
(283.7)
4.4
(318.4)
8.5
(53.2)
(642.4)
(63.1)
(705.5)
-
(1,458.1)
1,101.8
0.3
-
(1,457.8)
-
-
-
-
-
-
705.5
(31.9)
31.9
705.5
-
705.5
-
357.6
348.6
1,808.0
(191.6)
49.4
40.7
130.7
(412.4)
250.7
(689.2)
17.6
(86.3)
(919.6)
(64.9)
(984.5)
-
733.0
540.1
350.4
1,623.5
(187.7)
26.8
67.3
48.7
(330.5)
958.6
(3.0)
85.1
(104.1)
606.1
(76.8)
529.3
-
-
-
-
-
-
-
-
-
-
(1,229.6)
695.4
(94.4)
94.4
(534.2)
-
(534.2)
-
1,834.8
897.7
699.0
3,431.5
(379.3)
76.2
108.0
179.4
(742.9)
(20.3)
3.2
8.3
(96.0)
(847.7)
(141.7)
(989.4)
-
$
(984.5)
$
(705.5)
$
705.5
$
(984.5)
$
529.3
$
(534.2)
$
(989.4)
$
-
$
-
$
-
$
-
$
(4.9)
$
-
$
(4.9)
$
(984.5)
$
(705.5)
$
705.5
$
(984.5)
$
534.2
$
(534.2)
$
(984.5)
$
-
$
-
$
-
$
-
$
(4.9)
$
-
$
(4.9)
$
(984.5)
$
(705.5)
$
705.5
$
(984.5)
$
534.2
$
(534.2)
$
(984.5)
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p60 (March 22, 2016 22:38:00)
FS 60
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Consolidating statement of operations for the year ended December 31, 2014
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Total cost of sales
Gross profit (loss)
Other operating expense
Exploration and business development
General and administrative
Operating loss
Other income (expense) - net
Equity in earnings (losses) of associate, joint venture and
intercompany investments
Finance income
Finance expense
Earnings (loss) before tax
Income tax recovery (expense) - net
Earnings (loss) from continuing operations after tax
Earnings (loss) from discontinued operations after tax
Net (loss) earnings
Net (loss) earnings from continuing operations attributable to:
Non-controlling interest
Common shareholders
Net (loss) earnings attributable to:
Non-controlling interest
Common shareholders
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustm ents
Total
Guarantors
Non-
guarantors
Elim inations
Consolidated
$
1,341.9
$
1,672.5
$
(1,174.5)
$
1,839.9
$
1,626.4
$
-
$
3,466.3
1,323.2
1,089.9
(1,174.5)
1,238.6
7.3
26.8
350.2
242.8
-
-
357.5
269.6
1,357.3
1,682.9
(1,174.5)
1,865.7
(15.4)
1.8
22.3
108.4
(147.9)
(0.9)
(1,251.0)
29.0
(40.5)
(10.4)
24.6
16.5
5.3
(56.8)
(27.0)
(938.1)
2.2
(25.5)
-
-
-
-
-
-
(25.8)
26.4
38.8
113.7
(204.7)
(27.9)
1,102.1
(1,087.0)
(2.2)
2.2
29.0
(63.8)
(1,411.3)
(1,045.2)
1,102.1
(1,354.4)
11.3
(56.9)
-
(45.6)
(1,400.0)
(1,102.1)
1,102.1
(1,400.0)
233.5
(3.3)
3.3
233.5
732.6
517.2
981.8
2,231.6
(605.2)
85.4
66.8
65.1
(822.5)
325.0
(5.4)
59.3
(93.4)
(537.0)
(64.1)
(601.1)
(0.2)
-
-
-
-
-
-
-
-
-
(512.6)
1,086.6
(77.1)
77.1
574.0
-
574.0
0.2
1,971.2
874.7
1,251.4
4,097.3
(631.0)
111.8
105.6
178.8
(1,027.2)
(215.5)
(5.8)
11.2
(80.1)
(1,317.4)
(109.7)
(1,427.1)
233.5
$
(1,166.5)
$
(1,105.4)
$
1,105.4
$
(1,166.5)
$
(601.3)
$
574.2
$
(1,193.6)
$
-
$
-
$
-
$
-
$
(27.1)
$
-
$
(27.1)
$
(1,400.0)
$
(1,102.1)
$
1,102.1
$
(1,400.0)
$
(574.0)
$
574.0
$
(1,400.0)
$
-
$
-
$
-
$
-
$
(27.1)
$
-
$
(27.1)
$
(1,166.5)
$
(1,105.4)
$
1,105.4
$
(1,166.5)
$
(574.2)
$
574.2
$
(1,166.5)
FS 61
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p61 (March 22, 2016 22:38:00)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Consolidating statement of comprehensive income (loss) for the year ended December 31, 2015
Net earnings (loss)
$
(984.5)
$
(705.5)
$
705.5
$
(984.5)
$
529.3
$
(534.2)
$
(989.4)
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustm ents
Total
Guarantors
Guarantors
Non-
guarantors
Elim inations
Consolidated
Other com prehensive incom e (loss), net of tax:
Other comprehensive income (loss) to be reclassified to
profit or loss in subsequent periods:
Change in fair value of investments (a)
Reclassification to earnings for impairment charges
Accumulated other comprehensive loss related to
investments sold (b)
Changes in fair value of derivative financial instruments
designated as cash flow hedges (c)
Accumulated other comprehensive income related to
derivatives settled (d)
Equity in other comprehensive income (loss) of
intercompany investments
Total com prehensive incom e (loss)
Comprehensive income (loss) from continuing operations
Comprehensive income (loss) from discontinued operations
Total com prehensive incom e (loss)
Attributable to non-controlling interest
Attributable to com m on shareholders
(a) Net of tax of
(b) Net of tax of
(c) Net of tax of
(d) Net of tax of
(28.3)
7.6
-
(8.2)
24.8
(4.1)
18.9
0.2
-
-
(29.6)
43.8
14.4
-
-
-
-
-
-
-
(14.4)
(28.1)
7.6
-
-
-
-
(37.8)
(0.3)
68.6
10.3
4.5
4.8
4.5
-
-
-
-
-
-
-
(4.5)
(28.1)
7.6
-
(38.1)
73.4
14.8
-
(969.7)
$
(691.1)
$
691.1
$
(969.7)
$
533.8
$
(538.7)
$
(974.6)
(969.7)
$
(691.1)
$
691.1
$
(969.7)
$
533.8
$
(538.7)
$
(974.6)
-
-
(969.7)
$
(691.1)
$
-
(969.7)
-
-
-
-
$
$
$
$
$
$
-
(691.1)
-
-
(13.3)
19.7
$
$
$
$
$
$
-
691.1
-
691.1
-
-
-
-
$
$
$
$
$
$
$
-
(969.7)
$
-
(969.7)
-
-
(13.3)
19.7
$
$
$
$
$
$
-
533.8
(4.9)
538.7
-
-
0.2
1.6
$
$
$
$
$
$
$
-
-
(538.7)
$
(974.6)
-
(538.7)
-
-
-
-
$
$
$
$
$
$
(4.9)
(969.7)
-
-
(13.1)
21.3
$
$
$
$
$
$
$
$
$
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p62 (March 22, 2016 22:38:01)
FS 62
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Consolidating statement of comprehensive income (loss) for the year ended December 31, 2014
Net earnings (loss)
$
(1,166.5)
$
(1,105.4)
$
1,105.4
$
(1,166.5)
$
(601.3)
$
574.2
$
(1,193.6)
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustm ents
Total
Guarantors
Guarantors
Non-
guarantors
Elim inations
Consolidated
Other com prehensive incom e (loss), net of tax:
Other comprehensive income (loss) to be reclassified to
profit or loss in subsequent periods:
Change in fair value of investments (a)
Reclassification to earnings for impairment charges
Accumulated other comprehensive loss related to
investments sold (b)
Changes in fair value of derivative financial instruments
designated as cash flow hedges (c)
Accumulated other comprehensive income related to
derivatives settled (d)
Equity in other comprehensive income (loss) of
intercompany investments
Total com prehensive incom e (loss)
Comprehensive income (loss) from continuing operations
Comprehensive income (loss) from discontinued operations
Total com prehensive incom e (loss)
Attributable to non-controlling interest
Attributable to com m on shareholders
(a) Net of tax of
(b) Net of tax of
(c) Net of tax of
(d) Net of tax of
9.7
1.3
(6.1)
(22.8)
8.3
(9.6)
-
(0.2)
0.2
-
(8.5)
17.3
8.8
-
-
-
-
-
-
-
(8.8)
9.5
1.5
(6.1)
(31.3)
25.6
(0.8)
(8.8)
(2.5)
-
-
(9.0)
2.7
(8.8)
-
-
-
-
-
-
-
8.8
7.0
1.5
(6.1)
(40.3)
28.3
(9.6)
-
(1,176.1)
$
(1,096.6)
$
1,096.6
$
(1,176.1)
$
(610.1)
$
583.0
$
(1,203.2)
(1,409.6)
$
(1,093.3)
$
1,093.3
$
(1,409.6)
$
(609.9)
$
582.8
$
(1,436.7)
233.5
(3.3)
3.3
233.5
(0.2)
(1,176.1)
$
(1,096.6)
$
1,096.6
-
(1,176.1)
-
-
-
-
$
$
$
$
$
$
-
(1,096.6)
-
-
(1.9)
8.2
$
$
$
$
$
$
-
1,096.6
-
-
-
-
$
$
$
$
$
$
$
(1,176.1)
$
(610.1)
$
-
(1,176.1)
-
-
(1.9)
8.2
$
$
$
$
$
$
(27.1)
(583.0)
-
-
(3.0)
0.9
$
$
$
$
$
$
0.2
583.0
-
583.0
-
-
-
-
$
$
$
$
$
$
$
233.5
(1,203.2)
(27.1)
(1,176.1)
-
-
(4.9)
9.1
$
$
$
$
$
$
$
$
$
FS 63
Kinross Gold 2015
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p63 (March 22, 2016 22:38:01)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Consolidating statement of cash flows for the year ended December 31, 2015
Net inflow (outflow ) of cash related to the follow ing
activities:
Operating:
Net earnings (loss) from continuing operations
$
(984.5)
$
(705.5)
$
705.5
$
(984.5)
$
529.3
$
(534.2)
$
(989.4)
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustm ents
Total
Guarantors
Non-
guarantors
Elim inations
Consolidated
Adjustments to reconcile net earnings (loss) from continuing
operations to net cash provided from (used in) operating activities:
Depreciation, depletion and amortization
Impairment charges
Impairment of investments
Equity in losses (earnings) of associate, joint venture and
intercompany investments
Non-hedge derivative (gains) losses - net
Share-based compensation expense
Finance Expense
Deferred tax expense (recovery)
Foreign exchange losses (gains) and other
Reclamation expense (recovery)
Changes in operating assets and liabilities:
Accounts receivable and other assets
Inventories
Accounts payable and accrued liabilities
Cash flow provided from (used in) operating activities
Income taxes recovered (paid)
Net cash flow of continuing operations provided from
(used in) operating activities
Net cash flow of discontinued operations used in
operating activities
Investing:
Additions to property, plant and equipment
Net proceeds from (additions to) long-term investments and
other assets
Net proceeds from the sale of property, plant and equipment
Decrease in restricted cash
Interest received and other
Net cash flow of continuing operations used in investing
activities
Net cash flow of discontinued operations provided from
investing activities
Financing:
Issuance of common shares on exercise of options
Proceeds from issuance of debt
Repayment of debt
Interest paid
Dividends received from (paid to) common shareholders and
subsidiaries
Settlement of derivative instruments
Intercompany advances
Other
Net cash flow of continuing operations provided from
(used in) financing activities
Net cash flow of discontinued operations used in financing
activities
Effect of exchange rate changes on cash and cash
equivalents of continuing operations
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
6.8
-
6.6
1,076.3
(17.7)
17.1
65.0
-
(229.0)
-
2.0
2.1
(16.1)
(71.4)
-
350.5
348.6
0.1
318.4
(0.2)
-
53.2
80.0
12.0
-
53.4
27.5
(52.1)
485.9
15.2
0.3
-
-
(705.5)
-
-
(31.9)
-
-
-
-
(0.3)
-
(31.9)
-
357.6
348.6
6.7
689.2
(17.9)
17.1
86.3
80.0
(217.0)
-
55.4
29.3
(68.2)
382.6
15.2
540.1
350.4
0.9
3.0
16.4
-
104.1
(27.0)
235.2
(7.9)
35.6
34.2
96.1
1,910.4
(152.6)
-
-
-
(695.4)
-
-
(94.4)
-
-
-
-
-
-
897.7
699.0
7.6
(3.2)
(1.5)
17.1
96.0
53.0
18.2
(7.9)
91.0
63.5
27.9
(1,324.0)
-
969.0
(137.4)
(71.4)
501.1
(31.9)
397.8
1,757.8
(1,324.0)
831.6
-
-
(16.8)
(341.4)
(0.3)
-
-
0.3
(28.8)
0.8
0.5
2.5
(16.8)
(366.4)
1.0
-
-
-
(47.6)
-
-
(63.6)
(2.9)
(114.1)
-
-
(201.3)
315.1
-
-
22.5
(22.5)
-
(16.3)
-
(78.4)
-
(94.7)
-
-
40.0
131.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31.9
-
31.9
-
-
-
-
-
(358.2)
(251.8)
(29.1)
0.8
0.5
2.8
(30.6)
1.5
30.3
1.2
(383.2)
(249.4)
1.0
-
22.5
(22.5)
(47.6)
-
-
-
(80.0)
(1.2)
-
-
-
-
-
-
-
-
-
-
-
-
(16.3)
(1,213.3)
1,229.6
-
(110.1)
(2.9)
-
15.7
-
94.4
-
-
(610.0)
(59.7)
2.3
30.8
4.0
(632.6)
1.0
-
22.5
(102.5)
(48.8)
-
-
-
(2.9)
(176.9)
(1,278.8)
1,324.0
(131.7)
-
-
(161.3)
446.1
-
(7.9)
221.7
537.4
-
-
-
-
-
(7.9)
60.4
983.5
$
113.8
$
171.0
$
-
$
284.8
$
759.1
$
-
$
1,043.9
59599 2015 Q4 -IFRS Financial Statements FINAL with folios.pdf - p64 (March 22, 2016 22:38:01)
FS 64
Kinross Gold 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2015 and 2014
(Tabular amounts in millions of United States dollars)
Consolidating statement of cash flows for the year ended December 31, 2014
Net inflow (outflow ) of cash related to the follow ing
activities:
Operating:
Net earnings (loss) from continuing operations
$
(1,400.0)
$
(1,102.1)
$
1,102.1
$
(1,400.0)
$
(601.1)
$
574.0
$
(1,427.1)
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustm ents
Total
Guarantors
Guarantors
Non-
guarantors
Elim inations
Consolidated
Adjustments to reconcile net earnings (loss) from continuing
operations to net cash provided from (used in) operating activities:
Depreciation, depletion and amortization
Impairment charges
Impairment of investments
Equity in losses (earnings) of associate, joint venture and
intercompany investments
7.3
26.8
1.3
350.2
242.8
0.2
-
-
-
357.5
269.6
1.5
1,251.0
938.1
(1,102.1)
1,087.0
517.2
981.8
156.6
5.4
(10.8)
-
93.4
(75.7)
49.8
17.5
13.2
(34.5)
96.1
-
-
-
874.7
1,251.4
158.1
(1,086.6)
-
-
(77.1)
-
-
-
-
-
-
5.8
5.1
26.2
80.1
(13.8)
45.8
17.5
26.9
(59.4)
52.1
1,208.9
(173.9)
(589.7)
-
1,043.4
(185.3)
15.9
26.2
63.8
61.9
(4.0)
-
13.7
(24.9)
(44.0)
424.2
(11.4)
412.8
1,035.0
(589.7)
858.1
(5.0)
(3.8)
(309.6)
(322.2)
(25.4)
1.8
16.1
2.6
(30.1)
28.7
1.6
1.9
(314.5)
(320.1)
149.2
(1.0)
0.1
913.0
(920.1)
(17.5)
52.1
(2.0)
(151.7)
(7.5)
-
-
(60.0)
(3.1)
(564.7)
-
74.6
2.9
(133.6)
(550.3)
-
-
108.9
337.2
-
(19.7)
140.1
397.3
-
-
-
-
-
-
-
-
-
-
-
-
512.6
-
77.1
-
589.7
-
-
-
-
(8.8)
(631.8)
(55.5)
30.5
17.7
4.5
(634.6)
148.2
0.1
913.0
(980.1)
(20.6)
-
(2.0)
-
(4.6)
(94.2)
-
(19.7)
249.0
734.5
14.7
26.2
40.5
-
(0.3)
-
(1.9)
(3.7)
(34.1)
(72.2)
-
1.2
-
25.5
61.9
(3.7)
-
15.6
(21.2)
(9.9)
498.6
(11.4)
(72.2)
487.2
(1.2)
(3.8)
(29.9)
(279.7)
8.0
-
15.5
0.5
(33.4)
1.8
0.6
2.1
(5.9)
(308.6)
150.0
(0.8)
0.1
492.9
(500.0)
(17.4)
96.7
(2.0)
(40.7)
(3.5)
-
420.1
(420.1)
(0.1)
(44.6)
-
(113.2)
(4.0)
26.1
(161.9)
-
-
96.8
218.3
-
-
12.1
118.9
-
-
(2.2)
-
-
-
-
-
-
(2.2)
-
(2.2)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2.2
-
2.2
-
-
-
-
$
315.1
$
131.0
$
-
$
446.1
$
537.4
$
-
$
983.5
Non-hedge derivative (gains) losses - net
Share-based compensation expense
Finance expense
Deferred tax expense (recovery)
Foreign exchange losses (gains) and other
Reclamation expense (recovery)
Changes in operating assets and liabilities:
Accounts receivable and other assets
Inventories
Accounts payable and accrued liabilities
Cash flow provided from (used in) operating activities
Income taxes recovered (paid)
Net cash flow of continuing operations provided from
(used in) operating activities
Net cash flow of discontinued operations used in
operating activities
Investing:
Additions to property, plant and equipment
Net proceeds from (additions to) long-term investments and
other assets
Net proceeds from the sale of property, plant and equipment
Decrease in restricted cash
Interest received and other
Net cash flow of continuing operations used in investing
activities
Net cash flow of discontinued operations provided from
(used in) investing activities
Financing:
Issuance of common shares on exercise of options
Proceeds from issuance of debt
Repayment of debt
Interest paid
Dividends received from (paid to) common shareholders and
subsidiaries
Settlement of derivative instruments
Intercompany advances
Other
Net cash flow of continuing operations provided from
(used in) financing activities
Net cash flow of discontinued operations used in
financing activities
Effect of exchange rate changes on cash and cash
equivalents of continuing operations
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
FS 65
Kinross Gold 2015
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MINERAL RESERVE AND
MINERAL RESOURCE STATEMENT
PROVEN AND PROBABLE MINERAL RESERVES
Gold
Proven and Probable Mineral Reserves (1, 3, 4, 5, 6, 8, 9, 11)
Kinross Gold Corporation’s Share at December 31, 2015
Property
Location
Kinross
Interest
(%)
100.0%
100.0%
100.0%
100.0%
USA
USA
USA
USA
Chile
Chile
Brazil
25.0%
100.0%
100.0%
Ghana
Mauritania
90.0%
100.0%
Russia
Russia
100.0%
100.0%
NORTH AMERICA
Bald Mountain 8
Fort Knox Area
Kettle River
Round Mountain Area 8
Subtotal
SOUTH AMERICA
Cerro Casale 9
Maricunga
Paracatu
Subtotal
AFRICA
Chirano
Tasiast 11
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Gold
Proven
Probable
Proven and Probable
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
14,647
47,740
–
39,062
101,449
57,425
15,209
427,432
500,066
7,275
30,467
37,742
634
1,253
1,887
641,144
0.8
0.4
–
0.7
0.6
0.6
0.9
0.4
0.5
1.2
1.4
1.4
372
628
–
907
39,980
99,578
166
27,083
1,907
166,807
1,195
428
5,653
241,975
25,432
260,558
7,276
527,965
287
1,406
7,394
101,711
1,693
109,105
0.6
0.4
8.7
0.6
0.5
0.6
0.8
0.5
0.5
3.6
2.1
2.2
745
1,394
47
563
54,627
147,318
166
66,145
2,749
268,256
4,616
614
3,992
299,400
40,641
687,990
9,222
1,028,031
848
6,813
14,669
132,178
7,661
146,847
10.2
8.8
9.3
0.6
209
355
564
1,631
5,904
7,535
11,440
811,412
11.6
8.1
8.9
0.8
606
1,544
2,150
2,265
7,157
9,422
21,782
1,452,556
0.6
0.4
8.7
0.7
0.5
0.6
0.8
0.4
0.5
2.4
1.9
2.0
11.2
8.3
9.0
0.7
1,117
2,022
47
1,470
4,656
5,811
1,042
9,645
16,498
1,135
8,219
9,354
815
1,899
2,714
33,222
59599 KinrossAR 2015-Mar29 pp66-77.pdf - p1 (March 29, 2016 21:39:55)
66
Kinross Gold 2015
Silver
Proven and Probable Mineral Reserves (1, 3, 4, 5, 6, 8, 9)
Kinross Gold Corporation’s Share at December 31, 2015
Property
Location
Kinross
Interest
(%)
NORTH AMERICA
Round Mountain Area 8
USA
100.0%
Subtotal
SOUTH AMERICA
Cerro Casale 9
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
Chile
25.0%
Russia
Russia
100.0%
100.0%
Proven
Probable
Proven and Probable
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
462
462
57,425
57,425
634
1,253
1,887
13.1
13.1
1.9
1.9
195
195
1,908
1,908
3,522
241,975
3,522
241,975
11.0
11.0
1.4
1.4
675
675
2,370
2,370
11.4
11.4
870
870
11,150
299,400
11,150
299,400
1.5
1.5
14,672
14,672
16.6
124.4
338
5,011
88.2
5,349
1,631
5,904
7,535
18.7
100.7
979
19,112
82.9
20,091
2,265
7,157
9,422
18.1
104.8
1,317
24,123
84.0
25,440
59,774
4.7
9,066
251,418
3.9
31,916
311,192
4.1
40,982
Copper
Proven and Probable Mineral Reserves (1, 3, 4, 5, 6, 9)
Kinross Gold Corporation’s Share at December 31, 2015
Property
Location
Kinross
Interest
(%)
Proven
Probable
Proven and Probable
Tonnes
(kt)
Grade
(%)
Pounds
(Mlb)
Tonnes
(kt)
Grade
(%)
Pounds
(Mlb)
Tonnes
(kt)
Grade
(%)
Pounds
(Mlb)
SOUTH AMERICA
Cerro Casale 9
Subtotal
Total Copper
Chile
25.0%
57,425
57,425
57,425
0.19
0.19
0.19
240
241,975
240
241,975
240
241,975
0.23
0.23
0.23
1,204
299,400
1,204
299,400
1,204
299,400
0.22
0.22
0.22
1,444
1,444
1,444
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MEASURED AND INDICATED MINERAL RESOURCES
Gold
Measured and Indicated Mineral Resources (Excludes Proven and Probable Mineral Reserves) (2, 3, 4, 5, 6, 7, 8, 9, 10, 11)
Kinross Gold Corporation’s Share at December 31, 2015
Property
Location
NORTH AMERICA
Bald Mountain 8
Fort Knox Area
Kettle River
Round Mountain Area 8
White Gold
Subtotal
SOUTH AMERICA
Cerro Casale 9
La Coipa 10
Lobo Marte
Maricunga
Paracatu
USA
USA
USA
USA
Yukon
Chile
Chile
Chile
Chile
Brazil
Kinross
Interest
(%)
100.0%
100.0%
100.0%
100.0%
100.0%
25.0%
100.0%
100.0%
100.0%
100.0%
Subtotal
AFRICA
Chirano
Tasiast 11
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Gold
Ghana
Mauritania
90.0%
100.0%
Russia
Russia
100.0%
100.0%
Measured
Indicated
Measured and Indicated
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
36,337
7,077
–
14,624
–
58,038
5,739
5,364
96,646
17,860
137,307
262,916
3,378
8,611
11,989
4
146
150
333,093
0.8
0.5
–
0.5
–
0.7
0.3
1.8
1.1
0.8
0.3
0.7
1.5
0.8
1.0
8.0
6.5
6.6
0.7
951
103
–
258
–
152,634
88,745
72
27,534
9,788
1,312
278,773
56
307
3,525
445
1,264
68,423
25,452
88,720
180,224
178,201
5,597
541,020
161
230
391
1
31
32
7,585
66,236
73,821
132
1,018
1,150
7,332
894,764
0.6
0.5
5.1
0.5
2.7
0.6
0.4
1.8
1.2
0.7
0.3
0.7
2.4
1.4
1.5
2,982
1,320
12
425
840
188,971
95,822
72
42,158
9,788
5,579
336,811
787
1,440
3,489
3,830
2,003
74,162
30,816
185,366
198,084
315,508
11,549
803,936
578
2,980
10,963
74,847
3,558
85,810
18.2
7.3
8.6
0.7
77
240
317
136
1,164
1,300
21,003
1,227,857
0.6
0.5
5.1
0.5
2.7
0.6
0.4
1.8
1.2
0.7
0.3
0.7
2.1
1.3
1.4
17.9
7.2
8.4
0.7
3,933
1,423
12
683
840
6,891
843
1,747
7,014
4,275
3,267
17,146
739
3,210
3,949
78
271
349
28,335
Silver
Measured and Indicated Mineral Resources (Excludes Proven and Probable Mineral Reserves) (2, 3, 4, 5, 6, 7, 8, 9,10)
Kinross Gold Corporation’s Share at December 31, 2015
Property
Location
Kinross
Interest
(%)
NORTH AMERICA
Round Mountain Area 8
USA
100.0%
Subtotal
SOUTH AMERICA
Cerro Casale 9
La Coipa 10
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
Chile
Chile
25.0%
100.0%
Russia
Russia
100.0%
100.0%
Measured
Indicated
Measured and Indicated
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
1,214
1,214
5,739
5,364
11,103
4
146
150
12,467
9.3
9.3
1.2
40.0
19.9
6.6
82.4
80.3
19.6
362
362
10,025
10,025
7.2
7.2
2,325
11,239
2,325
11,239
7.4
7.4
2,687
2,687
220
6,893
68,423
25,452
1.1
70.1
2,328
57,341
74,162
30,816
1.1
64.8
2,548
64,234
7,113
93,875
19.8
59,669
104,978
19.8
66,782
1
387
388
132
1,018
1,150
15.9
98.8
89.3
68
3,234
3,302
136
1,164
1,300
15.7
96.8
88.3
69
3,621
3,690
7,863
105,050
19.3
65,296
117,517
19.4
73,159
67
Kinross Gold 2015
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Copper
Measured and Indicated Mineral Resources (Excludes Proven and Probable Mineral Reserves) (2, 3, 4, 5, 6, 7, 9)
Kinross Gold Corporation’s Share at December 31, 2015
Property
Location
Kinross
Interest
(%)
Measured
Indicated
Measured and Indicated
Tonnes
(kt)
Grade
(%)
Pounds
(Mlb)
Tonnes
(kt)
Grade
(%)
Pounds
(Mlb)
Tonnes
(kt)
Grade
(%)
Pounds
(Mlb)
SOUTH AMERICA
Cerro Casale 9
Subtotal
Total Copper
Chile
25.0%
5,739
5,739
5,739
0.13
0.13
0.13
17
17
17
68,423
68,423
68,423
0.16
0.16
0.16
248
248
248
74,162
74,162
74,162
0.16
0.16
0.16
265
265
265
INFERRED MINERAL RESOURCES
Gold
Inferred Mineral Resources (2, 3, 4, 5, 6, 7, 8, 9, 10, 11)
Kinross Gold Corporation’s Share at December 31, 2015
Kinross
Interest
(%)
100.0%
100.0%
100.0%
100.0%
100.0%
25.0%
100.0%
100.0%
100.0%
100.0%
Location
USA
USA
USA
USA
Yukon
Chile
Chile
Chile
Chile
Brazil
Ghana
Mauritania
90.0%
100.0%
Russia
Russia
100.0%
100.0%
Tonnes
(kt)
24,396
14,824
36
16,205
2,166
57,627
123,860
2,121
2,003
53,942
10,515
192,441
1,602
5,596
7,198
78
404
482
257,748
Inferred
Grade
(g/t)
Ounces
(koz)
0.5
0.5
6.7
0.4
1.8
0.5
0.4
1.5
1.1
0.6
0.4
0.5
2.9
1.9
2.1
9.8
8.3
8.6
0.5
378
221
8
233
125
965
1,498
101
69
1,053
143
2,864
149
346
495
25
108
133
4,457
Property
NORTH AMERICA
Bald Mountain 8
Fort Knox Area
Kettle River
Round Mountain Area 8
White Gold
Subtotal
SOUTH AMERICA
Cerro Casale 9
La Coipa 10
Lobo Marte
Maricunga Area
Paracatu
Subtotal
AFRICA
Chirano
Tasiast 11
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Gold
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Silver
Inferred Mineral Resources (2, 3, 4, 5, 6, 7, 8, 9, 10)
Kinross Gold Corporation’s Share at December 31, 2015
Property
NORTH AMERICA
Round Mountain Area 8
Subtotal
SOUTH AMERICA
Cerro Casale 9
La Coipa 10
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
Copper
Inferred Mineral Resources (2, 3, 4, 5, 6, 7, 9)
Kinross Gold Corporation’s Share at December 31, 2015
Property
SOUTH AMERICA
Cerro Casale 9
Subtotal
Total Copper
Kinross
Interest
(%)
Tonnes
(kt)
Inferred
Grade
(g/t)
Ounces
(koz)
Location
USA
100.0%
2,377
2,377
5.9
5.9
454
454
Chile
Chile
25.0%
100.0%
123,860
2,121
1.0
45.2
4,126
3,081
125,981
1.8
7,207
Russia
Russia
100.0%
100.0%
78
404
482
13.7
125.2
34
1,626
107.2
1,660
128,840
2.3
9,321
Kinross
Interest
(%)
Tonnes
(kt)
Inferred
Grade
(%)
Pounds
(Mlb)
Location
Chile
25.0%
123,860
123,860
123,860
0.19
0.19
0.19
523
523
523
69
Kinross Gold 2015
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Mineral Reserve and Mineral Resource Statement Notes
(1) Unless otherwise noted, the Company’s mineral reserves are estimated using appropriate cut-off grades based on an assumed gold price of
$US 1,200 per ounce, a silver price of $US 17.00 per ounce and a copper price of $US $3.00 per pound. Mineral reserves are estimated using
appropriate process recoveries, operating costs and mine plans that are unique to each property and include estimated allowances for dilution
and mining recovery. Mineral reserve estimates are reported in contained units and are estimated based on the following foreign exchange rates:
Russian Rouble to $US
Chilean Peso to $US
Brazilian Real to $US
Ghanaian Cedi to $US
50
600
3.00
3.50
Mauritanian Ouguiya to $US
300
(2) Unless otherwise noted, the Company’s mineral resources are estimated using appropriate cut-off grades based on a gold price of $US 1,400 per ounce,
a silver price of $US 20.00 per ounce, a copper price of $US $3.00 per pound. Foreign exchange rates for estimating mineral resources were the same as
for mineral reserves.
(3)
The Company’s mineral reserve and mineral resource estimates as at December 31, 2015 are classified in accordance with the Canadian Institute of
Mining, Metallurgy and Petroleum (“CIM”) “CIM Definition Standards - For Mineral Resources and Mineral Reserves” adopted by the CIM Council (as
amended, the “CIM Definition Standards”) in accordance with the requirements of National Instrument 43-101 “Standards of Disclosure for Mineral
Projects” (“NI 43-101”). Mineral reserve and mineral resource estimates reflect the Company’s reasonable expectation that all necessary permits and
approvals will be obtained and maintained.
(4) Cautionary note to U.S. Investors concerning estimates of mineral reserves and mineral resources. These estimates have been prepared in accordance
with the requirements of Canadian securities laws, which differ from the requirements of United States’ securities laws. The terms “mineral reserve”,
“proven mineral reserve and “probable mineral reserve” are Canadian mining terms as defined in accordance with NI 43-101 and the CIM Definition
Standards. The CIM Definition Standards differ from the definitions in the United States Securities and Exchange Commission (“SEC”) Guide 7 (“SEC
Guide 7”) under the United States Securities Act of 1933, as amended. Under SEC Guide 7, a “final” or “bankable” feasibility study is required to report
mineral reserves, the three-year historical average price is used in any mineral reserve or cash flow analysis to designate mineral reserves and the primary
environmental analysis or report must be filed with the appropriate governmental authority. In addition, the terms “mineral resource”, “measured
mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in NI 43-101 and recognized by Canadian securities laws
but are not defined terms under SEC Guide 7 or recognized under U.S. securities laws. U.S. investors are cautioned not to assume that any part or all
of mineral deposits in these categories will ever be upgraded to mineral reserves. “Inferred mineral resources” have a great amount of uncertainty
as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral
resource” will ever be upgraded to a higher category. Under Canadian securities laws, estimates of “inferred mineral resources” may not form the basis
of feasibility or pre-feasibility studies, except in rare cases. U.S. investors are cautioned not to assume that all or any part of an inferred mineral resource
exists or is economically or legally mineable. Accordingly, these mineral reserve and mineral resource estimates and related information may not be
comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal
laws and the rules and regulations thereunder, including SEC Guide 7.
(5)
(6)
Except as provided in Note (9), the Company’s mineral resource and mineral reserve estimates were prepared under the supervision of and verified by
Mr. John Sims, an officer of Kinross, who is a qualified person as defined by NI 43-101.
The Company’s normal data verification procedures have been used in collecting, compiling, interpreting and processing the data used to estimate
mineral reserves and mineral resources. Independent data verification has not been performed.
(7) Mineral resources that are not mineral reserves do not have to demonstrate economic viability. Mineral resources are subject to infill drilling, permitting,
mine planning, mining dilution and recovery losses, among other things, to be converted into mineral reserves. Due to the uncertainty associated with
inferred mineral resources, it cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to indicated or measured
mineral resources, including as a result of continued exploration.
(8)
(9)
Bald Mountain and the remaining 50% interest of Round Mountain were acquired by Kinross effective January 11, 2016.
Estimates for the Cerro Casale project are based on a project update completed by Barrick Gold Corporation in the first half of 2011 and have been
updated to reflect current guidance. Mineral reserves and mineral resources are estimated using appropriate cut-off grades based on the following
commodity prices and foreign exchange rates:
Mineral reserves – Gold price of $US 1,000 per ounce, Silver price of $US 16.00 per ounce, Copper price of $US 2.00 per pound, Chilean Peso to
$US 525
Mineral resources – Gold price of $US 1,400 per ounce, Silver price of $US 19.00 per ounce, Copper price of $US 3.50 per pound, Chilean Peso to
$US 585
The mineral reserve and mineral resource estimates for Cerro Casale were prepared under the supervision of Mr. Rick Sims, who is a qualified person
as defined by NI 43-101.
(10)
Includes mineral resources from the Puren deposit in which the Company holds a 65% interest. Mineral resources for the Phase 7 project are reported at
100% ownership, however Kinross has a 75% interest in the Phase 7 project.
(11) Tasiast proven and probable mineral reserve, and measured, indicated and inferred mineral resource estimates in this table, as at December 31, 2015,
are based on the results of the pre-feasibility study assessing the 30,000 tonnes per day CIL mill expansion. For further information, please see the
Company’s news release dated March 30, 2016 and the National Instrument 43-101 Technical Report for Tasiast dated March 30, 2016, both available
at www.kinross.com and under the Company’s profile on SEDAR (www.sedar.com).
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Kinross Gold 2015
MINERAL RESERVE AND MINERAL RESOURCE DEFINITIONS
A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least
a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic
and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral
Reserve includes diluting materials and allowances for losses that may occur when the material is mined.
A “Probable Mineral Reserve” is the economically mineable part of an Indicated and, in some circumstances, a
Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate
information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of
reporting, that economic extraction can be justified.
A “Proven Mineral Reserve” is the economically mineable part of a Measured Mineral Resource demonstrated by at
least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical,
economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.
A Mineral Resource is a concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized
organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and
quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade,
geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological
evidence and knowledge.
An “Inferred Mineral Resource” is that part of a Mineral Resource for which quantity and grade or quality can be
estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified,
geological and grade continuity. The estimate is based on limited information and sampling gathered through
appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
An “Indicated Mineral Resource” is that part of a Mineral Resource for which quantity, grade or quality, densities, shape
and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of
technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.
The estimate is based on detailed and reliable exploration and testing information gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for
geological and grade continuity to be reasonably assumed.
A “Measured Mineral Resource” is that part of a Mineral Resource for which quantity, grade or quality, densities, shape,
and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the
appropriate application of technical and economic parameters, to support production planning and evaluation of the
economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill
holes that are spaced closely enough to confirm both geological and grade continuity.
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SUMMARIZED FIVE-YEAR REVIEW (5, 6)
(in millions, except per share amounts)
Operating results from continuing operations
Revenue
Net loss from continuing operations
attributable to common shareholders
Net cash flow from continuing operations provided
from operating activities
Capital expenditures
Financial position
2015
2014
2013
2012
2011
$ 3,052.2
$ 3,466.3
$ 3,779.5
$ 4,307.3
$ 3,842.5
(984.5)
(1,400.0)
(3,012.6)
(2,546.2)
(2,093.5)
831.6
610.0
858.1
796.6
1,317.3
1,366.6
631.8
1,262.4
1,858.3
1,538.5
Cash, cash equivalents and short-term investments
$ 1,043.9
$
983.5
$
734.5
$ 1,982.5
$ 1,767.3
Working capital
Total assets
1,590.3
1,982.7
1,692.9
2,281.8
2,322.1
7,735.4
8,951.4
10,286.7
14,882.6
16,508.8
Long-term debt (including current portion)
1,981.4
2,058.1
2,119.6
2,632.6
1,633.1
Common shareholders’ equity
3,889.3
4,843.0
6,014.0
9,850.2
12,390.4
Per share data
Net loss from continuing operations
attributable to common shareholders – basic
$
(0.86)
$
(1.22)
$
(2.64)
$
(2.24)
$
(1.84)
2015 KINROSS SHARE TRADING DATA
High
Low
$
$
$
$
$
$
$
$
4.48
3.19
2.98
3.16
3.71
2.62
2.36
2.40
$
$
$
$
$
$
$
$
2.80
2.74
1.79
2.23
2.20
2.19
1.35
1.68
TSX (Cdn dollars)
First quarter
Second quarter
Third quarter
Fourth quarter
NYSE (U.S. dollars)
First quarter
Second quarter
Third quarter
Fourth quarter
73
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59599 KinrossAR 2015-Mar29 pp66-77.pdf - p8 (March 29, 2016 21:40:00)
74
Kinross Gold 2015
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION
All statements, other than statements of historical fact, contained or incorporated by reference in this Annual Report 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 Annual Report. Forward-looking
statements contained in this Annual Report, include, without limitation, statements with respect to our guidance for
production; production costs of sales, all-in sustaining cost and capital expenditures, mineral reserve and mineral resource
estimates, as well as references to other possible events, the future price of gold and silver, the estimation of mineral reserves
and mineral resources, the realization of mineral reserve and mineral resource estimates, the timing and amount of estimated
future production, costs of production, capital expenditures, costs and timing of the development of projects, success of
exploration, development and mining activities, permitting timelines, government regulation, mining operation, environmental
risks, currency fluctuations, capital requirements, project studies, mine life extensions, continuous improvement initiatives; and
resolution of pending litigation. The words “anticipate”, “assumption”, “believe”, “budget”, “concept”, “consideration”,
“contingent”, “estimates”, ‘‘expects’’, “explore”, “feasibility”, “forecast”, “focus”, “forward”, ”future”, “guidance”,
“indicate”, “intend”, “initiative”, “measures”, “objective”, “outlook”, “opportunity”, “PFS”, “phased”, “plan”, “positioned",
“possible”, “potential”, “pre-feasibility”, “priority”, “project”, “proposed”, “prospective”, “risk”, “strategy”, “study”,
“target”, “trend” or “upside”, or variations of or similar such words and phrases or statements that certain actions, events or
results may, could, should, would, might, 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, models and
assumptions of Kinross referenced, contained or incorporated by reference in this Annual Report, which may prove to be
incorrect, include, but are not limited to, the various assumptions set forth herein and in our most recently filed Annual
Information Form and our Management’s Discussion and Analysis (“MD&A”) as well as: (1) there being no significant
disruptions affecting the operations of the Company whether due to extreme weather events (including, without limitation,
excessive or lack of rainfall) and other or related natural disasters, labour disruptions (including but not limited to following
workforce reductions), supply disruptions, power disruptions, damage to equipment or otherwise; (2) permitting,
development, operations and production from the Company’s operations being consistent with Kinross’ current expectations
including, without limitation, water and power supply, and launch of the tailings reprocessing facility at Paracatu; (3) political
and legal developments in any jurisdiction in which the Company operates being consistent with its current expectations
including, without limitation, the impact of any escalating political tensions and uncertainty in the Russian Federation and
Ukraine or any related sanctions and any other similar restrictions or penalties imposed, or actions taken, by any government,
including but not limited to potential power rationing, tailings facility regulation and amendments to mining laws in Brazil,
potential amendments to water laws and/or other water use restrictions and regulatory actions in Chile, potential amendments
to minerals and mining laws and dam safety regulation in Ghana, potential amendments to customs and mining laws
(including but not limited amendments to the VAT) in Mauritania, and potential amendments to and enforcement of tax laws in
Russia (including, but not limited to, the interpretation, implementation, application and enforcement of any such laws and
amendments thereto), being consistent with Kinross’ current expectations; (4) the exchange rate between the Canadian dollar,
Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately
consistent with current levels; (5) certain price assumptions for gold and silver; (6) prices for diesel, natural gas, fuel oil,
electricity and other key supplies being approximately consistent with current levels; (7) production and cost of sales forecasts
for the Company meeting expectations; (8) the accuracy of the current mineral reserve and mineral resource estimates of the
Company (including but not limited to ore tonnage and ore grade estimates); (9) labour and materials costs increasing on a
basis consistent with Kinross’ current expectations; (10) the terms and conditions of the legal and fiscal stability agreements for
the Tasiast and Chirano operations being interpreted and applied in a manner consistent with their intent and Kinross’
expectations; (11) goodwill and/or asset impairment potential; and (12) access to capital markets, including but not limited to
credit ratings being consistent with the Company’s current expectations. 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:
sanctions (or any other similar restrictions or penalties) now or subsequently imposed, or other actions taken, by, against, in
respect of or otherwise impacting any jurisdiction in which the Company is domiciled or operates (including but not limited to
the Russian Federation, Canada, the European Union and the United States), or any government or citizens of, persons or
companies domiciled in, or the Company’s business, operations or other activities in, any such jurisdiction; litigation
commenced, or other claims or actions brought, against the Company (and/or any of its directors, officers or employees) in
respect of the cessation by the Company of investment in and development of Fruta Del Norte and its sale, or any of the
74
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59599 KinrossAR 2015-p74 Mar31.pdf - p1 (March 31, 2016 18:44:31)
Company’s prior activities on or in respect thereof or otherwise in Ecuador; fluctuations in the currency markets; fluctuations in
the spot and forward price of gold or certain other commodities (such as fuel and electricity); changes in the discount rates
applied to calculate the present value of net future cash flows based on country-specific real weighted average cost of capital;
changes in the market valuations of peer group gold producers and the Company, and the resulting impact on market price to
net asset value multiples; changes in various market variables, such as interest rates, foreign exchange rates, gold or silver
prices and lease rates, or global fuel prices, that could impact the mark-to-market value of outstanding derivative instruments
and ongoing payments/receipts under any financial obligations; risks arising from holding derivative instruments (such as
credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation
(including, but not limited to, income tax, advance income tax, stamp tax, withholding tax, capital tax, tariffs, value-added or
sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, royalty, excise tax, customs/import or export
taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with any related fine, penalty,
surcharge, or interest imposed in connection with such taxes), controls, policies and regulations; the security of personnel and
assets; political or economic developments in Brazil, Canada, Chile, Ghana, Mauritania, Russia, the United States, or other
countries in which Kinross does business or may carry on business; business opportunities that may be presented to, or
pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical difficulties in
connection with mining or development activities; employee relations; litigation or other claims against, or regulatory
investigations and/or any enforcement actions or sanctions in respect of the Company (and/or its directors, officers, or
employees) including, but not limited to, securities class action litigation in Canada and/or the United States, or any
investigations, enforcement actions and/or sanctions under any applicable anti-corruption, international sanctions and/or
anti-money laundering laws and regulations in Canada, the United States or any other applicable jurisdiction; the speculative
nature of gold exploration and development including, but not limited to, the risks of obtaining necessary licenses and
permits; diminishing quantities or grades of mineral reserves; adverse changes in our credit rating; and contests over title to
properties. 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 the inability to obtain insurance, to cover these risks). Many of
these uncertainties and contingencies can directly or indirectly affect, and could cause, Kinross’ actual results to differ
materially from those expressed or implied in any forward-looking statements made by, or on behalf of, Kinross, including, but
not limited to, resulting in an impairment charge on goodwill and/or assets. 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 Annual Report are qualified
by these cautionary statements 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 Factors’’ section of our most recently filed
Annual Information Form and the “Risk Analysis” section of our 2015 year-end MD&A. 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.
75
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59599 KinrossAR 2015-Mar29 pp66-77.pdf - p10 (March 29, 2016 21:40:02)
76
Kinross Gold 2015
Key Sensitivities
Approximately 70%-80% of the Company’s costs are denominated in U.S. dollars. A 10% change in foreign currency exchange
rates would be expected to result in an approximate $15 impact on production cost of sales per ounce 7. Specific to the Russian
ruble, a 10% change in the exchange rate would be expected to result in an approximate $14 impact on Russian production
cost of sales per ounce. Specific to the Brazilian real, a 10% change in the exchange rate would be expected to result in an
approximate $24 impact on Brazilian production cost of sales per ounce. A $10 per barrel change in the price of oil would be
expected to result in an approximate $3 impact on production cost of sales per ounce. A $100 change in the price of gold would
be expected to result in an approximate $3 impact on production cost of sales per ounce as a result of a change in royalties.
Other Information
Where we say ‘‘we’’, ‘‘us’’, ‘‘our’’, the ‘‘Company’’, or ‘‘Kinross’’ in this Annual Report, we mean Kinross Gold Corporation and/or
one or more or all of its subsidiaries, as may be applicable.
The technical information about the Company’s mineral properties (other than exploration activities) contained in this Annual
Report has been prepared under the supervision of Mr. John Sims, an officer of the Company who is a “qualified person” within
the meaning of National Instrument 43-101 (“NI 43-101”). The technical information about the Company’s exploration activities
contained in this Annual Report has been prepared under the supervision of Mr. Sylvain Guerard, an officer of the Company who
is a “qualified person” within the meaning of NI 43-101.
75
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76
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59599 KinrossAR 2015-Mar29 pp66-77.pdf - p11 (March 29, 2016 21:40:03)
ENDNOTES
1 Kinross’ guidance and outlook for 2016 represents forward-looking information and users are cautioned that actual results may vary. Please refer to
the Cautionary Statement on page 74, as well as the Company’s news release dated February 10, 2016, available on our website at www.kinross.com.
2 “Attributable” is based on Kinross’ 90% share of Chirano production.
3 “Adjusted net earnings (loss) attributable to common shareholders”, “Adjusted net earnings (loss) per share”, “Adjusted operating cash flow”, “Attributable
production cost of sales per equivalent ounce sold” and “Attributable all-in sustaining cost per equivalent ounce sold” figures used throughout this report
are non-GAAP financial measures. For the definition and reconciliation of these non-GAAP measures, refer to Section 11, Supplemental Information of
Management’s Discussion and Analysis in this report. Adjusted operating cash flow per share, also a non-GAAP measure, is defined as “adjusted operating
cash flow” divided by the “weighted average number of common shares outstanding (basic)”. The weighted average number of common shares outstanding
(basic) during the year ended December 31, 2015 was 1,146.0 million (2014: 1,144.3 million; 2013: 1,142.1 million).
4 Reported net loss includes an after-tax non-cash impairment charge of $689.7 million which includes charges related to property, plant and equipment of
$430.2 million and inventory and other asset write-downs of $259.5 million (2014: $932.2 million; 2013: $2,834.1 million).
5 On June 10, 2013, the Company announced its decision to cease development of Fruta del Norte (“FDN”). As a result, FDN was classified as a discontinued
operation. On December 17, 2014, the Company disposed of its interest in FDN. On June 28, 2012, the Company disposed of its interest in Crixás. The
comparative figures exclude the results of FDN and Crixás.
6 Figures reported for 2011 have not been recast for IFRS 11, which was adopted on January 1, 2013.
7 Refers to all of the currencies in the countries where the Company has mining operations, fluctuating simultaneously by 10% in the same direction, either
appreciating, or depreciating, taking into consideration the impact of hedging and the weighting of each currency within our consolidated cost structure.
77
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59599 KinrossAR 2015-Mar29 pp66-77.pdf - p12 (March 29, 2016 21:40:03)
TSX: K
Toronto Stock
Exchange
NYSE: KGC
New York
Stock Exchange
Kinross is a global gold mining
company with exceptional and
consistent operating results driven
by a high performance culture. With
ten mines in three core regions, our
focus is delivering value based on
the core principles of operational
excellence, balance sheet strength
and responsible mining.
Our Operations
Dvoinoye
Kupol
Fort Knox
Kettle River-Buckhorn
Bald Mountain
Toronto
Round Mountain
Tasiast
Chirano
Paracatu
Maricunga
1
Letter to Shareholders
2015 Achievements
4
Corporate Governance Highlights 6
6
Directors + Senior Leadership
7
Financial Summary
Financial Review
7
Cautionary Statement on
Forward-Looking Information
74
CORPORATE INFORMATION
Shareholder Information
Contact Information
Publications
Transfer Agent and Registrar
General
Kinross Gold Corporation
25 York Street, 17th Floor
Toronto, Ontario,
Canada M5J 2V5
Website: Kinross.com
Telephone: 416-365-5123
Toll-free: 1-866-561-3636
Facsimile: 416-363-6622
Email: info@kinross.com
Investor Relations
Tom Elliott, Senior Vice-President,
Investor Relations and
Corporate Development
Telephone: 416-365-3390
Email: tom.elliott@kinross.com
Media Relations
Louie Diaz, Director,
Corporate Communications
Telephone: 416-369-6469
Email: louie.diaz@kinross.com
Shareholder Inquiries
Computershare
Investor Services Inc.
9th Floor,
100 University Avenue
Toronto, Ontario,
Canada M5J 2Y1
www.computershare.com/kinross
Toll-free: 1-800-564-6253
Toll-free facsimile: 1-888-453-0330
Computershare
Investor Services Inc.
Toronto, Ontario, Canada
Toll-free: 1-800-564-6253
Proxy Solicitation Agent
Kingsdale Shareholder Services
Toronto, Ontario, Canada
Annual Shareholders Meeting
Wednesday, May 11, 2016 at
10:00 a.m. EDT at the Glenn Gould
Studio, 250 Front Street West,
Toronto, Ontario, Canada
Trading Data
TSX
K – common
NYSE
KGC – common
Legal Counsel
Osler, Hoskin & Harcourt LLP
Toronto, Ontario, Canada
Sullivan & Cromwell LLP
New York, New York,
United States
Auditors
KPMG LLP
Toronto, Ontario, Canada
@KinrossGold
To obtain copies of Kinross’
publications, please visit our corporate
website at Kinross.com, or contact us
by email at info@kinross.com or call
1-866-561-3636.
Operational Excellence.
Financial Discipline.
Annual Report
2015
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Corporate Responsibility Report
Kinross publishes its corporate
responsibility performance data
annually and a comprehensive Global
Reporting Initiative (GRI) report every
two years. In 2016, we will be publishing
our 2015 Corporate Responsibility
Report online. This report will provide
a detailed account of our social,
environmental, and health and safety
performance for 2014 and 2015.
Corporate
Responsibility Report
2015
All figures in U.S. dollars and from continuing operations.
Endnotes can be found on page 77 of this report.
designed and produced by smith + associates
www.smithandassoc.com
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Operational Excellence.
Financial Discipline.
Annual Report
2015
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KINROSS GOLD CORPORATION
25 York Street, 17th Floor
Toronto, Ontario, Canada
M5J 2V5