Annual Report 2017
25
years of delivering value.
Kinross is a global gold mining company with
strong and consistent operating results driven
by a high performance culture. With a diverse
portfolio of mines and development projects,
our focus is delivering value based on the core
principles of operational excellence, balance
sheet strength and responsible mining.
TSX: K
Toronto Stock Exchange
NYSE: KGC
New York Stock Exchange
Celebrating Kinross Gold’s 25th Anniversary
25 years of Delivering Value
2018 marks our 25th year. Visit our 25th anniversary
microsite at 25anniversary.kinross.com
Dvoinoye
Kupol
Fort Knox
Bald Mountain
Toronto
Round Mountain
Operating mine
Development projects
Tasiast
Chirano
Paracatu
La Coipa
All figures are in U.S. dollars unless otherwise noted. Endnotes can be found on page 76 of this report.
01
04
Letter to Shareholders
2017 Achievements
Our History (foldout)
Corporate Governance Highlights 06
06
Directors + Senior Leadership
07
Financial Summary
07
Financial Review
Cautionary Statement on
Forward-Looking Information
74
ifc-rev.pdf - p1 (March 15, 2018 20:30:38)
DT
J. Paul Rollinson
President and
Chief Executive
Officer
$445.4 Million
Net Earnings
$1.2 Billion
Adjusted Operating Cash Flow1
$2.6 Billion
In Liquidity
$669 Per Ounce
Production Cost of Sales1
Letter to Shareholders
On June 3, 1993, Kinross Gold Corporation appeared as a new listing on the Toronto Stock
Exchange. In its first year of operation, the new company would account for gold equivalent
production of just over 80,000 ounces.
Kinross has come a long way since those humble
beginnings. As we celebrate our 25th anniversary in
2018, it’s worth reflecting on the strengths that have
made Kinross one of the world’s leading gold producers,
and that continue to drive the exciting future we are
building. The Company’s impressive performance in 2017
underscored those strengths in multiple areas.
We also announced additional development opportunities.
Most notably, at Fort Knox in Alaska, the Gilmore project
gives us mineral rights to a significant land parcel
immediately adjacent to the mine, more than doubling
measured and indicated mineral resource estimates and
providing an exciting opportunity to extend the life of
one of our best mines.
Our production of 2.67 million gold equivalent ounces2
ranked among the world’s top producers. We met our
guidance for production, costs and capital expenditures
for the sixth consecutive year. We finished 2017 at the high
end of our production guidance and the low end on both
cost of sales and all-in sustaining cost, demonstrating how
the strategic priority of operational excellence has become
embedded into day-to-day practice at our sites. Our teams
at Bald Mountain, Round Mountain and Tasiast all deserve
special mention for an outstanding year.
Kinross’ financial strength – another strategic priority –
was further reinforced in 2017. Our operations generated
adjusted cash flow of over $1.2 billion, while our adjusted
net earnings almost doubled year-over-year. Our
strong liquidity of $2.6 billion gives us a solid financial
foundation for advancing our impressive portfolio of low-
risk, high-quality organic development projects.
These projects have benefited significantly from another
key Kinross strength: the skill of our technical teams in
de-risking projects, optimizing mine plans, and finding
innovative solutions to improve overall economics and
returns by reducing capital and operating costs.
In 2017, we made excellent progress at these projects and
met all our key milestones, on schedule and on budget.
At Tasiast, construction of the Phase One expansion
advanced on schedule, and we are on track for full
commercial production by the end of June 2018. We also
announced that we are moving ahead with Phase Two of
the expansion, which promises to deliver the full potential
of the world-class Tasiast deposit. In Nevada, we are moving
forward with the Round Mountain Phase W project, while
the Vantage Complex at Bald Mountain is proceeding on
schedule. In Russia, we look forward to initial high-grade ore
from the Moroshka deposit in the second half of 2018.
In 2018, we look forward to delivering on additional
milestones at all of our projects and opportunities as we
continue to execute our development plan.
We remain prudent and disciplined in our approach to
mergers, acquisitions and divestitures to generate value
for shareholders. In 2017, we unlocked significant value
for our shareholders and enhanced our balance sheet
through the sale of Kinross’ 25% interest in Cerro Casale for
consideration including $260 million in cash, a $40 million
deferred payment, and a 1.25 % royalty.
At the same time, we are making other prudent
investments to lower costs and secure the future
of our existing mines. At Paracatu in Brazil – a large,
long-life cornerstone asset – we recently announced
the acquisition of two hydroelectric power plants.
These plants are expected to lower overall cost of sales
by approximately $80 per ounce over the life of mine
while securing approximately 70% of the mine’s long-
term power requirements.
2017 Highlights
• Achieved year-over-year improvements in safety metrics
of injury frequency and severity. Regrettably, our strong
safety record was overshadowed by an employee fatality
at our Kupol mine, underscoring the importance of
keeping safety top of mind every shift, every task.
• Met production and cost guidance for the sixth
consecutive year. Produced 2.67 million gold equivalent
ounces (Au eq. oz.), at the high end of our guidance
range, at a cost of sales of $669 per Au eq. oz., and an
all-in sustaining cost of $954 per Au eq. oz., at the low
end of our guidance range.
• Generated $1.2 billion in adjusted operating cash flow,
a $240 million increase year-over-year.
KINROSS ANNUAL REPORT 2017 01
• Ended 2017 with more than $1 billion in cash
and total liquidity of approximately $2.6 billion.
• Advanced Phase One construction of the Tasiast
mill expansion, which remains on schedule for full
commercial production by the end of June 2018.
• Announced decision to proceed with Phase Two of
the Tasiast expansion and commenced engineering
and procurement.
• Announced decision to proceed with Round Mountain
Phase W and commenced stripping, initial construction
and site preparation activities ahead of schedule.
• Advanced the Vantage Complex project at Bald
Mountain on schedule.
• Completed the September Northeast project in Russia
and commenced development of the Moroshka deposit.
• Gained mineral rights to the Gilmore land package,
adding 2.1 million ounces in estimated measured and
indicated mineral resources and potentially extending
mine life at Fort Knox.
• Launched a pre-feasibility study at Tasiast Sud.
• Added approximately four million ounces to mineral
reserve estimates to offset depletion.
• Extended mining at Round Mountain by five years, Fort
Knox mine life by one year, mill production at Kupol by
one year and Paracatu mine life to 2032.
• Spent more than $2 billion in countries where we
operate through local purchasing, wages and taxes to
benefit local communities and provide economic value.
Outlook for 2018 3
We forecast another year of solid operating results in
2018. Gold production is forecast to be 2.5 million Au eq.
oz., which is in line with our average production over the
last several years. Looking forward, we expect production
to be at or slightly above 2.5 million Au eq. oz. over the
next three years.
Production cost of sales in 2018 are forecast to be $730
per Au eq. oz., while all-in sustaining costs are expected
to be approximately $975 per Au eq. oz., in line with the
mid point of our 2017 guidance. We expect production
cost of sales to decline slightly in 2019 and 2020 as lower
cost production comes online.
Our capital expenditures are forecast to be approximately
$1.1 billion, reflecting the investments we are making in
our development projects as we leverage our financial
strength to build our future.
2018E Production2, 3
2.5 million (+/-5%)
Russia 20%
Dvoinoye
Kupol
West Africa 20%
Tasiast
Chirano
02
Americas 60%
Fort Knox
Bald Mountain
Round Mountain
Paracatu
Financial Strength to Invest in our Future
In 2017, our operations generated approximately $1.2
billion in adjusted operating cash flow, an increase of
approximately 25% over the previous year. Year-over-year,
our cash position increased by approximately $200 million,
and we entered 2018 with total available liquidity of
$2.6 billion. Kinross has no scheduled debt repayments
until 2021.
Our excellent liquidity and strong balance sheet
means we are well positioned to fund our pipeline
of development projects.
Generating Future Value at our
Development Projects
Kinross’ development strategy is focused on high-quality
projects in our three operating regions, offering the key
benefits of low execution risk, established infrastructure,
and familiar permitting and operating jurisdictions.
In 2018, we expect to meet important milestones at
our five projects as well as our three additional
development opportunities.
Tasiast Phase One: Construction of Tasiast Phase One
has proceeded on time and on budget. Full commercial
production is expected by the end of June 2018. Phase
One is expected to almost double Tasiast’s production to
approximately 400,000 Au eq. oz., and significantly reduce
all-in sustaining costs.
Tasiast Phase Two: Phase Two is expected to double
Tasiast’s production once again to more than 800,000
Au eq. oz. per year, while further reducing costs. The project
is proceeding on schedule, with project and construction
teams expected to transition from Phase One to Phase Two
development to establish project continuity. Phase Two is
scheduled to begin commercial production in Q3 2020.
Round Mountain Phase W: Strong work by our technical
team contributed to a significant improvement in forecast
returns for this project, which is expected to add an
additional five years of mining at one of Kinross’ top
performing operations. Stripping, initial construction and
site preparation commenced ahead of schedule in late
2017. The project remains on schedule to encounter initial
low-grade ore in mid-2019.
Bald Mountain Vantage Complex: Kinross continues to
view Bald Mountain as a long-life asset with considerable
upside potential, given its large under-explored land
package and pipeline of high-quality targets. The
Vantage Complex project is proceeding on schedule,
with construction well underway. Commissioning for the
proposed heap leach pad and processing facilities is
expected to commence in Q1 2019.
Moroshka: At the Moroshka satellite deposit in Russia,
located approximately four kilometres east of Kupol,
development of the twin declines is on schedule and on
budget. Mining of high-grade ore at Moroshka is expected
to commence in the second half of 2018 for processing in
the Kupol mill.
Development Projects
Our pipeline of five high-quality development projects are all proceeding on
schedule and on budget, and extending mine life and adding ounces in all three
Kinross regions – the Americas, Russia and West Africa. Three development
opportunities and their exploration results are also expected to contribute to
additional mine life and add reserves.
expansion
Tasiast on schedule
and on budget
Phase One project is on
schedule to begin full commercial
production by end of June 2018
with Phase Two on track
+2 million Au oz.
mineral resources
Gained mining rights to
Gilmore land, adding more
than 2 million ounces of
mineral resources to our
project pipeline at Fort Knox
Nevada
projects
Round Mountain Phase
W and Bald Mountain
Vantage Complex are
proceeding on schedule
and expected to be
completed in 2019
Corporate Governance Highlights
• The board met seven times in 2017. The board
met independent of management at all of the
meetings, including at all regularly scheduled
board meetings.
• All directors were independent, except
the CEO.
• All committees comprised solely of
independent directors.
• Continued to maintain board diversity target
of 33% women directors.
• Kinross ranked 32nd out of 242 companies in the
Globe and Mail annual corporate governance
survey. Kinross received a score of 89 out of 100
points, in a tie for the top ranking gold mining
company and the third highest among all
companies in the materials sector.
• Scored 136 out of 150 points on the Board
Shareholder Confidence Index of the Clarkson
Centre for Board Effectiveness.
Board of Directors
(left to right)
John E. Oliver
Independent Chair H
Kerry D. Dyte
Corporate Director A, CGN
Kelly J. Osborne
Corporate Director CGN, CR
Ian Atkinson
Corporate Director CGN, CR
Ave G. Lethbridge
Corporate Director A, H
Una M. Power
Corporate Director A, CR
John A. Brough
Corporate Director A, H
Catherine
McLeod-Seltzer
Corporate Director CGN, CR
J. Paul Rollinson
President and Chief
Executive Officer
A
Audit and Risk Committee
CGN Corporate Governance and
Nominating Committee
CR
H
Corporate Responsibility and
Technical Committee
Human Resource and
Compensation Committee
Responsible Mining
Mining responsibly is integral to our business strategy. This requires operating in accordance with
the highest standards of ethical conduct, and responsibly managing our impacts while leveraging
opportunities from our activities to generate sustainable long-term value in host communities.
Safety is our first priority. In 2017, year-over-year improvements in reportable injury rates were
overshadowed by a single employee fatality, the first at a Kinross operation since 2012.
$2+ billion
spent in
host countries
97%
of workforce from
host countries
met or
exceeded
environmental targets
The local procurement, wages, and
taxes generated by our operations
are an important contribution to the
economies of host countries
Creating meaningful
livelihoods for our employees
is one of the most powerful
impacts of our business
Delivered on site-level
targets for permitting,
water management and
concurrent reclamation
Senior Leadership Team
(left to right)
Lauren M. Roberts
Senior Vice-President and
Chief Operating Officer
J. Paul Rollinson
President and Chief
Executive Officer
Paul B. Tomory
Senior Vice-President and
Chief Technical Officer
Tony S. Giardini
Executive Vice-President
and Chief Financial Officer
Gina M. Jardine
Senior Vice-President,
Human Resources
Geoffrey P. Gold
Executive Vice-President,
Corporate Development,
External Relations and Chief
Legal Officer
LEARN MORE
ABOUT OUR
HISTORY
KINROSS ANNUAL REPORT 2017 05
06
Fort Knox Gilmore: In late 2017, we were excited to
announce that we gained mineral rights to the Gilmore
land package, which lies immediately adjacent to Fort Knox
and has the potential to extend mine life at one of our best
operations. As a result of previous drilling at Gilmore, we
have added 2.1 million ounces in estimated measured and
indicated mineral resources at Fort Knox. A feasibility study
to assess a multi-phase layback of the Fort Knox pit, and
the construction of a new heap leach pad, is expected to
be completed in mid-2018.
Tasiast Sud: A pre-feasibility study (PFS) for this
Tasiast satellite deposit is proceeding as planned and
is expected to be completed in the second half of 2018.
The PFS contemplates a dump leach operation that
would combine materials from multiple deposits in
the area, and the trucking of high-grade ore to the
Tasiast mill, located approximately 10 kilometres north
of the project.
La Coipa Restart: In February 2018, Kinross entered into an
agreement to acquire 50% of the Phase 7 deposit from its
joint venture partner, which will give the Company 100%
ownership of the Phase 7 deposit and the mining rights
contemplated by the pre-feasibility study completed in 2015.
The Company expects to receive the remaining sectoral
permits required for the project in the first half of 2018.
Exploration Review
Kinross’ 2017 exploration program was highly successful
in adding valuable resource ounces to our operations.
We added more than 3.5 million ounces to measured and
indicated mineral resource estimates, mainly from Fort
Knox, Round Mountain and Kupol.4
We have a particularly strong track record of adding
ounces and extending mine life at our Russian mines and
have now extended expected mill production at Kupol –
a high-grade, high-margin asset – until the end of 2022.
Kupol will again be an exploration priority in 2018.
Other 2018 priorities include Bald Mountain, where
we will conduct infill drilling and focus on earlier stage
targets, and Tasiast Sud. While brownfields exploration
remains Kinross’ core exploration focus, we also pursue
greenfields opportunities and high-margin types of
deposits through strategic investments and partnerships
with high-quality junior exploration companies.
Commitment to Responsible Mining
We take pride in our 25-year history of cooperative
relations with our host countries and local communities.
That history has depended in part on strong company-
wide standards and policies to back up our firm
commitment to responsible mining. But it is also the result
of diligent work by our local teams to maintain respectful,
mutually beneficial relationships at a grassroots level –
helping to ensure that Kinross is consistently regarded
as a good neighbour wherever we operate.
For example, at our Mineral Hill reclamation site, we were
proud to partner with Trout Unlimited and the Rocky
Mountain Elk Foundation to achieve positive benefits
for the environment and local community by protecting
important fish and wildlife habitat near Yellowstone
National Park.
We also actively listen and engage with our stakeholders.
In 2017, we had more than 112,000 stakeholder
interactions, including community members, government
representatives, and non-profit organizations at our sites.
Another key is helping our host communities build
sustainable economic strength and capacity. In 2017,
we spent more than $2 billion in the countries where we
operate through wages, local purchasing, and taxes, in
addition to our many direct and in-kind contributions
in support of health, education, social, cultural, and
environmental programs.
In 2017, for the eighth consecutive year, Kinross Gold was
named one of Canada’s Best 50 Corporate Citizens by
Corporate Knights magazine, placing first among gold
mining companies for the third year in a row.
Strength for the Future
We believe the strengths Kinross has built represent
significant value in today’s mining world, and bode very
well for our future success:
• An unbroken six-year record of consistently delivering
results and meeting production and cost targets at our
operations;
• A diverse pipeline of projects and development
opportunities with low execution risk that are
expected to maintain strong, low-cost production
into the future;
• A record of meeting key project milestones on time
and on budget;
• A strong balance sheet and the liquidity to fund our
project pipeline;
• A highly skilled team with exceptional technical strength,
both at our operations and our projects;
• A strong culture underpinned by our eight People
Commitments;
• An excellent record of co-operative relations with
our host governments and communities; and
• One of the best safety records in the industry.
In closing, let me thank our employees – past and
present – who have helped Kinross to grow and thrive
for these 25 years.
As our story enters its next exciting chapter, I also thank
our shareholders for your continued support.
2017 Achievements
Operational Excellence
Kinross achieved sixth straight year of strong results and meeting
production and cost guidance. We remained focused on operational
excellence, building a culture of continuous improvement, innovation
and disciplined cost management.
6 consecutive
years
2.67 million
Au eq. oz.
$669 per Au eq. oz.
production cost of sales1
Sixth consecutive year
meeting or outperforming our
production and cost guidance
Delivered strong
production with each
region meeting guidance
Decreased production cost of sales year-
over-year by more than $40 per ounce
and at the low end of guidance
Financial Discipline
We maintained significant liquidity and a strong balance sheet
throughout 2017. With strong cash flow and zero debt maturities
until 2021, we have the financial strength and flexibility to fund
our pipeline of development growth projects.
$2.6 billion
in liquidity
$1.2 billion
in adjusted operating cash flow1
zero
debt maturities until 2021
Maintained one of
the strongest balance
sheets in the industry
Increased adjusted operating
cash flow by $240 million
year-over-year
Manageable debt schedule
with no debt maturities
until 2021
J. Paul Rollinson
President and Chief Executive Officer
KINROSS ANNUAL REPORT 2017 03
04
2017 Achievements
Operational Excellence
Kinross achieved sixth straight year of strong results and meeting
production and cost guidance. We remained focused on operational
excellence, building a culture of continuous improvement, innovation
and disciplined cost management.
6 consecutive
years
2.67 million
Au eq. oz.
$669 per Au eq. oz.
production cost of sales1
Sixth consecutive year
meeting or outperforming our
production and cost guidance
Delivered strong
production with each
region meeting guidance
Decreased production cost of sales year-
over-year by more than $40 per ounce
and at the low end of guidance
Financial Discipline
We maintained significant liquidity and a strong balance sheet
throughout 2017. With strong cash flow and zero debt maturities
until 2021, we have the financial strength and flexibility to fund
our pipeline of development growth projects.
$2.6 billion
in liquidity
$1.2 billion
in adjusted operating cash flow1
zero
debt maturities until 2021
Maintained one of
the strongest balance
sheets in the industry
Increased adjusted operating
cash flow by $240 million
year-over-year
Manageable debt schedule
with no debt maturities
until 2021
04
Development Projects
Our pipeline of five high-quality development projects are all proceeding on
schedule and on budget, and extending mine life and adding ounces in all three
Kinross regions – the Americas, Russia and West Africa. Three development
opportunities and their exploration results are also expected to contribute to
additional mine life and add reserves.
expansion
Tasiast on schedule
and on budget
Phase One project is on
schedule to begin full commercial
production by end of June 2018
with Phase Two on track
+2 million Au oz.
mineral resources
Gained mining rights to
Gilmore land, adding more
than 2 million ounces of
mineral resources to our
project pipeline at Fort Knox
Nevada
projects
Round Mountain Phase
W and Bald Mountain
Vantage Complex are
proceeding on schedule
and expected to be
completed in 2019
Corporate Governance Highlights
• The board met seven times in 2017. The board
met independent of management at all of the
meetings, including at all regularly scheduled
board meetings.
• All directors were independent, except
the CEO.
• All committees comprised solely of
independent directors.
• Continued to maintain board diversity target
of 33% women directors.
• Kinross ranked 32nd out of 242 companies in the
Globe and Mail annual corporate governance
survey. Kinross received a score of 89 out of 100
points, in a tie for the top ranking gold mining
company and the third highest among all
companies in the materials sector.
• Scored 136 out of 150 points on the Board
Shareholder Confidence Index of the Clarkson
Centre for Board Effectiveness.
Board of Directors
(left to right)
John E. Oliver
Independent Chair H
Kerry D. Dyte
Corporate Director A, CGN
Kelly J. Osborne
Corporate Director CGN, CR
Ian Atkinson
Corporate Director CGN, CR
Ave G. Lethbridge
Corporate Director A, H
Una M. Power
Corporate Director A, CR
John A. Brough
Corporate Director A, H
Catherine
McLeod-Seltzer
Corporate Director CGN, CR
J. Paul Rollinson
President and Chief
Executive Officer
A
Audit and Risk Committee
CGN Corporate Governance and
Nominating Committee
CR
H
Corporate Responsibility and
Technical Committee
Human Resource and
Compensation Committee
Responsible Mining
Mining responsibly is integral to our business strategy. This requires operating in accordance with
the highest standards of ethical conduct, and responsibly managing our impacts while leveraging
opportunities from our activities to generate sustainable long-term value in host communities.
Safety is our first priority. In 2017, year-over-year improvements in reportable injury rates were
overshadowed by a single employee fatality, the first at a Kinross operation since 2012.
$2+ billion
spent in
host countries
97%
of workforce from
host countries
met or
exceeded
environmental targets
The local procurement, wages, and
taxes generated by our operations
are an important contribution to the
economies of host countries
Creating meaningful
livelihoods for our employees
is one of the most powerful
impacts of our business
Delivered on site-level
targets for permitting,
water management and
concurrent reclamation
Senior Leadership Team
(left to right)
Lauren M. Roberts
Senior Vice-President and
Chief Operating Officer
J. Paul Rollinson
President and Chief
Executive Officer
Paul B. Tomory
Senior Vice-President and
Chief Technical Officer
Tony S. Giardini
Executive Vice-President
and Chief Financial Officer
Gina M. Jardine
Senior Vice-President,
Human Resources
Geoffrey P. Gold
Executive Vice-President,
Corporate Development,
External Relations and Chief
Legal Officer
LEARN MORE
ABOUT OUR
HISTORY
KINROSS ANNUAL REPORT 2017 05
06
K.4.232 Kinross2017AR_FA_Mar14rev22.pdf - p1 (March 15, 2018 20:35:52)
DT
Founder Robert M. Buchan
(P. Eng.) establishes Kinross
through the amalgamation of
CMP Resources Ltd., Plexus
Resources and 1021105
Ontario Corporation
On May 31, 1993 Kinross
enters the global gold
mining business
1.6 million Au oz. in estimated
proven and probable reserves
K
Kinross is listed on the
Toronto Stock Exchange
(TSX) on June 3rd
83,000 Au eq. oz. total
production
Kinross welcomes the Fort
Knox mine in Alaska,
which continues to be a
top producer, and 50%
of the Maricunga mine
in Chile, through the
acquisition of Amax Gold.
Kinross becomes the fifth
largest gold producer
in North America with
annual production of over
874,000 Au eq. oz.
Merges with TVX Gold
and Echo Bay Mines Ltd.
Assets include:
La Coipa in Chile
(50%)
Paracatu in Brazil
(49%)
Round Mountain in Nevada
(50%)
Kettle River in Washington
State (100%)
KGC
Kinross is listed on
the New York Stock
Exchange on
February 3, 2003
Our History
A significant milestone: Kinross Gold has been operating
for a quarter of a century. Twenty-five years of responsible
mining and almost 40 million ounces of gold produced.
Our timeline showcases key moments, accolades and
milestones in Kinross’ rich 25-year history.
Kinross acquires Crown
Resources Corporation,
gaining 100% ownership of
the Buckhorn deposit in
Washington State
Kettle River receives the
Mining Health and Safety
Administration Sentinels
of Safety National Award
for two consecutive years
(2005 and 2006) and zero
lost-time injuries
Consolidates 100%
ownership of the Paracatu
mine, purchasing the
remaining 51% interest
from Rio Tinto
First gold poured at
Paracatu expansion project,
transforming it into one of
Brazil’s largest gold mines
Commercial production
begins at Kettle River-
Buckhorn, a model for
environmentally responsible
small footprint mining
Completes construction
of the Kupol gold mine
and begins commercial
production, overcoming
logistical challenges
associated with remoteness
of Russia’s Far East
1.8 million Au eq. oz.
production milestone
Launches four core
values company-wide – the
pillars of Kinross’ culture
OUR VALUES:
• Putting people first
• Outstanding corporate
citizenship
• High performance culture
• Rigorous financial discipline
KINROSS OPERATIONS TODAY
Fort Knox
Bald Mountain
Round Mountain
Toronto
Tasiast
Chirano
Paracatu
La Coipa
Dvoinoye
Kupol
Operating mine
Development projects
Expands our global portfolio
through the acquisition of the
Tasiast mine in Mauritania and
the Chirano mine in Ghana
J. Paul Rollinson
is appointed Chief
Executive Officer
Mining operations come to an
end at Kettle River-Buckhorn,
two years later than scheduled
and after producing 200,000
ounces more than originally
planned
Announces a unique
partnership with Trout
Unlimited and the Rocky
Mountain Elk Foundation to
protect wildlife habitat near
Yellowstone National Park as
part of Mineral Hill reclamation
Acquires the high-
grade Dvoinoye deposit
approximately 100 km north
of Kupol
Advances corporate-wide
culture of “Continuous
Improvement” to ensure
operational excellence globally
Drives Company focus on:
• Safety and Mining
Responsibly
• Operational Excellence
• Financial Discipline and
Balance Sheet Strength
• Quality over Quantity
Celebrates 20 years of
successful operation in
Russia
Achieves 33% board gender
diversity target with six men
and three women
Named one of Canada’s Top
50 Corporate Citizens by
Corporate Knights for the eighth
consecutive year, and was ranked
as the top gold mining company
for the third consecutive year
Addition of over 2 million
ounces to our mineral resource
estimates after gaining mining
rights to land adjacent Fort Knox
Company executing on
5 projects and advancing
3 development
opportunities
• Tasiast Phase One
and Phase Two
• Round Mountain
Phase W
• Bald Mountain Vantage
Complex
• Moroshka project in Russia
• Fort Knox Gilmore
feasibility study
• Tasiast Sud pre-feasibility
study
• La Coipa Restart
1993
FIRST YEAR
1998
GROWTH THROUGH
ACQUISITION
2003
GROWING GLOBALLY
2004
EXPANDING
OPERATIONS
2006
RESPONSIBLE MINING
2008
GROWING OUR
BUSINESS GLOBALLY
2010
A TRANSFORMATIONAL YEAR
2012
2015
BUILDING VALUE
2017
DISCIPLINED GROWTH
2018
THE FUTURE IS BRIGHT
1995
RUSSIA’S FAR EAST
2002
INDUSTRY
LEADERSHIP
Kinross’ first entry into
Russia with a minority
interest in the
Aginksoe project
Contributes to international
standards and codes for
the use of cyanide in the
gold industry and commits
to the International Cyanide
Management Code
2005
Tye W. Burt is appointed
President and Chief
Executive Officer
2007
A PIVOTAL YEAR
2009
RECORD PRODUCTION
AND REVENUE
2011
SUPPORTING
EDUCATION
2013
20 YEARS OF
RESPONSIBLE MINING
2014
MINING RESPONSIBLY
2016
OPERATIONAL EXCELLENCE
Kinross acquires Bema Gold, adding to our growing
global portfolio. Acquisition includes:
The remaining 50% interest in Maricunga,
giving Kinross full ownership
A 75% interest in the Kupol gold-silver project in
Far East Russia
Receives an “A” rating in the Maclean’s magazine
annual corporate responsibility survey, the highest
grade earned by a Canadian mining company
Chosen as a constituent of the
Jantzi Social Index®, a leading
index of socially responsible,
Canadian-based companies
Receives top honours for safety practices at
Round Mountain, Kettle River-Buckhorn and Paracatu
Launches Ten Guiding
Principles for Corporate
Responsibility, a set of
clear, non-negotiable
standards at the core
of our CR strategy
2.2 million Au eq. oz.
record production
Introduces the
“Living Our Values
Awards” (LOVA) program
to celebrate employees
who exemplify our values
every day
Commits to major funding
of mining education in Alaska
and Mauritania
Commercial production
gets underway at
Dvoinoye, on schedule
and on budget
Named to Dow Jones
Sustainability World Index for
first time and maintains place
on the Dow Jones Sustainability
Index North America
Increases ownership
at Kupol to 100%
Achieves highest
gold production in
the company’s history,
a record 2.8 million
Au eq. oz.
31 million ounces of gold in
proven and probable reserves
Launches Phase One expansion
at Tasiast, part of a two-phased
expansion of the mine
Named the top gold mining
company in the World Wildlife
Fund’s rating of companies in
Russia
Focuses on high-quality Nevada
assets: completes acquisition of Bald
Mountain mine and remaining 50% of
Round Mountain mine
Achieves gold production milestones –
Fort Knox pours seven millionth ounce
and Kupol celebrates five million ounces
Receives its fourth award for
reclamation from the U.S. Bureau
of Land Management, this time for
the social closure plan at Kettle
River-Buckhorn
Doubles mineral reserves
at Bald Mountain to support
potential significant mine
life extension
Contributes to 687 local
community programs,
initiatives and events to
an estimated 805,000
people through cash and
in-kind donations
2.7 million Au eq. oz.
record production
Founder Robert M. Buchan
(P. Eng.) establishes Kinross
through the amalgamation of
CMP Resources Ltd., Plexus
Resources and 1021105
Ontario Corporation
On May 31, 1993 Kinross
enters the global gold
mining business
1.6 million Au oz. in estimated
proven and probable reserves
K
Kinross is listed on the
Toronto Stock Exchange
(TSX) on June 3rd
83,000 Au eq. oz. total
production
Kinross welcomes the Fort
Knox mine in Alaska,
which continues to be a
top producer, and 50%
of the Maricunga mine
in Chile, through the
acquisition of Amax Gold.
Kinross becomes the fifth
largest gold producer
in North America with
annual production of over
874,000 Au eq. oz.
Merges with TVX Gold
and Echo Bay Mines Ltd.
Assets include:
La Coipa in Chile
(50%)
Paracatu in Brazil
(49%)
Round Mountain in Nevada
(50%)
Kettle River in Washington
State (100%)
KGC
Kinross is listed on
the New York Stock
Exchange on
February 3, 2003
Our History
A significant milestone: Kinross Gold has been operating
for a quarter of a century. Twenty-five years of responsible
mining and almost 40 million ounces of gold produced.
Our timeline showcases key moments, accolades and
milestones in Kinross’ rich 25-year history.
Kinross acquires Crown
Resources Corporation,
gaining 100% ownership of
the Buckhorn deposit in
Washington State
Kettle River receives the
Mining Health and Safety
Administration Sentinels
of Safety National Award
for two consecutive years
(2005 and 2006) and zero
lost-time injuries
Consolidates 100%
ownership of the Paracatu
mine, purchasing the
remaining 51% interest
from Rio Tinto
First gold poured at
Paracatu expansion project,
transforming it into one of
Brazil’s largest gold mines
Commercial production
begins at Kettle River-
Buckhorn, a model for
environmentally responsible
small footprint mining
Completes construction
of the Kupol gold mine
and begins commercial
production, overcoming
logistical challenges
associated with remoteness
of Russia’s Far East
1.8 million Au eq. oz.
production milestone
Launches four core
values company-wide – the
pillars of Kinross’ culture
OUR VALUES:
• Putting people first
• Outstanding corporate
citizenship
• High performance culture
• Rigorous financial discipline
KINROSS OPERATIONS TODAY
Fort Knox
Bald Mountain
Round Mountain
Toronto
Tasiast
Chirano
Paracatu
La Coipa
Dvoinoye
Kupol
Operating mine
Development projects
Expands our global portfolio
through the acquisition of the
Tasiast mine in Mauritania and
the Chirano mine in Ghana
J. Paul Rollinson
is appointed Chief
Executive Officer
Mining operations come to an
end at Kettle River-Buckhorn,
two years later than scheduled
and after producing 200,000
ounces more than originally
planned
Announces a unique
partnership with Trout
Unlimited and the Rocky
Mountain Elk Foundation to
protect wildlife habitat near
Yellowstone National Park as
part of Mineral Hill reclamation
Acquires the high-
grade Dvoinoye deposit
approximately 100 km north
of Kupol
Advances corporate-wide
culture of “Continuous
Improvement” to ensure
operational excellence globally
Drives Company focus on:
• Safety and Mining
Responsibly
• Operational Excellence
• Financial Discipline and
Balance Sheet Strength
• Quality over Quantity
Celebrates 20 years of
successful operation in
Russia
Achieves 33% board gender
diversity target with six men
and three women
Named one of Canada’s Top
50 Corporate Citizens by
Corporate Knights for the eighth
consecutive year, and was ranked
as the top gold mining company
for the third consecutive year
Addition of over 2 million
ounces to our mineral resource
estimates after gaining mining
rights to land adjacent Fort Knox
Company executing on
5 projects and advancing
3 development
opportunities
• Tasiast Phase One
and Phase Two
• Round Mountain
Phase W
• Bald Mountain Vantage
Complex
• Moroshka project in Russia
• Fort Knox Gilmore
feasibility study
• Tasiast Sud pre-feasibility
study
• La Coipa Restart
1993
FIRST YEAR
1998
GROWTH THROUGH
ACQUISITION
2003
GROWING GLOBALLY
2004
EXPANDING
OPERATIONS
2006
RESPONSIBLE MINING
2008
GROWING OUR
BUSINESS GLOBALLY
2010
A TRANSFORMATIONAL YEAR
2012
2015
BUILDING VALUE
2017
DISCIPLINED GROWTH
2018
THE FUTURE IS BRIGHT
1995
RUSSIA’S FAR EAST
2002
INDUSTRY
LEADERSHIP
Kinross’ first entry into
Russia with a minority
interest in the
Aginksoe project
Contributes to international
standards and codes for
the use of cyanide in the
gold industry and commits
to the International Cyanide
Management Code
2005
Tye W. Burt is appointed
President and Chief
Executive Officer
2007
A PIVOTAL YEAR
2009
RECORD PRODUCTION
AND REVENUE
2011
SUPPORTING
EDUCATION
2013
20 YEARS OF
RESPONSIBLE MINING
2014
MINING RESPONSIBLY
2016
OPERATIONAL EXCELLENCE
Kinross acquires Bema Gold, adding to our growing
global portfolio. Acquisition includes:
The remaining 50% interest in Maricunga,
giving Kinross full ownership
A 75% interest in the Kupol gold-silver project in
Far East Russia
Receives an “A” rating in the Maclean’s magazine
annual corporate responsibility survey, the highest
grade earned by a Canadian mining company
Chosen as a constituent of the
Jantzi Social Index®, a leading
index of socially responsible,
Canadian-based companies
Receives top honours for safety practices at
Round Mountain, Kettle River-Buckhorn and Paracatu
Launches Ten Guiding
Principles for Corporate
Responsibility, a set of
clear, non-negotiable
standards at the core
of our CR strategy
2.2 million Au eq. oz.
record production
Introduces the
“Living Our Values
Awards” (LOVA) program
to celebrate employees
who exemplify our values
every day
Commits to major funding
of mining education in Alaska
and Mauritania
Commercial production
gets underway at
Dvoinoye, on schedule
and on budget
Named to Dow Jones
Sustainability World Index for
first time and maintains place
on the Dow Jones Sustainability
Index North America
Increases ownership
at Kupol to 100%
Achieves highest
gold production in
the company’s history,
a record 2.8 million
Au eq. oz.
31 million ounces of gold in
proven and probable reserves
Launches Phase One expansion
at Tasiast, part of a two-phased
expansion of the mine
Named the top gold mining
company in the World Wildlife
Fund’s rating of companies in
Russia
Focuses on high-quality Nevada
assets: completes acquisition of Bald
Mountain mine and remaining 50% of
Round Mountain mine
Achieves gold production milestones –
Fort Knox pours seven millionth ounce
and Kupol celebrates five million ounces
Receives its fourth award for
reclamation from the U.S. Bureau
of Land Management, this time for
the social closure plan at Kettle
River-Buckhorn
Doubles mineral reserves
at Bald Mountain to support
potential significant mine
life extension
Contributes to 687 local
community programs,
initiatives and events to
an estimated 805,000
people through cash and
in-kind donations
2.7 million Au eq. oz.
record production
Founder Robert M. Buchan
(P. Eng.) establishes Kinross
through the amalgamation of
CMP Resources Ltd., Plexus
Resources and 1021105
Ontario Corporation
On May 31, 1993 Kinross
enters the global gold
mining business
1.6 million Au oz. in estimated
proven and probable reserves
K
Kinross is listed on the
Toronto Stock Exchange
(TSX) on June 3rd
83,000 Au eq. oz. total
production
Kinross welcomes the Fort
Knox mine in Alaska,
which continues to be a
top producer, and 50%
of the Maricunga mine
in Chile, through the
acquisition of Amax Gold.
Kinross becomes the fifth
largest gold producer
in North America with
annual production of over
874,000 Au eq. oz.
Merges with TVX Gold
and Echo Bay Mines Ltd.
Assets include:
La Coipa in Chile
(50%)
Paracatu in Brazil
(49%)
Round Mountain in Nevada
(50%)
Kettle River in Washington
State (100%)
KGC
Kinross is listed on
the New York Stock
Exchange on
February 3, 2003
Our History
A significant milestone: Kinross Gold has been operating
for a quarter of a century. Twenty-five years of responsible
mining and almost 40 million ounces of gold produced.
Our timeline showcases key moments, accolades and
milestones in Kinross’ rich 25-year history.
Kinross acquires Crown
Resources Corporation,
gaining 100% ownership of
the Buckhorn deposit in
Washington State
Kettle River receives the
Mining Health and Safety
Administration Sentinels
of Safety National Award
for two consecutive years
(2005 and 2006) and zero
lost-time injuries
Consolidates 100%
ownership of the Paracatu
mine, purchasing the
remaining 51% interest
from Rio Tinto
First gold poured at
Paracatu expansion project,
transforming it into one of
Brazil’s largest gold mines
Commercial production
begins at Kettle River-
Buckhorn, a model for
environmentally responsible
small footprint mining
Completes construction
of the Kupol gold mine
and begins commercial
production, overcoming
logistical challenges
associated with remoteness
of Russia’s Far East
1.8 million Au eq. oz.
production milestone
Launches four core
values company-wide – the
pillars of Kinross’ culture
OUR VALUES:
• Putting people first
• Outstanding corporate
citizenship
• High performance culture
• Rigorous financial discipline
KINROSS OPERATIONS TODAY
Fort Knox
Bald Mountain
Round Mountain
Toronto
Tasiast
Chirano
Paracatu
La Coipa
Dvoinoye
Kupol
Operating mine
Development projects
Expands our global portfolio
through the acquisition of the
Tasiast mine in Mauritania and
the Chirano mine in Ghana
J. Paul Rollinson
is appointed Chief
Executive Officer
Mining operations come to an
end at Kettle River-Buckhorn,
two years later than scheduled
and after producing 200,000
ounces more than originally
planned
Announces a unique
partnership with Trout
Unlimited and the Rocky
Mountain Elk Foundation to
protect wildlife habitat near
Yellowstone National Park as
part of Mineral Hill reclamation
Acquires the high-
grade Dvoinoye deposit
approximately 100 km north
of Kupol
Advances corporate-wide
culture of “Continuous
Improvement” to ensure
operational excellence globally
Drives Company focus on:
• Safety and Mining
Responsibly
• Operational Excellence
• Financial Discipline and
Balance Sheet Strength
• Quality over Quantity
Celebrates 20 years of
successful operation in
Russia
Achieves 33% board gender
diversity target with six men
and three women
Named one of Canada’s Top
50 Corporate Citizens by
Corporate Knights for the eighth
consecutive year, and was ranked
as the top gold mining company
for the third consecutive year
Addition of over 2 million
ounces to our mineral resource
estimates after gaining mining
rights to land adjacent Fort Knox
Company executing on
5 projects and advancing
3 development
opportunities
• Tasiast Phase One
and Phase Two
• Round Mountain
Phase W
• Bald Mountain Vantage
Complex
• Moroshka project in Russia
• Fort Knox Gilmore
feasibility study
• Tasiast Sud pre-feasibility
study
• La Coipa Restart
1993
FIRST YEAR
1998
GROWTH THROUGH
ACQUISITION
2003
GROWING GLOBALLY
2004
EXPANDING
OPERATIONS
2006
RESPONSIBLE MINING
2008
GROWING OUR
BUSINESS GLOBALLY
2010
A TRANSFORMATIONAL YEAR
2012
2015
BUILDING VALUE
2017
DISCIPLINED GROWTH
2018
THE FUTURE IS BRIGHT
1995
RUSSIA’S FAR EAST
2002
INDUSTRY
LEADERSHIP
Kinross’ first entry into
Russia with a minority
interest in the
Aginksoe project
Contributes to international
standards and codes for
the use of cyanide in the
gold industry and commits
to the International Cyanide
Management Code
2005
Tye W. Burt is appointed
President and Chief
Executive Officer
2007
A PIVOTAL YEAR
2009
RECORD PRODUCTION
AND REVENUE
2011
SUPPORTING
EDUCATION
2013
20 YEARS OF
RESPONSIBLE MINING
2014
MINING RESPONSIBLY
2016
OPERATIONAL EXCELLENCE
Kinross acquires Bema Gold, adding to our growing
global portfolio. Acquisition includes:
The remaining 50% interest in Maricunga,
giving Kinross full ownership
A 75% interest in the Kupol gold-silver project in
Far East Russia
Receives an “A” rating in the Maclean’s magazine
annual corporate responsibility survey, the highest
grade earned by a Canadian mining company
Chosen as a constituent of the
Jantzi Social Index®, a leading
index of socially responsible,
Canadian-based companies
Receives top honours for safety practices at
Round Mountain, Kettle River-Buckhorn and Paracatu
Launches Ten Guiding
Principles for Corporate
Responsibility, a set of
clear, non-negotiable
standards at the core
of our CR strategy
2.2 million Au eq. oz.
record production
Introduces the
“Living Our Values
Awards” (LOVA) program
to celebrate employees
who exemplify our values
every day
Commits to major funding
of mining education in Alaska
and Mauritania
Commercial production
gets underway at
Dvoinoye, on schedule
and on budget
Named to Dow Jones
Sustainability World Index for
first time and maintains place
on the Dow Jones Sustainability
Index North America
Increases ownership
at Kupol to 100%
Achieves highest
gold production in
the company’s history,
a record 2.8 million
Au eq. oz.
31 million ounces of gold in
proven and probable reserves
Launches Phase One expansion
at Tasiast, part of a two-phased
expansion of the mine
Named the top gold mining
company in the World Wildlife
Fund’s rating of companies in
Russia
Focuses on high-quality Nevada
assets: completes acquisition of Bald
Mountain mine and remaining 50% of
Round Mountain mine
Achieves gold production milestones –
Fort Knox pours seven millionth ounce
and Kupol celebrates five million ounces
Receives its fourth award for
reclamation from the U.S. Bureau
of Land Management, this time for
the social closure plan at Kettle
River-Buckhorn
Doubles mineral reserves
at Bald Mountain to support
potential significant mine
life extension
Contributes to 687 local
community programs,
initiatives and events to
an estimated 805,000
people through cash and
in-kind donations
2.7 million Au eq. oz.
record production
Founder Robert M. Buchan
(P. Eng.) establishes Kinross
through the amalgamation of
CMP Resources Ltd., Plexus
Resources and 1021105
Ontario Corporation
On May 31, 1993 Kinross
enters the global gold
mining business
1.6 million Au oz. in estimated
proven and probable reserves
K
Kinross is listed on the
Toronto Stock Exchange
(TSX) on June 3rd
83,000 Au eq. oz. total
production
Kinross welcomes the Fort
Knox mine in Alaska,
which continues to be a
top producer, and 50%
of the Maricunga mine
in Chile, through the
acquisition of Amax Gold.
Kinross becomes the fifth
largest gold producer
in North America with
annual production of over
874,000 Au eq. oz.
Merges with TVX Gold
and Echo Bay Mines Ltd.
Assets include:
La Coipa in Chile
(50%)
Paracatu in Brazil
(49%)
Round Mountain in Nevada
(50%)
Kettle River in Washington
State (100%)
KGC
Kinross is listed on
the New York Stock
Exchange on
February 3, 2003
Our History
A significant milestone: Kinross Gold has been operating
for a quarter of a century. Twenty-five years of responsible
mining and almost 40 million ounces of gold produced.
Our timeline showcases key moments, accolades and
milestones in Kinross’ rich 25-year history.
Kinross acquires Crown
Resources Corporation,
gaining 100% ownership of
the Buckhorn deposit in
Washington State
Kettle River receives the
Mining Health and Safety
Administration Sentinels
of Safety National Award
for two consecutive years
(2005 and 2006) and zero
lost-time injuries
Consolidates 100%
ownership of the Paracatu
mine, purchasing the
remaining 51% interest
from Rio Tinto
First gold poured at
Paracatu expansion project,
transforming it into one of
Brazil’s largest gold mines
Commercial production
begins at Kettle River-
Buckhorn, a model for
environmentally responsible
small footprint mining
Completes construction
of the Kupol gold mine
and begins commercial
production, overcoming
logistical challenges
associated with remoteness
of Russia’s Far East
1.8 million Au eq. oz.
production milestone
Launches four core
values company-wide – the
pillars of Kinross’ culture
OUR VALUES:
• Putting people first
• Outstanding corporate
citizenship
• High performance culture
• Rigorous financial discipline
KINROSS OPERATIONS TODAY
Fort Knox
Bald Mountain
Round Mountain
Toronto
Tasiast
Chirano
Paracatu
La Coipa
Dvoinoye
Kupol
Operating mine
Development projects
Expands our global portfolio
through the acquisition of the
Tasiast mine in Mauritania and
the Chirano mine in Ghana
J. Paul Rollinson
is appointed Chief
Executive Officer
Mining operations come to an
end at Kettle River-Buckhorn,
two years later than scheduled
and after producing 200,000
ounces more than originally
planned
Announces a unique
partnership with Trout
Unlimited and the Rocky
Mountain Elk Foundation to
protect wildlife habitat near
Yellowstone National Park as
part of Mineral Hill reclamation
Acquires the high-
grade Dvoinoye deposit
approximately 100 km north
of Kupol
Advances corporate-wide
culture of “Continuous
Improvement” to ensure
operational excellence globally
Drives Company focus on:
• Safety and Mining
Responsibly
• Operational Excellence
• Financial Discipline and
Balance Sheet Strength
• Quality over Quantity
Celebrates 20 years of
successful operation in
Russia
Achieves 33% board gender
diversity target with six men
and three women
Named one of Canada’s Top
50 Corporate Citizens by
Corporate Knights for the eighth
consecutive year, and was ranked
as the top gold mining company
for the third consecutive year
Addition of over 2 million
ounces to our mineral resource
estimates after gaining mining
rights to land adjacent Fort Knox
Company executing on
5 projects and advancing
3 development
opportunities
• Tasiast Phase One
and Phase Two
• Round Mountain
Phase W
• Bald Mountain Vantage
Complex
• Moroshka project in Russia
• Fort Knox Gilmore
feasibility study
• Tasiast Sud pre-feasibility
study
• La Coipa Restart
1993
FIRST YEAR
1998
GROWTH THROUGH
ACQUISITION
2003
GROWING GLOBALLY
2004
EXPANDING
OPERATIONS
2006
RESPONSIBLE MINING
2008
GROWING OUR
BUSINESS GLOBALLY
2010
A TRANSFORMATIONAL YEAR
2012
2015
BUILDING VALUE
2017
DISCIPLINED GROWTH
2018
THE FUTURE IS BRIGHT
1995
RUSSIA’S FAR EAST
2002
INDUSTRY
LEADERSHIP
Kinross’ first entry into
Russia with a minority
interest in the
Aginksoe project
Contributes to international
standards and codes for
the use of cyanide in the
gold industry and commits
to the International Cyanide
Management Code
2005
Tye W. Burt is appointed
President and Chief
Executive Officer
2007
A PIVOTAL YEAR
2009
RECORD PRODUCTION
AND REVENUE
2011
SUPPORTING
EDUCATION
2013
20 YEARS OF
RESPONSIBLE MINING
2014
MINING RESPONSIBLY
2016
OPERATIONAL EXCELLENCE
Kinross acquires Bema Gold, adding to our growing
global portfolio. Acquisition includes:
The remaining 50% interest in Maricunga,
giving Kinross full ownership
A 75% interest in the Kupol gold-silver project in
Far East Russia
Receives an “A” rating in the Maclean’s magazine
annual corporate responsibility survey, the highest
grade earned by a Canadian mining company
Chosen as a constituent of the
Jantzi Social Index®, a leading
index of socially responsible,
Canadian-based companies
Receives top honours for safety practices at
Round Mountain, Kettle River-Buckhorn and Paracatu
Launches Ten Guiding
Principles for Corporate
Responsibility, a set of
clear, non-negotiable
standards at the core
of our CR strategy
2.2 million Au eq. oz.
record production
Introduces the
“Living Our Values
Awards” (LOVA) program
to celebrate employees
who exemplify our values
every day
Commits to major funding
of mining education in Alaska
and Mauritania
Commercial production
gets underway at
Dvoinoye, on schedule
and on budget
Named to Dow Jones
Sustainability World Index for
first time and maintains place
on the Dow Jones Sustainability
Index North America
Increases ownership
at Kupol to 100%
Achieves highest
gold production in
the company’s history,
a record 2.8 million
Au eq. oz.
31 million ounces of gold in
proven and probable reserves
Launches Phase One expansion
at Tasiast, part of a two-phased
expansion of the mine
Named the top gold mining
company in the World Wildlife
Fund’s rating of companies in
Russia
Focuses on high-quality Nevada
assets: completes acquisition of Bald
Mountain mine and remaining 50% of
Round Mountain mine
Achieves gold production milestones –
Fort Knox pours seven millionth ounce
and Kupol celebrates five million ounces
Receives its fourth award for
reclamation from the U.S. Bureau
of Land Management, this time for
the social closure plan at Kettle
River-Buckhorn
Doubles mineral reserves
at Bald Mountain to support
potential significant mine
life extension
Contributes to 687 local
community programs,
initiatives and events to
an estimated 805,000
people through cash and
in-kind donations
2.7 million Au eq. oz.
record production
Development Projects
Our pipeline of five high-quality development projects are all proceeding on
schedule and on budget, and extending mine life and adding ounces in all three
Kinross regions – the Americas, Russia and West Africa. Three development
opportunities and their exploration results are also expected to contribute to
additional mine life and add reserves.
expansion
Tasiast on schedule
and on budget
Phase One project is on
schedule to begin full commercial
production by end of June 2018
with Phase Two on track
+2 million Au oz.
mineral resources
Gained mining rights to
Gilmore land, adding more
than 2 million ounces of
mineral resources to our
project pipeline at Fort Knox
Nevada
projects
Round Mountain Phase
W and Bald Mountain
Vantage Complex are
proceeding on schedule
and expected to be
completed in 2019
Corporate Governance Highlights
• The board met seven times in 2017. The board
met independent of management at all of the
meetings, including at all regularly scheduled
board meetings.
• All directors were independent, except
the CEO.
• All committees comprised solely of
independent directors.
• Continued to maintain board diversity target
of 33% women directors.
• Kinross ranked 32nd out of 242 companies in the
Globe and Mail annual corporate governance
survey. Kinross received a score of 89 out of 100
points, in a tie for the top ranking gold mining
company and the third highest among all
companies in the materials sector.
• Scored 136 out of 150 points on the Board
Shareholder Confidence Index of the Clarkson
Centre for Board Effectiveness.
Board of Directors
(left to right)
John E. Oliver
Independent Chair H
Kerry D. Dyte
Corporate Director A, CGN
Kelly J. Osborne
Corporate Director CGN, CR
Ian Atkinson
Corporate Director CGN, CR
Ave G. Lethbridge
Corporate Director A, H
Una M. Power
Corporate Director A, CR
John A. Brough
Corporate Director A, H
Catherine
McLeod-Seltzer
Corporate Director CGN, CR
J. Paul Rollinson
President and Chief
Executive Officer
A
Audit and Risk Committee
CGN Corporate Governance and
Nominating Committee
CR
H
Corporate Responsibility and
Technical Committee
Human Resource and
Compensation Committee
Responsible Mining
Mining responsibly is integral to our business strategy. This requires operating in accordance with
the highest standards of ethical conduct, and responsibly managing our impacts while leveraging
opportunities from our activities to generate sustainable long-term value in host communities.
Safety is our first priority. In 2017, year-over-year improvements in reportable injury rates were
overshadowed by a single employee fatality, the first at a Kinross operation since 2012.
$2+ billion
spent in
host countries
97%
of workforce from
host countries
met or
exceeded
environmental targets
The local procurement, wages, and
taxes generated by our operations
are an important contribution to the
economies of host countries
Creating meaningful
livelihoods for our employees
is one of the most powerful
impacts of our business
Delivered on site-level
targets for permitting,
water management and
concurrent reclamation
Senior Leadership Team
(left to right)
Lauren M. Roberts
Senior Vice-President and
Chief Operating Officer
J. Paul Rollinson
President and Chief
Executive Officer
Paul B. Tomory
Senior Vice-President and
Chief Technical Officer
Tony S. Giardini
Executive Vice-President
and Chief Financial Officer
Gina M. Jardine
Senior Vice-President,
Human Resources
Geoffrey P. Gold
Executive Vice-President,
Corporate Development,
External Relations and Chief
Legal Officer
LEARN MORE
ABOUT OUR
HISTORY
KINROSS ANNUAL REPORT 2017 05
06
K.4.232 Kinross2017AR_FA_Mar14rev22.pdf - p1 (March 15, 2018 20:35:52)
DT
Financial Summary
(In millions except ounces, per share amounts, gold price and per ounce amounts)
Revenue
Net cash flow provided from operating activities
Adjusted operating cash flow 1
Impairment, net of reversals 5
Net earnings (loss) attributable to common shareholders 5
Net earnings (loss) per share attributable to common shareholders 5
Basic
Diluted
Adjusted net earnings (loss) 1
Adjusted net earnings (loss) 1 per share
Production cost of sales per equivalent ounce sold 1
All-in sustaining cost per gold equivalent ounce sold 1
Capital expenditures
Average realized gold price per ounce 8
Attributable gold equivalent ounces produced 2
2017
3,303.0
951.6
1,166.7
21.5
445.4
0.36
0.35
178.7
0.14
669
954
897.6
1,260
$
$
$
$
$
$
$
$
$
$
$
$
$
2016
3,472.0
1,099.2
926.7
139.6
(104.0)
(0.08)
(0.08)
93.0
0.08
712
984
633.8
1,249
$
$
$
$
$
$
$
$
$
$
$
$
$
2015
3,052.2
831.6
786.6
699.0
(984.5)
(0.86)
(0.86)
(91.0)
(0.08)
696
975
610.0
1,159
$
$
$
$
$
$
$
$
$
$
$
$
$
2,673,533
2,789,150
2,594,652
Financial Review
Management’s Discussion and Analysis
Management’s Responsibility for Financial Statements
Report of Independent 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 3
FS 5
68
73
73
KINROSS ANNUAL REPORT 2017 07
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
This
management's
discussion
and
analysis
("MD&A"),
prepared
as
of
February
14,
2018,
relates
to
the
financial
condition
and
results
of
operations
of
Kinross
Gold
Corporation
together
with
its
wholly
owned
subsidiaries,
as
at
December
31,
2017
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,
2017
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
2017
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,
2017,
as
well
as
our
outlook.
This
MD&A
contains
forward-‐looking
statements
and
should
be
read
in
conjunction
with
the
risk
factors
described
in
"Risk
Analysis"
and
in
the
“Cautionary
Statement
on
Forward-‐Looking
Information”
on
pages
58
–
59
of
this
MD&A.
For
additional
discussion
of
risk
factors
please
refer
to
the
Company's
Annual
Information
Form
for
the
year
ended
December
31,
2016,
which
is
available
on
the
Company's
website
www.kinross.com
and
on
www.sedar.com.
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
the
United
States,
the
Russian
Federation,
Brazil,
Chile,
Ghana,
Mauritania,
and
Canada.
Gold
is
produced
in
the
form
of
doré,
which
is
shipped
to
refineries
for
final
processing.
Kinross
also
produces
and
sells
a
quantity
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
Bald
Mountain
Kettle
River-‐Buckhorn
Kupol(a)
Paracatu
Maricunga
Tasiast
Chirano
Operator
Location
Kinross
Kinross
Kinross
Kinross
Kinross
Kinross
Kinross
Kinross
Kinross
USA
USA
USA
USA
Russian
Federation
Brazil
Chile
Mauritania
Ghana
1
Ownership
percentage
at
December
31,
2017
100%
100%
100%
100%
100%
100%
100%
100%
90%
2016
100%
100%
100%
100%
100%
100%
100%
100%
90%
(a)
The
Kupol
segment
includes
the
Kupol
and
Dvoinoye
mines.
1 KINROSS ANNUAL REPORT MDA
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Consolidated
Financial
and
Operating
Highlights
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Consolidated
Financial
Performance
Years
ended
December
31,
2017
vs.
2016
2016
vs.
2015
2017
vs.
2016
2017
2016
2015
Change
%
Change
(e)
Change
%
Change(e)
7%
5%
7%
6%
14%
8%
(5%)
(80%)
106%
89%
91%
91%
nm
nm
32%
18%
4%
8%
3%
2%
2%
0%
1%
2%
3%
(in
millions,
except
ounces,
per
share
amounts
and
per
ounce
amounts)
Operating
Highlights
Total
gold
equivalent
ounces
(a)
Produced
(c)
Sold
(c)
Attributable
gold
equivalent
ounces
(a)
Produced
(c)
Sold
(c)
Financial
Highlights
Metal
sales
Production
cost
of
sales
2,698,136
2,810,345
2,620,262
2,621,875
2,778,902
2,634,867
(112,209)
(157,027)
2,673,533
2,789,150
2,594,652
(115,617)
2,596,754
2,758,306
2,608,870
(161,552)
(4%)
(6%)
(4%)
(6%)
190,083
144,035
194,498
149,436
$
3,303.0
$
3,472.0
$
3,052.2
$
(169.0)
(5%)
$
419.8
$
1,757.4
$
1,983.8
$
1,834.8
$
(226.4)
(11%)
$
149.0
Depreciation,
depletion
and
amortization
$
819.4
$
855.0
$
897.7
$
(35.6)
(4%)
$
(42.7)
Impairment,
net
of
reversals
Operating
earnings
(loss)
$
21.5
$
139.6
$
699.0
$
(118.1)
(85%)
$
(559.4)
$
336.5
$
46.3
$
(742.9)
$
290.2
Net
earnings
(loss)
attributable
to
common
shareholders
$
445.4
$
(104.0)
$
(984.5)
$
549.4
Basic
earnings
(loss)
per
share
attributable
to
common
shareholders
$
0.36
$
(0.08)
$
(0.86)
$
0.44
Diluted
earnings
(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 (d)
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)
$
$
0.35
178.7
$
$
(0.08)
93.0
$
$
(0.86)
(91.0)
$
$
0.43
85.7
$
0.14
$
0.08
$
(0.08)
$
0.06
75%
$
0.16
$
951.6
$
1,099.2
$
831.6
$
(147.6)
(13%)
$
267.6
$
1,166.7
$
926.7
$
786.6
$
240.0
26%
$
140.1
$
897.6
$
633.8
$
610.0
$
263.8
42%
$
23.8
$
1,260
$
1,249
$
1,159
$
11
1%
$
90
$
670
$
714
$
696
$
(44)
(6%)
$
18
$
669
$
712
$
696
$
(43)
(6%)
$
16
$
653
$
696
$
684
$
(43)
(6%)
$
12
$
946
$
975
$
971
$
(29)
(3%)
$
4
$
954
$
984
$
975
$
(30)
(3%)
$
9
$
$
1,164
1,166
$
$
1,073
1,079
$
$
1,047
1,049
$
$
91
87
8%
8%
$
$
26
30
nm
nm
nm
$
789.2
$
880.5
$
0.78
nm
92%
$
$
0.78
184.0
(a)
(b)
(c)
(d)
(e)
"Total"
includes
100%
of
Chirano
production.
"Attributable"
includes
Kinross'
share
of
Chirano
(90%)
production.
The
definition
and
reconciliation
of
these
non-‐GAAP
financial
measures
are
included
in
Section
11
of
this
document.
"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
2017
was
73.72:1
(2016
-‐
72.95:1
and
2015
-‐
73.92:1).
Average
realized
gold
price
is
a
non-‐GAAP
financial
measure
and
is
defined
in
Section
11
of
this
document.
"nm"
means
not
meaningful.
2
KINROSS ANNUAL REPORT MDA 2
Kinross’
attributable
production
decreased
by
4%
compared
with
2016,
primarily
due
to
a
decrease
in
production
at
Kupol
due
to
lower
grades,
at
Paracatu
due
to
a
temporary
curtailment
as
a
result
of
lower
than
average
rainfall
in
the
area,
and
at
Maricunga
due
to
the
suspension
of
mining
and
crushing
activities
in
2016.
These
decreases
were
offset
by
higher
production
at
Bald
Mountain
as
a
result
of
more
ounces
recovered
from
the
heap
leach
pads
and
higher
grades,
as
well
as
at
Round
Mountain
and
Tasiast
due
to
higher
grades.
Metal
sales
decreased
by
5%
in
2017
compared
with
2016
due
to
a
decrease
in
gold
equivalent
ounces
sold,
slightly
offset
by
an
increase
in
average
metal
prices
realized.
The
average
realized
gold
price
increased
to
$1,260
per
ounce
in
2017
from
$1,249
per
ounce
in
2016.
Gold
equivalent
ounces
sold
in
2017
decreased
to
2,621,875
ounces
from
2,778,902
ounces
in
2016,
primarily
due
to
the
decrease
in
production
as
described
above.
Production
cost
of
sales
decreased
by
11%
compared
with
2016,
primarily
due
to
the
decrease
in
gold
equivalent
ounces
sold
as
described
above,
as
well
as
a
decrease
in
operating
waste
mined
at
Fort
Knox.
These
decreases
were
partially
offset
by
higher
production
cost
of
sales
at
Bald
Mountain
due
to
an
increase
in
gold
equivalent
ounces
sold.
The
decrease
in
production
cost
of
sales
resulted
in
a
6%
decrease
in
attributable
production
cost
of
sales
per
equivalent
ounce
sold
compared
with
2016.
During
2017,
depreciation,
depletion
and
amortization
decreased
by
4%
compared
with
2016,
primarily
due
to
the
decrease
in
gold
equivalent
ounces
sold
at
Kupol,
Paracatu
and
Maricunga.
This
decrease
was
slightly
offset
by
an
increase
in
depreciation,
depletion
and
amortization
at
Bald
Mountain
and
Round
Mountain
due
to
an
increase
in
gold
equivalent
ounces
sold,
as
well
as
at
Chirano
due
to
an
increase
in
gold
equivalent
ounces
sold
and
a
decrease
in
the
mineral
reserves
as
at
December
31,
2016.
At
December
31,
2017,
upon
completion
of
its
annual
assessment
of
the
carrying
value
of
its
Cash
Generating
Units
(“CGUs”),
the
Company
recorded
a
net,
after-‐tax,
impairment
reversal
of
$62.1
million.
The
impairment
reversal
was
entirely
related
to
property,
plant
and
equipment
and
included
after-‐tax
impairment
reversals
at
Tasiast
and
Fort
Knox
of
$142.9
million
and
$86.2
million,
respectively,
partially
offset
by
an
after-‐tax
impairment
charge
at
Paracatu
of
$167.0
million.
The
impairment
reversals
at
Tasiast
and
Fort
Knox
were
mainly
due
to
an
increase
in
the
Company’s
short-‐term
and
long-‐term
gold
price
estimates,
as
well
as
Tasiast
Phase
Two
progressing
as
planned
and
additions
to
Fort
Knox’s
mineral
reserve
estimates.
The
impairment
charge
at
Paracatu
was
mainly
a
result
of
changes
in
the
fiscal
regime
in
Brazil
that
were
considered
in
the
cash
flow
analysis
used
to
assess
its
recoverable
amount.
The
impairment
charge
at
Paracatu
is
net
of
a
tax
recovery
of
$86.0
million
and
the
impairment
reversal
at
Fort
Knox
is
net
of
a
tax
expense
of
$2.4
million.
There
was
no
tax
impact
on
the
impairment
reversal
at
Tasiast.
During
2016,
the
Company
recorded
impairment
charges
at
Maricunga
of
$68.3
million
against
property,
plant
and
equipment
and
$71.3
million
against
metals
and
supplies
inventory
as
a
result
of
the
suspension
of
mining
and
crushing
activities
during
the
year.
Operating
earnings
increased
to
$336.5
million
in
2017
from
$46.3
million
in
2016.
The
change
in
operating
earnings
was
primarily
due
to
lower
impairment
charges
as
well
as
increased
margins
(metal
sales
less
production
cost
of
sales).
On
March
28,
2017,
the
Company
announced
that
it
had
entered
into
an
agreement
with
Goldcorp
Inc.
(“Goldcorp”)
to
sell
its
25%
interest
in
the
Cerro
Casale
project
and
its
100%
interest
in
the
Quebrada
Seca
exploration
project
in
Chile.
In
connection
with
the
sale,
the
Company
recorded
a
reversal
of
previously
recorded
impairment
charges
of
$97.0
million
during
the
three
months
ended
March
31,
2017
within
other
income
(expense).
On
June
9,
2017,
the
Company
completed
the
sale
and
recognized
a
gain
on
disposition
of
$12.7
million
in
other
income
(expense).
On
May
18,
2017,
the
Company
entered
into
an
agreement
with
White
Gold
Corp.
to
sell
its
100%
interest
in
the
White
Gold
exploration
project
in
the
Yukon
Territory.
On
June
14,
2017,
the
Company
completed
the
sale
and
recognized
a
loss
on
disposition
of
$1.7
million
in
other
income
(expense).
On
September
18,
2017,
the
Company
entered
into
an
agreement
with
Integra
Resources
Corp.
(“Integra”)
to
sell
its
100%
interest
in
the
DeLamar
reclamation
property
(“DeLamar”).
On
November
3,
2017,
the
Company
completed
the
sale
and
recognized
a
gain
on
disposition
of
$44.2
million
in
other
income
(expense).
During
2017,
net
earnings
attributable
to
common
shareholders
were
$445.4
million,
or
$0.36
per
share,
compared
with
a
net
loss
attributable
to
common
shareholders
of
$104.0
million,
or
$0.08
per
share,
in
2016.
The
change
was
primarily
a
result
of
the
increase
in
operating
earnings,
the
impairment
reversal
recorded
in
relation
to
the
sale
of
Cerro
Casale,
and
gains
recognized
upon
disposition
of
DeLamar,
Cerro
Casale
and
Quebrada
Seca,
as
described
above.
In
addition,
an
income
tax
recovery
of
$23.2
million
3
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Consolidated
Financial
and
Operating
Highlights
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Consolidated
Financial
Performance
Years
ended
December
31,
2017
vs.
2016
2016
vs.
2015
2017
vs.
2016
(in
millions,
except
ounces,
per
share
amounts
and
per
ounce
amounts)
Operating
Highlights
Total
gold
equivalent
ounces
(a)
Attributable
gold
equivalent
ounces
(a)
Produced
(c)
Sold
(c)
Produced
(c)
Sold
(c)
Financial
Highlights
Metal
sales
Production
cost
of
sales
Impairment,
net
of
reversals
Operating
earnings
(loss)
2017
2016
2015
Change
%
Change
(e)
Change
%
Change(e)
2,698,136
2,810,345
2,620,262
2,621,875
2,778,902
2,634,867
(112,209)
(157,027)
2,673,533
2,789,150
2,594,652
(115,617)
2,596,754
2,758,306
2,608,870
(161,552)
(4%)
(6%)
(4%)
(6%)
190,083
144,035
194,498
149,436
$
3,303.0
$
3,472.0
$
3,052.2
$
(169.0)
(5%)
$
419.8
$
1,757.4
$
1,983.8
$
1,834.8
$
(226.4)
(11%)
$
149.0
Depreciation,
depletion
and
amortization
$
819.4
$
855.0
$
897.7
$
(35.6)
(4%)
$
(42.7)
$
21.5
$
139.6
$
699.0
$
(118.1)
(85%)
$
(559.4)
$
336.5
$
46.3
$
(742.9)
$
290.2
nm
nm
nm
nm
$
789.2
$
880.5
$
0.78
$
0.78
Net
earnings
(loss)
attributable
to
common
shareholders
$
445.4
$
(104.0)
$
(984.5)
$
549.4
Basic
earnings
(loss)
per
share
attributable
to
common
shareholders
$
0.36
$
(0.08)
$
(0.86)
$
0.44
Diluted
earnings
(loss)
per
share
attributable
to
common
shareholders
$
0.35
$
(0.08)
$
(0.86)
$
0.43
Adjusted
net
earnings
(loss)
attributable
to
common
shareholders (b)
$
178.7
$
93.0
$
(91.0)
$
85.7
92%
$
184.0
Adjusted
net
earnings
(loss)
per
share
(b)
$
0.14
$
0.08
$
(0.08)
$
0.06
75%
$
0.16
Net
cash
flow
provided
from
operating
activities
$
951.6
$
1,099.2
$
831.6
$
(147.6)
(13%)
$
267.6
Adjusted
operating
cash
flow
(b)
Capital
expenditures
Average
realized
gold
price
per
ounce (d)
Consolidated
production
cost
of
sales
per
equivalent
ounce (c)
sold(b)
Attributable(a)
production
cost
of
sales
per
equivalent
ounce
(c)
sold(b)
$
1,166.7
$
926.7
$
786.6
$
240.0
26%
$
140.1
$
897.6
$
633.8
$
610.0
$
263.8
42%
$
23.8
$
1,260
$
1,249
$
1,159
$
11
1%
$
90
$
670
$
714
$
696
$
(44)
(6%)
$
18
$
669
$
712
$
696
$
(43)
(6%)
$
16
Attributable(a)
production
cost
of
sales
per
ounce
sold
on
a
by-‐product
basis (b)
$
653
$
696
$
684
$
(43)
(6%)
$
12
Attributable(a)
all-‐in
sustaining
cost
per
ounce
sold
on
a
by-‐product
basis (b)
$
946
$
975
$
971
$
(29)
(3%)
$
4
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)
$
954
$
984
$
975
$
(30)
(3%)
$
9
$
1,164
$
1,073
$
1,047
$
91
$
1,166
$
1,079
$
1,049
$
87
8%
8%
$
26
$
30
"Total"
includes
100%
of
Chirano
production.
"Attributable"
includes
Kinross'
share
of
Chirano
(90%)
production.
The
definition
and
reconciliation
of
these
non-‐GAAP
financial
measures
are
included
in
Section
11
of
this
document.
(a)
(b)
(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
2017
was
73.72:1
(2016
-‐
72.95:1
and
2015
-‐
73.92:1).
(d)
Average
realized
gold
price
is
a
non-‐GAAP
financial
measure
and
is
defined
in
Section
11
of
this
document.
(e)
"nm"
means
not
meaningful.
7%
5%
7%
6%
14%
8%
(5%)
(80%)
106%
89%
91%
91%
nm
nm
32%
18%
4%
8%
3%
2%
2%
0%
1%
2%
3%
Kinross’
attributable
production
decreased
by
4%
compared
with
2016,
primarily
due
to
a
decrease
in
production
at
Kupol
due
to
lower
grades,
at
Paracatu
due
to
a
temporary
curtailment
as
a
result
of
lower
than
average
rainfall
in
the
area,
and
at
Maricunga
due
to
the
suspension
of
mining
and
crushing
activities
in
2016.
These
decreases
were
offset
by
higher
production
at
Bald
Mountain
as
a
result
of
more
ounces
recovered
from
the
heap
leach
pads
and
higher
grades,
as
well
as
at
Round
Mountain
and
Tasiast
due
to
higher
grades.
Metal
sales
decreased
by
5%
in
2017
compared
with
2016
due
to
a
decrease
in
gold
equivalent
ounces
sold,
slightly
offset
by
an
increase
in
average
metal
prices
realized.
The
average
realized
gold
price
increased
to
$1,260
per
ounce
in
2017
from
$1,249
per
ounce
in
2016.
Gold
equivalent
ounces
sold
in
2017
decreased
to
2,621,875
ounces
from
2,778,902
ounces
in
2016,
primarily
due
to
the
decrease
in
production
as
described
above.
Production
cost
of
sales
decreased
by
11%
compared
with
2016,
primarily
due
to
the
decrease
in
gold
equivalent
ounces
sold
as
described
above,
as
well
as
a
decrease
in
operating
waste
mined
at
Fort
Knox.
These
decreases
were
partially
offset
by
higher
production
cost
of
sales
at
Bald
Mountain
due
to
an
increase
in
gold
equivalent
ounces
sold.
The
decrease
in
production
cost
of
sales
resulted
in
a
6%
decrease
in
attributable
production
cost
of
sales
per
equivalent
ounce
sold
compared
with
2016.
During
2017,
depreciation,
depletion
and
amortization
decreased
by
4%
compared
with
2016,
primarily
due
to
the
decrease
in
gold
equivalent
ounces
sold
at
Kupol,
Paracatu
and
Maricunga.
This
decrease
was
slightly
offset
by
an
increase
in
depreciation,
depletion
and
amortization
at
Bald
Mountain
and
Round
Mountain
due
to
an
increase
in
gold
equivalent
ounces
sold,
as
well
as
at
Chirano
due
to
an
increase
in
gold
equivalent
ounces
sold
and
a
decrease
in
the
mineral
reserves
as
at
December
31,
2016.
At
December
31,
2017,
upon
completion
of
its
annual
assessment
of
the
carrying
value
of
its
Cash
Generating
Units
(“CGUs”),
the
Company
recorded
a
net,
after-‐tax,
impairment
reversal
of
$62.1
million.
The
impairment
reversal
was
entirely
related
to
property,
plant
and
equipment
and
included
after-‐tax
impairment
reversals
at
Tasiast
and
Fort
Knox
of
$142.9
million
and
$86.2
million,
respectively,
partially
offset
by
an
after-‐tax
impairment
charge
at
Paracatu
of
$167.0
million.
The
impairment
reversals
at
Tasiast
and
Fort
Knox
were
mainly
due
to
an
increase
in
the
Company’s
short-‐term
and
long-‐term
gold
price
estimates,
as
well
as
Tasiast
Phase
Two
progressing
as
planned
and
additions
to
Fort
Knox’s
mineral
reserve
estimates.
The
impairment
charge
at
Paracatu
was
mainly
a
result
of
changes
in
the
fiscal
regime
in
Brazil
that
were
considered
in
the
cash
flow
analysis
used
to
assess
its
recoverable
amount.
The
impairment
charge
at
Paracatu
is
net
of
a
tax
recovery
of
$86.0
million
and
the
impairment
reversal
at
Fort
Knox
is
net
of
a
tax
expense
of
$2.4
million.
There
was
no
tax
impact
on
the
impairment
reversal
at
Tasiast.
During
2016,
the
Company
recorded
impairment
charges
at
Maricunga
of
$68.3
million
against
property,
plant
and
equipment
and
$71.3
million
against
metals
and
supplies
inventory
as
a
result
of
the
suspension
of
mining
and
crushing
activities
during
the
year.
Operating
earnings
increased
to
$336.5
million
in
2017
from
$46.3
million
in
2016.
The
change
in
operating
earnings
was
primarily
due
to
lower
impairment
charges
as
well
as
increased
margins
(metal
sales
less
production
cost
of
sales).
On
March
28,
2017,
the
Company
announced
that
it
had
entered
into
an
agreement
with
Goldcorp
Inc.
(“Goldcorp”)
to
sell
its
25%
interest
in
the
Cerro
Casale
project
and
its
100%
interest
in
the
Quebrada
Seca
exploration
project
in
Chile.
In
connection
with
the
sale,
the
Company
recorded
a
reversal
of
previously
recorded
impairment
charges
of
$97.0
million
during
the
three
months
ended
March
31,
2017
within
other
income
(expense).
On
June
9,
2017,
the
Company
completed
the
sale
and
recognized
a
gain
on
disposition
of
$12.7
million
in
other
income
(expense).
On
May
18,
2017,
the
Company
entered
into
an
agreement
with
White
Gold
Corp.
to
sell
its
100%
interest
in
the
White
Gold
exploration
project
in
the
Yukon
Territory.
On
June
14,
2017,
the
Company
completed
the
sale
and
recognized
a
loss
on
disposition
of
$1.7
million
in
other
income
(expense).
On
September
18,
2017,
the
Company
entered
into
an
agreement
with
Integra
Resources
Corp.
(“Integra”)
to
sell
its
100%
interest
in
the
DeLamar
reclamation
property
(“DeLamar”).
On
November
3,
2017,
the
Company
completed
the
sale
and
recognized
a
gain
on
disposition
of
$44.2
million
in
other
income
(expense).
During
2017,
net
earnings
attributable
to
common
shareholders
were
$445.4
million,
or
$0.36
per
share,
compared
with
a
net
loss
attributable
to
common
shareholders
of
$104.0
million,
or
$0.08
per
share,
in
2016.
The
change
was
primarily
a
result
of
the
increase
in
operating
earnings,
the
impairment
reversal
recorded
in
relation
to
the
sale
of
Cerro
Casale,
and
gains
recognized
upon
disposition
of
DeLamar,
Cerro
Casale
and
Quebrada
Seca,
as
described
above.
In
addition,
an
income
tax
recovery
of
$23.2
million
2
3 KINROSS ANNUAL REPORT MDA
3
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
was
recorded
in
2017,
compared
with
an
income
tax
expense
of
$49.6
million
in
2016.
The
$23.2
million
income
tax
recovery
recognized
in
2017
includes
a
net
tax
recovery
of
$83.6
million
related
to
the
impairment
charge
at
Paracatu
and
the
impairment
reversal
at
Fort
Knox,
and
an
estimated
net
benefit
of
$93.4
million
due
to
the
enactment
of
U.S.
Tax
Reform
legislation
on
December
22,
2017.
The
estimated
net
benefit
includes
a
benefit
of
$124.4
million
in
respect
of
the
collectability
of
the
Alternative
Minimum
Tax
(“AMT”)
credit,
which
is
partially
offset
by
the
write-‐down
of
net
deferred
tax
assets
to
reflect
the
reduction
in
the
U.S.
corporate
tax
rate
from
35%
to
21%
beginning
January
1,
2018.
Further
guidance
on
the
implementation
and
application
of
the
U.S.
Tax
Reform
legislation
will
be
forthcoming
in
regulations
to
be
issued
by
the
Department
of
Treasury,
legislation
or
guidance
from
the
states
in
which
the
Company
operates
and
directions
from
the
Office
of
Management
and
Budget.
Such
legislation,
regulations,
directions
and
additional
guidance
may
require
changes
to
the
estimated
net
benefit
recorded
and
the
impact
of
such
changes
will
be
accounted
for
in
the
period
in
which
the
legislation,
regulations,
directions,
and
additional
guidance
are
enacted
or
released
by
the
relevant
authorities.
The
$49.6
million
income
tax
expense
recognized
in
2016
included
a
$65.1
million
recovery
due
to
re-‐measurement
of
deferred
tax
assets
and
liabilities
as
a
result
of
fluctuations
in
foreign
exchange
rates
with
respect
to
the
Brazilian
real
and
the
Russian
rouble,
$32.0
million
of
expense
due
to
a
proposal
to
reassess
taxes
which
was
received
in
the
second
quarter
of
2016
and
a
tax
benefit
of
$27.7
million
realized
by
the
Company
as
a
result
of
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
In
addition,
tax
expense
decreased
due
to
differences
in
the
level
of
income
in
the
Company’s
operating
jurisdictions
from
one
period
to
the
next.
Kinross'
combined
federal
and
provincial
statutory
tax
rate
for
2017
was
26.5%
(2016
–
26.5%).
Adjusted
net
earnings
attributable
to
common
shareholders
was
$178.7
million,
or
$0.14
per
share,
for
2017
compared
with
adjusted
net
earnings
attributable
to
common
shareholders
of
$93.0
million,
or
$0.08
per
share,
in
2016.
The
increase
in
adjusted
net
earnings
was
mainly
due
to
the
increase
in
margins
described
above.
lower
than
the
carrying
amount,
an
impairment
charge
of
$68.3
million
was
recorded
against
property,
plant
and
equipment.
The
Company
also
recorded
an
inventory
impairment
charge
of
$71.3
million
related
to
metals
and
supplies
inventory
as
a
result
of
the
suspension.
During
2015,
the
Company
recorded
after-‐tax
impairment
charges
of
$430.2
million
related
to
property
plant
and
equipment,
and
impairment
charges
of
$259.5
million
related
to
inventory
and
other
assets.
Operating
earnings
increased
to
$46.3
million
in
2016
from
an
operating
loss
of
$742.9
million
in
the
same
period
of
2015.
The
change
in
earnings
was
primarily
due
to
lower
impairment
charges
as
well
as
increased
margins
(metal
sales
less
production
cost
of
sales).
During
2016,
net
loss
attributable
to
common
shareholders
was
$104.0
million,
or
$0.08
per
share,
compared
with
a
net
loss
attributable
to
common
shareholders
of
$984.5
million,
or
$0.86
per
share,
in
2015.
The
change
was
primarily
a
result
of
the
increase
in
operating
earnings
described
above.
In
addition,
an
income
tax
expense
of
$49.6
million
was
recorded
in
2016,
compared
with
an
income
tax
expense
of
$141.7
million
in
2015.
The
$49.6
million
income
tax
expense
recognized
in
2016
included
a
$65.1
million
recovery
due
to
re-‐measurement
of
deferred
tax
assets
and
liabilities
as
a
result
of
fluctuations
in
foreign
exchange
rates
with
respect
to
the
Brazilian
real
and
the
Russian
rouble,
$32.0
million
of
expense
due
to
a
proposal
to
reassess
taxes
which
was
received
in
the
second
quarter
of
2016
and
a
tax
benefit
of
$27.7
million
realized
by
the
Company
as
a
result
of
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
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.
In
addition,
tax
expense
decreased
due
to
differences
in
the
level
of
income
in
the
Company’s
operating
jurisdictions
from
one
period
to
the
next.
Kinross'
combined
federal
and
provincial
statutory
tax
rate
for
2016
was
26.5%
(2015
–
26.5%).
During
2017,
net
cash
flow
provided
from
operating
activities
decreased
to
$951.6
million
from
$1,099.2
million
in
2016
primarily
due
to
less
favourable
working
capital
movements
and
higher
taxes
paid,
partially
offset
by
higher
margins.
Adjusted
operating
cash
flow
increased
to
$1,166.7
million
from
$926.7
million
in
2016,
primarily
due
to
the
increase
in
margins.
Adjusted
net
earnings
attributable
to
common
shareholders
was
$93.0
million,
or
$0.08
per
share,
for
2016
compared
with
adjusted
net
loss
attributable
to
common
shareholders
of
$91.0
million,
or
$0.08
per
share,
in
2015.
The
increase
in
adjusted
net
earnings
was
mainly
due
to
the
increase
in
margins
described
above.
Capital
expenditures
increased
by
42%
in
2017
compared
with
2016,
primarily
due
to
increased
spending
at
Tasiast,
Bald
Mountain
and
Fort
Knox,
offset
by
lower
spending
at
Kupol.
During
2016,
net
cash
flow
provided
from
operating
activities
increased
to
$1,099.2
million
from
$831.6
million
in
2015
and
adjusted
operating
cash
flow
increased
to
$926.7
million
from
$786.6
million
in
2015,
both
primarily
due
to
the
increase
in
margins.
During
2017,
attributable
all-‐in
sustaining
cost
per
equivalent
ounce
sold
and
per
ounce
sold
on
a
by-‐product
basis
decreased
from
2016
largely
due
to
lower
production
cost
of
sales.
Attributable
all-‐in
cost
per
equivalent
ounce
sold
and
per
ounce
sold
on
a
by-‐
product
basis
increased
compared
with
2016,
primarily
due
to
an
increase
in
non-‐sustaining
capital
expenditures.
Capital
expenditures
increased
by
4%
in
2016
compared
with
2015,
primarily
due
to
increased
spending
resulting
from
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain
as
well
as
at
Kupol,
Tasiast
and
Chirano,
partially
offset
by
lower
spending
at
Fort
Knox,
Maricunga
and
the
Corporate
and
other
segment.
2016
vs.
2015
Kinross’
attributable
production
increased
by
7%
compared
with
2015,
primarily
due
to
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
These
increases
were
partially
offset
by
lower
production
at
Chirano
due
to
a
decrease
in
grades,
at
Tasiast
due
to
lower
recovery
from
the
dump
leach
pads
and
the
six
week
temporary
suspension
of
operations,
and
at
Maricunga
as
a
result
of
the
suspension
of
mining
activities
in
2016.
Metal
sales
increased
by
14%
in
2016
compared
with
2015
due
to
an
increase
in
metal
prices
realized
and
gold
equivalent
ounces
sold.
The
average
realized
gold
price
increased
to
$1,249
per
ounce
in
2016
from
$1,159
per
ounce
in
2015.
Gold
equivalent
ounces
sold
in
2016
increased
to
2,778,902
ounces
from
2,634,867
ounces
in
2015,
primarily
due
to
the
increase
in
production
described
above.
Production
cost
of
sales
increased
by
8%
compared
with
2015,
primarily
due
to
the
increase
in
gold
equivalent
ounces
sold
as
described
above,
as
well
as
an
increase
in
operating
waste
mined
at
Fort
Knox,
partially
offset
by
lower
costs
at
Maricunga,
Tasiast
and
Kupol
due
to
decreases
in
gold
equivalent
ounces
sold,
lower
fuel
and
labour
costs
at
Kupol,
and
favourable
foreign
exchange
movements
at
Paracatu
resulting
from
the
effectiveness
of
the
Company’s
hedge
program.
The
increase
in
production
cost
of
sales
resulted
in
higher
attributable
production
cost
of
sales
per
equivalent
ounce
sold
compared
with
2015.
During
2016,
depreciation,
depletion
and
amortization
decreased
by
5%
compared
with
2015,
primarily
due
to
a
decrease
in
the
depreciable
asset
base
at
Fort
Knox
and
Kupol.
Additionally,
depreciation
was
lower
at
Chirano
related
to
an
increase
in
mineral
reserves
at
December
31,
2015
and
a
decrease
in
gold
equivalent
ounces
sold.
The
decreases
were
partially
offset
by
an
increase
in
the
depreciable
asset
base
as
a
result
of
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
At
September
30,
2016,
the
Company
identified
the
suspension
of
mining
at
Maricunga
as
an
indication
of
impairment
and
performed
an
impairment
assessment
to
determine
the
recoverable
amount
of
the
Maricunga
CGU.
As
the
recoverable
amount
was
4
KINROSS ANNUAL REPORT MDA 4
During
2016,
attributable
all-‐in
sustaining
cost
per
equivalent
ounce
sold
and
per
ounce
sold
on
a
by-‐product
basis
remained
comparable
with
2015.
Attributable
all-‐in
cost
per
equivalent
ounce
sold
and
per
ounce
sold
on
a
by-‐product
basis
increased
compared
with
2015,
primarily
due
to
an
increase
in
non-‐sustaining
capital
and
reclamation
expenditures.
Mineral
Reserves1
Kinross’
total
estimated
proven
and
probable
gold
reserves
at
year-‐end
2017
were
approximately
25.9
million
ounces.
The
decrease
of
5.1
million
ounces
in
estimated
gold
reserves
compared
to
year-‐end
2016
was
mainly
a
result
of
the
sale
of
Cerro
Casale,
which
accounted
for
5.8
million
ounces
in
estimated
mineral
reserves.
Proven
and
probable
silver
reserves
at
year-‐end
2017
were
estimated
at
approximately
52.6
million
ounces,
a
net
decrease
of
15.2
million
ounces
compared
with
year-‐end
2016,
primarily
due
to
the
sale
of
Cerro
Casale,
which
accounted
for
14.7
million
silver
ounces.
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
14,
2018.
5
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
was
recorded
in
2017,
compared
with
an
income
tax
expense
of
$49.6
million
in
2016.
The
$23.2
million
income
tax
recovery
recognized
in
2017
includes
a
net
tax
recovery
of
$83.6
million
related
to
the
impairment
charge
at
Paracatu
and
the
impairment
reversal
at
Fort
Knox,
and
an
estimated
net
benefit
of
$93.4
million
due
to
the
enactment
of
U.S.
Tax
Reform
legislation
on
December
22,
2017.
The
estimated
net
benefit
includes
a
benefit
of
$124.4
million
in
respect
of
the
collectability
of
the
Alternative
Minimum
Tax
(“AMT”)
credit,
which
is
partially
offset
by
the
write-‐down
of
net
deferred
tax
assets
to
reflect
the
reduction
in
the
U.S.
corporate
tax
rate
from
35%
to
21%
beginning
January
1,
2018.
Further
guidance
on
the
implementation
and
application
of
the
U.S.
Tax
Reform
legislation
will
be
forthcoming
in
regulations
to
be
issued
by
the
Department
of
Treasury,
legislation
or
guidance
from
the
states
in
which
the
Company
operates
and
directions
from
the
Office
of
Management
and
Budget.
Such
legislation,
regulations,
directions
and
additional
guidance
may
require
changes
to
the
estimated
net
benefit
recorded
and
the
impact
of
such
changes
will
be
accounted
for
in
the
period
in
which
the
legislation,
regulations,
directions,
and
additional
guidance
are
enacted
or
released
by
the
relevant
authorities.
The
$49.6
million
income
tax
expense
recognized
in
2016
included
a
$65.1
million
recovery
due
to
re-‐measurement
of
deferred
tax
assets
and
liabilities
as
a
result
of
fluctuations
in
foreign
exchange
rates
with
respect
to
the
Brazilian
real
and
the
Russian
rouble,
$32.0
million
of
expense
due
to
a
proposal
to
reassess
taxes
which
was
received
in
the
second
quarter
of
2016
and
a
tax
benefit
of
$27.7
million
realized
by
the
Company
as
a
result
of
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
In
addition,
tax
expense
decreased
due
to
differences
in
the
level
of
income
in
the
Company’s
operating
jurisdictions
from
one
period
to
the
next.
Kinross'
combined
federal
and
provincial
statutory
tax
rate
for
2017
was
26.5%
(2016
–
26.5%).
Adjusted
net
earnings
attributable
to
common
shareholders
was
$178.7
million,
or
$0.14
per
share,
for
2017
compared
with
adjusted
net
earnings
attributable
to
common
shareholders
of
$93.0
million,
or
$0.08
per
share,
in
2016.
The
increase
in
adjusted
net
earnings
was
mainly
due
to
the
increase
in
margins
described
above.
lower
than
the
carrying
amount,
an
impairment
charge
of
$68.3
million
was
recorded
against
property,
plant
and
equipment.
The
Company
also
recorded
an
inventory
impairment
charge
of
$71.3
million
related
to
metals
and
supplies
inventory
as
a
result
of
the
suspension.
During
2015,
the
Company
recorded
after-‐tax
impairment
charges
of
$430.2
million
related
to
property
plant
and
equipment,
and
impairment
charges
of
$259.5
million
related
to
inventory
and
other
assets.
Operating
earnings
increased
to
$46.3
million
in
2016
from
an
operating
loss
of
$742.9
million
in
the
same
period
of
2015.
The
change
in
earnings
was
primarily
due
to
lower
impairment
charges
as
well
as
increased
margins
(metal
sales
less
production
cost
of
sales).
During
2016,
net
loss
attributable
to
common
shareholders
was
$104.0
million,
or
$0.08
per
share,
compared
with
a
net
loss
attributable
to
common
shareholders
of
$984.5
million,
or
$0.86
per
share,
in
2015.
The
change
was
primarily
a
result
of
the
increase
in
operating
earnings
described
above.
In
addition,
an
income
tax
expense
of
$49.6
million
was
recorded
in
2016,
compared
with
an
income
tax
expense
of
$141.7
million
in
2015.
The
$49.6
million
income
tax
expense
recognized
in
2016
included
a
$65.1
million
recovery
due
to
re-‐measurement
of
deferred
tax
assets
and
liabilities
as
a
result
of
fluctuations
in
foreign
exchange
rates
with
respect
to
the
Brazilian
real
and
the
Russian
rouble,
$32.0
million
of
expense
due
to
a
proposal
to
reassess
taxes
which
was
received
in
the
second
quarter
of
2016
and
a
tax
benefit
of
$27.7
million
realized
by
the
Company
as
a
result
of
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
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.
In
addition,
tax
expense
decreased
due
to
differences
in
the
level
of
income
in
the
Company’s
operating
jurisdictions
from
one
period
to
the
next.
Kinross'
combined
federal
and
provincial
statutory
tax
rate
for
2016
was
26.5%
(2015
–
26.5%).
During
2017,
net
cash
flow
provided
from
operating
activities
decreased
to
$951.6
million
from
$1,099.2
million
in
2016
primarily
due
to
less
favourable
working
capital
movements
and
higher
taxes
paid,
partially
offset
by
higher
margins.
Adjusted
operating
cash
flow
increased
to
$1,166.7
million
from
$926.7
million
in
2016,
primarily
due
to
the
increase
in
margins.
Adjusted
net
earnings
attributable
to
common
shareholders
was
$93.0
million,
or
$0.08
per
share,
for
2016
compared
with
adjusted
net
loss
attributable
to
common
shareholders
of
$91.0
million,
or
$0.08
per
share,
in
2015.
The
increase
in
adjusted
net
earnings
was
mainly
due
to
the
increase
in
margins
described
above.
Capital
expenditures
increased
by
42%
in
2017
compared
with
2016,
primarily
due
to
increased
spending
at
Tasiast,
Bald
Mountain
and
Fort
Knox,
offset
by
lower
spending
at
Kupol.
During
2016,
net
cash
flow
provided
from
operating
activities
increased
to
$1,099.2
million
from
$831.6
million
in
2015
and
adjusted
operating
cash
flow
increased
to
$926.7
million
from
$786.6
million
in
2015,
both
primarily
due
to
the
increase
in
margins.
During
2017,
attributable
all-‐in
sustaining
cost
per
equivalent
ounce
sold
and
per
ounce
sold
on
a
by-‐product
basis
decreased
from
2016
largely
due
to
lower
production
cost
of
sales.
Attributable
all-‐in
cost
per
equivalent
ounce
sold
and
per
ounce
sold
on
a
by-‐
product
basis
increased
compared
with
2016,
primarily
due
to
an
increase
in
non-‐sustaining
capital
expenditures.
Capital
expenditures
increased
by
4%
in
2016
compared
with
2015,
primarily
due
to
increased
spending
resulting
from
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain
as
well
as
at
Kupol,
Tasiast
and
Chirano,
partially
offset
by
lower
spending
at
Fort
Knox,
Maricunga
and
the
Corporate
and
other
segment.
2016
vs.
2015
Kinross’
attributable
production
increased
by
7%
compared
with
2015,
primarily
due
to
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
These
increases
were
partially
offset
by
lower
production
at
Chirano
due
to
a
decrease
in
grades,
at
Tasiast
due
to
lower
recovery
from
the
dump
leach
pads
and
the
six
week
temporary
suspension
of
operations,
and
at
Maricunga
as
a
result
of
the
suspension
of
mining
activities
in
2016.
Metal
sales
increased
by
14%
in
2016
compared
with
2015
due
to
an
increase
in
metal
prices
realized
and
gold
equivalent
ounces
sold.
The
average
realized
gold
price
increased
to
$1,249
per
ounce
in
2016
from
$1,159
per
ounce
in
2015.
Gold
equivalent
ounces
sold
in
2016
increased
to
2,778,902
ounces
from
2,634,867
ounces
in
2015,
primarily
due
to
the
increase
in
production
described
above.
Production
cost
of
sales
increased
by
8%
compared
with
2015,
primarily
due
to
the
increase
in
gold
equivalent
ounces
sold
as
described
above,
as
well
as
an
increase
in
operating
waste
mined
at
Fort
Knox,
partially
offset
by
lower
costs
at
Maricunga,
Tasiast
and
Kupol
due
to
decreases
in
gold
equivalent
ounces
sold,
lower
fuel
and
labour
costs
at
Kupol,
and
favourable
foreign
exchange
movements
at
Paracatu
resulting
from
the
effectiveness
of
the
Company’s
hedge
program.
The
increase
in
production
cost
of
sales
resulted
in
higher
attributable
production
cost
of
sales
per
equivalent
ounce
sold
compared
with
2015.
During
2016,
depreciation,
depletion
and
amortization
decreased
by
5%
compared
with
2015,
primarily
due
to
a
decrease
in
the
depreciable
asset
base
at
Fort
Knox
and
Kupol.
Additionally,
depreciation
was
lower
at
Chirano
related
to
an
increase
in
mineral
reserves
at
December
31,
2015
and
a
decrease
in
gold
equivalent
ounces
sold.
The
decreases
were
partially
offset
by
an
increase
in
the
depreciable
asset
base
as
a
result
of
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
At
September
30,
2016,
the
Company
identified
the
suspension
of
mining
at
Maricunga
as
an
indication
of
impairment
and
performed
an
impairment
assessment
to
determine
the
recoverable
amount
of
the
Maricunga
CGU.
As
the
recoverable
amount
was
4
During
2016,
attributable
all-‐in
sustaining
cost
per
equivalent
ounce
sold
and
per
ounce
sold
on
a
by-‐product
basis
remained
comparable
with
2015.
Attributable
all-‐in
cost
per
equivalent
ounce
sold
and
per
ounce
sold
on
a
by-‐product
basis
increased
compared
with
2015,
primarily
due
to
an
increase
in
non-‐sustaining
capital
and
reclamation
expenditures.
Mineral
Reserves1
Kinross’
total
estimated
proven
and
probable
gold
reserves
at
year-‐end
2017
were
approximately
25.9
million
ounces.
The
decrease
of
5.1
million
ounces
in
estimated
gold
reserves
compared
to
year-‐end
2016
was
mainly
a
result
of
the
sale
of
Cerro
Casale,
which
accounted
for
5.8
million
ounces
in
estimated
mineral
reserves.
Proven
and
probable
silver
reserves
at
year-‐end
2017
were
estimated
at
approximately
52.6
million
ounces,
a
net
decrease
of
15.2
million
ounces
compared
with
year-‐end
2016,
primarily
due
to
the
sale
of
Cerro
Casale,
which
accounted
for
14.7
million
silver
ounces.
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
14,
2018.
5 KINROSS ANNUAL REPORT MDA
5
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
2.
IMPACT
OF
KEY
ECONOMIC
TRENDS
Price
of
Gold
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Source:
Bloomberg
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
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
2017,
the
price
of
gold
fluctuated
between
a
low
of
$1,150
per
ounce
in
January
to
a
high
of
$1,358
per
ounce
in
September.
The
average
price
for
the
year
based
on
the
London
Bullion
Market
Association
PM
Fix
was
$1,257
per
ounce,
a
$6
per
ounce
increase
over
the
2016
average
price
of
$1,251
per
ounce.
Major
influences
on
the
gold
price
in
2017
included
the
weakening
of
the
U.S.
dollar,
negative
interest
rate
policies
in
Japan
and
Europe
and
strong
equity
markets.
Gold
weakened
with
the
U.S.
Federal
Reserve
raising
interest
rates
by
75
basis
points
but
rebounded
after
the
interest
rate
announcements.
Investors
buying
gold
exchange-‐traded
funds
(“ETF”)
increased
during
2017.
In
2017,
gold
ETF
holdings
increased
throughout
the
year,
ending
the
year
near
the
2016
peak
holdings.
Gold
was
also
impacted
by
the
continued
uncertainty
over
Brexit
and
the
political
climate
in
the
U.S.
Source:
London
Bullion
Marketing
Association
London
PM
Fix
1
Average
realized
gold
price
is
a
non-‐GAAP
financial
measure
and
is
defined
in
Section
11
of
this
document.
During
2017,
the
Company
realized
an
average
gold
price
of
$1,260
per
ounce
compared
to
the
average
PM
Fix
of
$1,257
per
ounce.
6
KINROSS ANNUAL REPORT MDA 6
7
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
2.
IMPACT
OF
KEY
ECONOMIC
TRENDS
Price
of
Gold
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Source:
Bloomberg
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
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
2017,
the
price
of
gold
fluctuated
between
a
low
of
$1,150
per
ounce
in
January
to
a
high
of
$1,358
per
ounce
in
September.
The
average
price
for
the
year
based
on
the
London
Bullion
Market
Association
PM
Fix
was
$1,257
per
ounce,
a
$6
per
ounce
increase
over
the
2016
average
price
of
$1,251
per
ounce.
Major
influences
on
the
gold
price
in
2017
included
the
weakening
of
the
U.S.
dollar,
negative
interest
rate
policies
in
Japan
and
Europe
and
strong
equity
markets.
Gold
weakened
with
the
U.S.
Federal
Reserve
raising
interest
rates
by
75
basis
points
but
rebounded
after
the
interest
rate
announcements.
Investors
buying
gold
exchange-‐traded
funds
(“ETF”)
increased
during
2017.
In
2017,
gold
ETF
holdings
increased
throughout
the
year,
ending
the
year
near
the
2016
peak
holdings.
Gold
was
also
impacted
by
the
continued
uncertainty
over
Brexit
and
the
political
climate
in
the
U.S.
Source:
London
Bullion
Marketing
Association
London
PM
Fix
1
Average
realized
gold
price
is
a
non-‐GAAP
financial
measure
and
is
defined
in
Section
11
of
this
document.
During
2017,
the
Company
realized
an
average
gold
price
of
$1,260
per
ounce
compared
to
the
average
PM
Fix
of
$1,257
per
ounce.
6
7 KINROSS ANNUAL REPORT MDA
7
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Gold
Supply
and
Demand
Fundamentals
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Source:
GFMS
Gold
Survey
2017
Q4
Update
Total
gold
supply
decreased
by
approximately
2.6%
in
2017
relative
to
2016,
largely
due
to
an
increase
in
producer
hedging.
Global
gold
mine
production
increased
by
1.5%
offset
by
a
decrease
of
4.2%
in
supply
of
recycled
gold.
Mine
production
and
recycled
gold
remain
the
dominant
sources
of
gold
supply,
and
in
2017
they
represented
approximately
70%
and
28%
of
total
supply,
respectively.
Central
banks
have
not
been
a
source
of
supply
to
the
market,
but
have
rather
been
net
buyers,
as
noted
below.
Source:
GFMS
2017
Gold
Survey
Q4
Update
Physical
demand
rebounded
from
a
seven
year
low
and
increased
by
approximately
17%
in
2017
relative
to
2016.
Fabrication
demand
is
estimated
to
have
increased
by
19%
in
2017
relative
to
2016,
mainly
due
to
higher
demand
in
China
and
India.
Bar
hoarding
increased
by
approximately
6%
in
2017.
Purchases
from
central
banks
increased
by
36%
during
the
year,
due
to
purchases
from
Russia
and
Turkey.
8
KINROSS ANNUAL REPORT MDA 8
9
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Gold
Supply
and
Demand
Fundamentals
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Source:
GFMS
Gold
Survey
2017
Q4
Update
Total
gold
supply
decreased
by
approximately
2.6%
in
2017
relative
to
2016,
largely
due
to
an
increase
in
producer
hedging.
Global
gold
mine
production
increased
by
1.5%
offset
by
a
decrease
of
4.2%
in
supply
of
recycled
gold.
Mine
production
and
recycled
gold
remain
the
dominant
sources
of
gold
supply,
and
in
2017
they
represented
approximately
70%
and
28%
of
total
supply,
respectively.
Central
banks
have
not
been
a
source
of
supply
to
the
market,
but
have
rather
been
net
buyers,
as
noted
below.
Source:
GFMS
2017
Gold
Survey
Q4
Update
Physical
demand
rebounded
from
a
seven
year
low
and
increased
by
approximately
17%
in
2017
relative
to
2016.
Fabrication
demand
is
estimated
to
have
increased
by
19%
in
2017
relative
to
2016,
mainly
due
to
higher
demand
in
China
and
India.
Bar
hoarding
increased
by
approximately
6%
in
2017.
Purchases
from
central
banks
increased
by
36%
during
the
year,
due
to
purchases
from
Russia
and
Turkey.
8
9 KINROSS ANNUAL REPORT MDA
9
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Cost
Sensitivity
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Currency
Fluctuations
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
experienced
fuel
price
increases
in
the
second
half
of
2017,
reflecting
OPEC’s
decision
to
continue
production
cuts
and
increased
global
demand.
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
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
61%
of
the
Company’s
expected
attributable
production
in
2018
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.
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.
10
KINROSS ANNUAL REPORT MDA 10
11
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Cost
Sensitivity
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Currency
Fluctuations
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
experienced
fuel
price
increases
in
the
second
half
of
2017,
reflecting
OPEC’s
decision
to
continue
production
cuts
and
increased
global
demand.
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
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
61%
of
the
Company’s
expected
attributable
production
in
2018
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.
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.
10
11 KINROSS ANNUAL REPORT MDA
11
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
2018,
Kinross
expects
to
produce
2.5
million
gold
equivalent
ounces
(+/-‐
5%)
from
its
operations
and
expects
to
be
at
or
slightly
above
the
same
level
of
production
over
the
next
three
years.
The
forecast
decrease
compared
with
full-‐year
2017
production
is
mainly
a
result
of
mine
sequencing
at
several
operations,
including
anticipated
lower
grades
at
Kupol
and
Dvoinoye,
the
closure
of
Kettle
River-‐Buckhorn
and
the
suspension
of
mining
at
Maricunga,
partially
offset
by
an
expected
production
increase
in
the
West
Africa
region.
The
production
guidance
has
taken
into
consideration
the
potential
for
a
temporary
curtailment
of
mill
operations
at
Paracatu
due
to
the
possibility
of
seasonal
rainfall
shortages
in
the
area.
Production
is
expected
to
be
higher
in
the
second
half
of
2018
than
the
first
half
mainly
as
a
result
of
expected
production
from
the
Tasiast
Phase
One
expansion.
Production
cost
of
sales
per
gold
equivalent
ounce
is
expected
to
be
$730
(+/-‐
5%)
for
2018.
The
expected
increase
for
2018
compared
with
full-‐year
2017
production
cost
of
sales
per
ounce
is
mainly
as
a
result
of
mine
sequencing,
with
anticipated
lower
grades
at
Dvoinoye
and
Round
Mountain
and
an
increase
in
operating
waste
mined
at
Fort
Knox
and
Tasiast.
Kinross
expects
production
cost
of
sales
per
gold
equivalent
ounce
to
decline
slightly
in
2019
and
2020
as
lower
cost
production
comes
online.
The
Company
has
forecast
an
all-‐in
sustaining
cost
of
$975
(+/-‐
5%)
per
ounce
sold
on
both
a
gold
equivalent
and
by-‐product
basis
for
2018,
which
is
largely
in
line
with
full-‐year
2017
all-‐in
sustaining
cost
per
ounce.
Material
assumptions
used
to
forecast
2018
production
costs
are:
a
gold
price
of
$1,200
per
ounce,
a
silver
price
of
$16
per
ounce,
an
oil
price
of
$55
per
barrel,
and
foreign
exchange
rates
of
3.25
Brazilian
reais
to
the
U.S.
dollar,
1.25
Canadian
dollars
to
the
U.S.
dollar,
60
Russian
roubles
to
the
U.S.
dollar,
650
Chilean
pesos
to
the
U.S.
dollar,
4.00
Ghanaian
cedi
to
the
U.S.
dollar,
33
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
$17
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
$19
and
$38
on
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
$4
impact
on
our
production
cost
of
sales
per
ounce
as
a
result
of
a
change
in
royalties.
Total
capital
expenditures
for
2018
are
forecast
to
be
approximately
$1,075
million
(+/-‐
5%)
(including
capitalized
interest
of
approximately
$40
million).
Of
this
amount,
sustaining
capital
expenditures
are
expected
to
be
approximately
$355
million,
and
non-‐
sustaining
capital
of
approximately
$680
million
for
the
Tasiast
expansion
project,
the
Round
Mountain
Phase
W
project,
and
other
development
projects
and
studies.
The
2018
forecast
for
exploration
is
approximately
$75
million,
none
of
which
is
expected
to
be
capitalized,
with
2018
overhead
(general
and
administrative
and
business
development
expenses)
forecast
to
be
approximately
$165
million,
both
of
which
are
consistent
with
last
year’s
guidance.
Other
operating
costs
expected
to
be
incurred
in
2018
are
approximately
$100
million,
which
includes
approximately
$50
million
of
care
and
maintenance
costs
in
Chile.
Based
on
our
assumed
gold
price
and
other
inputs,
net
income
tax
expense
is
expected
to
be
$35
million
and
taxes
paid
are
expected
to
be
$70 million,
with
the
expense
increasing
at
15%
of
any
profit
resulting
from
higher
gold
prices
and
taxes
paid
increasing
at
a
lower
rate
of
7%
as
a
result
of
the
realization
of
the
U.S.
AMT
credit.
Depreciation,
depletion
and
amortization
is
forecast
to
be
approximately
$300
per
gold
equivalent
ounce.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
4. PROJECT
UPDATES
AND
NEW
DEVELOPMENTS
Tasiast
Phase
One
and
Phase
Two
expansion
The
Tasiast
Phase
One
project
development
is
progressing
well,
and
continues
to
be
on
time
and
on
budget,
with
full
commercial
production
expected
by
the
end
of
June.
Plant
construction
is
now
93%
complete
and
the
remaining
work
is
now
focused
on
electrical,
instrumentation
and
controls
installations.
Mechanical
installation
of
the
primary
crusher,
conveyor,
stockpile
and
carbon-‐
in-‐leach
(“CIL”)
plant
modifications,
which
includes
the
cyclones,
three
leach
tanks
and
elution
circuit,
are
now
substantially
complete.
Commissioning
of
the
primary
crusher
and
CIL
plant
is
expected
to
begin
in
late
February,
and
the
SAG
mill
in
April.
The
Tasiast
Phase
Two
project
is
proceeding
on
schedule,
as
Phase
One
nears
completion.
Project
and
construction
teams
are
expected
to
transition
from
Phase
One
to
Phase
Two
development
to
establish
continuity
between
projects.
Overall
engineering
is
now
33%
complete
and
procurement
is
progressing
well,
with
the
power
plant
and
EPCM
contracts
now
awarded.
Early
works
for
the
ball
mill
and
power
plant
are
expected
to
commence
in
the
second
quarter
of
2018.
Phase
Two
is
expected
to
begin
commercial
production
in
the
third
quarter
of
2020.
The
Company
is
considering
an
asset
level
financing
for
Tasiast
and
has
initiated
discussions
to
better
understand
the
level
of
interest
from
potential
primary
lenders.
Once
initial
feedback
has
been
received,
the
Company
will
decide
whether
to
proceed
and
identify
additional
potential
lenders
in
order
to
complete
the
financing.
Also
in
connection
with
Tasiast,
the
Company
has
completed
a
political
risk
insurance
policy
agreement
with
the
Multilateral
Investment
Guarantee
Agency,
a
member
of
the
World
The
Vantage
Complex
project
is
proceeding
on
schedule,
with
initial
construction
work
now
well
underway
and
engineering
more
than
80%
complete.
Permitting
is
proceeding
as
planned
and contractors
for
more
than
half
the
scope
of
the
project
work
have
been
selected.
Commissioning
for
the
proposed
heap
leach
pad
and
processing
facilities
is
expected
to
commence
in
the
first
quarter
of
At
the
Moroshka
satellite
deposit
in
Russia,
located
approximately
four
kilometres
east
of
Kupol,
development
of
the
twin
declines
continues
to
proceed
on
schedule
and
on
budget.
Mining
of
high-‐grade
ore
at
Moroshka
is
expected
to
commence
in
the
second
half
Bank.
Bald
Mountain
Vantage
Complex
2019.
Moroshka
project
of
2018
for
processing
in
the
Kupol
mill.
Round
Mountain
Phase
W
Stripping,
initial
construction
and
site
preparation
activities
commenced
ahead
of
schedule
in
late
2017
after
the
receipt
of
the
Decision
Record
and
other
approvals
from
the
U.S.
Bureau
of
Land
Management.
The
construction
management
team
for
Phase
W
has
been
mobilized
to
site
and
earthworks
have
begun
in
the
project
area.
Detailed
engineering
is
progressing
on
schedule,
with
heap
leach
engineering
complete
and
mine
infrastructure
and
processing
facility
engineering
approximately
50%
complete.
Procurement
activities
are
underway
for
critical
long
lead
items
and
tracking
according
to
plan.
State
permitting
is
proceeding
as
planned,
with
all
major
permits
now
received.
The
Phase
W
project
remains
on
schedule,
with
initial
low
grade
ore
expected
to
be
encountered
in
mid-‐2019.
Fort
Knox
Gilmore
Permitting
activities
have
commenced
and
feasibility
study
activities
are
ongoing
for
the
Gilmore
project.
The
feasibility
study,
which
is
expected
to
be
completed
in
mid-‐2018,
is
assessing
a
multi-‐phase
layback
of
the
Fort
Knox
pit
and
the
construction
of
a
new
heap
leach
pad.
The
Company
gained
mineral
rights
to
the
Gilmore
land,
which
is
located
immediately
west
of
the
Fort
Knox
pit,
on
December
12,
2017.
As
a
result,
the
Company
added
2.1
million
gold
ounces
in
estimated
measured
and
indicated
resources
and
300,000
ounces
in
estimated
inferred
resources.
This
was
offset
by
a
conversion
of
254,000
ounces
of
mineral
resources
to
mineral
reserves,
for
a
net
addition
of
1.8
million
ounces
to
measured
and
indicated
resource
estimates.
An
additional
199,000
ounces
was
added
to
estimated
inferred
resources
from
exploration
and
engineering
for
a
total
increase
of
499,000
ounces
to
inferred
resource
estimates.
12
KINROSS ANNUAL REPORT MDA 12
13
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
3. OUTLOOK
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
4. PROJECT
UPDATES
AND
NEW
DEVELOPMENTS
The
forward-‐looking
information
contained
in
this
section
is
subject
to
the
risk
factors
and
assumptions
contained
in
the
Cautionary
Tasiast
Phase
One
and
Phase
Two
expansion
Statement
on
Forward-‐Looking
Information
included
with
this
MD&A
and
the
risk
factors
set
out
in
Section
10
–
Risk
Analysis.
Operational
Outlook
In
2018,
Kinross
expects
to
produce
2.5
million
gold
equivalent
ounces
(+/-‐
5%)
from
its
operations
and
expects
to
be
at
or
slightly
above
the
same
level
of
production
over
the
next
three
years.
The
forecast
decrease
compared
with
full-‐year
2017
production
is
mainly
a
result
of
mine
sequencing
at
several
operations,
including
anticipated
lower
grades
at
Kupol
and
Dvoinoye,
the
closure
of
Kettle
River-‐Buckhorn
and
the
suspension
of
mining
at
Maricunga,
partially
offset
by
an
expected
production
increase
in
the
West
Africa
region.
The
production
guidance
has
taken
into
consideration
the
potential
for
a
temporary
curtailment
of
mill
operations
at
Paracatu
due
to
the
possibility
of
seasonal
rainfall
shortages
in
the
area.
Production
is
expected
to
be
higher
in
the
second
half
of
2018
than
the
first
half
mainly
as
a
result
of
expected
production
from
the
Tasiast
Phase
One
expansion.
Production
cost
of
sales
per
gold
equivalent
ounce
is
expected
to
be
$730
(+/-‐
5%)
for
2018.
The
expected
increase
for
2018
compared
with
full-‐year
2017
production
cost
of
sales
per
ounce
is
mainly
as
a
result
of
mine
sequencing,
with
anticipated
lower
grades
at
Dvoinoye
and
Round
Mountain
and
an
increase
in
operating
waste
mined
at
Fort
Knox
and
Tasiast.
Kinross
expects
production
cost
of
sales
per
gold
equivalent
ounce
to
decline
slightly
in
2019
and
2020
as
lower
cost
production
comes
online.
The
Company
has
forecast
an
all-‐in
sustaining
cost
of
$975
(+/-‐
5%)
per
ounce
sold
on
both
a
gold
equivalent
and
by-‐product
basis
for
2018,
which
is
largely
in
line
with
full-‐year
2017
all-‐in
sustaining
cost
per
ounce.
Material
assumptions
used
to
forecast
2018
production
costs
are:
a
gold
price
of
$1,200
per
ounce,
a
silver
price
of
$16
per
ounce,
an
oil
price
of
$55
per
barrel,
and
foreign
exchange
rates
of
3.25
Brazilian
reais
to
the
U.S.
dollar,
1.25
Canadian
dollars
to
the
U.S.
dollar,
60
Russian
roubles
to
the
U.S.
dollar,
650
Chilean
pesos
to
the
U.S.
dollar,
4.00
Ghanaian
cedi
to
the
U.S.
dollar,
33
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
$17
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
$19
and
$38
on
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
$4
impact
on
our
production
cost
of
sales
per
ounce
as
a
result
of
a
change
in
royalties.
Total
capital
expenditures
for
2018
are
forecast
to
be
approximately
$1,075
million
(+/-‐
5%)
(including
capitalized
interest
of
approximately
$40
million).
Of
this
amount,
sustaining
capital
expenditures
are
expected
to
be
approximately
$355
million,
and
non-‐
sustaining
capital
of
approximately
$680
million
for
the
Tasiast
expansion
project,
the
Round
Mountain
Phase
W
project,
and
other
development
projects
and
studies.
The
2018
forecast
for
exploration
is
approximately
$75
million,
none
of
which
is
expected
to
be
capitalized,
with
2018
overhead
(general
and
administrative
and
business
development
expenses)
forecast
to
be
approximately
$165
million,
both
of
which
are
consistent
with
last
year’s
guidance.
care
and
maintenance
costs
in
Chile.
Other
operating
costs
expected
to
be
incurred
in
2018
are
approximately
$100
million,
which
includes
approximately
$50
million
of
Based
on
our
assumed
gold
price
and
other
inputs,
net
income
tax
expense
is
expected
to
be
$35
million
and
taxes
paid
are
expected
to
be
$70 million,
with
the
expense
increasing
at
15%
of
any
profit
resulting
from
higher
gold
prices
and
taxes
paid
increasing
at
a
lower
rate
of
7%
as
a
result
of
the
realization
of
the
U.S.
AMT
credit.
Depreciation,
depletion
and
amortization
is
forecast
to
be
approximately
$300
per
gold
equivalent
ounce.
The
Tasiast
Phase
One
project
development
is
progressing
well,
and
continues
to
be
on
time
and
on
budget,
with
full
commercial
production
expected
by
the
end
of
June.
Plant
construction
is
now
93%
complete
and
the
remaining
work
is
now
focused
on
electrical,
instrumentation
and
controls
installations.
Mechanical
installation
of
the
primary
crusher,
conveyor,
stockpile
and
carbon-‐
in-‐leach
(“CIL”)
plant
modifications,
which
includes
the
cyclones,
three
leach
tanks
and
elution
circuit,
are
now
substantially
complete.
Commissioning
of
the
primary
crusher
and
CIL
plant
is
expected
to
begin
in
late
February,
and
the
SAG
mill
in
April.
The
Tasiast
Phase
Two
project
is
proceeding
on
schedule,
as
Phase
One
nears
completion.
Project
and
construction
teams
are
expected
to
transition
from
Phase
One
to
Phase
Two
development
to
establish
continuity
between
projects.
Overall
engineering
is
now
33%
complete
and
procurement
is
progressing
well,
with
the
power
plant
and
EPCM
contracts
now
awarded.
Early
works
for
the
ball
mill
and
power
plant
are
expected
to
commence
in
the
second
quarter
of
2018.
Phase
Two
is
expected
to
begin
commercial
production
in
the
third
quarter
of
2020.
The
Company
is
considering
an
asset
level
financing
for
Tasiast
and
has
initiated
discussions
to
better
understand
the
level
of
interest
from
potential
primary
lenders.
Once
initial
feedback
has
been
received,
the
Company
will
decide
whether
to
proceed
and
identify
additional
potential
lenders
in
order
to
complete
the
financing.
Also
in
connection
with
Tasiast,
the
Company
has
completed
a
political
risk
insurance
policy
agreement
with
the
Multilateral
Investment
Guarantee
Agency,
a
member
of
the
World
Bank.
Bald
Mountain
Vantage
Complex
The
Vantage
Complex
project
is
proceeding
on
schedule,
with
initial
construction
work
now
well
underway
and
engineering
more
than
80%
complete.
Permitting
is
proceeding
as
planned
and contractors
for
more
than
half
the
scope
of
the
project
work
have
been
selected.
Commissioning
for
the
proposed
heap
leach
pad
and
processing
facilities
is
expected
to
commence
in
the
first
quarter
of
2019.
Moroshka
project
At
the
Moroshka
satellite
deposit
in
Russia,
located
approximately
four
kilometres
east
of
Kupol,
development
of
the
twin
declines
continues
to
proceed
on
schedule
and
on
budget.
Mining
of
high-‐grade
ore
at
Moroshka
is
expected
to
commence
in
the
second
half
of
2018
for
processing
in
the
Kupol
mill.
Round
Mountain
Phase
W
Stripping,
initial
construction
and
site
preparation
activities
commenced
ahead
of
schedule
in
late
2017
after
the
receipt
of
the
Decision
Record
and
other
approvals
from
the
U.S.
Bureau
of
Land
Management.
The
construction
management
team
for
Phase
W
has
been
mobilized
to
site
and
earthworks
have
begun
in
the
project
area.
Detailed
engineering
is
progressing
on
schedule,
with
heap
leach
engineering
complete
and
mine
infrastructure
and
processing
facility
engineering
approximately
50%
complete.
Procurement
activities
are
underway
for
critical
long
lead
items
and
tracking
according
to
plan.
State
permitting
is
proceeding
as
planned,
with
all
major
permits
now
received.
The
Phase
W
project
remains
on
schedule,
with
initial
low
grade
ore
expected
to
be
encountered
in
mid-‐2019.
Fort
Knox
Gilmore
Permitting
activities
have
commenced
and
feasibility
study
activities
are
ongoing
for
the
Gilmore
project.
The
feasibility
study,
which
is
expected
to
be
completed
in
mid-‐2018,
is
assessing
a
multi-‐phase
layback
of
the
Fort
Knox
pit
and
the
construction
of
a
new
heap
leach
pad.
The
Company
gained
mineral
rights
to
the
Gilmore
land,
which
is
located
immediately
west
of
the
Fort
Knox
pit,
on
December
12,
2017.
As
a
result,
the
Company
added
2.1
million
gold
ounces
in
estimated
measured
and
indicated
resources
and
300,000
ounces
in
estimated
inferred
resources.
This
was
offset
by
a
conversion
of
254,000
ounces
of
mineral
resources
to
mineral
reserves,
for
a
net
addition
of
1.8
million
ounces
to
measured
and
indicated
resource
estimates.
An
additional
199,000
ounces
was
added
to
estimated
inferred
resources
from
exploration
and
engineering
for
a
total
increase
of
499,000
ounces
to
inferred
resource
estimates.
12
13 KINROSS ANNUAL REPORT MDA
13
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Tasiast
Sud
project
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Disposition
of
Interest
in
White
Gold
The
Tasiast
Sud
pre-‐feasibility
study
(“PFS”)
is
proceeding
as
planned
and
is
expected
to
be
completed
in
the
second
half
of
2018.
The
PFS
is
contemplating
a
potential
dump
leach
operation
that
would
combine
materials
from
multiple
deposits
in
the
area,
and
the
trucking
of
high
grade
ore
to
the
Tasiast
mill,
located
approximately
10
kilometres
north
of
the
project.
The
Company
added
approximately
820,000
ounces
to
inferred
mineral
resource
estimates
at
Tasiast
Sud
in
2017.
La
Coipa
restart
project
Compania
Minera
Mantos
de
Oro
(“MDO”),
a
subsidiary
of
the
Company,
currently
holds
a
50%
ownership
interest
in
the
Phase
7
deposit
through
its
50%
ownership
of
Minera
La
Coipa
(“MLC”),
with
the
remaining
50%
held
by
Salmones
de
Chile
Alimentos
S.A.
(“SDCA”).
Pursuant
to
an
agreement
signed
on
February
2,
2018,
MDO,
MLC
and
SDCA
have
agreed,
among
other
things,
to
spin
out
the
Phase
7
concessions
into
a
new
company
and
MDO
has
agreed
to
purchase
SDCA’s
50%
interest
in
such
company
in
exchange
for
payments
to
SDCA
totaling
$65
million
($35
million
on
closing
and
$30
million
on
or
before
January
31,
2019).
Following
completion
of
the
transaction,
MDO
will
have
a
100%
ownership
interest
in
the
Phase
7
deposit.
The
transaction
is
subject
to
certain
conditions
and
is
expected
to
close
within
90
days.
In
2017,
approximately
844,000
ounces
of
gold
and
34
million
ounces
of
silver
at
Phase
7
and
Puren,
which
comprise
the
La
Coipa
Restart
project,
was
converted
to
estimated
mineral
reserves
from
estimated
mineral
resources.
The
scope
of
work
contemplated
by
the
project
PFS
included
modifications
and
enhancements
to
the
existing
plant
and
infrastructure
in
order
to
allow
blending
and
processing
of
higher
grade
material
from
the
Phase
7
deposit
with
oxide/transition
material
from
the
existing
Puren
deposit.
The
Company
received
approval
on
the
project
Declaration
of
Impact
to
Environment
(“DIA”)
permit
in
2016
and
expects
to
receive
sectoral
permits
in
the
first
half
of
2018.
Paracatu
update
Paracatu
resumed
mining
and
processing
activities
in
the
fourth
quarter
of
2017
as
sufficient
water
became
available.
The
Company
continues
to
advance
its
water
mitigation
efforts
to
prepare
for
potential
lower
rainfall
levels
in
the
future.
These
efforts
include
securing
ground
water
rights
and
installation
of
wells
around
the
site.
Brazilian
royalty
legislation
On
July
26,
2017,
Brazilian
President
Temer
signed
certain
provisional
measures
related
to
the
mining
sector
which,
among
other
things,
increase
the
royalty
on
gold
and
on
silver
from
1%
and
0.2%
of
net
sales,
respectively,
to
2%
of
gross
revenues.
The
royalty
increase
for
gold
was
subsequently
reduced
to
1.5%.
The
law
was
approved
and
came
into
force
as
of
January
1,
2018.
Paracatu
optimization
studies
Kinross
has
recently
completed
initial
optimization
and
analysis
work
for
Paracatu.
The
optimization
and
analysis
work
focused
on
determining
the
optimal
mine
plan
after
taking
into
account
changes
undertaken
at
Paracatu
over
the
past
few
years.
The
optimization
work
also
assessed
the
impact
of
throughput
variances
in
quartzite-‐impacted
zones,
lower
realized
recoveries
in
certain
zones
of
the
ore
body,
water
mitigation
projects,
local
cost
inflation,
and
changes
to
the
fiscal
regime
in
Brazil.
The
technical
work
resulted
in
an
increase
of
332,000
ounces
to
the
site’s
mineral
reserves
estimates
before
2017
depletion
and
expects
to
extend
Paracatu’s
mine
life
to
2032.
Recent
Transactions
Disposition
of
Interest
in
Cerro
Casale
On
March
28,
2017,
the
Company
announced
it
had
entered
into
an
agreement
to
sell
its
25%
interest
in
the
Cerro
Casale
project,
and
its
100%
interest
in
the
Quebrada
Seca
exploration
project
in
Chile
to
Goldcorp.
On
June
9,
2017,
the
Company
completed
the
sale
for
gross
cash
proceeds
of
$260.0
million
(which
included
$20.0
million
for
Quebrada
Seca),
a
contingent
payment
of
$40.0
million
following
a
construction
decision
for
Cerro
Casale,
the
assumption
by
Goldcorp
of
a
$20.0
million
contingent
payment
obligation
payable
to
Barrick
Gold
Corporation
(“Barrick”)
when
production
at
Cerro
Casale
commences,
and
a
1.25%
royalty
on
25%
of
gross
revenues
from
all
metals
sold
at
the
properties
(with
the
Company
foregoing
the
first
$10.0
million).
Additionally
on
closing,
the
Company
entered
into
a
water
supply
agreement
with
the
Cerro
Casale
joint
venture
to
have
certain
rights
to
access,
up
to
a
fixed
amount,
water
not
required
by
the
Cerro
Casale
joint
venture.
On
May
18,
2017,
the
Company
entered
into
an
agreement
with
White
Gold
Corp.
to
sell
its
100%
interest
in
the
White
Gold
exploration
project
in
the
Yukon
Territory.
On
June
14,
2017,
the
Company
completed
the
sale
for
gross
cash
proceeds
of
$7.6
million
(CDN$10.0
million),
17.5
million
common
shares
of
White
Gold
Corp.
representing
19.9%
of
the
issued
and
outstanding
shares
of
White
Gold
Corp.,
and
deferred
payments
of
$11.4
million
(CDN$15.0
million),
payable
in
three
equal
payments
of
$3.8
million
(CDN$5.0
million)
upon
completion
of
specific
milestones.
Completion
of
$500.0
million
Unsecured
Debt
Offering
On
July
6,
2017,
Kinross
completed
a
$500.0
million
offering
of
debt
securities
consisting
of
4.50%
senior
notes
due
2027.
Kinross
received
net
proceeds
of
$494.7
million
from
the
offering,
after
payment
of
related
fees
and
expenses.
The
notes
rank
equally
with
the
Company’s
existing
senior
notes.
The
proceeds
from
this
transaction
were
used
to
fully
repay
the
outstanding
balance
of
the
$500.0
million
term
loan
on
July
12,
2017.
Disposition
of
Interest
in
DeLamar
On
September
18,
2017,
the
Company
entered
into
an
agreement
with
Integra
to
sell
its
100%
interest
in
DeLamar.
On
November
3,
2017,
the
Company
completed
the
sale
for
cash
consideration
and
a
non-‐interest
bearing
promissory
note,
payable
18
months
after
closing,
totaling
$5.6
million
(CDN$7.2
million),
common
shares
representing
9.9%
of
the
issued
and
outstanding
shares
of
Integra,
and
a
2.5%
net
smelter
return
royalty
that
will
be
reduced
to
1%
when
royalty
payments
have
accumulated
to
$7.8
On
February
14,
2018,
Kinross
Brasil
Mineração
(“KBM”),
a
subsidiary
of
the
Company,
signed
an
agreement
to
acquire
two
hydroelectric
power
plants
in
the
State
of
Goias,
Brazil
from
a
subsidiary
of
Gerdau
SA
for
$257.0
million.
The
two
plants
are
expected
to
secure
a
long-‐term
supply
of
power
and
lower
production
costs
over
the
life
of
the
mine
at
Paracatu.
The
transaction
is
subject
to
regulatory
approvals
and
is
expected
to
close
in
approximately
three
to
six
months.
million
(CDN$10.0
million).
Acquisition
of
Power
Plants
in
Brazil
Other
Developments
Board
of
Directors
update
Kinross
has
appointed
Mr.
Kerry
Dyte
to
its
Board
of
Directors
effective
as
of
November
8,
2017.
Mr.
John
M.H.
Huxley,
who
has
been
a
Kinross
Board
member
since
1993,
retired
effective
as
of
December
31,
2017.
14
KINROSS ANNUAL REPORT MDA 14
15
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Disposition
of
Interest
in
White
Gold
On
May
18,
2017,
the
Company
entered
into
an
agreement
with
White
Gold
Corp.
to
sell
its
100%
interest
in
the
White
Gold
exploration
project
in
the
Yukon
Territory.
On
June
14,
2017,
the
Company
completed
the
sale
for
gross
cash
proceeds
of
$7.6
million
(CDN$10.0
million),
17.5
million
common
shares
of
White
Gold
Corp.
representing
19.9%
of
the
issued
and
outstanding
shares
of
White
Gold
Corp.,
and
deferred
payments
of
$11.4
million
(CDN$15.0
million),
payable
in
three
equal
payments
of
$3.8
million
(CDN$5.0
million)
upon
completion
of
specific
milestones.
Completion
of
$500.0
million
Unsecured
Debt
Offering
On
July
6,
2017,
Kinross
completed
a
$500.0
million
offering
of
debt
securities
consisting
of
4.50%
senior
notes
due
2027.
Kinross
received
net
proceeds
of
$494.7
million
from
the
offering,
after
payment
of
related
fees
and
expenses.
The
notes
rank
equally
with
the
Company’s
existing
senior
notes.
The
proceeds
from
this
transaction
were
used
to
fully
repay
the
outstanding
balance
of
the
$500.0
million
term
loan
on
July
12,
2017.
Disposition
of
Interest
in
DeLamar
On
September
18,
2017,
the
Company
entered
into
an
agreement
with
Integra
to
sell
its
100%
interest
in
DeLamar.
On
November
3,
2017,
the
Company
completed
the
sale
for
cash
consideration
and
a
non-‐interest
bearing
promissory
note,
payable
18
months
after
closing,
totaling
$5.6
million
(CDN$7.2
million),
common
shares
representing
9.9%
of
the
issued
and
outstanding
shares
of
Integra,
and
a
2.5%
net
smelter
return
royalty
that
will
be
reduced
to
1%
when
royalty
payments
have
accumulated
to
$7.8
million
(CDN$10.0
million).
Paracatu
resumed
mining
and
processing
activities
in
the
fourth
quarter
of
2017
as
sufficient
water
became
available.
The
Company
continues
to
advance
its
water
mitigation
efforts
to
prepare
for
potential
lower
rainfall
levels
in
the
future.
These
efforts
include
securing
ground
water
rights
and
installation
of
wells
around
the
site.
Acquisition
of
Power
Plants
in
Brazil
On
February
14,
2018,
Kinross
Brasil
Mineração
(“KBM”),
a
subsidiary
of
the
Company,
signed
an
agreement
to
acquire
two
hydroelectric
power
plants
in
the
State
of
Goias,
Brazil
from
a
subsidiary
of
Gerdau
SA
for
$257.0
million.
The
two
plants
are
expected
to
secure
a
long-‐term
supply
of
power
and
lower
production
costs
over
the
life
of
the
mine
at
Paracatu.
The
transaction
is
subject
to
regulatory
approvals
and
is
expected
to
close
in
approximately
three
to
six
months.
Other
Developments
Board
of
Directors
update
Kinross
has
appointed
Mr.
Kerry
Dyte
to
its
Board
of
Directors
effective
as
of
November
8,
2017.
Mr.
John
M.H.
Huxley,
who
has
been
a
Kinross
Board
member
since
1993,
retired
effective
as
of
December
31,
2017.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Tasiast
Sud
project
The
Tasiast
Sud
pre-‐feasibility
study
(“PFS”)
is
proceeding
as
planned
and
is
expected
to
be
completed
in
the
second
half
of
2018.
The
PFS
is
contemplating
a
potential
dump
leach
operation
that
would
combine
materials
from
multiple
deposits
in
the
area,
and
the
trucking
of
high
grade
ore
to
the
Tasiast
mill,
located
approximately
10
kilometres
north
of
the
project.
The
Company
added
approximately
820,000
ounces
to
inferred
mineral
resource
estimates
at
Tasiast
Sud
in
2017.
La
Coipa
restart
project
Compania
Minera
Mantos
de
Oro
(“MDO”),
a
subsidiary
of
the
Company,
currently
holds
a
50%
ownership
interest
in
the
Phase
7
deposit
through
its
50%
ownership
of
Minera
La
Coipa
(“MLC”),
with
the
remaining
50%
held
by
Salmones
de
Chile
Alimentos
S.A.
(“SDCA”).
Pursuant
to
an
agreement
signed
on
February
2,
2018,
MDO,
MLC
and
SDCA
have
agreed,
among
other
things,
to
spin
out
the
Phase
7
concessions
into
a
new
company
and
MDO
has
agreed
to
purchase
SDCA’s
50%
interest
in
such
company
in
exchange
for
payments
to
SDCA
totaling
$65
million
($35
million
on
closing
and
$30
million
on
or
before
January
31,
2019).
Following
completion
of
the
transaction,
MDO
will
have
a
100%
ownership
interest
in
the
Phase
7
deposit.
The
transaction
is
subject
to
certain
conditions
and
is
expected
to
close
within
90
days.
In
2017,
approximately
844,000
ounces
of
gold
and
34
million
ounces
of
silver
at
Phase
7
and
Puren,
which
comprise
the
La
Coipa
Restart
project,
was
converted
to
estimated
mineral
reserves
from
estimated
mineral
resources.
The
scope
of
work
contemplated
by
the
project
PFS
included
modifications
and
enhancements
to
the
existing
plant
and
infrastructure
in
order
to
allow
blending
and
processing
of
higher
grade
material
from
the
Phase
7
deposit
with
oxide/transition
material
from
the
existing
Puren
deposit.
The
Company
received
approval
on
the
project
Declaration
of
Impact
to
Environment
(“DIA”)
permit
in
2016
and
expects
to
receive
sectoral
permits
in
the
first
half
of
2018.
Paracatu
update
Brazilian
royalty
legislation
Paracatu
optimization
studies
Paracatu’s
mine
life
to
2032.
Recent
Transactions
Disposition
of
Interest
in
Cerro
Casale
On
July
26,
2017,
Brazilian
President
Temer
signed
certain
provisional
measures
related
to
the
mining
sector
which,
among
other
things,
increase
the
royalty
on
gold
and
on
silver
from
1%
and
0.2%
of
net
sales,
respectively,
to
2%
of
gross
revenues.
The
royalty
increase
for
gold
was
subsequently
reduced
to
1.5%.
The
law
was
approved
and
came
into
force
as
of
January
1,
2018.
Kinross
has
recently
completed
initial
optimization
and
analysis
work
for
Paracatu.
The
optimization
and
analysis
work
focused
on
determining
the
optimal
mine
plan
after
taking
into
account
changes
undertaken
at
Paracatu
over
the
past
few
years.
The
optimization
work
also
assessed
the
impact
of
throughput
variances
in
quartzite-‐impacted
zones,
lower
realized
recoveries
in
certain
zones
of
the
ore
body,
water
mitigation
projects,
local
cost
inflation,
and
changes
to
the
fiscal
regime
in
Brazil.
The
technical
work
resulted
in
an
increase
of
332,000
ounces
to
the
site’s
mineral
reserves
estimates
before
2017
depletion
and
expects
to
extend
On
March
28,
2017,
the
Company
announced
it
had
entered
into
an
agreement
to
sell
its
25%
interest
in
the
Cerro
Casale
project,
and
its
100%
interest
in
the
Quebrada
Seca
exploration
project
in
Chile
to
Goldcorp.
On
June
9,
2017,
the
Company
completed
the
sale
for
gross
cash
proceeds
of
$260.0
million
(which
included
$20.0
million
for
Quebrada
Seca),
a
contingent
payment
of
$40.0
million
following
a
construction
decision
for
Cerro
Casale,
the
assumption
by
Goldcorp
of
a
$20.0
million
contingent
payment
obligation
payable
to
Barrick
Gold
Corporation
(“Barrick”)
when
production
at
Cerro
Casale
commences,
and
a
1.25%
royalty
on
25%
of
gross
revenues
from
all
metals
sold
at
the
properties
(with
the
Company
foregoing
the
first
$10.0
million).
Additionally
on
closing,
the
Company
entered
into
a
water
supply
agreement
with
the
Cerro
Casale
joint
venture
to
have
certain
rights
to
access,
up
to
a
fixed
amount,
water
not
required
by
the
Cerro
Casale
joint
venture.
14
15 KINROSS ANNUAL REPORT MDA
15
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
5. CONSOLIDATED
RESULTS
OF
OPERATIONS
Operating Highlights
(in
millions,
except
ounces
and
per
ounce
amounts)
Operating
Statistics
Total
gold
equivalent
ounces
(a)
Produced
(c)
Sold
(c)
Attributable
gold
equivalent
ounces
(a)
Produced
(c)
Sold
(c)
Gold
ounces
-‐
sold
Silver
ounces
-‐
sold
(000's)
Average
realized
gold
price
per
ounce (b)
Financial
data
Metal
sales
Production
cost
of
sales
Depreciation,
depletion
and
amortization
Impairment,
net
of
reversals
Operating
earnings
(loss)
Net
earnings
(loss)
attributable
to
common
shareholders
Years
ended
December
31,
2017
vs.
2016
2016
vs.
2015
2017
2016
2015
Change
%
Change
(d)
Change
%
Change
2,698,136
2,810,345
2,620,262
2,621,875
2,778,902
2,634,867
(112,209)
(157,027)
(4%)
(6%)
190,083
144,035
2,673,533
2,789,150
2,594,652
2,596,754
2,758,306
2,608,870
(115,617)
(161,552)
2,553,178
2,697,912
2,562,219
(144,734)
5,058
5,913
5,378
(855)
(4%)
(6%)
(5%)
(14%)
194,498
149,436
135,693
535
$
1,260
$
1,249
$
1,159
$
11
1%
$
90
$
3,303.0
$
3,472.0
$
3,052.2
$
(169.0)
(5%)
$
419.8
$
1,757.4
$
1,983.8
$
1,834.8
$
(226.4)
(11%)
$
149.0
$
$
819.4
21.5
$
$
855.0
139.6
$
$
897.7
699.0
$
$
(35.6)
(118.1)
$
$
336.5
445.4
$
$
46.3
(104.0)
$
$
(742.9)
(984.5)
$
$
290.2
549.4
(4%)
(85%)
$
$
(42.7)
(559.4)
nm
nm
$
$
789.2
880.5
7%
5%
7%
6%
5%
10%
8%
14%
8%
(5%)
(80%)
106%
89%
(a)
(b)
(c)
"Total"
includes
100%
of
Chirano
production.
"Attributable"
includes
Kinross'
share
of
Chirano
(90%)
production.
The
definition
of
this
non-‐GAAP
financial
measure
is
included
in
Section
11
of
this
document.
"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
2017
was
73.72:1
(2016
-‐
72.95:1
and
2015
-‐
73.92:1).
(d)
"nm"
means
not
meaningful.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Operating
Earnings
(Loss)
by
Segment
(in
millions)
Operating
segments
Fort
Knox
Round
Mountain
Bald
Mountain
Kettle
River-‐Buckhorn
Paracatu
Maricunga
Kupol
(a)
Tasiast
Chirano
Non-‐operating
segment
Corporate
and
Other
(b)
Total
Years
ended
December
31,
2017
vs.
2016
2016
vs.
2015
2017
2016
2015
Change
%
Change
(c)
Change
%
Change
(c)
$
224.7
$
110.0
$
(180.8)
$
114.7
104%
$
290.8
139.7
68.5
43.4
(263.3)
21.3
225.0
118.8
(27.5)
85.8
(37.4)
64.0
36.2
(150.6)
345.3
(119.9)
(58.0)
(8.9)
-‐
30.3
24.4
(60.4)
150.1
(361.2)
(70.1)
53.9
105.9
(20.6)
(299.5)
171.9
(120.3)
238.7
30.5
63%
nm
(32%)
nm
114%
(35%)
199%
53%
94.7
(37.4)
33.7
11.8
(90.2)
195.2
241.3
12.1
(214.1)
(229.1)
(266.3)
15.0
$
336.5
$
46.3
$
(742.9)
$
290.2
7%
nm
37.2
$
789.2
161%
nm
nm
111%
48%
(149%)
130%
67%
17%
14%
106%
(a )
T he
K upol
s eg ment
inc ludes
the
K upol
a nd
Dvoinoye
mines .
(b)
"C orpora te
a nd
O ther"
inc ludes
opera ting
c os ts
whic h
a re
not
direc tly
rela ted
to
individua l
mining
properties
s uc h
a s
overhea d
expens es ,
g a ins
a nd
los s es
on
dis pos a l
of
a s s ets
a nd
inves tments ,
a nd
other
c os ts
rela ting
to
non-‐ opera ting
a s s ets
(inc luding
L a
C oipa ,
L obo-‐ Ma rte,
C erro
C a s a le
until
its
dis pos a l
on
J une
9,
2017
a nd
White
G old
until
its
dis pos a l
on
J une
14,
2017).
(c)
"nm"
means
not
meaningful.
16
KINROSS ANNUAL REPORT MDA 16
17
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
5. CONSOLIDATED
RESULTS
OF
OPERATIONS
Operating Highlights
(in
millions,
except
ounces
and
per
ounce
amounts)
Operating
Statistics
Total
gold
equivalent
ounces
(a)
Produced
(c)
Sold
(c)
Produced
(c)
Sold
(c)
Attributable
gold
equivalent
ounces
(a)
Gold
ounces
-‐
sold
Silver
ounces
-‐
sold
(000's)
Average
realized
gold
price
per
ounce (b)
Financial
data
Metal
sales
Production
cost
of
sales
Depreciation,
depletion
and
amortization
Impairment,
net
of
reversals
Operating
earnings
(loss)
Years
ended
December
31,
2017
vs.
2016
2016
vs.
2015
2017
2016
2015
Change
%
Change
(d)
Change
%
Change
2,698,136
2,810,345
2,620,262
2,621,875
2,778,902
2,634,867
(112,209)
(157,027)
(4%)
(6%)
190,083
144,035
2,673,533
2,789,150
2,594,652
2,596,754
2,758,306
2,608,870
(115,617)
(161,552)
2,553,178
2,697,912
2,562,219
(144,734)
5,058
5,913
5,378
(855)
(4%)
(6%)
(5%)
(14%)
194,498
149,436
135,693
535
$
1,260
$
1,249
$
1,159
$
11
1%
$
90
$
3,303.0
$
3,472.0
$
3,052.2
$
(169.0)
(5%)
$
419.8
$
1,757.4
$
1,983.8
$
1,834.8
$
(226.4)
(11%)
$
149.0
$
819.4
$
855.0
$
897.7
$
(35.6)
(4%)
$
(42.7)
$
21.5
$
139.6
$
699.0
$
(118.1)
(85%)
$
(559.4)
$
336.5
$
46.3
$
(742.9)
$
290.2
nm
nm
$
789.2
$
880.5
7%
5%
7%
6%
5%
10%
8%
14%
8%
(5%)
(80%)
106%
89%
Net
earnings
(loss)
attributable
to
common
shareholders
$
445.4
$
(104.0)
$
(984.5)
$
549.4
"Total"
includes
100%
of
Chirano
production.
"Attributable"
includes
Kinross'
share
of
Chirano
(90%)
production.
The
definition
of
this
non-‐GAAP
financial
measure
is
included
in
Section
11
of
this
document.
(a)
(b)
(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
2017
was
73.72:1
(2016
-‐
72.95:1
and
2015
-‐
73.92:1).
(d)
"nm"
means
not
meaningful.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Operating
Earnings
(Loss)
by
Segment
(in
millions)
Operating
segments
Fort
Knox
Round
Mountain
Bald
Mountain
Kettle
River-‐Buckhorn
Paracatu
Maricunga
Kupol
(a)
Tasiast
Chirano
Non-‐operating
segment
Corporate
and
Other
(b)
Total
Years
ended
December
31,
2017
vs.
2016
2016
vs.
2015
2017
2016
2015
Change
%
Change
(c)
Change
%
Change
(c)
$
224.7
139.7
68.5
43.4
(263.3)
21.3
$
110.0
85.8
(37.4)
64.0
36.2
(150.6)
$
(180.8)
(8.9)
-‐
30.3
24.4
(60.4)
$
114.7
53.9
105.9
(20.6)
(299.5)
171.9
225.0
118.8
(27.5)
345.3
(119.9)
(58.0)
150.1
(361.2)
(70.1)
(120.3)
238.7
30.5
104%
63%
nm
(32%)
nm
114%
(35%)
199%
53%
$
290.8
94.7
(37.4)
33.7
11.8
(90.2)
195.2
241.3
12.1
(214.1)
336.5
$
(229.1)
46.3
$
(266.3)
(742.9)
$
15.0
290.2
$
7%
nm
37.2
789.2
$
161%
nm
nm
111%
48%
(149%)
130%
67%
17%
14%
106%
(a )
T he
K upol
s eg ment
inc ludes
the
K upol
a nd
Dvoinoye
mines .
(b)
"C orpora te
a nd
O ther"
inc ludes
opera ting
c os ts
whic h
a re
not
direc tly
rela ted
to
individua l
mining
properties
s uc h
a s
overhea d
expens es ,
g a ins
a nd
los s es
on
dis pos a l
of
a s s ets
a nd
inves tments ,
a nd
other
c os ts
rela ting
to
non-‐ opera ting
a s s ets
(inc luding
L a
C oipa ,
L obo-‐ Ma rte,
C erro
C a s a le
until
its
dis pos a l
on
J une
9,
2017
a nd
White
G old
until
its
dis pos a l
on
J une
14,
2017).
(c)
"nm"
means
not
meaningful.
16
17 KINROSS ANNUAL REPORT MDA
17
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Round
Mountain
(100%
ownership
and
operator)
–
USA
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
Years
ended
December
31,
2017
2016
Change
%
Change
26,418
23,270
1.41
81.2%
23,530
23,713
0.98
80.7%
2,888
(443)
0.43
0.5%
436,932
438,051
378,264
377,910
58,668
60,141
$
552.2
$
477.1
$
75.1
302.5
107.4
142.3
2.6
292.0
94.7
90.4
4.6
10.5
12.7
51.9
(2.0)
12%
(2%)
44%
1%
16%
16%
16%
4%
13%
57%
(43%)
63%
Depreciation,
depletion
and
amortization
Exploration
and
business
development
Segment
operating
earnings
$
139.7
$
85.8
$
53.9
(a )
Inc ludes
19,611,000
to nnes
pla c ed
o n
the
hea p
lea c h
pa ds
during
2017
(2016
-‐
20,084,000
to nnes ).
(b)
A m o unt
repres ents
m ill
g ra de
a nd
rec o v ery
o nly.
O re
pla c ed
o n
the
hea p
lea c h
pa ds
ha d
a n
a v era g e
g ra de
o f
0.50
g ram s
per
to nne
during
2017
(2016
-‐
0.44
g ram s
per
to nne).
D ue
to
the
na ture
o f
hea p
lea c h
o pera tio ns ,
po int-‐
in-‐tim e
rec o v ery
ra tes
a re
no t
m ea ning ful.
The
Company
acquired
its
50%
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.
On
January
11,
2016,
the
Company
acquired
the
remaining
50%
interest
in
Round
Mountain,
along
with
the
Bald
Mountain
gold
mine
from
Barrick.
During
2017,
tonnes
of
ore
mined
and
mill
grade
increased
by
12%
and
44%
respectively,
compared
with
2016,
primarily
due
to
mine
sequencing
which
involved
mining
in
a
deeper
location
with
higher
grade.
Gold
equivalent
ounces
produced
increased
by
16%
compared
with
2016,
primarily
due
to
higher
mill
grade.
Metal
sales
increased
to
$552.2
million
in
2017
from
$477.1
million
in
2016
due
to
an
increase
in
gold
equivalent
ounces
sold.
During
2017,
production
cost
of
sales
increased
by
4%
compared
to
2016,
mainly
due
to
the
increase
in
gold
equivalent
ounces
sold
partially
offset
by
a
decrease
in
labour
and
contractor
costs
by
7%.
Depreciation,
depletion
and
amortization
increased
to
$107.4
million
in
2017
from
$94.7
million
in
2016,
primarily
due
to
increases
in
gold
equivalent
ounces
sold
and
the
depreciable
asset
base,
slightly
offset
by
an
increase
in
the
mineral
reserves
at
the
end
of
the
third
quarter
of
2017.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Mining
Operations
Fort
Knox
(100%
ownership
and
operator)
–
USA
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
reversal
Exploration
and
business
development
Other
Segment
operating
earnings
Years
ended
December
31,
2017
2016
Change
%
Change
(c)
26,362
32,736
0.84
82.5%
31,750
42,360
0.69
82.8%
(5,388)
(9,624)
0.15
(0.3%)
381,115
381,779
409,844
408,059
(28,729)
(26,280)
$
$
481.1
239.9
86.6
(88.6)
243.2
9.0
9.5
224.7
$
510.8
302.2
88.7
-‐
119.9
8.9
1.0
110.0
$
(29.7)
(62.3)
(2.1)
(88.6)
123.3
0.1
8.5
114.7
$
$
(17%)
(23%)
22%
(0%)
(7%)
(6%)
(6%)
(21%)
(2%)
nm
103%
1%
nm
104%
(a )
(b)
Inc ludes
20,267,000
to nnes
pla c ed
o n
the
hea p
lea c h
pa ds
during
2017
(2016
-‐
29,142,000
to nnes ).
A m o unt
repres ents
m ill
g ra de
a nd
rec o v ery
o nly.
O re
pla c ed
o n
the
hea p
lea c h
pa ds
ha d
a n
a v era g e
g ra de
o f
0.25
g ram s
per
to nne
during
2017
(2016
-‐
0.27
g ram s
per
to nne).
D ue
to
the
na ture
o f
hea p
lea c h
o pera tio ns ,
po int-‐in-‐tim e
rec o v ery
ra tes
a re
no t
m ea ning ful.
(c )
"nm "
m ea ns
no t
m ea ning ful.
The
Company
has
been
operating
the
Fort
Knox
mine,
located
near
Fairbanks,
Alaska,
since
it
was
acquired
in
1998.
2017
vs.
2016
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
decreased
by
17%
compared
with
2016,
primarily
due
to
planned
mine
sequencing,
which
involved
increased
capitalized
stripping.
Tonnes
of
ore
processed
were
lower
by
23%
in
2017
compared
with
2016,
largely
due
to
fewer
tonnes
placed
on
the
heap
leach
pads
as
a
result
of
the
decrease
in
ore
mined. Mill
grades
were
22%
higher
in
2017
compared
with
2016
as
a
result
of
mine
sequencing.
Gold
equivalent
ounces
produced
decreased
by
7%
compared
with
2016,
primarily
due
to
a
decrease
in
ounces
produced
from
the
heap
leach
pads
as
a
result
of
fewer
tonnes
placed,
offset
by
an
increase
in
mill
grades.
Metal
sales
were
6%
lower
in
2017
compared
with
2016
due
to
a
decrease
in
gold
equivalent
ounces
sold.
During
2017,
production
cost
of
sales
was
lower
by
21%
compared
with
2016,
due
to
less
operating
waste
mined
and
an
8%
decrease
in
labour
and
contractor
costs,
partially
offset
by
a
17%
increase
in
maintenance
and
power
costs.
Depreciation,
depletion
and
amortization
in
2017
decreased
by
2%,
mainly
due
to
lower
gold
equivalent
ounces
sold,
partially
offset
by
an
increase
in
the
depreciable
asset
base.
At
December
31,
2017,
the
Company
recognized
a
reversal
of
previously
recorded
impairment
charges
of
$88.6
million.
The
non-‐
cash
impairment
reversal
related
to
property,
plant
and
equipment
was
primarily
due
to
an
increase
in
the
Company’s
estimates
of
future
metal
prices
and
additions
to
Fort
Knox’s
mineral
reserve
estimates.
No
such
impairment
reversal
was
recognized
in
2016.
During
2017,
other
operating
costs
of
$9.5
million
primarily
includes
costs
related
to
the
Gilmore
feasibility
study.
18
KINROSS ANNUAL REPORT MDA 18
19
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Mining
Operations
Fort
Knox
(100%
ownership
and
operator)
–
USA
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Round
Mountain
(100%
ownership
and
operator)
–
USA
Years
ended
December
31,
2017
2016
Change
%
Change
$
$
$
$
$
75.1
10.5
12.7
51.9
(2.0)
53.9
552.2
302.5
107.4
142.3
2.6
139.7
477.1
292.0
94.7
90.4
4.6
85.8
12%
(2%)
44%
1%
16%
16%
16%
4%
13%
57%
(43%)
63%
26,418
23,270
1.41
81.2%
23,530
23,713
0.98
80.7%
2,888
(443)
0.43
0.5%
436,932
438,051
378,264
377,910
58,668
60,141
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
Exploration
and
business
development
Segment
operating
earnings
Years
ended
December
31,
2017
2016
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
reversal
Exploration
and
business
development
26,362
32,736
0.84
82.5%
31,750
42,360
0.69
82.8%
(5,388)
(9,624)
0.15
(0.3%)
381,115
381,779
409,844
408,059
(28,729)
(26,280)
$
481.1
$
510.8
$
(29.7)
239.9
86.6
(88.6)
243.2
9.0
9.5
302.2
88.7
-‐
119.9
8.9
1.0
(62.3)
(2.1)
(88.6)
123.3
0.1
8.5
Other
(a )
(b)
Segment
operating
earnings
$
224.7
$
110.0
$
114.7
Inc ludes
20,267,000
to nnes
pla c ed
o n
the
hea p
lea c h
pa ds
during
2017
(2016
-‐
29,142,000
to nnes ).
A m o unt
repres ents
m ill
g ra de
a nd
rec o v ery
o nly.
O re
pla c ed
o n
the
hea p
lea c h
pa ds
ha d
a n
a v era g e
g ra de
o f
0.25
g ram s
per
to nne
during
2017
(2016
-‐
0.27
g ram s
per
to nne).
D ue
to
the
na ture
o f
hea p
lea c h
o pera tio ns ,
po int-‐in-‐tim e
rec o v ery
ra tes
a re
no t
m ea ning ful.
(c )
"nm "
m ea ns
no t
m ea ning ful.
(17%)
(23%)
22%
(0%)
(7%)
(6%)
(6%)
(21%)
(2%)
nm
103%
1%
nm
104%
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
decreased
by
17%
compared
with
2016,
primarily
due
to
planned
mine
sequencing,
which
involved
increased
capitalized
stripping.
Tonnes
of
ore
processed
were
lower
by
23%
in
2017
compared
with
2016,
largely
due
to
fewer
tonnes
placed
on
the
heap
leach
pads
as
a
result
of
the
decrease
in
ore
mined. Mill
grades
were
22%
higher
in
2017
compared
with
2016
as
a
result
of
mine
sequencing.
Gold
equivalent
ounces
produced
decreased
by
7%
compared
with
2016,
primarily
due
to
a
decrease
in
ounces
produced
from
the
heap
leach
pads
as
a
result
of
fewer
tonnes
placed,
offset
by
an
increase
in
mill
grades.
Metal
sales
were
6%
lower
in
2017
compared
with
2016
due
to
a
decrease
in
gold
equivalent
ounces
sold.
During
2017,
production
cost
of
sales
was
lower
by
21%
compared
with
2016,
due
to
less
operating
waste
mined
and
an
8%
decrease
in
labour
and
contractor
costs,
partially
offset
by
a
17%
increase
in
maintenance
and
power
costs.
Depreciation,
depletion
and
amortization
in
2017
decreased
by
2%,
mainly
due
to
lower
gold
equivalent
ounces
sold,
partially
offset
by
an
increase
in
the
depreciable
asset
base.
At
December
31,
2017,
the
Company
recognized
a
reversal
of
previously
recorded
impairment
charges
of
$88.6
million.
The
non-‐
cash
impairment
reversal
related
to
property,
plant
and
equipment
was
primarily
due
to
an
increase
in
the
Company’s
estimates
of
future
metal
prices
and
additions
to
Fort
Knox’s
mineral
reserve
estimates.
No
such
impairment
reversal
was
recognized
in
2016.
During
2017,
other
operating
costs
of
$9.5
million
primarily
includes
costs
related
to
the
Gilmore
feasibility
study.
The
Company
has
been
operating
the
Fort
Knox
mine,
located
near
Fairbanks,
Alaska,
since
it
was
acquired
in
1998.
2017
vs.
2016
(a )
Inc ludes
19,611,000
to nnes
pla c ed
o n
the
hea p
lea c h
pa ds
during
2017
(2016
-‐
20,084,000
to nnes ).
(b)
A m o unt
repres ents
m ill
g ra de
a nd
rec o v ery
o nly.
O re
pla c ed
o n
the
hea p
lea c h
pa ds
ha d
a n
a v era g e
g ra de
o f
0.50
g ram s
per
to nne
during
2017
(2016
-‐
0.44
g ram s
per
to nne).
D ue
to
the
na ture
o f
hea p
lea c h
o pera tio ns ,
po int-‐
in-‐tim e
rec o v ery
ra tes
a re
no t
m ea ning ful.
The
Company
acquired
its
50%
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.
On
January
11,
2016,
the
Company
acquired
the
remaining
50%
interest
in
Round
Mountain,
along
with
the
Bald
Mountain
gold
mine
from
Barrick.
During
2017,
tonnes
of
ore
mined
and
mill
grade
increased
by
12%
and
44%
respectively,
compared
with
2016,
primarily
due
to
mine
sequencing
which
involved
mining
in
a
deeper
location
with
higher
grade.
Gold
equivalent
ounces
produced
increased
by
16%
compared
with
2016,
primarily
due
to
higher
mill
grade.
Metal
sales
increased
to
$552.2
million
in
2017
from
$477.1
million
in
2016
due
to
an
increase
in
gold
equivalent
ounces
sold.
During
2017,
production
cost
of
sales
increased
by
4%
compared
to
2016,
mainly
due
to
the
increase
in
gold
equivalent
ounces
sold
partially
offset
by
a
decrease
in
labour
and
contractor
costs
by
7%.
Depreciation,
depletion
and
amortization
increased
to
$107.4
million
in
2017
from
$94.7
million
in
2016,
primarily
due
to
increases
in
gold
equivalent
ounces
sold
and
the
depreciable
asset
base,
slightly
offset
by
an
increase
in
the
mineral
reserves
at
the
end
of
the
third
quarter
of
2017.
18
19 KINROSS ANNUAL REPORT MDA
19
$
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Bald
Mountain
(100%
ownership
and
operator)
–
USA
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Kettle
River–Buckhorn
(100%
ownership
and
operator)
–
USA
2017
Years
ended
December
31,
Change
2016
%
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
Exploration
and
business
development
Other
Segment
operating
earnings
(loss)
21,615
21,615
0.80
282,715
262,916
10,656
10,656
0.64
10,959
10,959
0.16
130,144
111,464
152,571
151,452
$
$
$
331.5
168.9
83.5
79.1
9.5
1.1
68.5
139.6
131.7
38.6
(30.7)
4.7
2.0
(37.4)
191.9
37.2
44.9
109.8
4.8
(0.9)
105.9
$
$
$
103%
103%
25%
117%
136%
137%
28%
116%
nm
102%
(45%)
nm
(a)
(b)
D ue
to
the
nature
o f
heap
leac h
o peratio ns ,
po int-‐in-‐tim e
rec o v ery
rates
are
no t
m eaning ful.
"nm "
m eans
no t
m eaning ful.
The
Company
completed
the
acquisition
of
100%
of
the
Bald
Mountain
open
pit
mine
on
January
11,
2016
from
Barrick,
which
includes
a
large
associated
land
package.
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
and
processed
increased
by
103%
compared
to
2016,
consistent
with
the
mine
plan.
Grade
increased
by
25%
in
2017,
compared
to
2016,
due
to
mine
sequencing
which
involved
mining
in
higher
grade
locations.
Gold
equivalent
ounces
produced
increased
by
117%
compared
to
2016
primarily
due
to
more
ounces
recovered
from
the
heap
leach
pads,
as
a
result
of
more
tonnes
placed
and
the
higher
grade.
Gold
equivalent
ounces
sold
in
2017
were
lower
than
production
due
to
timing
of
sales.
In
2017,
metal
sales
increased
to
$331.5
million
from
$139.6
million
in
2016
due
to
the
increase
in
gold
equivalent
ounces
sold.
Production
cost
of
sales
increased
by
28%
compared
to
2016
due
to
higher
gold
equivalent
ounces
sold
in
addition
to
an
increase
in
labour,
reagents
and
fuel
costs
by
37%,
partially
offset
by
a
33%
decrease
in
maintenance
and
contractor
costs.
Depreciation,
depletion
and
amortization
increased
by
116%
compared
to
2016,
primarily
due
to
increases
in
gold
equivalent
ounces
sold
and
the
depreciable
asset
base.
20
KINROSS ANNUAL REPORT MDA 20
21
Years
ended
December
31,
2017
2016
Change
%
Change (a)
189
234
9.53
438
441
7.84
94.4%
93.3%
(249)
(207)
1.69
1.1%
76,570
77,087
112,274
112,038
(35,704)
(34,951)
$
96.3
$
139.8
$
(43.5)
36.8
0.6
58.9
4.6
10.9
73.0
1.3
65.5
2.2
(0.7)
(36.2)
(0.7)
(6.6)
2.4
11.6
(57%)
(47%)
22%
1%
(32%)
(31%)
(31%)
(50%)
(54%)
(10%)
109%
nm
(32%)
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
Exploration
and
business
development
Other
(a)
"nm"
means
not
meaningful.
mining
activities
were
completed.
2017
vs.
2016
Segment
operating
earnings
$
43.4
$
64.0
$
(20.6)
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.
In
2017,
the
Kettle
River
mine
came
to
the
end
of
its
life
and
Tonnes
of
ore
mined
and
tonnes
processed
decreased
by
57%
and
47%,
respectively,
due
to
the
completion
of
mining
activities
during
2017.
Gold
equivalent
ounces
produced
and
sold
decreased
by
32%
and
31%,
respectively,
compared
with
2016,
primarily
due
to
lower
throughput
offset
by
an
increase
in
grade.
Metal
sales
decreased
by
31%
in
2017
compared
with
2016
due
to
the
decrease
in
gold
equivalent
ounces
sold.
Production
cost
of
sales
and
depreciation,
depletion
and
amortization
decreased
by
50%
and
54%,
respectively,
compared
with
2016,
mainly
due
to
the
completion
of
mining
activities
during
2017.
In
2017,
other
costs
of
$10.9
million
includes
reclamation
expense
related
to
a
revision
of
estimates
for
the
reclamation
and
remediation
obligation
as
the
mine
prepares
for
its
closure.
Years
ended
December
31,
2017
2016
Change
%
Change
(b)
21,615
21,615
0.80
282,715
262,916
168.9
83.5
79.1
9.5
1.1
10,656
10,656
0.64
10,959
10,959
0.16
130,144
111,464
152,571
151,452
131.7
38.6
(30.7)
4.7
2.0
37.2
44.9
109.8
4.8
(0.9)
103%
103%
25%
117%
136%
137%
28%
116%
nm
102%
(45%)
nm
$
331.5
$
139.6
$
191.9
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
Exploration
and
business
development
Other
(a)
(b)
"nm "
m eans
no t
m eaning ful.
includes
a
large
associated
land
package.
2017
vs.
2016
Segment
operating
earnings
(loss)
$
68.5
$
(37.4)
$
105.9
D ue
to
the
nature
o f
heap
leac h
o peratio ns ,
po int-‐in-‐tim e
rec o v ery
rates
are
no t
m eaning ful.
The
Company
completed
the
acquisition
of
100%
of
the
Bald
Mountain
open
pit
mine
on
January
11,
2016
from
Barrick,
which
During
2017,
tonnes
of
ore
mined
and
processed
increased
by
103%
compared
to
2016,
consistent
with
the
mine
plan.
Grade
increased
by
25%
in
2017,
compared
to
2016,
due
to
mine
sequencing
which
involved
mining
in
higher
grade
locations.
Gold
equivalent
ounces
produced
increased
by
117%
compared
to
2016
primarily
due
to
more
ounces
recovered
from
the
heap
leach
pads,
as
a
result
of
more
tonnes
placed
and
the
higher
grade.
Gold
equivalent
ounces
sold
in
2017
were
lower
than
production
due
to
timing
of
sales.
In
2017,
metal
sales
increased
to
$331.5
million
from
$139.6
million
in
2016
due
to
the
increase
in
gold
equivalent
ounces
sold.
Production
cost
of
sales
increased
by
28%
compared
to
2016
due
to
higher
gold
equivalent
ounces
sold
in
addition
to
an
increase
in
labour,
reagents
and
fuel
costs
by
37%,
partially
offset
by
a
33%
decrease
in
maintenance
and
contractor
costs.
Depreciation,
depletion
and
amortization
increased
by
116%
compared
to
2016,
primarily
due
to
increases
in
gold
equivalent
ounces
sold
and
the
depreciable
asset
base.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Bald
Mountain
(100%
ownership
and
operator)
–
USA
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Kettle
River–Buckhorn
(100%
ownership
and
operator)
–
USA
Years
ended
December
31,
2017
2016
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
Exploration
and
business
development
Other
Segment
operating
earnings
(a)
"nm"
means
not
meaningful.
189
234
9.53
94.4%
438
441
7.84
93.3%
(249)
(207)
1.69
1.1%
76,570
77,087
112,274
112,038
(35,704)
(34,951)
$
$
$
96.3
36.8
0.6
58.9
4.6
10.9
43.4
139.8
73.0
1.3
65.5
2.2
(0.7)
64.0
(43.5)
(36.2)
(0.7)
(6.6)
2.4
11.6
(20.6)
$
$
$
(57%)
(47%)
22%
1%
(32%)
(31%)
(31%)
(50%)
(54%)
(10%)
109%
nm
(32%)
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.
In
2017,
the
Kettle
River
mine
came
to
the
end
of
its
life
and
mining
activities
were
completed.
2017
vs.
2016
Tonnes
of
ore
mined
and
tonnes
processed
decreased
by
57%
and
47%,
respectively,
due
to
the
completion
of
mining
activities
during
2017.
Gold
equivalent
ounces
produced
and
sold
decreased
by
32%
and
31%,
respectively,
compared
with
2016,
primarily
due
to
lower
throughput
offset
by
an
increase
in
grade.
Metal
sales
decreased
by
31%
in
2017
compared
with
2016
due
to
the
decrease
in
gold
equivalent
ounces
sold.
Production
cost
of
sales
and
depreciation,
depletion
and
amortization
decreased
by
50%
and
54%,
respectively,
compared
with
2016,
mainly
due
to
the
completion
of
mining
activities
during
2017.
In
2017,
other
costs
of
$10.9
million
includes
reclamation
expense
related
to
a
revision
of
estimates
for
the
reclamation
and
remediation
obligation
as
the
mine
prepares
for
its
closure.
20
21 KINROSS ANNUAL REPORT MDA
21
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Paracatu
(100%
ownership
and
operator)
–
Brazil
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
charge
Other
Segment
operating
earnings
(loss)
(a )
"nm "
m ea ns
no t
m ea ning ful.
Years
ended
December
31,
2017
2016
Change
%
Change
(a)
Years
ended
December
31,
2017
2016
Change
%
Change
(b)
27,770
37,623
0.41
74.6%
47,206
46,816
0.45
72.3%
(19,436)
(9,193)
(0.04)
2.3%
359,959
356,251
483,014
482,827
(123,055)
(126,576)
$
$
447.0
310.2
127.0
253.0
(243.2)
20.1
(263.3)
$
599.6
346.4
142.7
-‐
110.5
74.3
36.2
$
(152.6)
(36.2)
(15.7)
253.0
(353.7)
(54.2)
(299.5)
$
$
(41%)
(20%)
(9%)
3%
(25%)
(26%)
(25%)
(10%)
(11%)
nm
nm
(73%)
nm
The
Company
acquired
a
49%
ownership
interest
in
the
Paracatu
open
pit
mine,
located
in
the
State
of
Minas
Gerais,
Brazil,
upon
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.
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
and
processed
decreased
by
41%
and
20%,
respectively,
compared
to
2016
due
to
a
temporary
curtailment
as
a
result
of
lower
than
average
rainfall
in
the
area.
Grade
decreased
by
9%
in
2017
compared
to
2016
due
to
the
metallurgical
characteristics
of
the
ore
mined.
Gold
equivalent
ounces
produced
decreased
by
25%
compared
with
2016,
mainly
as
a
result
of
the
decrease
in
throughput
and
grades.
Gold
equivalent
ounces
sold
in
2017
were
lower
than
production
due
to
timing
of
sales.
Metal
sales
decreased
by
25%
in
2017
compared
with
2016
due
to
the
decrease
in
gold
equivalent
ounces
sold.
Production
cost
of
sales
was
lower
by
10%
in
2017
compared
with
2016,
primarily
due
to
the
decrease
in
gold
equivalent
ounces
sold,
partially
offset
by
an
increase
in
operating
waste
mined.
Depreciation,
depletion
and
amortization
decreased
by
11%
mainly
as
a
result
of
fewer
gold
equivalent
ounces
sold,
offset
by
an
increase
in
the
depreciable
asset
base.
Metal
sales
and
production
cost
of
sales
decreased
by
76%
and
86%,
respectively,
compared
with
2016
primarily
due
to
the
decrease
in
gold
equivalent
ounces
sold.
Depreciation,
depletion
and
amortization
decreased
from
$34.4
million
in
2016
to
$4.6
million
in
2017,
primarily
due
to
decreases
in
gold
equivalent
ounces
sold
and
the
depreciable
asset
base
as
a
result
of
the
impairment
charge
recognized
in
2016.
During
2017,
other
costs
of
$20.1
million
mainly
included
$23.6
million
of
costs
related
to
the
temporary
curtailment,
offset
by
revenues
of
$9.0
million
related
to
the
sale
of
excess
energy
that
became
available
as
a
result
of
the
curtailment.
Other
costs
of
$74.3
million
incurred
in
2016
included
$58.0
million
related
to
a
write-‐off
of
VAT
receivables
and
settlement
of
VAT
disputes
due
to
regulatory
changes
in
Brazil.
At
December
31,
2017,
the
Company
recorded
a
non-‐cash
impairment
charge
of
$253.0
million related
to
property,
plant
and
equipment.
The
impairment
charge
at
Paracatu
was
mainly
a
result
of
changes
in
the
fiscal
regime
in
Brazil
that
were
considered
in
the
cash
flow
analysis
used
to
assess
its
recoverable
amount.
No
such
impairment
charge
was
recognized
in
2016.
22
KINROSS ANNUAL REPORT MDA 22
23
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Maricunga
(100%
ownership
and
operator)
–
Chile
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
charge
Exploration
and
business
development
-‐
-‐
-‐
6,059
6,508
0.67
(6,059)
(6,508)
(0.67)
91,127
41,316
175,532
175,670
(84,405)
(134,354)
$
52.0
$
219.4
$
(167.4)
19.9
4.6
-‐
27.5
0.1
6.1
145.2
34.4
139.6
(99.8)
-‐
50.8
(125.3)
(29.8)
(139.6)
127.3
0.1
(44.7)
nm
nm
nm
(48%)
(76%)
(76%)
(86%)
(87%)
nm
128%
nm
(88%)
114%
Other
(a )
(b)
Segment
operating
earnings
(loss)
$
21.3
$
(150.6)
$
171.9
D ue
to
the
na ture
o f
hea p
lea c h
o pera tio ns ,
po int-‐in-‐tim e
rec o v ery
ra tes
a re
no t
m ea ning ful.
"nm "
m ea ns
no t
m ea ning ful.
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”).
During
2016,
mining
activities
at
Maricunga
were
suspended
as
a
result
of
the
imposition
of
a
water
curtailment
order
by
Chile’s
environmental
enforcement
authority
(the
“SMA”).
2017
vs.
2016
As
a
result
of
the
suspension
of
mining
and
crushing
activities
at
Maricunga
since
2016,
there
was
no
ore
mined
and
processed
in
2017.
During
2017,
gold
equivalent
ounces
produced
decreased
by
48%
compared
with
2016
primarily
due
to
the
suspension
of
mining
and
crushing
activities.
Gold
equivalent
ounces
sold
in
2017
were
lower
than
production
due
to
the
timing
of
sales
and
decreased
by
76%
compared
with
2016,
primarily
due
to
the
decrease
in
gold
equivalent
ounces
produced.
At
September
30
2016,
the
Company
recorded
impairment
charges
of
$139.6
million
that
were
related
to
the
suspension
of
mining
operations.
Other
costs
of
$50.8
million
incurred
in
2016
included
$20.1
million
related
to
the
suspension
of
mining
operations
and
$27.3
million
related
to
reclamation
and
remediation
costs.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Paracatu
(100%
ownership
and
operator)
–
Brazil
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
charge
Other
(a )
"nm "
m ea ns
no t
m ea ning ful.
Paracatu
from
Rio
Tinto
Plc.
2017
vs.
2016
Segment
operating
earnings
(loss)
$
(263.3)
$
36.2
$
(299.5)
The
Company
acquired
a
49%
ownership
interest
in
the
Paracatu
open
pit
mine,
located
in
the
State
of
Minas
Gerais,
Brazil,
upon
the
acquisition
of
TVX
Gold
Inc.
on
January
31,
2003.
On
December
31,
2004,
the
Company
purchased
the
remaining
51%
of
During
2017,
tonnes
of
ore
mined
and
processed
decreased
by
41%
and
20%,
respectively,
compared
to
2016
due
to
a
temporary
curtailment
as
a
result
of
lower
than
average
rainfall
in
the
area.
Grade
decreased
by
9%
in
2017
compared
to
2016
due
to
the
metallurgical
characteristics
of
the
ore
mined.
Gold
equivalent
ounces
produced
decreased
by
25%
compared
with
2016,
mainly
as
a
result
of
the
decrease
in
throughput
and
grades.
Gold
equivalent
ounces
sold
in
2017
were
lower
than
production
due
to
timing
of
sales.
Years
ended
December
31,
2017
2016
Change
%
Change
(a)
Years
ended
December
31,
2017
2016
Change
%
Change
(b)
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Maricunga
(100%
ownership
and
operator)
–
Chile
27,770
37,623
0.41
74.6%
47,206
46,816
0.45
72.3%
(19,436)
(9,193)
(0.04)
2.3%
359,959
356,251
483,014
482,827
(123,055)
(126,576)
$
447.0
$
599.6
$
(152.6)
310.2
127.0
253.0
(243.2)
20.1
346.4
142.7
-‐
110.5
74.3
(36.2)
(15.7)
253.0
(353.7)
(54.2)
(41%)
(20%)
(9%)
3%
(25%)
(26%)
(25%)
(10%)
(11%)
nm
nm
(73%)
nm
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
charge
Exploration
and
business
development
Other
Segment
operating
earnings
(loss)
-‐
-‐
-‐
6,059
6,508
0.67
(6,059)
(6,508)
(0.67)
91,127
41,316
175,532
175,670
(84,405)
(134,354)
$
$
$
52.0
19.9
4.6
-‐
27.5
0.1
6.1
21.3
219.4
145.2
34.4
139.6
(99.8)
-‐
50.8
(150.6)
(167.4)
(125.3)
(29.8)
(139.6)
127.3
0.1
(44.7)
171.9
$
$
$
nm
nm
nm
(48%)
(76%)
(76%)
(86%)
(87%)
nm
128%
nm
(88%)
114%
(a )
(b)
D ue
to
the
na ture
o f
hea p
lea c h
o pera tio ns ,
po int-‐in-‐tim e
rec o v ery
ra tes
a re
no t
m ea ning ful.
"nm "
m ea ns
no t
m ea ning ful.
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”).
During
2016,
mining
activities
at
Maricunga
were
suspended
as
a
result
of
the
imposition
of
a
water
curtailment
order
by
Chile’s
environmental
enforcement
authority
(the
“SMA”).
2017
vs.
2016
As
a
result
of
the
suspension
of
mining
and
crushing
activities
at
Maricunga
since
2016,
there
was
no
ore
mined
and
processed
in
2017.
During
2017,
gold
equivalent
ounces
produced
decreased
by
48%
compared
with
2016
primarily
due
to
the
suspension
of
mining
and
crushing
activities.
Gold
equivalent
ounces
sold
in
2017
were
lower
than
production
due
to
the
timing
of
sales
and
decreased
by
76%
compared
with
2016,
primarily
due
to
the
decrease
in
gold
equivalent
ounces
produced.
Metal
sales
decreased
by
25%
in
2017
compared
with
2016
due
to
the
decrease
in
gold
equivalent
ounces
sold.
Production
cost
of
sales
was
lower
by
10%
in
2017
compared
with
2016,
primarily
due
to
the
decrease
in
gold
equivalent
ounces
sold,
partially
offset
by
an
increase
in
operating
waste
mined.
Depreciation,
depletion
and
amortization
decreased
by
11%
mainly
as
a
result
of
fewer
gold
equivalent
ounces
sold,
offset
by
an
increase
in
the
depreciable
asset
base.
Metal
sales
and
production
cost
of
sales
decreased
by
76%
and
86%,
respectively,
compared
with
2016
primarily
due
to
the
decrease
in
gold
equivalent
ounces
sold.
Depreciation,
depletion
and
amortization
decreased
from
$34.4
million
in
2016
to
$4.6
million
in
2017,
primarily
due
to
decreases
in
gold
equivalent
ounces
sold
and
the
depreciable
asset
base
as
a
result
of
the
impairment
charge
recognized
in
2016.
During
2017,
other
costs
of
$20.1
million
mainly
included
$23.6
million
of
costs
related
to
the
temporary
curtailment,
offset
by
revenues
of
$9.0
million
related
to
the
sale
of
excess
energy
that
became
available
as
a
result
of
the
curtailment.
Other
costs
of
$74.3
million
incurred
in
2016
included
$58.0
million
related
to
a
write-‐off
of
VAT
receivables
and
settlement
of
VAT
disputes
due
to
At
September
30
2016,
the
Company
recorded
impairment
charges
of
$139.6
million
that
were
related
to
the
suspension
of
mining
operations.
Other
costs
of
$50.8
million
incurred
in
2016
included
$20.1
million
related
to
the
suspension
of
mining
operations
and
$27.3
million
related
to
reclamation
and
remediation
costs.
regulatory
changes
in
Brazil.
At
December
31,
2017,
the
Company
recorded
a
non-‐cash
impairment
charge
of
$253.0
million related
to
property,
plant
and
equipment.
The
impairment
charge
at
Paracatu
was
mainly
a
result
of
changes
in
the
fiscal
regime
in
Brazil
that
were
considered
in
the
cash
flow
analysis
used
to
assess
its
recoverable
amount.
No
such
impairment
charge
was
recognized
in
2016.
22
23 KINROSS ANNUAL REPORT MDA
23
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Kupol
(100%
ownership
and
operator)
–
Russian
Federation
(a)
Years
ended
December
31,
2017
2016
Change
%
Change
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)
1,915
1,733
10.01
81.11
94.8%
84.8%
2,002
1,710
12.72
103.38
95.3%
87.8%
(87)
23
(2.71)
(22.27)
(0.5%)
(3.0%)
580,451
577,007
734,143
736,001
(153,692)
(158,994)
3,879
3,873
4,909
4,902
(1,030)
(1,029)
Financial
Data
(in
millions)
Metal
sales
Production
cost
of
sales
Depreciation,
depletion
and
amortization
Exploration
and
business
development
Other
$
726.9
300.9
184.2
241.8
17.1
(0.3)
$
919.2
324.3
236.8
358.1
13.3
(0.5)
$
(192.3)
(23.4)
(52.6)
(116.3)
3.8
0.2
Segment
operating
earnings
$
225.0
$
345.3
$
(120.3)
(4%)
1%
(21%)
(22%)
(1%)
(3%)
(21%)
(22%)
(21%)
(21%)
(21%)
(7%)
(22%)
(32%)
29%
40%
(35%)
(a )
(b)
(c )
T he
K upo l
s eg m ent
inc ludes
the
K upo l
a nd
D v o ino ye
m ines .
Inc ludes
668,000
to nnes
o f
o re
m ined
fro m
D v o ino ye
during
2017
(2016
-‐
665,000
to nnes ).
"G o ld
equiv a lent
o unc es "
inc lude
s ilv er
o unc es
pro duc ed
a nd
s o ld
c o nv erted
to
a
g o ld
equiv a lent
ba s ed
o n
a
ra tio
o f
the
a v era g e
s po t
m a rk et
pric es
fo r
the
c o m m o dities
fo r
ea c h
perio d.
T he
ra tio
fo r
2017
wa s
73.72:1
(2016
-‐
72.95:1).
The
Company
acquired
a
75%
interest
in
the
Kupol
project
in
Far
Eastern
Russia
on
February
27,
2007.
The
remaining
25%
interest
was
acquired
from
the
State
Unitary
Enterprise
of
the
Chukotka
Autonomous
Okrug
on
April
27,
2011.
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
decreased
by
4%,
compared
with
2016,
primarily
due
to
mining
in
a
deeper
and
narrower
ore
body,
consistent
with
the
mine
plan.
Tonnes
of
ore
processed
increased
by
1%,
compared
with
2016
largely
due
to
an
increase
in
performance
of
the
mill.
Gold
grades
were
21%
lower
during
2017
compared
with
2016,
due
to
an
increase
in
the
proportion
of
ore
processed
from
the
low
grade
stopes
at
both
Kupol
and
Dvoinoye,
as
per
the
mine
plan.
Gold
equivalent
ounces
produced
decreased
by
21%
in
2017,
compared
with
2016,
due
to
lower
grades.
During
2017,
gold
equivalent
ounces
sold
were
lower
than
production
due
to
the
timing
of
shipments.
Metal
sales
decreased
by
21%
in
2017,
compared
with
2016
due
to
lower
gold
equivalent
ounces
sold,
partially
offset
by
higher
average
metal
prices
realized.
During
2017,
production
cost
of
sales
decreased
by
7%
compared
with
2016,
due
to
fewer
gold
equivalent
ounces
sold
and
a
decrease
in
fuel
costs
by
17%.
These
decreases
were
offset
by
an
increase
in
labour
costs
due
to
unfavourable
foreign
exchange
movements.
Depreciation,
depletion
and
amortization
decreased
by
22%
compared
with
2016
due
to
the
decrease
in
gold
equivalent
ounces
sold.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Tasiast
(100%
ownership
and
operator)
–
Mauritania
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
reversal
Exploration
and
business
development
Years
ended
December
31,
2017
2016
Change %
Change
(c)
6,685
4,101
2.36
92.3%
7,973
7,227
1.80
92.0%
(1,288)
(3,126)
0.56
0.3%
243,240
236,256
175,176
168,969
68,064
67,287
$
298.4
$
208.0
$
90.4
178.2
78.6
(142.9)
184.5
5.7
60.0
179.3
96.4
-‐
(67.7)
5.9
46.3
(1.1)
(17.8)
(142.9)
252.2
(0.2)
13.7
(16%)
(43%)
31%
0%
39%
40%
43%
(1%)
(18%)
nm
nm
(3%)
30%
199%
Other
(a)
(b)
Segment
operating
earnings
(loss)
$
118.8
$
(119.9)
$
238.7
Inc ludes
1,056,000
to nnes
plac ed
o n
the
heap
leac h
pads
during
2017
(2016
-‐
4,768,000
to nnes ).
A m o unt
repres ents
m ill
g rade
and
rec o v ery
o nly.
O re
plac ed
o n
the
dum p
leac h
pads
had
an
av erag e
g rade
o f
0.65
g ram s
per
to nne
during
2017
(2016
-‐
0.44
g ram s
per
to nne).
D ue
to
the
nature
o f
dum p
leac h
o peratio ns ,
po int-‐in-‐tim e
rec o v ery
rates
are
no t
m eaning ful.
(c )
"nm "
m eans
no t
m eaning ful.
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.
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
decreased
by
16%
compared
with
2016,
primarily
due
to
mine
sequencing,
which
involved
a
decrease
in
mining
of
lower
grade
leachable
ore
from
the
West
Branch
deposit.
Tonnes
of
ore
processed
were
43%
lower
compared
with
2016,
largely
due
to
fewer
tonnes
placed
on
the
dump
leach
pads
as
a
result
of
planned
mine
sequencing,
partially
offset
by
higher
productivity
at
the
mill.
Grades
relating
to
the
ore
processed
through
the
mill
increased
by
31%
compared
with
2016
due
to
planned
mine
sequencing.
During
2017,
gold
equivalent
ounces
produced
increased
by
39%
compared
with
the
same
period
in
2016,
primarily
due
to
the
increase
in
mill
grade
as
well
as
mill
throughput.
Metal
sales
increased
by
43%
compared
with
2016
due
to
an
increase
in
gold
equivalent
ounces
sold,
as
well
as
an
increase
in
average
metal
prices
realized.
During
2017,
production
cost
of
sales
decreased
by
1%
compared
with
2016,
primarily
due
to
a
decrease
in
operating
waste
mined
and
a
16%
decrease
in
labour
costs,
offset
by
higher
gold
equivalent
ounces
sold.
Increased
capitalized
stripping
contributed
to
the
decrease
in
depreciation,
depletion
and
amortization
of
18%
in
2017
as
compared
to
the
prior
year.
2016.
operations.
At
December
31,
2017,
the
Company
recognized
a
reversal
of
previously
recorded
impairment
charges
of
$142.9
million.
The
non-‐
cash
impairment
reversal
related
to
property,
plant
and
equipment
was
primarily
as
a
result
of
an
increase
in
the
Company’s
estimates
of
future
metal
prices
and
Tasiast
Phase
Two
progressing
as
planned.
No
such
impairment
reversal
was
recognized
in
During
2017,
other
operating
costs
of
$60.0
million
includes
$50.5
million
related
to
the
write-‐off
of
long-‐term
VAT
receivables.
Other
operating
costs
of
$46.3
million
recorded
in
2016
included
$20.3
million
of
costs
associated
with
the
temporary
suspension
of
24
KINROSS ANNUAL REPORT MDA 24
25
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Kupol
(100%
ownership
and
operator)
–
Russian
Federation
(a)
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Tasiast
(100%
ownership
and
operator)
–
Mauritania
Years
ended
December
31,
2017
2016
Change
%
Change
Years
ended
December
31,
2017
2016
Change %
Change
(c)
Operating
Statistics
Tonnes
ore
mined
(000's)
(b)
Tonnes
processed
(000's)
Grade
(grams/tonne):
Recovery:
Gold
Silver
Gold
Silver
Gold
equivalent
ounces:
(c)
Produced
Sold
Silver
ounces:
Produced
(000's)
Sold
(000's)
Financial
Data
(in
millions)
Metal
sales
Production
cost
of
sales
1,915
1,733
10.01
81.11
94.8%
84.8%
2,002
1,710
12.72
103.38
95.3%
87.8%
(87)
23
(2.71)
(22.27)
(0.5%)
(3.0%)
580,451
577,007
734,143
736,001
(153,692)
(158,994)
3,879
3,873
4,909
4,902
(1,030)
(1,029)
$
726.9
$
919.2
$
(192.3)
300.9
184.2
241.8
17.1
(0.3)
324.3
236.8
358.1
13.3
(0.5)
(23.4)
(52.6)
(116.3)
3.8
0.2
(4%)
1%
(21%)
(22%)
(1%)
(3%)
(21%)
(22%)
(21%)
(21%)
(21%)
(7%)
(22%)
(32%)
29%
40%
(35%)
Depreciation,
depletion
and
amortization
Exploration
and
business
development
Segment
operating
earnings
$
225.0
$
345.3
$
(120.3)
T he
K upo l
s eg m ent
inc ludes
the
K upo l
a nd
D v o ino ye
m ines .
Inc ludes
668,000
to nnes
o f
o re
m ined
fro m
D v o ino ye
during
2017
(2016
-‐
665,000
to nnes ).
"G o ld
equiv a lent
o unc es "
inc lude
s ilv er
o unc es
pro duc ed
a nd
s o ld
c o nv erted
to
a
g o ld
equiv a lent
ba s ed
o n
a
ra tio
o f
the
a v era g e
s po t
m a rk et
pric es
fo r
the
c o m m o dities
fo r
ea c h
perio d.
T he
ra tio
fo r
2017
wa s
73.72:1
(2016
-‐
The
Company
acquired
a
75%
interest
in
the
Kupol
project
in
Far
Eastern
Russia
on
February
27,
2007.
The
remaining
25%
interest
was
acquired
from
the
State
Unitary
Enterprise
of
the
Chukotka
Autonomous
Okrug
on
April
27,
2011.
Other
(a )
(b)
(c )
72.95:1).
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
decreased
by
4%,
compared
with
2016,
primarily
due
to
mining
in
a
deeper
and
narrower
ore
body,
consistent
with
the
mine
plan.
Tonnes
of
ore
processed
increased
by
1%,
compared
with
2016
largely
due
to
an
increase
in
performance
of
the
mill.
Gold
grades
were
21%
lower
during
2017
compared
with
2016,
due
to
an
increase
in
the
proportion
of
ore
processed
from
the
low
grade
stopes
at
both
Kupol
and
Dvoinoye,
as
per
the
mine
plan.
Gold
equivalent
ounces
produced
decreased
by
21%
in
2017,
compared
with
2016,
due
to
lower
grades.
During
2017,
gold
equivalent
ounces
sold
were
lower
than
production
due
to
the
timing
of
shipments.
Metal
sales
decreased
by
21%
in
2017,
compared
with
2016
due
to
lower
gold
equivalent
ounces
sold,
partially
offset
by
higher
average
metal
prices
realized.
During
2017,
production
cost
of
sales
decreased
by
7%
compared
with
2016,
due
to
fewer
gold
equivalent
ounces
sold
and
a
decrease
in
fuel
costs
by
17%.
These
decreases
were
offset
by
an
increase
in
labour
costs
due
to
unfavourable
foreign
exchange
movements.
Depreciation,
depletion
and
amortization
decreased
by
22%
compared
with
2016
due
to
the
decrease
in
gold
equivalent
ounces
sold.
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
reversal
Exploration
and
business
development
Other
Segment
operating
earnings
(loss)
6,685
4,101
2.36
92.3%
7,973
7,227
1.80
92.0%
(1,288)
(3,126)
0.56
0.3%
243,240
236,256
175,176
168,969
68,064
67,287
$
$
$
298.4
178.2
78.6
(142.9)
184.5
5.7
60.0
118.8
208.0
179.3
96.4
-‐
(67.7)
5.9
46.3
(119.9)
90.4
(1.1)
(17.8)
(142.9)
252.2
(0.2)
13.7
238.7
$
$
$
(16%)
(43%)
31%
0%
39%
40%
43%
(1%)
(18%)
nm
nm
(3%)
30%
199%
(a)
(b)
Inc ludes
1,056,000
to nnes
plac ed
o n
the
heap
leac h
pads
during
2017
(2016
-‐
4,768,000
to nnes ).
A m o unt
repres ents
m ill
g rade
and
rec o v ery
o nly.
O re
plac ed
o n
the
dum p
leac h
pads
had
an
av erag e
g rade
o f
0.65
g ram s
per
to nne
during
2017
(2016
-‐
0.44
g ram s
per
to nne).
D ue
to
the
nature
o f
dum p
leac h
o peratio ns ,
po int-‐in-‐tim e
rec o v ery
rates
are
no t
m eaning ful.
(c )
"nm "
m eans
no t
m eaning ful.
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.
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
decreased
by
16%
compared
with
2016,
primarily
due
to
mine
sequencing,
which
involved
a
decrease
in
mining
of
lower
grade
leachable
ore
from
the
West
Branch
deposit.
Tonnes
of
ore
processed
were
43%
lower
compared
with
2016,
largely
due
to
fewer
tonnes
placed
on
the
dump
leach
pads
as
a
result
of
planned
mine
sequencing,
partially
offset
by
higher
productivity
at
the
mill.
Grades
relating
to
the
ore
processed
through
the
mill
increased
by
31%
compared
with
2016
due
to
planned
mine
sequencing.
During
2017,
gold
equivalent
ounces
produced
increased
by
39%
compared
with
the
same
period
in
2016,
primarily
due
to
the
increase
in
mill
grade
as
well
as
mill
throughput.
Metal
sales
increased
by
43%
compared
with
2016
due
to
an
increase
in
gold
equivalent
ounces
sold,
as
well
as
an
increase
in
average
metal
prices
realized.
During
2017,
production
cost
of
sales
decreased
by
1%
compared
with
2016,
primarily
due
to
a
decrease
in
operating
waste
mined
and
a
16%
decrease
in
labour
costs,
offset
by
higher
gold
equivalent
ounces
sold.
Increased
capitalized
stripping
contributed
to
the
decrease
in
depreciation,
depletion
and
amortization
of
18%
in
2017
as
compared
to
the
prior
year.
At
December
31,
2017,
the
Company
recognized
a
reversal
of
previously
recorded
impairment
charges
of
$142.9
million.
The
non-‐
cash
impairment
reversal
related
to
property,
plant
and
equipment
was
primarily
as
a
result
of
an
increase
in
the
Company’s
estimates
of
future
metal
prices
and
Tasiast
Phase
Two
progressing
as
planned.
No
such
impairment
reversal
was
recognized
in
2016.
During
2017,
other
operating
costs
of
$60.0
million
includes
$50.5
million
related
to
the
write-‐off
of
long-‐term
VAT
receivables.
Other
operating
costs
of
$46.3
million
recorded
in
2016
included
$20.3
million
of
costs
associated
with
the
temporary
suspension
of
operations.
24
25 KINROSS ANNUAL REPORT MDA
25
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
Exploration
and
business
development
Other
Segment
operating
loss
Years
ended
December
31,
2017
2016
Change
%
Change
2,410
3,438
2.44
92.2%
2,722
3,458
2.10
91.4%
(312)
(20)
0.34
0.8%
246,027
251,212
211,954
205,964
34,073
45,248
$
$
$
317.6
200.1
138.6
(21.1)
8.2
(1.8)
(27.5)
258.5
189.7
109.9
(41.1)
8.9
8.0
(58.0)
59.1
10.4
28.7
20.0
(0.7)
(9.8)
30.5
$
$
$
(11%)
(1%)
16%
1%
16%
22%
23%
5%
26%
49%
(8%)
(123%)
53%
(a)
O perating
and
financ ial
data
are
at
100%
fo r
all
perio ds .
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.
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
decreased
by
11%
compared
with
2016,
due
to
the
completion
of
open
pit
mining
at
the
end
of
the
second
quarter
of
2017.
The
decrease
in
tonnes
of
ore
mined
from
the
open
pit
was
partially
offset
by
increased
mining
activities
at
the
Paboase
and
Akoti
underground
deposits.
Grades
increased
by
16%,
mainly
due
to
higher
grade
ore
mined
at
Paboase
and
Akoti.
Gold
equivalent
ounces
produced
were
16%
higher
compared
with
2016,
primarily
due
to
the
higher
grades.
During
2017,
gold
equivalent
ounces
sold
exceeded
production
due
to
timing
of
shipments.
During
2017,
metal
sales
increased
by
23%
compared
to
2016,
mainly
due
to
higher
gold
equivalent
ounces
sold.
Production
cost
of
sales
increased
by
5%
compared
with
2016,
primarily
due
to
an
increase
in
gold
equivalent
ounces
sold
and
a
9%
increase
in
labour
and
maintenance
costs,
partially
offset
by
a
16%
decrease
in
power
and
overhead
costs.
Depreciation,
depletion
and
amortization
increased
by
26%
compared
with
2016,
largely
due
to
the
increase
in
gold
equivalent
ounces
sold,
a
decrease
in
mineral
reserves
at
December
31,
2016,
and
a
decrease
in
the
remaining
useful
lives
of
open
pit
assets
related
to
the
completion
of
open
pit
mining
activities
at
the
end
of
the
second
quarter
of
2017.
26
KINROSS ANNUAL REPORT MDA 26
27
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Impairment,
Net
of
Reversals
(i n
mi l l i ons )
2017
2016
Change
%
Change
Prope rty,
pl a nt
a nd
e qui pme nt
(i )
$
21.5
$
68.3
$
(46.8)
I nve ntory
(i i )
Impa i rme nt
cha rge s
-‐
71.3
(71.3)
$
21.5
$
139.6
$
(118.1)
(69%)
(100%)
(85%)
i.
Property,
plant
and
equipment
At
December
31,
2017,
upon
completion
of
its
annual
assessment
of
the
carrying
value
of
its
CGUs,
the
Company
recorded
a
net,
after-‐tax,
impairment
reversal
of
$62.1
million.
The
impairment
reversal
was
entirely
related
to
property,
plant
and
equipment
and
included
after-‐tax
impairment
reversals
at
Tasiast
and
Fort
Knox
of
$142.9
million
and
$86.2
million,
respectively,
partially
offset
by
an
after-‐tax
impairment
charge
at
Paracatu
of
$167.0
million.
The
impairment
reversals
at
Tasiast
and
Fort
Knox
are
mainly
due
to
an
increase
in
the
Company’s
short-‐term
and
long-‐term
gold
price
estimates,
as
well
as
Tasiast
Phase
Two
progressing
as
planned
and
additions
to
Fort
Knox’s
mineral
reserve
estimates.
For
Tasiast,
the
reversal
represents
a
partial
reversal
of
the
total
impairment
charges
previously
recorded.
For
Fort
Knox,
the
reversal
represents
a
full
reversal
of
the
remaining
impairment
charge
recorded
in
2015.
The
impairment
charge
at
Paracatu
was
mainly
a
result
of
changes
in
the
fiscal
regime
in
Brazil
that
were
considered
in
the
cash
flow
analysis
used
to
assess
its
recoverable
amount.
The
impairment
charge
at
Paracatu
is
net
of
a
tax
recovery
of
$86.0
million
and
the
impairment
reversal
at
Fort
Knox
is
net
of
a
tax
expense
of
$2.4
million.
The
net
tax
recovery
of
$83.6
million
was
recorded
within
income
tax
expense.
There
was
no
tax
impact
on
the
impairment
reversal
at
Tasiast.
As
at
September
30,
2016,
the
Company
identified
the
suspension
of
mining
at
Maricunga
as
an
indication
of
impairment
and
performed
an
impairment
assessment
to
determine
the
recoverable
amount
of
the
Maricunga
CGU.
The
recoverable
amount
was
determined
by
considering
observable
market
values
for
comparable
assets.
As
the
recoverable
amount
was
lower
than
the
carrying
amount,
an
impairment
charge
of
$68.3
million
was
recorded
against
property,
plant
and
equipment.
No
impairment
charges
were
recorded
as
a
result
of
the
Company’s
annual
assessment
of
impairment
at
December
31,
2016.
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
amount
of
a
CGU
which
indicate
that
a
previously
recognized
impairment
loss
may
no
longer
exist
or
may
have
decreased.
ii.
Inventory
and
other
assets
Other
Operating
Expense
(in
millions)
Other
operating
expense
In
2016,
the
Company
recognized
impairment
charges
of
$71.3
million
related
to
metals
and
supplies
inventory
at
Maricunga,
resulting
from
the
suspension
of
mining
during
the
year.
Years
ended
December
31,
2017
2016
Change
%
Change
$
129.6
$
209.3
$
(79.7)
(38%)
In
2017,
other
operating
expense
included
$23.6
million
in
costs
related
to
the
temporary
curtailment
of
mining
activities
at
Paracatu
which
were
not
forecasted,
$17.5
million
related
to
a
write-‐off
of
VAT
receivables
and
settlement
of
VAT
disputes,
$9.5
million
related
to
the
Fort
Knox
Gilmore
Feasibility
study,
reclamation
expenses
related
to
properties
where
mining
activities
have
ceased
or
are
in
reclamation,
as
well
as
care
and
maintenance
and
other
costs.
Other
operating
expense
in
2016
included
$58.0
million
related
to
a
write-‐off
of
VAT
receivables
and
settlement
of
VAT
disputes
due
to
regulatory
changes
in
Brazil,
$40.4
million
in
costs
related
to
the
suspension
of
mining
activities
at
Maricunga
and
Tasiast,
reclamation
expenses
related
to
properties
where
mining
activities
have
ceased
or
are
in
reclamation,
as
well
as
care
and
maintenance
and
other
costs.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Chirano
(90%
ownership
and
operator)
–
Ghana(a)
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Impairment,
Net
of
Reversals
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
Exploration
and
business
development
Other
Segment
operating
loss
(a)
O perating
and
financ ial
data
are
at
100%
fo r
all
perio ds .
Years
ended
December
31,
2017
2016
Change
%
Change
2,410
3,438
2.44
92.2%
2,722
3,458
2.10
91.4%
246,027
251,212
211,954
205,964
34,073
45,248
$
317.6
$
258.5
$
59.1
200.1
138.6
(21.1)
8.2
(1.8)
189.7
109.9
(41.1)
8.9
8.0
$
(27.5)
$
(58.0)
$
30.5
(312)
(20)
0.34
0.8%
10.4
28.7
20.0
(0.7)
(9.8)
(11%)
(1%)
16%
1%
16%
22%
23%
5%
26%
49%
(8%)
(123%)
53%
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.
2017
vs.
2016
During
2017,
tonnes
of
ore
mined
decreased
by
11%
compared
with
2016,
due
to
the
completion
of
open
pit
mining
at
the
end
of
the
second
quarter
of
2017.
The
decrease
in
tonnes
of
ore
mined
from
the
open
pit
was
partially
offset
by
increased
mining
activities
at
the
Paboase
and
Akoti
underground
deposits.
Grades
increased
by
16%,
mainly
due
to
higher
grade
ore
mined
at
Paboase
and
Akoti.
Gold
equivalent
ounces
produced
were
16%
higher
compared
with
2016,
primarily
due
to
the
higher
grades.
During
2017,
gold
equivalent
ounces
sold
exceeded
production
due
to
timing
of
shipments.
During
2017,
metal
sales
increased
by
23%
compared
to
2016,
mainly
due
to
higher
gold
equivalent
ounces
sold.
Production
cost
of
sales
increased
by
5%
compared
with
2016,
primarily
due
to
an
increase
in
gold
equivalent
ounces
sold
and
a
9%
increase
in
labour
and
maintenance
costs,
partially
offset
by
a
16%
decrease
in
power
and
overhead
costs.
Depreciation,
depletion
and
amortization
increased
by
26%
compared
with
2016,
largely
due
to
the
increase
in
gold
equivalent
ounces
sold,
a
decrease
in
mineral
reserves
at
December
31,
2016,
and
a
decrease
in
the
remaining
useful
lives
of
open
pit
assets
related
to
the
completion
of
open
pit
mining
activities
at
the
end
of
the
second
quarter
of
2017.
(i n
mi l l i ons )
2017
2016
Change
%
Change
Prope rty,
pl a nt
a nd
e qui pme nt
(i )
$
21.5
$
68.3
$
(46.8)
I nve ntory
(i i )
Impa i rme nt
cha rge s
-‐
71.3
(71.3)
$
21.5
$
139.6
$
(118.1)
(69%)
(100%)
(85%)
i.
Property,
plant
and
equipment
At
December
31,
2017,
upon
completion
of
its
annual
assessment
of
the
carrying
value
of
its
CGUs,
the
Company
recorded
a
net,
after-‐tax,
impairment
reversal
of
$62.1
million.
The
impairment
reversal
was
entirely
related
to
property,
plant
and
equipment
and
included
after-‐tax
impairment
reversals
at
Tasiast
and
Fort
Knox
of
$142.9
million
and
$86.2
million,
respectively,
partially
offset
by
an
after-‐tax
impairment
charge
at
Paracatu
of
$167.0
million.
The
impairment
reversals
at
Tasiast
and
Fort
Knox
are
mainly
due
to
an
increase
in
the
Company’s
short-‐term
and
long-‐term
gold
price
estimates,
as
well
as
Tasiast
Phase
Two
progressing
as
planned
and
additions
to
Fort
Knox’s
mineral
reserve
estimates.
For
Tasiast,
the
reversal
represents
a
partial
reversal
of
the
total
impairment
charges
previously
recorded.
For
Fort
Knox,
the
reversal
represents
a
full
reversal
of
the
remaining
impairment
charge
recorded
in
2015.
The
impairment
charge
at
Paracatu
was
mainly
a
result
of
changes
in
the
fiscal
regime
in
Brazil
that
were
considered
in
the
cash
flow
analysis
used
to
assess
its
recoverable
amount.
The
impairment
charge
at
Paracatu
is
net
of
a
tax
recovery
of
$86.0
million
and
the
impairment
reversal
at
Fort
Knox
is
net
of
a
tax
expense
of
$2.4
million.
The
net
tax
recovery
of
$83.6
million
was
recorded
within
income
tax
expense.
There
was
no
tax
impact
on
the
impairment
reversal
at
Tasiast.
As
at
September
30,
2016,
the
Company
identified
the
suspension
of
mining
at
Maricunga
as
an
indication
of
impairment
and
performed
an
impairment
assessment
to
determine
the
recoverable
amount
of
the
Maricunga
CGU.
The
recoverable
amount
was
determined
by
considering
observable
market
values
for
comparable
assets.
As
the
recoverable
amount
was
lower
than
the
carrying
amount,
an
impairment
charge
of
$68.3
million
was
recorded
against
property,
plant
and
equipment.
No
impairment
charges
were
recorded
as
a
result
of
the
Company’s
annual
assessment
of
impairment
at
December
31,
2016.
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
amount
of
a
CGU
which
indicate
that
a
previously
recognized
impairment
loss
may
no
longer
exist
or
may
have
decreased.
ii.
Inventory
and
other
assets
In
2016,
the
Company
recognized
impairment
charges
of
$71.3
million
related
to
metals
and
supplies
inventory
at
Maricunga,
resulting
from
the
suspension
of
mining
during
the
year.
Other
Operating
Expense
(in
millions)
Other
operating
expense
Years
ended
December
31,
2017
2016
Change
%
Change
$
129.6
$
209.3
$
(79.7)
(38%)
In
2017,
other
operating
expense
included
$23.6
million
in
costs
related
to
the
temporary
curtailment
of
mining
activities
at
Paracatu
which
were
not
forecasted,
$17.5
million
related
to
a
write-‐off
of
VAT
receivables
and
settlement
of
VAT
disputes,
$9.5
million
related
to
the
Fort
Knox
Gilmore
Feasibility
study,
reclamation
expenses
related
to
properties
where
mining
activities
have
ceased
or
are
in
reclamation,
as
well
as
care
and
maintenance
and
other
costs.
Other
operating
expense
in
2016
included
$58.0
million
related
to
a
write-‐off
of
VAT
receivables
and
settlement
of
VAT
disputes
due
to
regulatory
changes
in
Brazil,
$40.4
million
in
costs
related
to
the
suspension
of
mining
activities
at
Maricunga
and
Tasiast,
reclamation
expenses
related
to
properties
where
mining
activities
have
ceased
or
are
in
reclamation,
as
well
as
care
and
maintenance
and
other
costs.
26
27 KINROSS ANNUAL REPORT MDA
27
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Exploration
and
Business
Development
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Reversal
of
Impairment
Charges
(in
millions)
Years
ended
December
31,
2017
2016
Change
Exploration
and
business
development
$
106.0
$
94.3
$
11.7
%
Change
12%
Foreign
Exchange
Losses
As
a
result
of
the
agreement
entered
into
in
the
first
quarter
of
2017
to
sell
Cerro
Casale
at
a
price
higher
than
the
carrying
value,
the
Company
recognized
a
reversal
of
previously
recorded
impairment
charges
of
$97.0
million.
During
2017,
exploration
and
business
development
expenses
were
$106.0
million
compared
with
$94.3
million
in
2016.
Of
the
total
exploration
and
business
development
expense,
expenditures
on
exploration
totaled
$75.6
million
in
2017
compared
with
$67.4
million
in
2016.
Capitalized
exploration
expenses,
including
capitalized
evaluation
expenditures,
totaled
$1.9
million
compared
with
$3.1
million
during
2016.
During
2017,
foreign
exchange
losses
were
$4.9
million
compared
with
losses
of
$6.3
million
in
2016.
The
foreign
exchange
losses
of
$4.9
million
in
2017
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
weakened
against
the
Mauritanian
ouguiya,
Chilean
peso,
Canadian
dollar
and
Russian
rouble
and
strengthened
against
the
Brazilian
real
as
at
December
31,
2017
relative
to
December
31,
2016.
Kinross
was
active
on
more
than
22
mine
sites,
near-‐mine
and
greenfield
initiatives
in
2017,
with
a
total
326,244
metres
drilled.
In
2016,
Kinross
was
active
on
more
than
23
mine
sites,
near-‐mine
and
greenfield
initiatives,
with
a
total
of
277,955
metres
drilled.
The
foreign
exchange
losses
of
$6.3
million
in
2016
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
weakened
against
the
Brazilian
real,
Chilean
peso
and
Canadian
dollar
and
strengthened
against
the
Mauritanian
ouguiya
as
at
December
31,
2016
relative
to
December
31,
2015.
General
and
Administrative
(in
millions)
Years
ended
December
31,
2017
2016
Change
General
and
administrative
$
132.6
$
143.7
$
(11.1)
%
Change
(8%)
Other
income
of
$38.6
million
recognized
in
2017
included
the
receipt
of
insurance
recoveries
of
$17.5
million
of
which
$15.1
million
was
related
to
Maricunga,
and
$9.9
million
related
to
a
settlement
of
a
royalty
agreement.
In
2016,
other
income
of
$19.5
million
included
insurance
recoveries
of
$13.0
million
related
to
Round
Mountain.
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
decreased
by
$11.1
million
in
2017
compared
with
2016
primarily
due
to
lower
professional
fees.
Other
Income
(Expense)
–
Net
(in
millions)
Years
ended
December
31,
2017
2016
Change
%
Change
(a)
Gain
on
disposition
of
associate
and
other
interests
-‐
net
$
55.2
$
-‐
$
55.2
Gain
on
disposition
of
other
assets
-‐
net
Reversal
of
impairment
charges
Foreign
exchange
losses
Net
non-‐hedge
derivative
gains
(losses)
Other
Other
income
-‐
net
(a)
"nm"
means
not
meaningful.
1.9
97.0
(4.9)
0.3
38.6
9.7
-‐
(6.3)
(0.4)
19.5
(7.8)
97.0
1.4
0.7
19.1
$
188.1
$
22.5
$
165.6
nm
(80%)
nm
22%
175%
98%
nm
During
2017,
other
income
increased
to
$188.1
million
from
$22.5
million
in
2016.
The
discussion
below
details
the
significant
changes
in
other
income
for
2017
compared
with
2016.
Gains
on
disposition
of
associate
and
other
interests
-‐
net
In
the
fourth
quarter
of
2017,
the
Company
completed
the
sale
of
its
100%
interest
in
DeLamar.
A
gain
of
$44.2
million
was
recognized
in
connection
with
the
sale.
In
the
second
quarter
of
2017,
the
Company
completed
the
sale
of
its
interests
in
Cerro
Casale,
Quebrada
Seca,
and
the
White
Gold
exploration
project.
A
gain
of
$12.7
million
was
recognized
in
connection
with
the
sale
of
Cerro
Casale
and
Quebrada
Seca
and
a
loss
of
$1.7
million
was
recognized
in
connection
with
the
sale
of
White
Gold.
28
KINROSS ANNUAL REPORT MDA 28
29
Other
Finance
Expense
(in
millions)
Finance
expense
Years
ended
December
31,
2017
2016
Change
%
Change
$
117.8
$
134.6
$
(16.8)
(12%)
Finance
expense
includes
accretion
on
reclamation
and
remediation
obligations
and
interest
expense.
Finance
expense
decreased
by
$16.8
million
compared
with
2016,
primarily
due
to
a
decrease
in
interest
expense.
During
2017,
interest
expense
was
$86.5
million
compared
with
$100.4
million
in
2016,
with
the
decrease
primarily
due
to
an
increase
in
interest
capitalized.
Interest
capitalized
was
$25.1
million
in
2017
compared
with
$15.2
million
in
2016,
with
the
increase
mainly
due
to
higher
qualifying
capital
expenditures.
Income
and
Mining
Taxes
and
Ghana.
Kinross
is
subject
to
tax
in
various
jurisdictions
including
Canada,
the
United
States,
Brazil,
Chile,
the
Russian
Federation,
Mauritania,
Income
tax
recovery
in
2017
was
$23.2
million,
compared
with
an
income
tax
expense
of
$49.6
million
in
2016.
The
$23.2
million
recovery
recognized
in
2017
includes
a
net
tax
recovery
of
$83.6
million
related
to
the
impairment
charge
at
Paracatu
and
impairment
reversal
at
Fort
Knox,
and
an
estimated
net
benefit
of
$93.4
million
due
to
the
enactment
of
U.S.
Tax
Reform
legislation
on
December
22,
2017.
The
estimated
net
benefit
includes
a
benefit
of
$124.4
million
in
respect
of
the
collectability
of
the
AMT
credit,
which
is
partially
offset
by
the
write-‐down
of
net
deferred
tax
assets
to
reflect
the
reduction
in
the
U.S.
corporate
tax
rate
from
35%
to
21%
beginning
January
1,
2018.
Further
guidance
on
the
implementation
and
application
of
the
U.S.
Tax
Reform
legislation
will
be
forthcoming
in
regulations
to
be
issued
by
the
Department
of
Treasury,
legislation
or
guidance
from
the
states
in
which
the
Company
operates
and
directions
from
the
Office
of
Management
and
Budget.
Such
legislation,
regulations,
directions
and
additional
guidance
may
require
changes
to
the
estimated
net
benefit
recorded
and
the
impact
of
such
changes
will
be
accounted
for
in
the
period
in
which
the
legislation,
regulations,
directions,
and
additional
guidance
are
enacted
or
released
by
the
relevant
authorities.
The
$49.6
million
income
tax
expense
recognized
in
2016
included
a
$65.1
million
recovery
due
to
re-‐
measurement
of
deferred
tax
assets
and
liabilities
as
a
result
of
fluctuations
in
foreign
exchange
rates
with
respect
to
the
Brazilian
real
and
the
Russian
rouble,
$32.0
million
of
expense
due
to
a
proposal
to
reassess
taxes
which
was
received
in
the
second
quarter
of
2016
and
a
tax
benefit
of
$27.7
million
realized
by
the
Company
as
a
result
of
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
In
addition,
tax
expense
decreased
due
to
differences
in
the
level
of
income
in
the
Company’s
operating
jurisdictions
from
one
period
to
the
next.
Kinross'
combined
federal
and
provincial
statutory
tax
rate
for
2017
was
26.5%
(2016
–
26.5%).
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Exploration
and
Business
Development
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Reversal
of
Impairment
Charges
(in
millions)
2017
2016
Change
%
Change
Years
ended
December
31,
As
a
result
of
the
agreement
entered
into
in
the
first
quarter
of
2017
to
sell
Cerro
Casale
at
a
price
higher
than
the
carrying
value,
the
Company
recognized
a
reversal
of
previously
recorded
impairment
charges
of
$97.0
million.
Exploration
and
business
development
$
106.0
$
94.3
$
11.7
12%
Foreign
Exchange
Losses
During
2017,
exploration
and
business
development
expenses
were
$106.0
million
compared
with
$94.3
million
in
2016.
Of
the
total
exploration
and
business
development
expense,
expenditures
on
exploration
totaled
$75.6
million
in
2017
compared
with
$67.4
million
in
2016.
Capitalized
exploration
expenses,
including
capitalized
evaluation
expenditures,
totaled
$1.9
million
compared
with
$3.1
million
during
2016.
During
2017,
foreign
exchange
losses
were
$4.9
million
compared
with
losses
of
$6.3
million
in
2016.
The
foreign
exchange
losses
of
$4.9
million
in
2017
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
weakened
against
the
Mauritanian
ouguiya,
Chilean
peso,
Canadian
dollar
and
Russian
rouble
and
strengthened
against
the
Brazilian
real
as
at
December
31,
2017
relative
to
December
31,
2016.
Kinross
was
active
on
more
than
22
mine
sites,
near-‐mine
and
greenfield
initiatives
in
2017,
with
a
total
326,244
metres
drilled.
In
2016,
Kinross
was
active
on
more
than
23
mine
sites,
near-‐mine
and
greenfield
initiatives,
with
a
total
of
277,955
metres
drilled.
The
foreign
exchange
losses
of
$6.3
million
in
2016
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
weakened
against
the
Brazilian
real,
Chilean
peso
and
Canadian
dollar
and
strengthened
against
the
Mauritanian
ouguiya
as
at
December
31,
2016
relative
to
December
31,
2015.
General
and
Administrative
Other
(in
millions)
2017
2016
Change
%
Change
General
and
administrative
$
132.6
$
143.7
$
(11.1)
(8%)
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.
Years
ended
December
31,
General
and
administrative
costs
decreased
by
$11.1
million
in
2017
compared
with
2016
primarily
due
to
lower
professional
fees.
Gain
on
disposition
of
associate
and
other
interests
-‐
net
$
55.2
$
-‐
$
55.2
Other
Income
(Expense)
–
Net
(in
millions)
Gain
on
disposition
of
other
assets
-‐
net
Reversal
of
impairment
charges
Foreign
exchange
losses
Net
non-‐hedge
derivative
gains
(losses)
Other
Other
income
-‐
net
(a)
"nm"
means
not
meaningful.
Years
ended
December
31,
2017
2016
Change
%
Change
(a)
1.9
97.0
(4.9)
0.3
38.6
9.7
-‐
(6.3)
(0.4)
19.5
(7.8)
97.0
1.4
0.7
19.1
$
188.1
$
22.5
$
165.6
nm
(80%)
nm
22%
175%
98%
nm
During
2017,
other
income
increased
to
$188.1
million
from
$22.5
million
in
2016.
The
discussion
below
details
the
significant
changes
in
other
income
for
2017
compared
with
2016.
Gains
on
disposition
of
associate
and
other
interests
-‐
net
In
the
fourth
quarter
of
2017,
the
Company
completed
the
sale
of
its
100%
interest
in
DeLamar.
A
gain
of
$44.2
million
was
recognized
in
connection
with
the
sale.
In
the
second
quarter
of
2017,
the
Company
completed
the
sale
of
its
interests
in
Cerro
Casale,
Quebrada
Seca,
and
the
White
Gold
exploration
project.
A
gain
of
$12.7
million
was
recognized
in
connection
with
the
sale
of
Cerro
Casale
and
Quebrada
Seca
and
a
loss
of
$1.7
million
was
recognized
in
connection
with
the
sale
of
White
Gold.
Other
income
of
$38.6
million
recognized
in
2017
included
the
receipt
of
insurance
recoveries
of
$17.5
million
of
which
$15.1
million
was
related
to
Maricunga,
and
$9.9
million
related
to
a
settlement
of
a
royalty
agreement.
In
2016,
other
income
of
$19.5
million
included
insurance
recoveries
of
$13.0
million
related
to
Round
Mountain.
Finance
Expense
(in
millions)
Finance
expense
Years
ended
December
31,
2017
2016
Change
%
Change
$
117.8
$
134.6
$
(16.8)
(12%)
Finance
expense
includes
accretion
on
reclamation
and
remediation
obligations
and
interest
expense.
Finance
expense
decreased
by
$16.8
million
compared
with
2016,
primarily
due
to
a
decrease
in
interest
expense.
During
2017,
interest
expense
was
$86.5
million
compared
with
$100.4
million
in
2016,
with
the
decrease
primarily
due
to
an
increase
in
interest
capitalized.
Interest
capitalized
was
$25.1
million
in
2017
compared
with
$15.2
million
in
2016,
with
the
increase
mainly
due
to
higher
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
recovery
in
2017
was
$23.2
million,
compared
with
an
income
tax
expense
of
$49.6
million
in
2016.
The
$23.2
million
recovery
recognized
in
2017
includes
a
net
tax
recovery
of
$83.6
million
related
to
the
impairment
charge
at
Paracatu
and
impairment
reversal
at
Fort
Knox,
and
an
estimated
net
benefit
of
$93.4
million
due
to
the
enactment
of
U.S.
Tax
Reform
legislation
on
December
22,
2017.
The
estimated
net
benefit
includes
a
benefit
of
$124.4
million
in
respect
of
the
collectability
of
the
AMT
credit,
which
is
partially
offset
by
the
write-‐down
of
net
deferred
tax
assets
to
reflect
the
reduction
in
the
U.S.
corporate
tax
rate
from
35%
to
21%
beginning
January
1,
2018.
Further
guidance
on
the
implementation
and
application
of
the
U.S.
Tax
Reform
legislation
will
be
forthcoming
in
regulations
to
be
issued
by
the
Department
of
Treasury,
legislation
or
guidance
from
the
states
in
which
the
Company
operates
and
directions
from
the
Office
of
Management
and
Budget.
Such
legislation,
regulations,
directions
and
additional
guidance
may
require
changes
to
the
estimated
net
benefit
recorded
and
the
impact
of
such
changes
will
be
accounted
for
in
the
period
in
which
the
legislation,
regulations,
directions,
and
additional
guidance
are
enacted
or
released
by
the
relevant
authorities.
The
$49.6
million
income
tax
expense
recognized
in
2016
included
a
$65.1
million
recovery
due
to
re-‐
measurement
of
deferred
tax
assets
and
liabilities
as
a
result
of
fluctuations
in
foreign
exchange
rates
with
respect
to
the
Brazilian
real
and
the
Russian
rouble,
$32.0
million
of
expense
due
to
a
proposal
to
reassess
taxes
which
was
received
in
the
second
quarter
of
2016
and
a
tax
benefit
of
$27.7
million
realized
by
the
Company
as
a
result
of
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
In
addition,
tax
expense
decreased
due
to
differences
in
the
level
of
income
in
the
Company’s
operating
jurisdictions
from
one
period
to
the
next.
Kinross'
combined
federal
and
provincial
statutory
tax
rate
for
2017
was
26.5%
(2016
–
26.5%).
28
29 KINROSS ANNUAL REPORT MDA
29
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
6. LIQUIDITY
AND
CAPITAL
RESOURCES
The
following
table
summarizes
Kinross’
cash
flow
activity:
(in
millions)
Cash
Flow
Provided
from
operating
activities
Used
in
investing
activities
Used
in
financing
activities
Effect
of
exchange
rate
changes
on
cash
and
cash
equivalents
Increase
(decrease)
in
cash
and
cash
equivalents
Cash
and
cash
equivalents,
beginning
of
period
Years
ended
December
31,
2017
2016
Change
%
Change
$
951.6
$
1,099.2
$
(147.6)
(687.2)
(69.0)
3.4
198.8
827.0
(1,270.1)
(48.3)
2.3
(216.9)
1,043.9
582.9
(20.7)
1.1
415.7
(216.9)
(13%)
46%
(43%)
48%
192%
(21%)
24%
Cash
and
cash
equivalents,
end
of
period
$
1,025.8
$
827.0
$
198.8
Cash
and
cash
equivalent
balances
increased
by
$198.8
million
in
2017
compared
with
a
decrease
of
$216.9
million
in
2016.
Detailed
discussions
regarding
cash
flow
movements
from
continuing
operations
are
noted
below.
Net
cash
flow
provided
from
operating
activities
decreased
by
$147.6
million
in
2017
compared
with
2016,
with
the
decrease
largely
due
to
less
favourable
working
capital
movements
and
higher
taxes
paid,
partially
offset
by
higher
margins.
Operating
Activities
2017
vs.
2016
Investing
Activities
2017
vs.
2016
Net
cash
flow
used
in
investing
activities
was
$687.2
million
in
2017
compared
with
$1,270.1
million
in
2016.
The
primary
uses
of
cash
in
2017
were
for
capital
expenditures
of
$897.6
million.
This
was
partially
offset
by
net
cash
proceeds
of
$269.6
million
from
the
sale
of
Kinross’
interests
in
Cerro
Casale,
Quebrada
Seca,
the
White
Gold
exploration
project,
and
DeLamar.
In
2016,
the
primary
uses
of
cash
were
for
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
interest
in
Round
Mountain
for
$588.0
million
and
capital
expenditures
of
$633.8
million.
30
KINROSS ANNUAL REPORT MDA 30
31
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
6. LIQUIDITY
AND
CAPITAL
RESOURCES
The
following
table
summarizes
Kinross’
cash
flow
activity:
(in
millions)
Cash
Flow
Provided
from
operating
activities
Used
in
investing
activities
Used
in
financing
activities
Effect
of
exchange
rate
changes
on
cash
and
cash
equivalents
Increase
(decrease)
in
cash
and
cash
equivalents
Cash
and
cash
equivalents,
beginning
of
period
Years
ended
December
31,
2017
2016
Change
%
Change
$
951.6
$
1,099.2
$
(147.6)
(687.2)
(69.0)
3.4
198.8
827.0
(1,270.1)
(48.3)
2.3
(216.9)
1,043.9
582.9
(20.7)
1.1
415.7
(216.9)
(13%)
46%
(43%)
48%
192%
(21%)
24%
Cash
and
cash
equivalents,
end
of
period
$
1,025.8
$
827.0
$
198.8
Cash
and
cash
equivalent
balances
increased
by
$198.8
million
in
2017
compared
with
a
decrease
of
$216.9
million
in
2016.
Detailed
discussions
regarding
cash
flow
movements
from
continuing
operations
are
noted
below.
Operating
Activities
2017
vs.
2016
Net
cash
flow
provided
from
operating
activities
decreased
by
$147.6
million
in
2017
compared
with
2016,
with
the
decrease
largely
due
to
less
favourable
working
capital
movements
and
higher
taxes
paid,
partially
offset
by
higher
margins.
Investing
Activities
2017
vs.
2016
Net
cash
flow
used
in
investing
activities
was
$687.2
million
in
2017
compared
with
$1,270.1
million
in
2016.
The
primary
uses
of
cash
in
2017
were
for
capital
expenditures
of
$897.6
million.
This
was
partially
offset
by
net
cash
proceeds
of
$269.6
million
from
the
sale
of
Kinross’
interests
in
Cerro
Casale,
Quebrada
Seca,
the
White
Gold
exploration
project,
and
DeLamar.
In
2016,
the
primary
uses
of
cash
were
for
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
interest
in
Round
Mountain
for
$588.0
million
and
capital
expenditures
of
$633.8
million.
30
31 KINROSS ANNUAL REPORT MDA
31
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
The
following
table
presents
a
breakdown
of
capital
expenditures
on
a
cash
basis:
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
(in
millions)
Operating
segments
Fort
Knox
Round
Mountain
Bald
Mountain
Kettle
River
-‐
Buckhorn
Paracatu
Maricunga
Kupol
(a)
Tasiast
Chirano
Non-‐operating
segment
Corporate
and
Other
(b)
Total
Years
ended
December
31,
2017
2016
Change
%
Change
$
102.1
$
70.2
$
31.9
95.8
90.5
-‐
122.4
1.5
54.3
379.4
46.6
71.9
40.5
-‐
108.5
5.1
88.8
190.9
46.6
23.9
50.0
-‐
13.9
(3.6)
(34.5)
188.5
-‐
5.0
11.3
(6.3)
$
897.6
$
633.8
$
263.8
45%
33%
123%
-‐
13%
(71%)
(39%)
99%
-‐
(56%)
42%
(a)
Includes
$10.4
million
of
capital
expenditures
at
Dvoinoye
during
2017
(2016
-‐
$14.4
million).
(b)
"Corporate
and
Other"
includes
corporate
and
other
non-‐operating
assets
including
La
Coipa,
Lobo-‐
Marte
and
White
Gold
until
its
disposal
on
June
14,
2017.
During
2017,
capital
expenditures
increased
by
$263.8
million
compared
with
2016,
primarily
due
to
higher
spending
at
Tasiast
related
to
the
Phase
One
expansion
project,
increased
spending
at
Bald
Mountain
mainly
due
to
the
Vantage
Complex
project
and
at
Fort
Knox
due
to
increased
capitalized
stripping
as
per
mine
sequencing.
The
increases
were
partially
offset
by
decreased
spending
at
Kupol
due
to
the
completion
of
the
filter
cake
project
in
2016.
Financing
Activities
2017
vs.
2016
Net
cash
flow
used
in
financing
activities
was
$69.0
million
in
2017
compared
with
cash
used
of
$48.3
million
in
2016.
Interest
paid
during
2017
was
$80.9
million,
of
which
$62.9
million
was
included
in
financing
activities.
Total
interest
paid
during
2016
was
$95.3
million,
of
which
$73.5
million
was
included
in
financing
activities.
During
2017,
the
Company
completed
a
$500.0
million
offering
of
debt
securities
consisting
of
4.50%
senior
notes
due
2027.
Kinross
received
net
proceeds
of
$494.7
million
from
the
offering,
after
payment
of
related
fees
and
expenses.
The
proceeds
received
in
this
transaction
were
then
used
to
fully
repay
the
outstanding
balance
of
the
$500.0
million
term
loan.
During
2016,
the
Company
received
net
proceeds
of
$275.7
million
on
the
completion
of
the
public
equity
offering
of
95.9
million
common
shares,
including
12.5
million
common
shares
issued
to
the
underwriters
on
the
exercise
of
their
over-‐allotment
option.
On
March
4,
2016,
Kinross
used
$175.0
million
of
the
net
proceeds
to
repay
its
drawing
on
the
revolving
credit
facility
on
January
4,
2016.
On
September
1,
2016,
the
Company
repaid
the
principal
amount
of
$250.0
million
of
senior
notes
maturing
in
September
2016.
Current
liabilities,
including
current
portion
of
long-‐term
debt
$
585.3
$
637.7
$
701.8
Balance
Sheet
(in
millions)
Cash
and
cash
equivalents
Current
assets
Total
assets
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)
As
at
December
31,
2017
2016
2015
$
1,025.8
$
827.0
$
1,043.9
$
2,284.4
$
2,080.7
$
2,292.1
$
8,157.2
$
7,979.3
$
7,735.4
$
2,563.1
$
2,594.4
$
2,452.7
$
1,732.6
$
1,733.2
$
1,981.4
$
3,538.0
$
3,795.0
$
3,802.2
$
4,583.6
$
4,145.5
$
3,889.3
$
35.6
$
38.8
$
43.9
$
1,699.1
$
1,443.0
$
1,590.3
3.9:1
3.26:1
3.27:1
(a)
Includes
long-‐term
debt
and
provisions.
(b)
Calculated
as
current
assets
less
current
liabilities.
(c)
Calculated
as
current
assets
divided
by
current
liabilities.
At
December
31,
2017,
Kinross
had
cash
and
cash
equivalents
of
$1,025.8
million,
an
increase
of
$198.8
million
from
the
balance
as
at
December
31,
2016,
primarily
due
to
net
operating
cash
inflows
of
$951.6
million
and
the
receipt
of
net
cash
proceeds
of
$269.6
million
related
to
the
sale
of
Cerro
Casale,
Quebrada
Seca,
the
White
Gold
exploration
project,
and
DeLamar.
These
inflows
were
offset
by
cash
outflows
of
$897.6
million
related
to
capital
expenditures
and
$73.8
million
for
additions
to
long-‐term
investments
and
other
assets.
Current
assets
increased
to
$2,284.4
million,
mainly
due
to
the
increase
in
cash
and
cash
equivalents
and
inventories,
partially
offset
by
a
decrease
in
current
income
tax
recoverable,
trade
receivables
and
VAT
receivables.
Total
assets
increased
by
$177.9
million
to
$8,157.2
million,
largely
due
to
increases
in
current
assets,
long-‐term
investments
and
long
term
receivables
offset
by
a
decrease
in
investments
in
associate
and
joint
ventures
as
a
result
of
the
sale
of
Cerro
Casale.
Current
liabilities
decreased
to
$585.3
million,
primarily
due
to
the
decrease
in
current
income
taxes
payable
and
the
current
portion
of
provisions,
partially
offset
by
an
increase
in
accounts
payable
and
accrued
liabilities.
Total
long-‐term
financial
liabilities
were
lower
by
$31.3
million,
primarily
due
to
a
decrease
in
other
long-‐term
liabilities.
At
December
31,
2016,
Kinross
had
cash
and
cash
equivalents
of
$827.0
million,
a
decrease
of
$216.9
million
from
the
balance
as
at
December
31,
2015,
primarily
due
to
net
cash
outflows
of
$588.0
million
used
in
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain,
capital
expenditures
of
$633.8
million,
repayment
of
debt
of
$250.0
million,
and
$59.8
million
for
additions
to
long-‐term
investments
and
other
assets,
partially
offset
by
net
operating
cash
flows
of
$1,099.2
million
and
net
proceeds
of
$275.7
million
received
from
the
equity
issuance.
Current
assets
decreased
to
$2,080.7
million,
mainly
due
to
the
decrease
in
cash
and
cash
equivalents,
partially
offset
by
an
increase
in
trade
receivables.
Total
assets
increased
by
$243.9
million
to
$7,979.3
million,
largely
due
to
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
Current
liabilities
decreased
to
$637.7
million,
primarily
due
to
the
repayment
of
the
current
portion
of
the
senior
notes
of
$250.0
million,
partially
offset
by
an
increase
in
accounts
payable
and
accrued
liabilities
and
income
tax
payable.
Total
long -‐term
financial
liabilities
were
higher
by
$141.7
million,
primarily
due
to
an
increase
in
provisions
as
a
result
of
the
acquisition.
As
of
February
13,
2018,
there
were
1,247.0 million
common
shares
of
the
Company
issued
and
outstanding.
In
addition,
at
the
same
date,
the
Company
had
12.1
million
share
purchase
options
outstanding
under
its
share
option
plan.
32
KINROSS ANNUAL REPORT MDA 32
33
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
The
following
table
presents
a
breakdown
of
capital
expenditures
on
a
cash
basis:
(in
millions)
Operating
segments
Fort
Knox
Round
Mountain
Bald
Mountain
Kettle
River
-‐
Buckhorn
Paracatu
Maricunga
Kupol
(a)
Tasiast
Chirano
Non-‐operating
segment
Corporate
and
Other
(b)
Total
Financing
Activities
2017
vs.
2016
Years
ended
December
31,
2017
2016
Change
%
Change
$
102.1
$
70.2
$
31.9
95.8
90.5
-‐
122.4
1.5
54.3
379.4
46.6
71.9
40.5
-‐
108.5
5.1
88.8
190.9
46.6
23.9
50.0
13.9
(3.6)
(34.5)
188.5
-‐
-‐
5.0
11.3
(6.3)
$
897.6
$
633.8
$
263.8
45%
33%
123%
13%
(71%)
(39%)
99%
-‐
-‐
(56%)
42%
(a)
Includes
$10.4
million
of
capital
expenditures
at
Dvoinoye
during
2017
(2016
-‐
$14.4
million).
(b)
"Corporate
and
Other"
includes
corporate
and
other
non-‐operating
assets
including
La
Coipa,
Lobo-‐
Marte
and
White
Gold
until
its
disposal
on
June
14,
2017.
During
2017,
capital
expenditures
increased
by
$263.8
million
compared
with
2016,
primarily
due
to
higher
spending
at
Tasiast
related
to
the
Phase
One
expansion
project,
increased
spending
at
Bald
Mountain
mainly
due
to
the
Vantage
Complex
project
and
at
Fort
Knox
due
to
increased
capitalized
stripping
as
per
mine
sequencing.
The
increases
were
partially
offset
by
decreased
spending
at
Kupol
due
to
the
completion
of
the
filter
cake
project
in
2016.
Net
cash
flow
used
in
financing
activities
was
$69.0
million
in
2017
compared
with
cash
used
of
$48.3
million
in
2016.
Interest
paid
during
2017
was
$80.9
million,
of
which
$62.9
million
was
included
in
financing
activities.
Total
interest
paid
during
2016
was
$95.3
million,
of
which
$73.5
million
was
included
in
financing
activities.
During
2017,
the
Company
completed
a
$500.0
million
offering
of
debt
securities
consisting
of
4.50%
senior
notes
due
2027.
Kinross
received
net
proceeds
of
$494.7
million
from
the
offering,
after
payment
of
related
fees
and
expenses.
The
proceeds
received
in
this
transaction
were
then
used
to
fully
repay
the
outstanding
balance
of
the
$500.0
million
term
loan.
During
2016,
the
Company
received
net
proceeds
of
$275.7
million
on
the
completion
of
the
public
equity
offering
of
95.9
million
common
shares,
including
12.5
million
common
shares
issued
to
the
underwriters
on
the
exercise
of
their
over-‐allotment
option.
On
March
4,
2016,
Kinross
used
$175.0
million
of
the
net
proceeds
to
repay
its
drawing
on
the
revolving
credit
facility
on
January
4,
2016.
On
September
1,
2016,
the
Company
repaid
the
principal
amount
of
$250.0
million
of
senior
notes
maturing
in
September
2016.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Balance
Sheet
(in
millions)
Cash
and
cash
equivalents
Current
assets
Total
assets
As
at
December
31,
2017
$
1,025.8
2016
2015
$
827.0
$
1,043.9
$
2,284.4
$
2,080.7
$
2,292.1
$
8,157.2
$
7,979.3
$
7,735.4
Current
liabilities,
including
current
portion
of
long-‐term
debt
$
585.3
$
637.7
$
701.8
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)
(a)
Includes
long-‐term
debt
and
provisions.
(b)
Calculated
as
current
assets
less
current
liabilities.
(c)
Calculated
as
current
assets
divided
by
current
liabilities.
$
2,563.1
$
2,594.4
$
2,452.7
$
1,732.6
$
1,733.2
$
1,981.4
$
3,538.0
$
3,795.0
$
3,802.2
$
4,583.6
$
4,145.5
$
3,889.3
$
35.6
$
38.8
$
43.9
$
1,699.1
$
1,443.0
$
1,590.3
3.9:1
3.26:1
3.27:1
At
December
31,
2017,
Kinross
had
cash
and
cash
equivalents
of
$1,025.8
million,
an
increase
of
$198.8
million
from
the
balance
as
at
December
31,
2016,
primarily
due
to
net
operating
cash
inflows
of
$951.6
million
and
the
receipt
of
net
cash
proceeds
of
$269.6
million
related
to
the
sale
of
Cerro
Casale,
Quebrada
Seca,
the
White
Gold
exploration
project,
and
DeLamar.
These
inflows
were
offset
by
cash
outflows
of
$897.6
million
related
to
capital
expenditures
and
$73.8
million
for
additions
to
long-‐term
investments
and
other
assets.
Current
assets
increased
to
$2,284.4
million,
mainly
due
to
the
increase
in
cash
and
cash
equivalents
and
inventories,
partially
offset
by
a
decrease
in
current
income
tax
recoverable,
trade
receivables
and
VAT
receivables.
Total
assets
increased
by
$177.9
million
to
$8,157.2
million,
largely
due
to
increases
in
current
assets,
long-‐term
investments
and
long
term
receivables
offset
by
a
decrease
in
investments
in
associate
and
joint
ventures
as
a
result
of
the
sale
of
Cerro
Casale.
Current
liabilities
decreased
to
$585.3
million,
primarily
due
to
the
decrease
in
current
income
taxes
payable
and
the
current
portion
of
provisions,
partially
offset
by
an
increase
in
accounts
payable
and
accrued
liabilities.
Total
long-‐term
financial
liabilities
were
lower
by
$31.3
million,
primarily
due
to
a
decrease
in
other
long-‐term
liabilities.
At
December
31,
2016,
Kinross
had
cash
and
cash
equivalents
of
$827.0
million,
a
decrease
of
$216.9
million
from
the
balance
as
at
December
31,
2015,
primarily
due
to
net
cash
outflows
of
$588.0
million
used
in
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain,
capital
expenditures
of
$633.8
million,
repayment
of
debt
of
$250.0
million,
and
$59.8
million
for
additions
to
long-‐term
investments
and
other
assets,
partially
offset
by
net
operating
cash
flows
of
$1,099.2
million
and
net
proceeds
of
$275.7
million
received
from
the
equity
issuance.
Current
assets
decreased
to
$2,080.7
million,
mainly
due
to
the
decrease
in
cash
and
cash
equivalents,
partially
offset
by
an
increase
in
trade
receivables.
Total
assets
increased
by
$243.9
million
to
$7,979.3
million,
largely
due
to
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
of
Round
Mountain.
Current
liabilities
decreased
to
$637.7
million,
primarily
due
to
the
repayment
of
the
current
portion
of
the
senior
notes
of
$250.0
million,
partially
offset
by
an
increase
in
accounts
payable
and
accrued
liabilities
and
income
tax
payable.
Total
long -‐term
financial
liabilities
were
higher
by
$141.7
million,
primarily
due
to
an
increase
in
provisions
as
a
result
of
the
acquisition.
As
of
February
13,
2018,
there
were
1,247.0 million
common
shares
of
the
Company
issued
and
outstanding.
In
addition,
at
the
same
date,
the
Company
had
12.1
million
share
purchase
options
outstanding
under
its
share
option
plan.
32
33 KINROSS ANNUAL REPORT MDA
33
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Financings
and
Credit
Facilities
Senior
notes
As
at
December
31,
2017,
the
Company’s
$1,750.0
million
of
senior
notes
consisted
of
$500.0
million
principal
amount
of
5.125%
notes
due
2021,
$500.0
million
principal
amount
of
5.950%
notes
due
2024,
$500.0
million
principal
amount
of
4.50%
notes
due
2027
and
$250.0
million
principal
amount
of
6.875%
notes
due
2041.
On
July
6,
2017,
the
Company
completed
a
$500.0
million
offering
of
debt
securities
consisting
of
4.50%
senior
notes
due
2027.
Kinross
received
net
proceeds
of
$494.7
million
from
the
offering,
after
payment
of
related
fees
and
expenses.
The
notes
rank
equally
with
the
Company’s
existing
senior
notes.
Corporate
revolving
credit
and
term
loan
facilities
On
July
12,
2017,
the
Company
fully
repaid
the
outstanding
balance
on
the
term
loan
with
proceeds
from
the
$500.0
million
offering
of
debt
securities
completed
on
July
6,
2017.
On
July
28,
2017,
the
Company
amended
its
$1,500.0
million
revolving
credit
facility
to
extend
the
maturity
date
by
one
year
from
August
10,
2021,
to
August
10,
2022.
As
at
December
31,
2017,
the
Company
had
utilized
$21.0
million
(December
31,
2016
–
$104.5
million)
of
its
$1,500.0
million
revolving
credit
facility.
The
amount
utilized
was
entirely
for
letters
of
credit.
As
at
December
31,
2017,
the
Company
had
no
scheduled
debt
repayments
until
2021.
Loan
interest
for
the
revolving
credit
facility
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,
2017,
interest
charges
and
fees,
are
as
follows:
Type
of
credit
Dollar
based
LIBOR
loan:
Revolving
credit
facility
Letters
of
credit
Standby
fee
applicable
to
unused
availability
LIBOR
plus
2.00%
1.33-‐2.00%
0.40%
The
revolving
credit
facility
contains
various
covenants
including
limits
on
indebtedness,
asset
sales
and
liens.
The
Company
is
in
compliance
with
its
financial
covenant
in
the
credit
agreement
at
December
31,
2017.
Other
Contractual
Obligations
and
Commitments
The
maturity
date
for
the
$250.0
million
Letter
of
Credit
guarantee
facility
with
Export
Development
Canada
(“EDC”)
was
extended
by
one
year
to
June
30,
2018,
effective
July
1,
2017.
Effective
December
5,
2017,
the
Company
entered
into
an
amendment
to
increase
the
amount
of
its
Letter
of
Credit
guarantee
facility
with
EDC
from
$250.0
million
to
$300.0
million.
Letters
of
credit
guaranteed
under
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
0.95%
to
1.00%.
As
at
December
31,
2017,
$215.2
million
(December
31,
2016
-‐
$215.1
million)
was
utilized
under
this
facility.
In
addition,
at
December
31,
2017,
the
Company
had
$230.2
million
(December
31,
2016
-‐
$117.7
million)
in
letters
of
credit
and
surety
bonds
outstanding
in
respect
of
its
operations
in
Brazil,
Mauritania,
Ghana
and
Chile.
These
have
been
issued
pursuant
to
arrangements
with
certain
international
banks.
As
at
December
31,
2017,
$254.7
million
(December
31,
2016
-‐
$216.7
million)
of
surety
bonds
were
outstanding
with
respect
to
Kinross’
operations
in
the
United
States.
The
surety
bonds
were
issued
pursuant
to
arrangements
with
international
insurance
companies.
34
KINROSS ANNUAL REPORT MDA 34
35
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
The
following
table
outlines
the
credit
facility
utilization
and
availability:
(in
millions)
Utilization
of
revolving
credit
facility
Utilization
of
EDC
facility
Borrowings
As
at,
December
31,
2017
2016
$
(21.0)
$
(104.5)
(215.2)
(215.1)
$
(236.2)
$
(319.6)
Available
under
revolving
credit
facility
$
1,479.0
$
1,395.5
Available
under
EDC
credit
facility
Available
credit
84.8
34.9
$
1,563.8
$
1,430.4
Total
debt
of
$1,732.6
million
at
December
31,
2017
consists
solely
of
the
senior
notes.
The
current
portion
of
this
debt
at
December
31,
2017
is
$nil.
Liquidity
Outlook
We
believe
that
the
Company’s
existing
cash
and
cash
equivalents
balance
of
$1,025.8
million,
available
credit
of
$1,563.8
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),
and
reclamation
and
remediation
obligations
currently
estimated
for
2018.
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.
The
following
table
summarizes
our
long-‐term
financial
liabilities
and
off-‐balance
sheet
contractual
obligations
as
at
December
31,
2017:
(in
millions)
Long-‐term
debt
obligations
(a)
Operating
lease
obligations
Purchase
obligations
(b)
Reclamation
and
remediation
obligations
Interest
and
other
fees
(a)
Total
Total
2018
2019
2020
2021
2022
$
1,750.0
$
-‐
$
-‐
$
-‐
$
500.0
$
-‐
$
1,250.0
49.9
822.3
1,183.7
972.0
25.9
462.0
64.4
104.6
12.5
285.2
65.0
102.9
4.9
5.9
55.6
102.9
2.9
34.5
117.5
102.9
2.9
0.1
62.4
74.9
$
4,777.9
$
656.9
$
465.6
$
169.3
$
757.8
$
140.3
$
2,588.0
2023
&
thereafter
0.8
34.6
818.8
483.8
(a)
Debt
repayments
are
based
on
amounts
due
pursuant
to
the
terms
of
existing
indebtedness.
(b)
Includes
both
capital
and
operating
commitments,
of
which
$192.7
million
relates
to
commitments
for
capital
expenditures.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Financings
and
Credit
Facilities
Senior
notes
As
at
December
31,
2017,
the
Company’s
$1,750.0
million
of
senior
notes
consisted
of
$500.0
million
principal
amount
of
5.125%
notes
due
2021,
$500.0
million
principal
amount
of
5.950%
notes
due
2024,
$500.0
million
principal
amount
of
4.50%
notes
due
2027
and
$250.0
million
principal
amount
of
6.875%
notes
due
2041.
On
July
6,
2017,
the
Company
completed
a
$500.0
million
offering
of
debt
securities
consisting
of
4.50%
senior
notes
due
2027.
Kinross
received
net
proceeds
of
$494.7
million
from
the
offering,
after
payment
of
related
fees
and
expenses.
The
notes
rank
equally
with
the
Company’s
existing
senior
notes.
Corporate
revolving
credit
and
term
loan
facilities
On
July
12,
2017,
the
Company
fully
repaid
the
outstanding
balance
on
the
term
loan
with
proceeds
from
the
$500.0
million
offering
of
debt
securities
completed
on
July
6,
2017.
On
July
28,
2017,
the
Company
amended
its
$1,500.0
million
revolving
credit
facility
to
extend
the
maturity
date
by
one
year
from
August
10,
2021,
to
August
10,
2022.
Loan
interest
for
the
revolving
credit
facility
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,
2017,
interest
charges
and
fees,
are
as
follows:
Type
of
credit
Dollar
based
LIBOR
loan:
Revolving
credit
facility
Letters
of
credit
Standby
fee
applicable
to
unused
availability
LIBOR
plus
2.00%
1.33-‐2.00%
0.40%
The
revolving
credit
facility
contains
various
covenants
including
limits
on
indebtedness,
asset
sales
and
liens.
The
Company
is
in
compliance
with
its
financial
covenant
in
the
credit
agreement
at
December
31,
2017.
The
maturity
date
for
the
$250.0
million
Letter
of
Credit
guarantee
facility
with
Export
Development
Canada
(“EDC”)
was
extended
by
one
year
to
June
30,
2018,
effective
July
1,
2017.
Effective
December
5,
2017,
the
Company
entered
into
an
amendment
to
increase
the
amount
of
its
Letter
of
Credit
guarantee
facility
with
EDC
from
$250.0
million
to
$300.0
million.
Letters
of
credit
guaranteed
under
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
0.95%
to
1.00%.
As
at
December
31,
2017,
$215.2
million
(December
31,
2016
-‐
$215.1
million)
was
utilized
under
this
facility.
In
addition,
at
December
31,
2017,
the
Company
had
$230.2
million
(December
31,
2016
-‐
$117.7
million)
in
letters
of
credit
and
surety
bonds
outstanding
in
respect
of
its
operations
in
Brazil,
Mauritania,
Ghana
and
Chile.
These
have
been
issued
pursuant
to
arrangements
with
certain
international
banks.
As
at
December
31,
2017,
$254.7
million
(December
31,
2016
-‐
$216.7
million)
of
surety
bonds
were
outstanding
with
respect
to
Kinross’
operations
in
the
United
States.
The
surety
bonds
were
issued
pursuant
to
arrangements
with
international
insurance
companies.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
The
following
table
outlines
the
credit
facility
utilization
and
availability:
(in
millions)
Utilization
of
revolving
credit
facility
Utilization
of
EDC
facility
Borrowings
As
at,
December
31,
2017
$
(21.0)
2016
$
(104.5)
(215.2)
(215.1)
$
(236.2)
$
(319.6)
Available
under
revolving
credit
facility
$
1,479.0
$
1,395.5
Available
under
EDC
credit
facility
Available
credit
84.8
34.9
$
1,563.8
$
1,430.4
Total
debt
of
$1,732.6
million
at
December
31,
2017
consists
solely
of
the
senior
notes.
The
current
portion
of
this
debt
at
December
31,
2017
is
$nil.
Liquidity
Outlook
As
at
December
31,
2017,
the
Company
had
utilized
$21.0
million
(December
31,
2016
–
$104.5
million)
of
its
$1,500.0
million
revolving
credit
facility.
The
amount
utilized
was
entirely
for
letters
of
credit.
As
at
December
31,
2017,
the
Company
had
no
scheduled
debt
repayments
until
2021.
We
believe
that
the
Company’s
existing
cash
and
cash
equivalents
balance
of
$1,025.8
million,
available
credit
of
$1,563.8
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),
and
reclamation
and
remediation
obligations
currently
estimated
for
2018.
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.
Other
Contractual
Obligations
and
Commitments
The
following
table
summarizes
our
long-‐term
financial
liabilities
and
off-‐balance
sheet
contractual
obligations
as
at
December
31,
2017:
(in
millions)
Long-‐term
debt
obligations
(a)
Operating
lease
obligations
Purchase
obligations
(b)
Reclamation
and
remediation
obligations
Interest
and
other
fees
(a)
Total
Total
2018
2019
2020
2021
2022
2023
&
thereafter
$
1,750.0
$
-‐
$
-‐
$
-‐
$
500.0
$
-‐
$
1,250.0
49.9
822.3
1,183.7
972.0
25.9
462.0
64.4
104.6
12.5
285.2
65.0
102.9
4.9
5.9
55.6
102.9
2.9
34.5
117.5
102.9
2.9
0.1
62.4
74.9
0.8
34.6
818.8
483.8
$
4,777.9
$
656.9
$
465.6
$
169.3
$
757.8
$
140.3
$
2,588.0
(a)
Debt
repayments
are
based
on
amounts
due
pursuant
to
the
terms
of
existing
indebtedness.
(b)
Includes
both
capital
and
operating
commitments,
of
which
$192.7
million
relates
to
commitments
for
capital
expenditures.
34
35 KINROSS ANNUAL REPORT MDA
35
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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.
Other
legal
matters
The
following
table
provides
a
summary
of
derivative
contracts
outstanding
at
December
31,
2017:
The
Company
is
from
time
to
time
involved
in
legal
proceedings,
arising
in
the
ordinary
course
of
its
business.
Typically,
the
amount
of
ultimate
liability
with
respect
to
these
actions
will
not,
in
the
opinion
of
management,
materially
affect
Kinross’
financial
position,
Foreign
currency
2018
2019
2020
Brazilian
real
forward
buy
contracts
(in
millions
of
U.S.
dollars)
$
69.6
$
-‐
$
-‐
Average
price
(Brazilian
reais)
Brazilian
real
zero
cost
collars
3.32
-‐
-‐
(in
millions
of
U.S.
dollars)
$
25.2
$
60.0
$
-‐
Average
put
strike
(Brazilian
reais)
Average
call
strike
(Brazilian
reais)
Canadian
dollar
forward
buy
contracts
3.75
4.12
3.45
3.64
-‐
-‐
(in
millions
of
U.S.
dollars)
$
40.5
$
18.0
$
-‐
Average
rate
(Canadian
dollars)
Russian
rouble
zero
cost
collars
1.35
1.28
-‐
(in
millions
of
U.S.
dollars)
$
24.0
$
-‐
$
-‐
Average
put
strike
(Russian
roubles)
Average
call
strike
(Russian
roubles)
60.0
71.2
-‐
-‐
-‐
-‐
WTI
oil
swap
contracts
(barrels)
907,482
594,451
90,000
Average
price
$
48.48
$
49.86
$
52.40
The
following
new
derivative
contracts
were
entered
into
during
the
year
ended
December
31,
2017:
•
•
•
•
•
$58.5
million
Canadian
dollars
at
an
average
rate
of
1.33
maturing
in
2018
to
2019;
$24.0
million
Russian
roubles
with
an
average
put
strike
of
60.00
and
an
average
call
strike
of
71.24
maturing
in
2018;
$69.6
million
Brazilian
reais
at
an
average
rate
of
3.32
maturing
in
2018;
$60.0
million
Brazilian
reais
with
an
average
put
strike
of
3.45
and
an
average
call
strike
of
3.64
maturing
in
2019;
1,048,000
barrels
of
WTI
oil
at
an
average
rate
of
$49.46
per
barrel
maturing
from
2017
to
2020.
Subsequent
to
December
31,
2017,
the
following
new
derivative
contracts
were
entered
into:
•
•
•
$24.0
million
Russian
roubles
with
an
average
put
strike
57.00
and
average
call
strike
67.50
maturing
in
2019;
$58.5
million
Brazilian
reais
with
an
average
put
strike
of
3.32
and
an
average
call
strike
of
3.66
maturing
in
2019;
348,000
barrels
of
WTI
oil
at
an
average
rate
of
$53.39
per
barrel
maturing
in
2019
to
2020.
The
Company
enters
into
total
return
swaps
(“TRS”)
as
economic
hedges
of
the
Company’s
deferred
share
units
and
cash-‐settled
restricted
share
units.
Hedge
accounting
was
not
applied
to
the
TRSs.
At
December
31,
2017,
5,695,000
TRS
units
were
outstanding.
Fair
value
of
derivative
instruments
The
fair
values
of
derivative
instruments
are
noted
in
the
table
below:
(in
millions)
Asset
(liability)
As
at,
December
31,
2017
2016
Foreign
currency
forward
and
collar
contracts
$
6.1
$
8.9
Energy
swap
contracts
Total
return
swap
contracts
12.9
0.6
12.3
(6.2)
$
19.6
$
15.0
36
KINROSS ANNUAL REPORT MDA 36
results
of
operations
or
cash
flows.
Maricunga
regulatory
proceedings
In
late
2013,
Compania
Minera
Maricunga
(“CMM”)
was
fined
approximately
$40,000
in
respect
of
the
degradation
of
the
Pantanillo
wetland
located
near
the
Maricunga
mine’s
water
pumping
wells.
CMM
paid
the
fine,
as
required,
and
sought
governmental
approval
of
remedial
action
plans
aimed
at
addressing
the
degradation.
CMM’s
remedial
action
plans
were
not
fully
approved
and
only
a
subset
of
CMM’s
planned
activities
were
allowed
to
be
implemented.
In
May
2015,
the
Chile
environmental
enforcement
authority
(“the
SMA”)
issued
a
resolution
alleging
that
CMM
had
irreparably
harmed
portions
of
the
Pantanillo
wetland
and
two
other
downstream
wetlands
known
respectively
as
Valle
Ancho
and
Barros
Negros,
and
that
the
mine’s
continuing
water
use
poses
an
imminent
risk
to
those
wetlands.
In
response,
CMM
submitted
legal
and
technical
defenses,
expert
reports
and
other
materials
challenging
the
SMA’s
allegations,
and,
complied
with
various
information
requests
from
the
SMA.
On
March
18,
2016,
the
SMA
issued
a
resolution
against
CMM
in
respect
of
the
SMA’s
May
2015
allegations
regarding
the
Valle
Ancho
wetland,
located
approximately
7
kilometresdowngradient
from
CMM’s
groundwater
wells
supplying
water
to
the
operation,
seeking
to
impose
a
sanction
of
an
immediate
complete
curtailment
of
water
use
from
the
groundwater
wells
and
related
aquifer
(the
“sanction
proceedings”).
Beginning
in
May
2016,
the
SMA
issued
a
series
of
resolutions
ordering
CMM
to
“temporarily”
curtail
the
pumping
of
water
from
the
groundwater
wells.
In
response,
CMM
suspended
mining
and
crushing
activities
and
reduced
water
consumption
to
minimal
levels.
CMM
contested
these
resolutions
by
seeking
reconsideration
with
the
SMA
and
appealing
to
Chile’s
Environmental
Tribunal,
but
its
efforts
were
unsuccessful
and,
except
for
a
short
period
of
time
in
July
2016,
the
Company’s
operations
have
remained
suspended.
On
June
24,
2016,
the
SMA
amended
its
initial
sanction
(the
“Amended
Sanction”).
The
terms
of
the
Amended
Sanction
effectively
required
CMM
to
cease
operations
and
close
the
mine,
with
water
use
curtailed
to
levels
far
below
those
required
for
closure
in
compliance
with
the
mine’s
government-‐approved
plan.
On
July
9,
2016,
CMM
filed
its
appeal
in
the
sanction
proceedings.
As
part
of
its
appeal,
CMM
submitted
legal
and
technical
arguments
and
reports
by
experts
on
wetland
vegetation,
analysis
of
long-‐term
satellite
imagery
and
groundwater
hydrology
criticizing
the
evidence
relied
upon
by
the
SMA
and
concluding
that
current
data
does
not
support
an
assertion
that
CMM’s
pumping
is
negatively
impacting
water
levels
7
kilometresdowngradient
at
the
Valle
Ancho
wetland.
On
August
30,
2016,
CMM
submitted
a
request
to
the
Environmental
Tribunal
that
it
issue
an
injunction
suspending
the
effectiveness
of
the
Amended
Sanction
pending
a
final
decision
on
the
merits
of
CMM’s
appeal
of
the
Amended
Sanction.
On
September
16,
2016,
the
Environmental
Tribunal
rejected
CMM’s
injunction
request.
On
August
7,
2017,
the
Environmental
Tribunal
upheld
the
SMA’s
Amended
Sanction
and
curtailment
orders
on
purely
procedural
grounds.
No
findings
were
made
by
the
Tribunal
on
the
issue
of
whether
CMM’s
pumping
caused
damage
to
area
wetlands,
as
alleged
by
the
SMA.
On
September
27,
2017,
CMM
appealed
the
matter
to
the
Supreme
Court
of
Chile,
which
accepted
the
appeal
on
December
14,
2017.
The
timing
of
any
substantive
decision
by
the
Supreme
Court
is
uncertain.
On
June
2,
2016,
CMM
was
served
with
two
separate
lawsuits
filed
by
the
Chilean
State
Defense
Counsel.
Both
lawsuits
are
based
upon
allegations
that
CMM’s
pumping
from
its
Pantanillo
area
groundwater
wells
has
caused
damage
to
area
wetlands.
One
action
relates
to
the
Pantanillo
wetland,
and
is
based
upon
the
sanction
imposed
upon
CMM
in
late
2013
(as
described
above).
The
other
action
relates
to
the
Valle
Ancho
wetland,
and
is
largely
based
upon
the
same
factual
assertions
at
issue
in
the
SMA
sanction
proceedings.
These
lawsuits
seek,
among
other
things,
to
require
CMM
to
cease
pumping
from
the
groundwater
wells,
finance
various
investigations
and
conduct
restoration
activities.
On
June
20,
2016,
CMM
filed
its
defenses.
Evidentiary
hearings
before
the
Environmental
Tribunal
occurred
in
2016
and
early
2017,
and
closing
arguments
occurred
in
December
2017.
The
timing
of
any
substantive
decision
by
the
Environmental
Tribunal
is
uncertain.
On
May
19,
2017,
a
release
of
diesel
fuel
occurred
from
a
power
generation
area
of
the
Rancho
del
Gallo
Camp.
The
release
occurred
when
a
pipe
valve
attached
to
a
fuel
tank
was
opened
by
an
unknown
party,
effectively
draining
the
tank.
CMM
estimates
that
approximately
15,000
litres
of
diesel
escaped
containment
affecting
the
surrounding
soil
and
a
nearby
stream.
After
discovering
the
release,
CMM
commenced
actions
designed
to
contain
the
release,
including
mobilization
of
a
third-‐party
response
team,
and
has
addressed
both
localized
and
downstream
impacts
of
the
release.
CMM
notified
the
relevant
authorities
of
the
release,
and
has
kept
them
informed
of
its
response
activities.
Various
agencies,
including
the
SMA,
have
reviewed,
or
are
reviewing
the
situation
and
have
requested
information
from
CMM.
Further,
the
SEC
(Superintendencia
de
Electridad
y
Combustibles),
the
agency
that
regulates
fuel
facilities
and
electrical
power,
commenced
an
administrative
action
against
CMM
for
alleged
regulatory
non-‐compliances
at
the
facility.
The
SEC
action,
or
other
legal
actions
relating
to
the
release,
could
result
in
the
imposition
of
fines
or
other
sanctions
against
CMM
or
its
employees.
37
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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.
Other
legal
matters
The
following
table
provides
a
summary
of
derivative
contracts
outstanding
at
December
31,
2017:
Foreign
currency
2018
2019
2020
(in
millions
of
U.S.
dollars)
$
69.6
$
-‐
$
-‐
(in
millions
of
U.S.
dollars)
$
25.2
$
60.0
$
-‐
Brazilian
real
forward
buy
contracts
Average
price
(Brazilian
reais)
Brazilian
real
zero
cost
collars
Average
put
strike
(Brazilian
reais)
Average
call
strike
(Brazilian
reais)
Canadian
dollar
forward
buy
contracts
Average
rate
(Canadian
dollars)
Russian
rouble
zero
cost
collars
Average
put
strike
(Russian
roubles)
Average
call
strike
(Russian
roubles)
(in
millions
of
U.S.
dollars)
$
40.5
$
18.0
$
-‐
1.35
1.28
(in
millions
of
U.S.
dollars)
$
24.0
$
-‐
$
-‐
3.32
3.75
4.12
60.0
71.2
3.45
3.64
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
WTI
oil
swap
contracts
(barrels)
907,482
594,451
90,000
Average
price
$
48.48
$
49.86
$
52.40
The
following
new
derivative
contracts
were
entered
into
during
the
year
ended
December
31,
2017:
•
•
•
•
•
•
•
•
$58.5
million
Canadian
dollars
at
an
average
rate
of
1.33
maturing
in
2018
to
2019;
$24.0
million
Russian
roubles
with
an
average
put
strike
of
60.00
and
an
average
call
strike
of
71.24
maturing
in
2018;
$69.6
million
Brazilian
reais
at
an
average
rate
of
3.32
maturing
in
2018;
$60.0
million
Brazilian
reais
with
an
average
put
strike
of
3.45
and
an
average
call
strike
of
3.64
maturing
in
2019;
1,048,000
barrels
of
WTI
oil
at
an
average
rate
of
$49.46
per
barrel
maturing
from
2017
to
2020.
Subsequent
to
December
31,
2017,
the
following
new
derivative
contracts
were
entered
into:
$24.0
million
Russian
roubles
with
an
average
put
strike
57.00
and
average
call
strike
67.50
maturing
in
2019;
$58.5
million
Brazilian
reais
with
an
average
put
strike
of
3.32
and
an
average
call
strike
of
3.66
maturing
in
2019;
348,000
barrels
of
WTI
oil
at
an
average
rate
of
$53.39
per
barrel
maturing
in
2019
to
2020.
The
Company
enters
into
total
return
swaps
(“TRS”)
as
economic
hedges
of
the
Company’s
deferred
share
units
and
cash-‐settled
restricted
share
units.
Hedge
accounting
was
not
applied
to
the
TRSs.
At
December
31,
2017,
5,695,000
TRS
units
were
outstanding.
Fair
value
of
derivative
instruments
The
fair
values
of
derivative
instruments
are
noted
in
the
table
below:
Foreign
currency
forward
and
collar
contracts
$
6.1
$
8.9
(in
millions)
Asset
(liability)
Energy
swap
contracts
Total
return
swap
contracts
As
at,
December
31,
2017
2016
12.9
0.6
12.3
(6.2)
$
19.6
$
15.0
36
The
Company
is
from
time
to
time
involved
in
legal
proceedings,
arising
in
the
ordinary
course
of
its
business.
Typically,
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.
Maricunga
regulatory
proceedings
In
late
2013,
Compania
Minera
Maricunga
(“CMM”)
was
fined
approximately
$40,000
in
respect
of
the
degradation
of
the
Pantanillo
wetland
located
near
the
Maricunga
mine’s
water
pumping
wells.
CMM
paid
the
fine,
as
required,
and
sought
governmental
approval
of
remedial
action
plans
aimed
at
addressing
the
degradation.
CMM’s
remedial
action
plans
were
not
fully
approved
and
only
a
subset
of
CMM’s
planned
activities
were
allowed
to
be
implemented.
In
May
2015,
the
Chile
environmental
enforcement
authority
(“the
SMA”)
issued
a
resolution
alleging
that
CMM
had
irreparably
harmed
portions
of
the
Pantanillo
wetland
and
two
other
downstream
wetlands
known
respectively
as
Valle
Ancho
and
Barros
Negros,
and
that
the
mine’s
continuing
water
use
poses
an
imminent
risk
to
those
wetlands.
In
response,
CMM
submitted
legal
and
technical
defenses,
expert
reports
and
other
materials
challenging
the
SMA’s
allegations,
and,
complied
with
various
information
requests
from
the
SMA.
On
March
18,
2016,
the
SMA
issued
a
resolution
against
CMM
in
respect
of
the
SMA’s
May
2015
allegations
regarding
the
Valle
Ancho
wetland,
located
approximately
7
kilometresdowngradient
from
CMM’s
groundwater
wells
supplying
water
to
the
operation,
seeking
to
impose
a
sanction
of
an
immediate
complete
curtailment
of
water
use
from
the
groundwater
wells
and
related
aquifer
(the
“sanction
proceedings”).
Beginning
in
May
2016,
the
SMA
issued
a
series
of
resolutions
ordering
CMM
to
“temporarily”
curtail
the
pumping
of
water
from
the
groundwater
wells.
In
response,
CMM
suspended
mining
and
crushing
activities
and
reduced
water
consumption
to
minimal
levels.
CMM
contested
these
resolutions
by
seeking
reconsideration
with
the
SMA
and
appealing
to
Chile’s
Environmental
Tribunal,
but
its
efforts
were
unsuccessful
and,
except
for
a
short
period
of
time
in
July
2016,
the
Company’s
operations
have
remained
suspended.
On
June
24,
2016,
the
SMA
amended
its
initial
sanction
(the
“Amended
Sanction”).
The
terms
of
the
Amended
Sanction
effectively
required
CMM
to
cease
operations
and
close
the
mine,
with
water
use
curtailed
to
levels
far
below
those
required
for
closure
in
compliance
with
the
mine’s
government-‐approved
plan.
On
July
9,
2016,
CMM
filed
its
appeal
in
the
sanction
proceedings.
As
part
of
its
appeal,
CMM
submitted
legal
and
technical
arguments
and
reports
by
experts
on
wetland
vegetation,
analysis
of
long-‐term
satellite
imagery
and
groundwater
hydrology
criticizing
the
evidence
relied
upon
by
the
SMA
and
concluding
that
current
data
does
not
support
an
assertion
that
CMM’s
pumping
is
negatively
impacting
water
levels
7
kilometresdowngradient
at
the
Valle
Ancho
wetland.
On
August
30,
2016,
CMM
submitted
a
request
to
the
Environmental
Tribunal
that
it
issue
an
injunction
suspending
the
effectiveness
of
the
Amended
Sanction
pending
a
final
decision
on
the
merits
of
CMM’s
appeal
of
the
Amended
Sanction.
On
September
16,
2016,
the
Environmental
Tribunal
rejected
CMM’s
injunction
request.
On
August
7,
2017,
the
Environmental
Tribunal
upheld
the
SMA’s
Amended
Sanction
and
curtailment
orders
on
purely
procedural
grounds.
No
findings
were
made
by
the
Tribunal
on
the
issue
of
whether
CMM’s
pumping
caused
damage
to
area
wetlands,
as
alleged
by
the
SMA.
On
September
27,
2017,
CMM
appealed
the
matter
to
the
Supreme
Court
of
Chile,
which
accepted
the
appeal
on
December
14,
2017.
The
timing
of
any
substantive
decision
by
the
Supreme
Court
is
uncertain.
On
June
2,
2016,
CMM
was
served
with
two
separate
lawsuits
filed
by
the
Chilean
State
Defense
Counsel.
Both
lawsuits
are
based
upon
allegations
that
CMM’s
pumping
from
its
Pantanillo
area
groundwater
wells
has
caused
damage
to
area
wetlands.
One
action
relates
to
the
Pantanillo
wetland,
and
is
based
upon
the
sanction
imposed
upon
CMM
in
late
2013
(as
described
above).
The
other
action
relates
to
the
Valle
Ancho
wetland,
and
is
largely
based
upon
the
same
factual
assertions
at
issue
in
the
SMA
sanction
proceedings.
These
lawsuits
seek,
among
other
things,
to
require
CMM
to
cease
pumping
from
the
groundwater
wells,
finance
various
investigations
and
conduct
restoration
activities.
On
June
20,
2016,
CMM
filed
its
defenses.
Evidentiary
hearings
before
the
Environmental
Tribunal
occurred
in
2016
and
early
2017,
and
closing
arguments
occurred
in
December
2017.
The
timing
of
any
substantive
decision
by
the
Environmental
Tribunal
is
uncertain.
On
May
19,
2017,
a
release
of
diesel
fuel
occurred
from
a
power
generation
area
of
the
Rancho
del
Gallo
Camp.
The
release
occurred
when
a
pipe
valve
attached
to
a
fuel
tank
was
opened
by
an
unknown
party,
effectively
draining
the
tank.
CMM
estimates
that
approximately
15,000
litres
of
diesel
escaped
containment
affecting
the
surrounding
soil
and
a
nearby
stream.
After
discovering
the
release,
CMM
commenced
actions
designed
to
contain
the
release,
including
mobilization
of
a
third-‐party
response
team,
and
has
addressed
both
localized
and
downstream
impacts
of
the
release.
CMM
notified
the
relevant
authorities
of
the
release,
and
has
kept
them
informed
of
its
response
activities.
Various
agencies,
including
the
SMA,
have
reviewed,
or
are
reviewing
the
situation
and
have
requested
information
from
CMM.
Further,
the
SEC
(Superintendencia
de
Electridad
y
Combustibles),
the
agency
that
regulates
fuel
facilities
and
electrical
power,
commenced
an
administrative
action
against
CMM
for
alleged
regulatory
non-‐compliances
at
the
facility.
The
SEC
action,
or
other
legal
actions
relating
to
the
release,
could
result
in
the
imposition
of
fines
or
other
sanctions
against
CMM
or
its
employees.
37 KINROSS ANNUAL REPORT MDA
37
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
previously
entered
into
by
Crown
and
the
WDOE
in
June
2013
(the
“Settlement
Agreement”).
On
February
28,
2014,
Crown
filed
an
appeal
of
the
Renewed
Permit
with
the
Washington
Pollution
Control
Hearings
Board
(“PCHB”).
In
addition,
on
January
15,
2015,
Crown
filed
a
lawsuit
against
the
WDOE
in
Ferry
County
Superior
Court,
Washington,
claiming
that
the
WDOE
breached
the
Settlement
Agreement
by
including
various
unworkable
compliance
terms
in
the
Renewed
Permit
(the
“Crown
Action”).
On
July
30,
2015,
the
PCHB
upheld
the
Renewed
Permit.
Crown
filed
a
Petition
for
Review
in
Ferry
County
Superior
Court,
Washington,
on
August
27,
2015,
seeking
to
have
the
PCHB
decision
overturned.
On
March
13,
2017,
the
Ferry
County
Superior
Court
upheld
the
PCHB’s
decision.
On
April
12,
2017,
Crown
appealed
the
Ferry
County
Superior
Court’s
ruling
to
the
State
of
Washington
Court
of
Appeals,
where
the
matter
remains
pending.
On
July
19,
2016,
the
WDOE
issued
an
Administrative
Order
(“AO”)
to
Crown
and
Kinross
Gold
Corporation
asserting
that
the
companies
had
exceeded
the
discharge
limits
in
the
Renewed
Permit
a
total
of
931
times
and
has
also
failed
to
maintain
the
capture
zone
required
under
the
Renewed
Permit.
The
AO
orders
the
companies
to
develop
an
action
plan
to
capture
and
treat
water
escaping
the
capture
zone,
undertake
various
investigations
and
studies,
revise
its
Adaptive
Management
Plan,
and
report
findings
by
various
deadlines
in
the
fourth
quarter
2016.
The
companies
timely
made
the
required
submittals.
On
August
17,
2016,
the
companies
filed
an
appeal
of
the
AO
with
the
PCHB
(the
“AO
Appeal”).
Because
the
AO
Appeal
raises
many
of
the
same
issues
that
have
been
raised
in
the
Appeal
and
Crown
Action,
the
companies
and
WDOE
agreed
to
stay
the
AO
Appeal
indefinitely
to
allow
these
matters
to
be
resolved.
The
PCHB
granted
the
request
for
stay
on
August
26,
2016.
The
stay
is
affirmed
by
the
PCHB
upon
receipt
of
applicable
filings.
The
stay
was
most
recently
affirmed
on
January
30,
2018.
On
November
30,
2017,
the
WDOE
issued
a
Notice
of
Violation
(“NOV”)
to
Crown
and
Kinross
asserting
that
the
companies
had
exceeded
the
discharge
limits
in
the
Permit
a
total
of
113
times
during
the
3rd
quarter
of
2017
and
also
failed
to
maintain
the
capture
zone
as
required
under
the
Permit.
The
NOV
ordered
the
companies
to
file
a
report
with
WDOE
identifying
the
steps
which
have
been
and
are
being
taken
to
“control
such
waste
or
pollution
or
otherwise
comply
with
this
determination,”
which
report
was
filed
on
January
19,
2018.
Following
its
review
of
this
report,
WDOE
may
issue
an
AO
or
other
directives
to
the
Company.
The
NOV
is
not
immediately
appealable,
but
any
subsequent
AO
or
other
directive
relating
to
the
NOV
may
be
appealed,
as
appropriate.
Crown
also
faces
potential
legal
actions
by
non-‐governmental
organizations
relating
to
the
Permit
and
the
renewed
Permit.
In
the
past,
Crown
and
Kinross
Gold
U.S.A.,
Inc.
have
received
Notice
of
Intent
to
Sue
letters
from
the
Okanogan
Highlands
Alliance
(“OHA”)
advising
that
it
intends
to
file
a
citizen’s
suit
against
Crown
under
the
CWA
for
alleged
violations
of
the
Permit,
renewed
Permit
and
the
CWA,
including
failure
to
adequately
capture
and
treat
mine-‐impacted
groundwater
and
surface
water
at
the
site
in
violation
of
the
Permit
and
renewed
Permit.
OHA’s
notice
letters
further
recite
that
the
CWA
authorizes
injunctive
relief
and
civil
penalties
in
the
amount
of
up
to
$37,500
per
day
per
violation.
However,
to
date,
OHA
has
not
filed
a
lawsuit.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
La
Coipa
permit
proceedings
MDO
suspended
operations
at
the
La
Coipa
mine
in
the
fourth
quarter
of
2013,
in
accordance
with
the
mine’s
permit
MDO
continued
its
water
treatment
program
(“WTP”)
to
remediate
levels
of
mercury
in
the
ground
water
due
to
seepage
from
its
tailing
facility.
La
Coipa’s
WTP,
related
facilities
and
monitoring
program,
including
downstream
monitoring
wells,
have
been
in
place
since
2000.
The
mine’s
groundwater
treatment
permit
establishes
a
very
low
standard
for
mercury
of
1
part
per
billion.
The
La
Coipa
mine
has
four
monitoring
wells
at
or
near
its
downstream
property
boundary
at
which
exceedance
of
the
permitted
standards
have
not
been
detected.
In
2015,
the
SMA
conducted
an
inspection
of
the
WTP
and
monitoring
wells
and
requested
certain
information
regarding
those
facilities
and
their
performance,
with
which
MDO
fully
cooperated.
On
March
16,
2016,
the
SMA
issued
a
resolution
alleging
violations
under
the
WTP.
The
resolution
specified
a
total
of
seven
charges,
alleging
permit
violations
at
the
WTP
and/or
failure
to
properly
permit
certain
related
activities,
including
capturing
water
at
an
undesignated
reservoir,
deficiencies
in
the
mercury
capture
system,
deficiencies
in
the
monitoring
system,
WTP
effluent
samples
from
2013
above
the
permitted
standard,
and
WTP
monitoring
well
samples
from
2013
and
2014
above
the
permitted
standard.
On
April
15,
2016,
MDO
submitted
a
compliance
plan
to
remediate
the
alleged
permit
violations
which,
following
further
submissions
to
the
SMA,
was
ultimately
accepted
on
July
7,
2016.
As
a
result,
the
sanctioning
process
has
been
suspended
without
any
fine
or
other
penalty
to
MDO
provided
the
plan
is
implemented
and
maintained
per
its
terms.
Failure
to
comply
with
the
plan
will
re-‐initiate
the
sanction
process
and
could
result
in
doubled
fines
of
up
to
$7.7
million
per
alleged
minor
violation
(five
in
total)
and
$15.4
million
per
alleged
serious
violation
(two
in
total).
On
October
14,
2016,
six
members
of
a
local
indigenous
community
commenced
an
action
in
the
Copiapo
Court
of
Appeals
challenging
the
recent
approval
of
the
DIA
permit
for
La
Coipa’s
Phase
7
project.
On
January
13,
2017,
the
Court
of
Appeals
rejected
the
legal
challenge,
which
the
plaintiffs
have
not
appealed
and
their
right
to
do
so
has
lapsed.
As
with
any
permit,
the
Phase
7
DIA
is
open
to
challenge
in
other
venues,
which
the
Company
will
vigorously
oppose.
If
such
a
challenge
were
brought
and
successful
in
its
ultimate
disposition,
the
DIA
could
be
revoked,
requiring
the
mine
to
undertake
a
more
rigorous
and
lengthy
Environmental
Impact
Study,
which
in
approving
the
DIA
the
Chilean
environmental
permitting
authority
had
deemed
unnecessary.
Sunnyside
litigation
The
Sunnyside
Mine
is
an
inactive
mine
situated
in
the
so-‐called
Bonita
Peak
Mining
District
(“District”)
near
Silverton,
Colorado.
A
subsidiary
of
Kinross,
Sunnyside
Gold
Corporation
("SGC"),
was
involved
in
operations
at
the
mine
from
1985
through
1991
and
subsequently
conducted
various
reclamation
and
closure
activities
at
the
mine
and
in
the
surrounding
area.
In
the
third
quarter
of
2016,
the
Environmental
Protection
Agency
(the
“EPA”)
listed
the
District,
including
areas
impacted
by
SGC’s
operations
and
closure
activities,
on
the
National
Priorities
List
pursuant
to
the
Comprehensive
Environmental
Response,
Compensation,
and
Liability
Act
(“CERCLA”).
SGC
has
challenged
portions
of
the
CERCLA
listing
in
the
United
States
Court
of
Appeals
for
District
of
Columbia
Circuit.
The
EPA
has
notified
SGC
that
SGC
is
a
potentially
responsible
party
under
CERCLA
and
may
be
jointly
and
severally
liable
for
cleanup
of
the
District
or
cleanup
costs
incurred
by
the
EPA
in
the
District.
The
EPA
may
in
the
future
provide
similar
notification
to
Kinross.
On
August
5,
2015,
while
working
in
another
mine
in
the
District
known
as
the
Gold
King,
the
EPA
caused
a
release
of
approximately
three
million
gallons
of
contaminated
water
into
a
tributary
of
the
Animas
River.
In
the
second
quarter
of
2016,
the
State
of
New
Mexico
filed
a
Complaint
naming
the
EPA,
SGC,
Kinross
and
others
alleging
violations
of
CERCLA,
the
Resource
Conservation
and
Recovery
Act
(“RCRA”),
and
the
Clean
Water
Act
(“CWA”)
and
claiming
negligence,
gross
negligence,
public
nuisance
and
trespass.
The
Complaint
seeks
cost
recovery,
damages,
injunctive
relief,
and
attorney’s
fees.
In
the
third
quarter
of
2016,
the
Navajo
Nation
initiated
litigation
against
the
EPA,
SGC
and
Kinross,
alleging
entitlement
to
cost
recovery
under
CERCLA
for
past
and
future
costs
incurred,
negligence,
gross
negligence,
trespass,
and
public
and
private
nuisance,
and
seeking
reimbursement
of
past
and
future
costs,
compensatory,
consequential
and
punitive
damages,
injunctive
relief
and
attorneys’
fees.
The
suits
brought
by
New
Mexico
and
the
Navajo
Nation
have
been
consolidated.
In
the
third
quarter
of
2017,
the
State
of
Utah
filed
a
Complaint
naming
SGC,
Kinross
and
others
alleging
negligence,
gross
negligence,
public
nuisance,
trespass,
and
violation
of
the
Utah
Water
Quality
Act
and
the
Utah
Solid
and
Hazardous
Waste
Act.
The
Complaint
seeks
cost
recovery,
compensatory,
consequential
and
punitive
damages,
penalties,
disgorgement
of
profits,
declaratory,
injunctive
and
other
relief
under
CERCLA,
attorney’s
fees,
and
costs.
Kettle
River-‐Buckhorn
regulatory
proceedings
Crown
Resources
Corporation
(“Crown”)
is
the
holder
of
a
waste
discharge
permit
(the
“Permit”)
in
respect
of
the
Buckhorn
Mine,
which
authorizes
and
regulates
mine-‐related
discharges
from
the
mine
and
its
water
treatment
plant.
On
February
27,
2014,
the
Washington
Department
of
Ecology
(the
“WDOE”)
renewed
the
Buckhorn
Mine’s
National
Pollution
Discharge
Elimination
System
Permit
(the
“Renewed
Permit”),
with
an
effective
date
of
March
1,
2014.
The
Renewed
Permit
contained
conditions
that
were
more
restrictive
than
the
original
discharge
permit.
In
addition,
the
Crown
felt
that
the
Renewed
Permit
was
internally
inconsistent,
technically
unworkable
and
inconsistent
with
existing
agreements
in
place
with
the
WDOE,
including
a
settlement
agreement
38
KINROSS ANNUAL REPORT MDA 38
39
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
previously
entered
into
by
Crown
and
the
WDOE
in
June
2013
(the
“Settlement
Agreement”).
On
February
28,
2014,
Crown
filed
an
appeal
of
the
Renewed
Permit
with
the
Washington
Pollution
Control
Hearings
Board
(“PCHB”).
In
addition,
on
January
15,
2015,
Crown
filed
a
lawsuit
against
the
WDOE
in
Ferry
County
Superior
Court,
Washington,
claiming
that
the
WDOE
breached
the
Settlement
Agreement
by
including
various
unworkable
compliance
terms
in
the
Renewed
Permit
(the
“Crown
Action”).
On
July
30,
2015,
the
PCHB
upheld
the
Renewed
Permit.
Crown
filed
a
Petition
for
Review
in
Ferry
County
Superior
Court,
Washington,
on
August
27,
2015,
seeking
to
have
the
PCHB
decision
overturned.
On
March
13,
2017,
the
Ferry
County
Superior
Court
upheld
the
PCHB’s
decision.
On
April
12,
2017,
Crown
appealed
the
Ferry
County
Superior
Court’s
ruling
to
the
State
of
Washington
Court
of
Appeals,
where
the
matter
remains
pending.
On
July
19,
2016,
the
WDOE
issued
an
Administrative
Order
(“AO”)
to
Crown
and
Kinross
Gold
Corporation
asserting
that
the
companies
had
exceeded
the
discharge
limits
in
the
Renewed
Permit
a
total
of
931
times
and
has
also
failed
to
maintain
the
capture
zone
required
under
the
Renewed
Permit.
The
AO
orders
the
companies
to
develop
an
action
plan
to
capture
and
treat
water
escaping
the
capture
zone,
undertake
various
investigations
and
studies,
revise
its
Adaptive
Management
Plan,
and
report
findings
by
various
deadlines
in
the
fourth
quarter
2016.
The
companies
timely
made
the
required
submittals.
On
August
17,
2016,
the
companies
filed
an
appeal
of
the
AO
with
the
PCHB
(the
“AO
Appeal”).
Because
the
AO
Appeal
raises
many
of
the
same
issues
that
have
been
raised
in
the
Appeal
and
Crown
Action,
the
companies
and
WDOE
agreed
to
stay
the
AO
Appeal
indefinitely
to
allow
these
matters
to
be
resolved.
The
PCHB
granted
the
request
for
stay
on
August
26,
2016.
The
stay
is
affirmed
by
the
PCHB
upon
receipt
of
applicable
filings.
The
stay
was
most
recently
affirmed
on
January
30,
2018.
On
November
30,
2017,
the
WDOE
issued
a
Notice
of
Violation
(“NOV”)
to
Crown
and
Kinross
asserting
that
the
companies
had
exceeded
the
discharge
limits
in
the
Permit
a
total
of
113
times
during
the
3rd
quarter
of
2017
and
also
failed
to
maintain
the
capture
zone
as
required
under
the
Permit.
The
NOV
ordered
the
companies
to
file
a
report
with
WDOE
identifying
the
steps
which
have
been
and
are
being
taken
to
“control
such
waste
or
pollution
or
otherwise
comply
with
this
determination,”
which
report
was
filed
on
January
19,
2018.
Following
its
review
of
this
report,
WDOE
may
issue
an
AO
or
other
directives
to
the
Company.
The
NOV
is
not
immediately
appealable,
but
any
subsequent
AO
or
other
directive
relating
to
the
NOV
may
be
appealed,
as
appropriate.
Crown
also
faces
potential
legal
actions
by
non-‐governmental
organizations
relating
to
the
Permit
and
the
renewed
Permit.
In
the
past,
Crown
and
Kinross
Gold
U.S.A.,
Inc.
have
received
Notice
of
Intent
to
Sue
letters
from
the
Okanogan
Highlands
Alliance
(“OHA”)
advising
that
it
intends
to
file
a
citizen’s
suit
against
Crown
under
the
CWA
for
alleged
violations
of
the
Permit,
renewed
Permit
and
the
CWA,
including
failure
to
adequately
capture
and
treat
mine-‐impacted
groundwater
and
surface
water
at
the
site
in
violation
of
the
Permit
and
renewed
Permit.
OHA’s
notice
letters
further
recite
that
the
CWA
authorizes
injunctive
relief
and
civil
penalties
in
the
amount
of
up
to
$37,500
per
day
per
violation.
However,
to
date,
OHA
has
not
filed
a
lawsuit.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
La
Coipa
permit
proceedings
MDO
suspended
operations
at
the
La
Coipa
mine
in
the
fourth
quarter
of
2013,
in
accordance
with
the
mine’s
permit
MDO
continued
its
water
treatment
program
(“WTP”)
to
remediate
levels
of
mercury
in
the
ground
water
due
to
seepage
from
its
tailing
facility.
La
Coipa’s
WTP,
related
facilities
and
monitoring
program,
including
downstream
monitoring
wells,
have
been
in
place
since
2000.
The
mine’s
groundwater
treatment
permit
establishes
a
very
low
standard
for
mercury
of
1
part
per
billion.
The
La
Coipa
mine
has
four
monitoring
wells
at
or
near
its
downstream
property
boundary
at
which
exceedance
of
the
permitted
standards
have
not
been
detected.
In
2015,
the
SMA
conducted
an
inspection
of
the
WTP
and
monitoring
wells
and
requested
certain
information
regarding
those
facilities
and
their
performance,
with
which
MDO
fully
cooperated.
On
March
16,
2016,
the
SMA
issued
a
resolution
alleging
violations
under
the
WTP.
The
resolution
specified
a
total
of
seven
charges,
alleging
permit
violations
at
the
WTP
and/or
failure
to
properly
permit
certain
related
activities,
including
capturing
water
at
an
undesignated
reservoir,
deficiencies
in
the
mercury
capture
system,
deficiencies
in
the
monitoring
system,
WTP
effluent
samples
from
2013
above
the
permitted
standard,
and
WTP
monitoring
well
samples
from
2013
and
2014
above
the
permitted
standard.
On
April
15,
2016,
MDO
submitted
a
compliance
plan
to
remediate
the
alleged
permit
violations
which,
following
further
submissions
to
the
SMA,
was
ultimately
accepted
on
July
7,
2016.
As
a
result,
the
sanctioning
process
has
been
suspended
without
any
fine
or
other
penalty
to
MDO
provided
the
plan
is
implemented
and
maintained
per
its
terms.
Failure
to
comply
with
the
plan
will
re-‐initiate
the
sanction
process
and
could
result
in
doubled
fines
of
up
to
$7.7
million
per
alleged
minor
violation
(five
in
total)
and
$15.4
million
per
alleged
serious
violation
(two
in
total).
On
October
14,
2016,
six
members
of
a
local
indigenous
community
commenced
an
action
in
the
Copiapo
Court
of
Appeals
challenging
the
recent
approval
of
the
DIA
permit
for
La
Coipa’s
Phase
7
project.
On
January
13,
2017,
the
Court
of
Appeals
rejected
the
legal
challenge,
which
the
plaintiffs
have
not
appealed
and
their
right
to
do
so
has
lapsed.
As
with
any
permit,
the
Phase
7
DIA
is
open
to
challenge
in
other
venues,
which
the
Company
will
vigorously
oppose.
If
such
a
challenge
were
brought
and
successful
in
its
ultimate
disposition,
the
DIA
could
be
revoked,
requiring
the
mine
to
undertake
a
more
rigorous
and
lengthy
Environmental
Impact
Study,
which
in
approving
the
DIA
the
Chilean
environmental
permitting
authority
had
deemed
unnecessary.
Sunnyside
litigation
The
Sunnyside
Mine
is
an
inactive
mine
situated
in
the
so-‐called
Bonita
Peak
Mining
District
(“District”)
near
Silverton,
Colorado.
A
subsidiary
of
Kinross,
Sunnyside
Gold
Corporation
("SGC"),
was
involved
in
operations
at
the
mine
from
1985
through
1991
and
subsequently
conducted
various
reclamation
and
closure
activities
at
the
mine
and
in
the
surrounding
area.
In
the
third
quarter
of
2016,
the
Environmental
Protection
Agency
(the
“EPA”)
listed
the
District,
including
areas
impacted
by
SGC’s
operations
and
closure
activities,
on
the
National
Priorities
List
pursuant
to
the
Comprehensive
Environmental
Response,
Compensation,
and
Liability
Act
(“CERCLA”).
SGC
has
challenged
portions
of
the
CERCLA
listing
in
the
United
States
Court
of
Appeals
for
District
of
Columbia
Circuit.
The
EPA
has
notified
SGC
that
SGC
is
a
potentially
responsible
party
under
CERCLA
and
may
be
jointly
and
severally
liable
for
cleanup
of
the
District
or
cleanup
costs
incurred
by
the
EPA
in
the
District.
The
EPA
may
in
the
future
provide
similar
notification
to
Kinross.
On
August
5,
2015,
while
working
in
another
mine
in
the
District
known
as
the
Gold
King,
the
EPA
caused
a
release
of
approximately
three
million
gallons
of
contaminated
water
into
a
tributary
of
the
Animas
River.
In
the
second
quarter
of
2016,
the
State
of
New
Mexico
filed
a
Complaint
naming
the
EPA,
SGC,
Kinross
and
others
alleging
violations
of
CERCLA,
the
Resource
Conservation
and
Recovery
Act
(“RCRA”),
and
the
Clean
Water
Act
(“CWA”)
and
claiming
negligence,
gross
negligence,
public
nuisance
and
trespass.
The
Complaint
seeks
cost
recovery,
damages,
injunctive
relief,
and
attorney’s
fees.
In
the
third
quarter
of
2016,
the
Navajo
Nation
initiated
litigation
against
the
EPA,
SGC
and
Kinross,
alleging
entitlement
to
cost
recovery
under
CERCLA
for
past
and
future
costs
incurred,
negligence,
gross
negligence,
trespass,
and
public
and
private
nuisance,
and
seeking
reimbursement
of
past
and
future
costs,
compensatory,
consequential
and
punitive
damages,
injunctive
relief
and
attorneys’
fees.
The
suits
brought
by
New
Mexico
and
the
Navajo
Nation
have
been
consolidated.
In
the
third
quarter
of
2017,
the
State
of
Utah
filed
a
Complaint
naming
SGC,
Kinross
and
others
alleging
negligence,
gross
negligence,
public
nuisance,
trespass,
and
violation
of
the
Utah
Water
Quality
Act
and
the
Utah
Solid
and
Hazardous
Waste
Act.
The
Complaint
seeks
cost
recovery,
compensatory,
consequential
and
punitive
damages,
penalties,
disgorgement
of
profits,
declaratory,
injunctive
and
other
relief
under
CERCLA,
attorney’s
fees,
and
costs.
Kettle
River-‐Buckhorn
regulatory
proceedings
Crown
Resources
Corporation
(“Crown”)
is
the
holder
of
a
waste
discharge
permit
(the
“Permit”)
in
respect
of
the
Buckhorn
Mine,
which
authorizes
and
regulates
mine-‐related
discharges
from
the
mine
and
its
water
treatment
plant.
On
February
27,
2014,
the
Washington
Department
of
Ecology
(the
“WDOE”)
renewed
the
Buckhorn
Mine’s
National
Pollution
Discharge
Elimination
System
Permit
(the
“Renewed
Permit”),
with
an
effective
date
of
March
1,
2014.
The
Renewed
Permit
contained
conditions
that
were
more
restrictive
than
the
original
discharge
permit.
In
addition,
the
Crown
felt
that
the
Renewed
Permit
was
internally
inconsistent,
technically
unworkable
and
inconsistent
with
existing
agreements
in
place
with
the
WDOE,
including
a
settlement
agreement
38
39 KINROSS ANNUAL REPORT MDA
39
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
7. SUMMARY
OF
QUARTERLY
INFORMATION
(in
millions,
except
per
share
amounts)
Q4
2017
Q3
Q2Q4
Q1
Q4
2016
Q3
Q2
Q1
(a)
Metal
sales
Net
earnings
(loss)
attributable
to
common
shareholders
Basic
earnings
(loss)
per
share
attributable
to
common
shareholders
Diluted
earnings
(loss)
per
share
attributable
to
common
shareholders
Net
cash
flow
provided
from
operating
activities
$
810.3
$
828.0
$
868.6
$
796.1
$
902.8
$
910.2
$
876.4
$
782.6
$
217.6
$
60.1
$
33.1
$
134.6
$
(116.5)
$
2.5
$
(25.0)
$
35.0
$
0.17
$
0.05
$
0.03
$
0.11
$
(0.09)
$
0.00
$
(0.02)
$
0.03
$
0.17
$
0.05
$
0.03
$
0.11
$
(0.09)
$
0.00
$
(0.02)
$
0.03
$
366.4
$
197.7
$
179.7
$
207.8
$
302.6
$
266.2
$
315.9
$
214.5
(a)
The
interim
financial
statements
for
the
three
months
ended
March
31,
2016,
were
recast
to
reflect
the
retrospective
impact
of
the
finalization
of
the
purchase
price
allocation
of
the
acquisition
of
Bald
Mountain
and
50%
of
Round
Mountain.
The
Company’s
results
over
the
past
several
quarters
have
been
driven
primarily
by
fluctuations
in
the
gold
price,
input
costs
and
changes
in
gold
equivalent
ounces
sold.
Fluctuations
in
the
silver
price
have
also
affected
results.
During
the
fourth
quarter
of
2017,
revenue
decreased
to
$810.3
million
on
total
gold
equivalent
ounces
sold
of
634,762
compared
with
$902.8
million
on
sales
of
743,427
total
gold
equivalent
ounces
during
the
fourth
quarter
of
2016.
The
average
gold
price
realized
in
the
fourth
quarter
of
2017
was
$1,276
per
ounce
compared
with
$1,217
per
ounce
in
the
fourth
quarter
of
2016.
Production
cost
of
sales
decreased
to
$414.5
million
compared
with
$529.4
million
in
the
same
period
of
2016,
primarily
due
to
a
decrease
in
gold
equivalent
ounces
sold
and
lower
costs
realized
at
Fort
Knox.
Fluctuations
in
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.
On
March
28,
2017,
the
Company
announced
that
it
entered
into
an
agreement
with
Goldcorp
to
sell
its
25%
interest
in
the
Cerro
Casale
project
and
its
100%
interest
in
the
Quebrada
Seca
exploration
project
in
Chile.
On
June
9,
2017,
the
Company
completed
the
sale
for
gross
cash
proceeds
of
$260.0
million
(which
included
$20.0
million
for
Quebrada
Seca).
In
connection
with
the
sale,
the
Company
recognized
a
gain
on
disposition
of
$12.7
million
during
the
three
months
ended
June
30,
2017.
On
May
18,
2017,
the
Company
entered
into
an
agreement
with
White
Gold
Corp.
to
sell
its
100%
interest
in
the
White
Gold
exploration
project
in
the
Yukon
Territory.
On
June
14,
2017,
the
Company
completed
the
sale
and
recognized
a
loss
on
disposition
of
$1.7
million
for
the
three
months
ended
June
30,
2017.
On
September
18,
2017,
the
Company
entered
into
an
agreement
with
Integra
to
sell
its
100%
interest
in
DeLamar.
On
November
3,
2017,
the
Company
completed
the
sale
and
recognized
a
gain
of
$44.2
million.
In
the
fourth
quarter
of
2017,
the
Company
recorded
a
net,
after-‐tax,
impairment
reversal
of
$62.1
million
related
to
impairment
reversals
at
its
Tasiast
and
Fort
Knox
CGUs,
offset
by
an
impairment
charge
at
its
Paracatu
CGU.
During
the
third
quarter
of
2016,
the
Company
recorded
an
impairment
charge
of
$139.6
million
relating
to
its
Maricunga
CGU
as
a
result
of
the
suspension
of
mining
and
crushing
activities.
The
impairment
charge
included
$68.3
million
related
to
property,
plant
and
equipment
and
$71.3
million
related
to
inventory.
On
January
11,
2016,
Kinross
completed
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
interest
in
Round
Mountain
from
Barrick
for
$610.0
million
in
cash,
subject
to
a
working
capital
adjustment.
In
April
2016,
the
Company
received
$22.0
million
in
cash
from
Barrick
in
connection
with
the
working
capital
adjustment,
which
reduced
the
final
purchase
price
to
$588.0
million.
Net
operating
cash
flows
increased
to
$366.4
million
in
the
fourth
quarter
of
2017,
compared
with
$302.6
million
in
the
same
period
of
2016,
primarily
due
to
the
increase
in
margins.
40
KINROSS ANNUAL REPORT MDA 40
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
control
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
control
over
financial
reporting.
In
making
this
assessment,
management
used
the
criteria
specified
in
Internal
Control
-‐
Integrated
Framework
(2013)
issued
by
the
Committee
of
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
control
over
financial
reporting
were
effective
as
at
December
31,
2017.
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
control
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
Critical
accounting
policies
and
estimates
are
disclosed
in
Note
5
of
the
financial
statements.
Recent
accounting
pronouncements
issued
by
the
IASB
are
disclosed
in
Note
4
of
the
financial
statements.
Recent
Accounting
Pronouncements
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
similar
across
the
mining
industry
while
others
are
specific
to
Kinross.
The
risk
factors
below
may
include
details
of
how
Kinross
seeks
to
mitigate
these
risks
where
possible.
For
additional
discussion
of
risk
factors
please
refer
to
the
Company's
Annual
Information
Form
for
the
year
ended
December
31,
2016,
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,
2017,
which
will
be
filed
on
SEDAR
on
or
about
March
31,
2018.
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
U.S.
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
2017,
the
Company’s
average
realized
gold
price
increased
to
$1,260
per
ounce
from
$1,249
per
ounce
in
2016.
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
41
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
7. SUMMARY
OF
QUARTERLY
INFORMATION
(in
millions,
except
per
share
amounts)
Q4
Q2Q4
Q1
Q4
Q2
Q1
(a)
Metal
sales
$
810.3
$
828.0
$
868.6
$
796.1
$
902.8
$
910.2
$
876.4
$
782.6
2017
Q3
2016
Q3
common
shareholders
$
217.6
$
60.1
$
33.1
$
134.6
$
(116.5)
$
2.5
$
(25.0)
$
35.0
attributable
to
common
shareholders
$
0.17
$
0.05
$
0.03
$
0.11
$
(0.09)
$
0.00
$
(0.02)
$
0.03
attributable
to
common
shareholders
$
0.17
$
0.05
$
0.03
$
0.11
$
(0.09)
$
0.00
$
(0.02)
$
0.03
Net
earnings
(loss)
attributable
to
Basic
earnings
(loss)
per
share
Diluted
earnings
(loss)
per
share
Net
cash
flow
provided
from
operating
activities
$
366.4
$
197.7
$
179.7
$
207.8
$
302.6
$
266.2
$
315.9
$
214.5
(a)
The
interim
financial
statements
for
the
three
months
ended
March
31,
2016,
were
recast
to
reflect
the
retrospective
impact
of
the
finalization
of
the
purchase
price
allocation
of
the
acquisition
of
Bald
Mountain
and
50%
of
Round
Mountain.
The
Company’s
results
over
the
past
several
quarters
have
been
driven
primarily
by
fluctuations
in
the
gold
price,
input
costs
and
changes
in
gold
equivalent
ounces
sold.
Fluctuations
in
the
silver
price
have
also
affected
results.
During
the
fourth
quarter
of
2017,
revenue
decreased
to
$810.3
million
on
total
gold
equivalent
ounces
sold
of
634,762
compared
with
$902.8
million
on
sales
of
743,427
total
gold
equivalent
ounces
during
the
fourth
quarter
of
2016.
The
average
gold
price
realized
in
the
fourth
quarter
of
2017
was
$1,276
per
ounce
compared
with
$1,217
per
ounce
in
the
fourth
quarter
of
2016.
Production
cost
of
sales
decreased
to
$414.5
million
compared
with
$529.4
million
in
the
same
period
of
2016,
primarily
due
to
a
decrease
in
gold
equivalent
ounces
sold
and
lower
costs
realized
at
Fort
Knox.
Fluctuations
in
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.
On
March
28,
2017,
the
Company
announced
that
it
entered
into
an
agreement
with
Goldcorp
to
sell
its
25%
interest
in
the
Cerro
Casale
project
and
its
100%
interest
in
the
Quebrada
Seca
exploration
project
in
Chile.
On
June
9,
2017,
the
Company
completed
the
sale
for
gross
cash
proceeds
of
$260.0
million
(which
included
$20.0
million
for
Quebrada
Seca).
In
connection
with
the
sale,
the
Company
recognized
a
gain
on
disposition
of
$12.7
million
during
the
three
months
ended
June
30,
2017.
On
May
18,
2017,
the
Company
entered
into
an
agreement
with
White
Gold
Corp.
to
sell
its
100%
interest
in
the
White
Gold
exploration
project
in
the
Yukon
Territory.
On
June
14,
2017,
the
Company
completed
the
sale
and
recognized
a
loss
on
disposition
of
$1.7
million
for
the
three
months
ended
June
30,
2017.
In
the
fourth
quarter
of
2017,
the
Company
recorded
a
net,
after-‐tax,
impairment
reversal
of
$62.1
million
related
to
impairment
reversals
at
its
Tasiast
and
Fort
Knox
CGUs,
offset
by
an
impairment
charge
at
its
Paracatu
CGU.
During
the
third
quarter
of
2016,
the
Company
recorded
an
impairment
charge
of
$139.6
million
relating
to
its
Maricunga
CGU
as
a
result
of
the
suspension
of
mining
and
crushing
activities.
The
impairment
charge
included
$68.3
million
related
to
property,
plant
and
equipment
and
$71.3
million
related
to
inventory.
On
January
11,
2016,
Kinross
completed
the
acquisition
of
Bald
Mountain
and
the
remaining
50%
interest
in
Round
Mountain
from
Barrick
for
$610.0
million
in
cash,
subject
to
a
working
capital
adjustment.
In
April
2016,
the
Company
received
$22.0
million
in
cash
from
Barrick
in
connection
with
the
working
capital
adjustment,
which
reduced
the
final
purchase
price
to
$588.0
million.
Net
operating
cash
flows
increased
to
$366.4
million
in
the
fourth
quarter
of
2017,
compared
with
$302.6
million
in
the
same
period
of
2016,
primarily
due
to
the
increase
in
margins.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
control
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
control
over
financial
reporting.
In
making
this
assessment,
management
used
the
criteria
specified
in
Internal
Control
-‐
Integrated
Framework
(2013)
issued
by
the
Committee
of
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
control
over
financial
reporting
were
effective
as
at
December
31,
2017.
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
control
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
Critical
accounting
policies
and
estimates
are
disclosed
in
Note
5
of
the
financial
statements.
Recent
Accounting
Pronouncements
Recent
accounting
pronouncements
issued
by
the
IASB
are
disclosed
in
Note
4
of
the
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
similar
across
the
mining
industry
while
others
are
specific
to
Kinross.
The
risk
factors
below
may
include
details
of
how
Kinross
seeks
to
mitigate
these
risks
where
possible.
For
additional
discussion
of
risk
factors
please
refer
to
the
Company's
Annual
Information
Form
for
the
year
ended
December
31,
2016,
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,
2017,
which
will
be
filed
on
SEDAR
on
or
about
March
31,
2018.
On
September
18,
2017,
the
Company
entered
into
an
agreement
with
Integra
to
sell
its
100%
interest
in
DeLamar.
On
November
3,
2017,
the
Company
completed
the
sale
and
recognized
a
gain
of
$44.2
million.
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
U.S.
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
2017,
the
Company’s
average
realized
gold
price
increased
to
$1,260
per
ounce
from
$1,249
per
ounce
in
2016.
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
40
41 KINROSS ANNUAL REPORT MDA
41
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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,
possibly
material.
Kinross
may
curtail
or
suspend
some
or
all
of
its
exploration
activities,
with
the
result
that
depleted
mineral
reserves
are
not
replaced.
In
addition,
the
market
value
of
Kinross'
gold
and/or
silver
inventory
may
be
reduced
and
existing
mineral
reserves
and
resource
estimates
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.
payment
of
royalties,
net
profit
interest
or
similar
obligations,
could
adversely
affect
Kinross’
operations
or
substantially
increase
the
costs
associated
with
those
operations.
Kinross
is
unable
to
predict
what
new
legislation
or
revisions
may
be
proposed
that
might
affect
its
business
or
when
any
such
proposals,
if
enacted,
might
become
effective.
Certain
of
the
Company’s
operations
are
the
subject
of
ongoing
regulatory
review
and
evaluation
by
governmental
authorities.
These
may
result
in
additional
regulatory
actions
against
the
affected
operating
subsidiaries,
and
may
have
an
adverse
effect
on
the
Company’s
future
operations
and/or
financial
condition.
For
further
details
refer
to
Section
6
–Other
legal
matters.
Nature
of
Mineral
Exploration
and
Mining
Reclamation
Costs
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
geological
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
incidental
to
exploration,
development
and
production
of
gold
and
silver,
any
of
which
could
result
in
damage
to
life
or
property,
or
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,
tailings
dam
failures
or
other
conditions,
may
be
encountered
in
the
drilling,
processing
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.
Whether
a
mineral
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
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
appropriate
and
cost-‐
effective
coverage
is
obtained.
Environmental
Impact
and
Related
Regulatory
Risk
Mining,
like
many
other
extractive
natural
resource
industries,
is
subject
to
potential
risks
and
liabilities
associated
with
the
effects
on
the
environment
resulting
from
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
activities
conducted
by
others
prior
to
the
ownership
of
a
property
by
Kinross.
In
addition,
Kinross
may
be
liable
to
third
parties
for
exposure
to
hazardous
materials
or
substances,
or
may
otherwise
be
involved
in
civil
litigation
related
to
environmental
claims.
The
costs
associated
with
such
responsibilities
and
liabilities
may
be
substantial.
The
payment
of
such
liabilities
would
reduce
funds
otherwise
available
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
on
the
operations
and
business
of
Kinross.
Kinross’
operations
and
exploration
activities
are
subject
to
various
laws
and
regulations
governing
the
protection
of
the
environment,
exploration,
development,
production,
imports/exports,
taxes,
labour
standards,
occupational
health,
waste
disposal,
toxic
substances,
mine
closure,
mine
safety,
and
other
matters.
The
legal
and
political
circumstances
outside
of
North
America
cause
these
risks
to
be
different
from,
and
in
many
cases,
greater
than,
comparable
risks
associated
with
operations
within
North
America.
New
laws
and
regulations,
amendments
to
existing
laws
and
regulations,
or
more
stringent
enforcement
of
existing
laws
and
regulations
could
have
a
material
adverse
impact
on
Kinross,
increase
costs,
cause
a
reduction
in
levels
of
production
and/or
delay
or
prevent
the
development
of
new
mining
properties.
Compliance
with
these
laws
and
regulations
is
part
of
the
business
and
requires
significant
expenditures.
Changes
in
laws
and
regulations,
including
those
pertaining
to
the
rights
of
leaseholders
or
the
42
KINROSS ANNUAL REPORT MDA 42
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,
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
control
over
financial
reporting
and
undertakes
continuous
evaluation
of
such
internal
controls.
Internal
control
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,
safeguards
with
respect
to
the
reliability
of
financial
reporting
and
financial
statement
preparation.
Kinross
is
required
to
satisfy
the
requirement
of
Section
404
of
the
U.S.
Sarbanes-‐Oxley
Act
of
2002
(“SOX”),
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
control
over
financial
reporting
in
accordance
with
SOX.
Kinross’
failure
to
satisfy
SOX
requirements
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
SOX.
Indebtedness
and
an
Inability
to
Satisfy
Repayment
Obligations
Although
Kinross
has
been
successful
in
repaying
debt
historically,
there
can
be
no
assurance
that
it
can
continue
to
do
so.
Kinross’
level
of
indebtedness
could
have
important
and
potentially
adverse
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
43
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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,
possibly
material.
Kinross
may
curtail
or
suspend
some
or
all
of
its
exploration
activities,
with
the
result
that
depleted
mineral
reserves
are
not
replaced.
In
addition,
the
market
value
of
Kinross'
gold
and/or
silver
inventory
may
be
reduced
and
existing
mineral
reserves
and
resource
estimates
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.
payment
of
royalties,
net
profit
interest
or
similar
obligations,
could
adversely
affect
Kinross’
operations
or
substantially
increase
the
costs
associated
with
those
operations.
Kinross
is
unable
to
predict
what
new
legislation
or
revisions
may
be
proposed
that
might
affect
its
business
or
when
any
such
proposals,
if
enacted,
might
become
effective.
Certain
of
the
Company’s
operations
are
the
subject
of
ongoing
regulatory
review
and
evaluation
by
governmental
authorities.
These
may
result
in
additional
regulatory
actions
against
the
affected
operating
subsidiaries,
and
may
have
an
adverse
effect
on
the
Company’s
future
operations
and/or
financial
condition.
For
further
details
refer
to
Section
6
–Other
legal
matters.
Nature
of
Mineral
Exploration
and
Mining
Reclamation
Costs
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
geological
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
incidental
to
exploration,
development
and
production
of
gold
and
silver,
any
of
which
could
result
in
damage
to
life
or
property,
or
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,
tailings
dam
failures
or
other
conditions,
may
be
encountered
in
the
drilling,
processing
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.
Whether
a
mineral
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
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
appropriate
and
cost-‐
effective
coverage
is
obtained.
Environmental
Impact
and
Related
Regulatory
Risk
Mining,
like
many
other
extractive
natural
resource
industries,
is
subject
to
potential
risks
and
liabilities
associated
with
the
effects
on
the
environment
resulting
from
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
activities
conducted
by
others
prior
to
the
ownership
of
a
property
by
Kinross.
In
addition,
Kinross
may
be
liable
to
third
parties
for
exposure
to
hazardous
materials
or
substances,
or
may
otherwise
be
involved
in
civil
litigation
related
to
environmental
claims.
The
costs
associated
with
such
responsibilities
and
liabilities
may
be
substantial.
The
payment
of
such
liabilities
would
reduce
funds
otherwise
available
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
on
the
operations
and
business
of
Kinross.
Kinross’
operations
and
exploration
activities
are
subject
to
various
laws
and
regulations
governing
the
protection
of
the
environment,
exploration,
development,
production,
imports/exports,
taxes,
labour
standards,
occupational
health,
waste
disposal,
toxic
substances,
mine
closure,
mine
safety,
and
other
matters.
The
legal
and
political
circumstances
outside
of
North
America
cause
these
risks
to
be
different
from,
and
in
many
cases,
greater
than,
comparable
risks
associated
with
operations
within
North
America.
New
laws
and
regulations,
amendments
to
existing
laws
and
regulations,
or
more
stringent
enforcement
of
existing
laws
and
regulations
could
have
a
material
adverse
impact
on
Kinross,
increase
costs,
cause
a
reduction
in
levels
of
production
and/or
delay
or
prevent
the
development
of
new
mining
properties.
Compliance
with
these
laws
and
regulations
is
part
of
the
business
and
requires
significant
expenditures.
Changes
in
laws
and
regulations,
including
those
pertaining
to
the
rights
of
leaseholders
or
the
42
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,
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
control
over
financial
reporting
and
undertakes
continuous
evaluation
of
such
internal
controls.
Internal
control
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,
safeguards
with
respect
to
the
reliability
of
financial
reporting
and
financial
statement
preparation.
Kinross
is
required
to
satisfy
the
requirement
of
Section
404
of
the
U.S.
Sarbanes-‐Oxley
Act
of
2002
(“SOX”),
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
control
over
financial
reporting
in
accordance
with
SOX.
Kinross’
failure
to
satisfy
SOX
requirements
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
SOX.
Indebtedness
and
an
Inability
to
Satisfy
Repayment
Obligations
Although
Kinross
has
been
successful
in
repaying
debt
historically,
there
can
be
no
assurance
that
it
can
continue
to
do
so.
Kinross’
level
of
indebtedness
could
have
important
and
potentially
adverse
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
43 KINROSS ANNUAL REPORT MDA
43
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
affected
by
financial,
business,
economic,
legal
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
insufficient
or
if
there
is
a
contravention
of
its
debt
covenant(s),
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
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
metal
prices
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,
2017,
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
reserve
estimates.
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.
Mineral
resources
that
are
not
mineral
reserves
do
not
have
demonstrated
economic
viability.
Due
to
the
uncertainty
of
measured,
indicated
or
inferred
mineral
resources,
these
mineral
resources
may
never
be
upgraded
to
proven
and
probable
mineral
reserves.
Measured,
indicated
and
inferred
mineral
resources
are
not
recognized
by
the
U.S.
Securities
and
Exchange
Commission
and
U.S.
investors
are
cautioned
not
to
assume
that
any
part
of
mineral
deposits
in
these
categories
will
ever
be
converted
into
reserves
or
recovered.
There
are
numerous
uncertainties
inherent
in
estimating
proven
and
probable
mineral
reserves.
The
estimates
in
this
document
are
based
on
various
assumptions
relating
to
metal
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.
Development
Projects
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;
mineral
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
requirements,
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.
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
at
significant
risk
of
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.
44
KINROSS ANNUAL REPORT MDA 44
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
production
and
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;
actual
ore
mined
varying
from
estimates
of
grade,
tonnage,
dilution
and
metallurgical
and
other
characteristics;
short
term
operating
factors
including
relating
to
the
ore
mineral
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
development,
mining
and
processing;
natural
phenomena,
such
as
inclement
weather
conditions,
water
availability,
floods,
and
earthquakes;
and
unexpected
labour
shortages,
strikes
or
other
disruptions.
Costs
of
production
may
also
be
affected
by
a
variety
of
factors,
including:
ore
grade,
ore
hardness,
metallurgy,
changing
waste-‐to-‐ore
ratios,
labour
costs,
cost
of
services,
commodities
(such
as
power
and
fuel)
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.
Shortages
and
Price
Volatility
of
Input
Commodities,
Services
and
Other
Inputs
The
Company
is
dependent
on
various
input
commodities
(such
as
diesel
fuel,
electricity,
natural
gas,
steel,
concrete
and
cyanide),
labour,
and
equipment
(including
parts)
to
conduct
its
mining
operations
and
development
projects.
A
shortage
of
such
input
commodities,
labour,
or
equipment
or
a
significant
increase
in
their
costs
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,
labour,
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
regarding
the
Russian
Federation
Ongoing
political
tensions
and
uncertainties
with
respect
to
the
Russian
Federation
(including
as
a
result
of
the
Russian
Federation’s
foreign
policy
decisions,
actions
in
respect
of
Ukraine
and
allegations
of
cyberattacks
and
other
interference
with
the
2016
U.S.
presidential
elections)
have
resulted
in
the
imposition
of
sectoral
and
other
economic
sanctions,
and
increased
the
risk
that
the
U.S.
and
certain
other
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
the
United
States,
Canada
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.
Uncertainty
in
Mauritania
Kinross
is
subject
to
political,
economic
and
security
risks
which,
should
they
materialize,
may
adversely
affect
the
Company’s
ability
to
operate
its
Tasiast
mine
in
Mauritania.
These
risks
include
but
are
not
limited
to
the
following:
(1)
the
potential
that
the
government
may
attempt
to
renegotiate
current
mining
conventions
or
to
revoke
existing
stability
provisions
in
those
conventions;
(2)
potential
political
instability;
(3)
the
security
situation
in
the
country
may
deteriorate;
(4)
a
lack
of
transparency
in
the
operation
of
the
government
and
development
of
new
laws;
(5)
the
potential
for
laws
and
regulations
to
be
inconsistently
applied;
(6)
the
conversion
of
exploration
licenses
to
exploitation
licenses,
including
the
pending
conversion
request
for
Tasiast
Sud;
and
(7)
a
number
of
public
policy
issues
material
to
the
economic
viability
of
the
current
operation
or
any
possible
expansion
may
not
be
positively
resolved.
These
issues
include,
but
are
not
limited
to,
a
process
and
timetable
for
payment
or
offset
of
VAT
refunds
owed
45
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
affected
by
financial,
business,
economic,
legal
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
insufficient
or
if
there
is
a
contravention
of
its
debt
covenant(s),
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
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
metal
prices
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,
2017,
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
reserve
estimates.
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.
Mineral
resources
that
are
not
mineral
reserves
do
not
have
demonstrated
economic
viability.
Due
to
the
uncertainty
of
measured,
indicated
or
inferred
mineral
resources,
these
mineral
resources
may
never
be
upgraded
to
proven
and
probable
mineral
reserves.
Measured,
indicated
and
inferred
mineral
resources
are
not
recognized
by
the
U.S.
Securities
and
Exchange
Commission
and
U.S.
investors
are
cautioned
not
to
assume
that
any
part
of
mineral
deposits
in
these
categories
will
ever
be
converted
into
reserves
or
recovered.
There
are
numerous
uncertainties
inherent
in
estimating
proven
and
probable
mineral
reserves.
The
estimates
in
this
document
are
based
on
various
assumptions
relating
to
metal
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.
Development
Projects
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;
mineral
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
requirements,
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.
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
at
significant
risk
of
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.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
production
and
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;
actual
ore
mined
varying
from
estimates
of
grade,
tonnage,
dilution
and
metallurgical
and
other
characteristics;
short
term
operating
factors
including
relating
to
the
ore
mineral
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
development,
mining
and
processing;
natural
phenomena,
such
as
inclement
weather
conditions,
water
availability,
floods,
and
earthquakes;
and
unexpected
labour
shortages,
strikes
or
other
disruptions.
Costs
of
production
may
also
be
affected
by
a
variety
of
factors,
including:
ore
grade,
ore
hardness,
metallurgy,
changing
waste-‐to-‐ore
ratios,
labour
costs,
cost
of
services,
commodities
(such
as
power
and
fuel)
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.
Shortages
and
Price
Volatility
of
Input
Commodities,
Services
and
Other
Inputs
The
Company
is
dependent
on
various
input
commodities
(such
as
diesel
fuel,
electricity,
natural
gas,
steel,
concrete
and
cyanide),
labour,
and
equipment
(including
parts)
to
conduct
its
mining
operations
and
development
projects.
A
shortage
of
such
input
commodities,
labour,
or
equipment
or
a
significant
increase
in
their
costs
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,
labour,
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
regarding
the
Russian
Federation
Ongoing
political
tensions
and
uncertainties
with
respect
to
the
Russian
Federation
(including
as
a
result
of
the
Russian
Federation’s
foreign
policy
decisions,
actions
in
respect
of
Ukraine
and
allegations
of
cyberattacks
and
other
interference
with
the
2016
U.S.
presidential
elections)
have
resulted
in
the
imposition
of
sectoral
and
other
economic
sanctions,
and
increased
the
risk
that
the
U.S.
and
certain
other
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
the
United
States,
Canada
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.
Uncertainty
in
Mauritania
Kinross
is
subject
to
political,
economic
and
security
risks
which,
should
they
materialize,
may
adversely
affect
the
Company’s
ability
to
operate
its
Tasiast
mine
in
Mauritania.
These
risks
include
but
are
not
limited
to
the
following:
(1)
the
potential
that
the
government
may
attempt
to
renegotiate
current
mining
conventions
or
to
revoke
existing
stability
provisions
in
those
conventions;
(2)
potential
political
instability;
(3)
the
security
situation
in
the
country
may
deteriorate;
(4)
a
lack
of
transparency
in
the
operation
of
the
government
and
development
of
new
laws;
(5)
the
potential
for
laws
and
regulations
to
be
inconsistently
applied;
(6)
the
conversion
of
exploration
licenses
to
exploitation
licenses,
including
the
pending
conversion
request
for
Tasiast
Sud;
and
(7)
a
number
of
public
policy
issues
material
to
the
economic
viability
of
the
current
operation
or
any
possible
expansion
may
not
be
positively
resolved.
These
issues
include,
but
are
not
limited
to,
a
process
and
timetable
for
payment
or
offset
of
VAT
refunds
owed
44
45 KINROSS ANNUAL REPORT MDA
45
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
by
the
government
to
the
Company,
the
long-‐term
stability
in
the
Company’s
relationship
with
the
workers’
union,
the
application
of
a
clear,
comprehensive,
legally
certain
and
enforceable
VAT
exemption
for
the
mining
industry,
labor
force
management
and
flexible
labor
practices
and
the
timely
issuance
of
work
permits
for
the
non-‐national
workforce.
U.S.
Environmental
Liability
Risk
In
the
United
States,
certain
mining
wastes
from
extraction
and
processing
of
ores
that
would
otherwise
be
considered
hazardous
waste
under
the
U.S.
Resource
Conservation
and
Recovery
Act
(“RCRA”)
and
state
law
equivalents,
are
currently
exempt
from
certain
U.S.
Environmental
Protection
Agency
(“EPA”)
regulations
governing
hazardous
waste.
If
mine
wastes
from
the
Company’s
U.S.
mining
operations,
including
those
at
the
Sunnyside
Mine
(see
Section
6
–
Other
legal
matters),
are
not
exempt,
and
are
treated
as
hazardous
waste
under
the
RCRA,
material
expenditures
could
be
required
for
waste
management
and/or
the
construction
of
additional
waste
disposal
facilities.
In
addition,
the
Company’s
activities
and
ownership
interests
potentially
expose
the
Company
to
liability
under
the
Comprehensive
Environmental
Response,
Compensation,
and
Liability
Act
(“CERCLA”)
and
its
state
law
equivalents.
Under
CERCLA
and
its
state
law
equivalents,
subject
to
certain
defenses,
any
present
or
past
owners
or
operators
of
a
facility,
and
any
parties
that
disposed
or
arranged
for
the
disposal
of
hazardous
substances
at
such
a
facility,
could
be
held
jointly
and
severally
liable
for
cleanup
costs
and
may
be
forced
to
undertake
remedial
cleanup
actions
or
to
pay
for
the
cleanup
efforts
in
response
to
unpermitted
releases
of
hazardous
substances.
Such
parties
may
also
be
liable
to
governmental
entities
for
the
cost
of
damages
to
natural
resources,
which
may
be
substantial.
Additional
regulations
or
requirements
may
also
be
imposed
upon
the
Company’s
operations,
tailings,
and
waste
disposal
areas
as
well
as
upon
mine
closure
under
federal
and
state
environmental
laws
and
regulations,
including,
without
limitation,
the
U.S.
Clean
Water
Act
(“CWA”)
and
state
law
equivalents.
Air
emissions
in
the
U.S.
are
subject
to
the
Clean
Air
Act
and
its
state
equivalents
as
well.
Additionally,
the
Company
is
subject
to
other
federal
and
state
environmental
laws,
and
potential
claims
existing
under
common
law,
relating
to
the
operation
and
closure
of
the
Company’s
U.S.
mine
sites.
Political,
Security,
Legal
and
Economic
Risk
The
Company
has
mining
and
exploration
operations
in
various
regions
of
the
world,
including
the
United
States,
Brazil,
Chile,
the
Russian
Federation,
Mauritania,
Ghana,
and
Canada
and
such
operations
are
exposed
to
various
levels
of
political,
security,
legal,
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;
crime,
including
organized
criminal
enterprise;
thefts
and
illegal
incursions
on
property
(including
as
occur
at
Paracatu
and
Tasiast)
which
illegal
incursions
could
result
in
serious
security
and
operational
issues,
including
the
endangerment
of
life
and
property;
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
(including
at
Tasiast)
could
result
in
serious
environmental,
social,
political,
security
and
operational
issues,
including
the
endangerment
of
life
and
property;
adequacy,
response
and
training
of
local
law
enforcement;
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
including
value
added
and
withholding
taxes,
royalties,
currency
exchange
rates,
gold
sales,
environmental
protection,
labour
relations,
price
controls,
repatriation
of
income,
and
return
of
capital,
which
may
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.
46
KINROSS ANNUAL REPORT MDA 46
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Licenses
and
Permits
The
development
projects
and
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.
Applicable
governmental
authorities
may
revoke
or
refuse
to
issue,
amend
or
renew
necessary
permits.
The
loss
of
such
permits
may
hinder
Kinross’
ability
to
operate
and
could
have
a
material
effect
on
Kinross’
financial
performance
and
results
of
operations.
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
of
or
operation
of
mining
facilities,
or
to
maintain
continued
operations
that
economically
justify
the
cost.
Kinross
endeavors
to
be
in
compliance
with
these
licenses
and
permits,
and
underlying
laws
and
regulations,
at
all
times.
Title
to
Properties
and
Community
Relations
The
validity
of
mining
rights,
including
mining
claims
which
constitute
most
of
Kinross'
property
holdings,
may,
in
certain
cases,
be
uncertain
and
subject
to
being
contested.
Kinross'
mining
rights,
claims
and
other
land
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
explore,
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
explore,
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
new
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.
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
To
determine
its
market
risk
sensitivities,
Kinross
uses
an
internally
generated
financial
forecast
model
that
is
sensitized
to,
among
other
things,
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
2017,
sensitivity
to
a
10%
change
in
the
gold
price
is
estimated
to
have
an
approximate
$280
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
2017,
sensitivity
to
a
10%
change
in
the
silver
price
is
estimated
to
have
an
approximate
$6
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
Joint
Arrangements
respect
of
such
properties.
Disclosures
about
Market
Risks
its
life.
Interest
Rate
Fluctuations
Hedging
Risks
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.
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
47
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
by
the
government
to
the
Company,
the
long-‐term
stability
in
the
Company’s
relationship
with
the
workers’
union,
the
application
of
a
clear,
comprehensive,
legally
certain
and
enforceable
VAT
exemption
for
the
mining
industry,
labor
force
management
and
flexible
labor
practices
and
the
timely
issuance
of
work
permits
for
the
non-‐national
workforce.
U.S.
Environmental
Liability
Risk
In
the
United
States,
certain
mining
wastes
from
extraction
and
processing
of
ores
that
would
otherwise
be
considered
hazardous
waste
under
the
U.S.
Resource
Conservation
and
Recovery
Act
(“RCRA”)
and
state
law
equivalents,
are
currently
exempt
from
certain
U.S.
Environmental
Protection
Agency
(“EPA”)
regulations
governing
hazardous
waste.
If
mine
wastes
from
the
Company’s
U.S.
mining
operations,
including
those
at
the
Sunnyside
Mine
(see
Section
6
–
Other
legal
matters),
are
not
exempt,
and
are
treated
as
hazardous
waste
under
the
RCRA,
material
expenditures
could
be
required
for
waste
management
and/or
the
construction
of
additional
waste
disposal
facilities.
In
addition,
the
Company’s
activities
and
ownership
interests
potentially
expose
the
Company
to
liability
under
the
Comprehensive
Environmental
Response,
Compensation,
and
Liability
Act
(“CERCLA”)
and
its
state
law
equivalents.
Under
CERCLA
and
its
state
law
equivalents,
subject
to
certain
defenses,
any
present
or
past
owners
or
operators
of
a
facility,
and
any
parties
that
disposed
or
arranged
for
the
disposal
of
hazardous
substances
at
such
a
facility,
could
be
held
jointly
and
severally
liable
for
cleanup
costs
and
may
be
forced
to
undertake
remedial
cleanup
actions
or
to
pay
for
the
cleanup
efforts
in
response
to
unpermitted
releases
of
hazardous
substances.
Such
parties
may
also
be
liable
to
governmental
entities
for
the
cost
of
damages
to
natural
resources,
which
may
be
substantial.
Additional
regulations
or
requirements
may
also
be
imposed
upon
the
Company’s
operations,
tailings,
and
waste
disposal
areas
as
well
as
upon
mine
closure
under
federal
and
state
environmental
laws
and
regulations,
including,
without
limitation,
the
U.S.
Clean
Water
Act
(“CWA”)
and
state
law
equivalents.
Air
emissions
in
the
U.S.
are
subject
to
the
Clean
Air
Act
and
its
state
equivalents
as
well.
Additionally,
the
Company
is
subject
to
other
federal
and
state
environmental
laws,
and
potential
claims
existing
under
common
law,
relating
to
the
operation
and
closure
of
the
Company’s
U.S.
mine
sites.
Political,
Security,
Legal
and
Economic
Risk
The
Company
has
mining
and
exploration
operations
in
various
regions
of
the
world,
including
the
United
States,
Brazil,
Chile,
the
Russian
Federation,
Mauritania,
Ghana,
and
Canada
and
such
operations
are
exposed
to
various
levels
of
political,
security,
legal,
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;
crime,
including
organized
criminal
enterprise;
thefts
and
illegal
incursions
on
property
(including
as
occur
at
Paracatu
and
Tasiast)
which
illegal
incursions
could
result
in
serious
security
and
operational
issues,
including
the
endangerment
of
life
and
property;
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
(including
at
Tasiast)
could
result
in
serious
environmental,
social,
political,
security
and
operational
issues,
including
the
endangerment
of
life
and
property;
adequacy,
response
and
training
of
local
law
enforcement;
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
including
value
added
and
withholding
taxes,
royalties,
currency
exchange
rates,
gold
sales,
environmental
protection,
labour
relations,
price
controls,
repatriation
of
income,
and
return
of
capital,
which
may
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.
46
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Licenses
and
Permits
The
development
projects
and
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.
Applicable
governmental
authorities
may
revoke
or
refuse
to
issue,
amend
or
renew
necessary
permits.
The
loss
of
such
permits
may
hinder
Kinross’
ability
to
operate
and
could
have
a
material
effect
on
Kinross’
financial
performance
and
results
of
operations.
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
of
or
operation
of
mining
facilities,
or
to
maintain
continued
operations
that
economically
justify
the
cost.
Kinross
endeavors
to
be
in
compliance
with
these
licenses
and
permits,
and
underlying
laws
and
regulations,
at
all
times.
Title
to
Properties
and
Community
Relations
The
validity
of
mining
rights,
including
mining
claims
which
constitute
most
of
Kinross'
property
holdings,
may,
in
certain
cases,
be
uncertain
and
subject
to
being
contested.
Kinross'
mining
rights,
claims
and
other
land
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
explore,
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
explore,
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
new
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.
Disclosures
about
Market
Risks
To
determine
its
market
risk
sensitivities,
Kinross
uses
an
internally
generated
financial
forecast
model
that
is
sensitized
to,
among
other
things,
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
2017,
sensitivity
to
a
10%
change
in
the
gold
price
is
estimated
to
have
an
approximate
$280
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
2017,
sensitivity
to
a
10%
change
in
the
silver
price
is
estimated
to
have
an
approximate
$6
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
47 KINROSS ANNUAL REPORT MDA
47
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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,
2017,
there
were
no
metal
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
and
silver
are
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
and
silver
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
U.S.
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,
2017.
Litigation
Risk
Legal
proceedings
may
be
brought
against
Kinross,
for
example,
litigation
based
on
its
business
activities,
environmental
laws,
tax
matters,
volatility
in
its
stock
price
or
failure
to
comply
with
its
disclosure
obligations,
which
could
have
a
material
adverse
effect
on
Kinross’
financial
condition
or
prospects.
Regulatory
and
government
agencies
may
bring
legal
proceedings
in
connection
with
the
enforcement
of
applicable
laws
and
regulations,
and
as
a
result
Kinross
may
be
subject
to
expenses
of
investigations
and
defense,
fines
or
penalties
for
violations
if
proven,
and
potentially
cost
and
expense
to
remediate,
increased
operating
costs
or
changes
to
operations,
and
cessation
of
operations
if
ordered
to
do
so
or
required
in
order
to
resolve
such
proceedings.
In
the
event
of
a
dispute
arising
at
Kinross’
foreign
operations,
Kinross
may
be
subject
to
the
exclusive
jurisdiction
of
foreign
courts
or
may
not
be
successful
in
subjecting
foreign
persons
to
the
jurisdiction
of
courts
in
Canada.
Kinross’
inability
to
enforce
its
rights
could
have
an
adverse
effect
on
its
future
cash
flows,
earnings,
results
of
operations
and
financial
condition.
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,
2017,
the
Company's
gross
credit
exposure,
including
cash
and
cash
equivalents,
was
$1,358.7
million
and
at
December
31,
2016,
the
gross
credit
exposure,
including
cash
and
cash
equivalents,
was
$1,075.2
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
requirements.
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
a
BBB-‐
rating
from
Fitch
Ratings,
a
Ba1
rating
from
Moody’s
and
a
BB+
rating
from
Standard
&
Poor’s.
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.
Potential
for
Incurring
Unexpected
Costs
or
Liabilities
as
a
Result
of
Acquisitions
Although
the
Company
conducts
investigations
in
connection
with
acquisitions,
risks
remain
regarding
any
undisclosed
or
unknown
liabilities
associated
with
any
such
acquisitions,
and
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
an
acquisition
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;
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
extended
the
maturity
date
of
its
revolving
credit
facility
by
one
year
to
August
2022.
As
at
December
31,
2017,
the
Company
had
$1,563.8
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.
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
commenced
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.
48
KINROSS ANNUAL REPORT MDA 48
49
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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,
2017,
there
were
no
metal
derivative
financial
instruments
outstanding.
In
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.
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
and
silver
are
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
and
silver
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
U.S.
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,
2017.
Litigation
Risk
Legal
proceedings
may
be
brought
against
Kinross,
for
example,
litigation
based
on
its
business
activities,
environmental
laws,
tax
matters,
volatility
in
its
stock
price
or
failure
to
comply
with
its
disclosure
obligations,
which
could
have
a
material
adverse
effect
on
Kinross’
financial
condition
or
prospects.
Regulatory
and
government
agencies
may
bring
legal
proceedings
in
connection
with
the
enforcement
of
applicable
laws
and
regulations,
and
as
a
result
Kinross
may
be
subject
to
expenses
of
investigations
and
defense,
fines
or
penalties
for
violations
if
proven,
and
potentially
cost
and
expense
to
remediate,
increased
operating
costs
or
changes
to
operations,
and
cessation
of
operations
if
ordered
to
do
so
or
required
in
order
to
resolve
such
proceedings.
In
the
event
of
a
dispute
arising
at
Kinross’
foreign
operations,
Kinross
may
be
subject
to
the
exclusive
jurisdiction
of
foreign
courts
or
may
not
be
successful
in
subjecting
foreign
persons
to
the
jurisdiction
of
courts
in
Canada.
Kinross’
inability
to
enforce
its
rights
could
have
an
adverse
effect
on
its
future
cash
flows,
earnings,
results
of
operations
and
financial
condition.
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,
2017,
the
Company's
gross
credit
exposure,
including
cash
and
cash
equivalents,
was
$1,358.7
million
and
at
December
31,
2016,
the
gross
credit
exposure,
including
cash
and
cash
equivalents,
was
$1,075.2
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
requirements.
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
a
BBB-‐
rating
from
Fitch
Ratings,
a
Ba1
rating
from
Moody’s
and
a
BB+
rating
from
Standard
&
Poor’s.
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
Potential
for
Incurring
Unexpected
Costs
or
Liabilities
as
a
Result
of
Acquisitions
Although
the
Company
conducts
investigations
in
connection
with
acquisitions,
risks
remain
regarding
any
undisclosed
or
unknown
liabilities
associated
with
any
such
acquisitions,
and
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
an
acquisition
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;
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
extended
the
maturity
date
of
its
revolving
credit
facility
by
one
year
to
August
2022.
As
at
December
31,
2017,
the
Company
had
$1,563.8
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.
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
commenced
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.
48
49 KINROSS ANNUAL REPORT MDA
49
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
11. SUPPLEMENTAL
INFORMATION
Reconciliation
of
Non-‐GAAP
Financial
Measures
Paracatu
Water
Supply
and
Use
Adjusted
Net
Earnings
Attributable
to
Common
Shareholders
and
Adjusted
Net
Earnings
per
Share
Operations
at
Paracatu
are
dependent
on
rainfall
and
river
water
capture
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
and
water
captured
from
the
river
is
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.
Cybersecurity
Risks
The
Company
relies
heavily
on
its
information
technology
systems
including,
without
limitation,
its
networks,
equipment,
hardware,
software,
telecommunications,
and
other
information
technology
(collectively,
“IT
systems”),
and
the
IT
systems
of
its
vendors
and
third-‐party
service
providers,
to
operate
its
business
as
a
whole
including
mining
operations
and
development
projects.
IT
systems
are
subject
to
an
increasing
threat
of
continually
evolving
cybersecurity
risks
including,
without
limitation,
computer
viruses,
security
breaches,
and
cyberattacks.
In
addition,
the
Company
is
subject
to
the
risk
of
unauthorized
access
to
its
IT
systems
or
its
information
through
fraud
or
other
means.
Kinross’
operations
also
depend
on
the
timely
maintenance,
upgrade
and
replacement
of
its
IT
systems,
as
well
as
pre-‐emptive
expenses
to
mitigate
cybersecurity
risks
and
other
IT
systems
disruptions.
Although
Kinross
has
not
experienced
any
material
losses
to
date
relating
to
cybersecurity,
or
other
IT
systems
disruptions,
there
can
be
no
assurance
that
Kinross
will
not
incur
such
losses
in
the
future.
Despite
the
Company’s
mitigation
efforts
including
implementing
an
IT
systems
security
risk
management
framework,
the
risk
and
exposure
to
these
threats
cannot
be
fully
mitigated
because
of,
among
other
things,
the
evolving
nature
of
cybersecurity
threats.
As
a
result,
cybersecurity
and
the
continued
development
and
enhancement
of
controls,
processes
and
practices
designed
to
protect
IT
systems
from
cybersecurity
threats
remain
a
priority.
As
these
threats
continue
to
evolve,
the
Company,
its
vendors
and
third-‐party
service
providers,
including
IT
service
providers,
may
be
required
to
expend
additional
resources
to
continue
to
modify
or
enhance
protective
measures
or
to
investigate
and
remediate
any
cybersecurity
vulnerabilities.
Any
cybersecurity
incidents
or
other
IT
systems
disruption
could
result
in
production
downtimes,
operational
delays,
destruction
or
corruption
of
data,
security
breaches,
financial
losses
from
remedial
actions,
the
theft
or
other
compromising
of
confidential
or
otherwise
protected
information,
fines
and
lawsuits,
or
damage
to
the
Company’s
reputation.
Any
such
occurrence
could
have
an
adverse
impact
on
Kinross’
financial
condition
and
results
of
operations.
50
KINROSS ANNUAL REPORT MDA 50
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
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
(reversals),
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)
to
adjusted
net
earnings
for
the
periods
presented:
Net
earnings
(loss)
attributable
to
common
shareholders
-‐
as
reported
$
445.4
$
(104.0)
Years
ended
December
31,
2017
2016
Gain
on
disposition
of
associate
and
interests
and
other
assets
-‐
net
Foreign
exchange
losses
(gains)
on
translation
of
tax
basis
and
foreign
exchange
on
deferred
(in
millions,
except
per
share
amounts)
Adjusting
items:
Foreign
exchange
losses
income
taxes
within
income
tax
expense
Acquisition
costs
Tax
benefits
realized
upon
acquisition
Impairment,
net
of
reversals (a)
Taxes
in
respect
of
prior
years
Mine
curtailment
and
suspension
related
costs (b)
Reclamation
and
remediation
expense
Chile
weather
event
related
costs
Insurance
recoveries
Settlement
of
a
royalty
agreement
U.S.
Tax
Reform
impact
Other(c)
Tax
effect
of
the
above
adjustments (d)
4.9
(57.1)
-‐
-‐
-‐
(75.5)
41.7
16.6
9.5
3.3
(17.5)
(9.9)
(93.4)
1.2
(90.5)
(266.7)
6.3
(9.7)
(65.1)
7.8
(27.7)
139.6
85.5
40.4
27.2
(13.0)
-‐
-‐
-‐
3.8
1.9
197.0
Adjusted
net
earnings
attributable
to
common
shareholders
Weighted
average
number
of
common
shares
outstanding
-‐
Basic
Adjusted
net
earnings
per
share
$
178.7
$
93.0
1,246.6
1,227.0
$
0.14
$
0.08
(a)
During
the
year
ended
December
31,
2017,
the
Company
recognized
an
impairment
charge
related
to
Paracatu
of
$253.0
million
and
reversals
of
impairment
charges
of
$231.5
million
related
to
property,
plant
and
equipment
at
Tasiast
and
Fort
Knox.
The
Company
also
recognized
a
reversal
of
impairment
charges
related
to
the
disposal
of
its
25%
interest
in
Cerro
Casale
of
$97.0
million
during
the
year
ended
December
31,
2017.
(b)
Includes
costs
related
to
the
temporary
curtailment
at
Paracatu
during
the
year
ended
December
31,
2017
of
$16.6
million.
During
the
year
ended
December
31,
2016,
mine
curtailment
and
suspension
related
costs
includes
costs
related
to
the
temporary
suspension
of
operations
at
Tasiast
and
the
suspension
of
mining
activities
at
Maricunga.
(c)
Other
includes
non-‐hedge
derivatives
losses
(gains).
(d)
Includes
a
net
tax
recovery
of
$83.6
million
related
to
the
impairment
charge
at
Paracatu
and
impairment
reversal
at
Fort
Knox
recognized
during
the
year
ended
December
31,
2017.
51
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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.
Paracatu
Water
Supply
and
Use
Operations
at
Paracatu
are
dependent
on
rainfall
and
river
water
capture
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
and
water
captured
from
the
river
is
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.
Cybersecurity
Risks
The
Company
relies
heavily
on
its
information
technology
systems
including,
without
limitation,
its
networks,
equipment,
hardware,
software,
telecommunications,
and
other
information
technology
(collectively,
“IT
systems”),
and
the
IT
systems
of
its
vendors
and
third-‐party
service
providers,
to
operate
its
business
as
a
whole
including
mining
operations
and
development
projects.
IT
systems
are
subject
to
an
increasing
threat
of
continually
evolving
cybersecurity
risks
including,
without
limitation,
computer
viruses,
security
breaches,
and
cyberattacks.
In
addition,
the
Company
is
subject
to
the
risk
of
unauthorized
access
to
its
IT
systems
or
its
information
through
fraud
or
other
means.
Kinross’
operations
also
depend
on
the
timely
maintenance,
upgrade
and
replacement
of
its
IT
systems,
as
well
as
pre-‐emptive
expenses
to
mitigate
cybersecurity
risks
and
other
IT
systems
disruptions.
Although
Kinross
has
not
experienced
any
material
losses
to
date
relating
to
cybersecurity,
or
other
IT
systems
disruptions,
there
can
be
no
assurance
that
Kinross
will
not
incur
such
losses
in
the
future.
Despite
the
Company’s
mitigation
efforts
including
implementing
an
IT
systems
security
risk
management
framework,
the
risk
and
exposure
to
these
threats
cannot
be
fully
mitigated
because
of,
among
other
things,
the
evolving
nature
of
cybersecurity
threats.
As
a
result,
cybersecurity
and
the
continued
development
and
enhancement
of
controls,
processes
and
practices
designed
to
protect
IT
systems
from
cybersecurity
threats
remain
a
priority.
As
these
threats
continue
to
evolve,
the
Company,
its
vendors
and
third-‐party
service
providers,
including
IT
service
providers,
may
be
required
to
expend
additional
resources
to
continue
to
modify
or
enhance
protective
measures
or
to
investigate
and
remediate
any
cybersecurity
vulnerabilities.
Any
cybersecurity
incidents
or
other
IT
systems
disruption
could
result
in
production
downtimes,
operational
delays,
destruction
or
corruption
of
data,
security
breaches,
financial
losses
from
remedial
actions,
the
theft
or
other
compromising
of
confidential
or
otherwise
protected
information,
fines
and
lawsuits,
or
damage
to
the
Company’s
reputation.
Any
such
occurrence
could
have
an
adverse
impact
on
Kinross’
financial
condition
and
results
of
operations.
50
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
(reversals),
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)
to
adjusted
net
earnings
for
the
periods
presented:
(in
millions,
except
per
share
amounts)
Net
earnings
(loss)
attributable
to
common
shareholders
-‐
as
reported
Adjusting
items:
Foreign
exchange
losses
Gain
on
disposition
of
associate
and
interests
and
other
assets
-‐
net
Foreign
exchange
losses
(gains)
on
translation
of
tax
basis
and
foreign
exchange
on
deferred
income
taxes
within
income
tax
expense
Acquisition
costs
Tax
benefits
realized
upon
acquisition
Impairment,
net
of
reversals (a)
Taxes
in
respect
of
prior
years
Mine
curtailment
and
suspension
related
costs (b)
Reclamation
and
remediation
expense
Chile
weather
event
related
costs
Insurance
recoveries
Settlement
of
a
royalty
agreement
U.S.
Tax
Reform
impact
Other(c)
Tax
effect
of
the
above
adjustments (d)
Adjusted
net
earnings
attributable
to
common
shareholders
Weighted
average
number
of
common
shares
outstanding
-‐
Basic
Adjusted
net
earnings
per
share
Years
ended
December
31,
2017
2016
$
445.4
$
(104.0)
4.9
(57.1)
6.3
(9.7)
-‐
-‐
-‐
(75.5)
41.7
16.6
9.5
3.3
(17.5)
(9.9)
(93.4)
1.2
(90.5)
(266.7)
178.7
1,246.6
0.14
(65.1)
7.8
(27.7)
139.6
85.5
40.4
27.2
-‐
(13.0)
-‐
-‐
3.8
1.9
197.0
93.0
1,227.0
0.08
$
$
$
$
(a)
During
the
year
ended
December
31,
2017,
the
Company
recognized
an
impairment
charge
related
to
Paracatu
of
$253.0
million
and
reversals
of
impairment
charges
of
$231.5
million
related
to
property,
plant
and
equipment
at
Tasiast
and
Fort
Knox.
The
Company
also
recognized
a
reversal
of
impairment
charges
related
to
the
disposal
of
its
25%
interest
in
Cerro
Casale
of
$97.0
million
during
the
year
ended
December
31,
2017.
(b)
Includes
costs
related
to
the
temporary
curtailment
at
Paracatu
during
the
year
ended
December
31,
2017
of
$16.6
million.
During
the
year
ended
December
31,
2016,
mine
curtailment
and
suspension
related
costs
includes
costs
related
to
the
temporary
suspension
of
operations
at
Tasiast
and
the
suspension
of
mining
activities
at
Maricunga.
(c)
Other
includes
non-‐hedge
derivatives
losses
(gains).
(d)
Includes
a
net
tax
recovery
of
$83.6
million
related
to
the
impairment
charge
at
Paracatu
and
impairment
reversal
at
Fort
Knox
recognized
during
the
year
ended
December
31,
2017.
51 KINROSS ANNUAL REPORT MDA
51
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
for
the
periods
presented:
Management
uses
these
measures
to
monitor
and
evaluate
the
performance
of
its
operating
properties.
(in
millions)
Net
cash
flow
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,
2017
2016
$
951.6
$
1,099.2
(108.6)
86.7
237.0
215.1
21.2
(79.5)
(114.2)
(172.5)
Adjusted
operating
cash
flow
$
1,166.7
$
926.7
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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.
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)
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
Years
ended
December
31,
2017
2016
$
1,757.4
$
1,983.8
(20.0)
(19.0)
$
1,737.4
$
1,964.8
2,621,875
(25,121)
2,596,754
2,778,902
(20,596)
2,758,306
$
670
$
714
$
669
$
712
52
KINROSS ANNUAL REPORT MDA 52
53
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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.
(in
millions)
Net
cash
flow
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,
2017
2016
$
951.6
$
1,099.2
(108.6)
86.7
237.0
215.1
21.2
(79.5)
(114.2)
(172.5)
Adjusted
operating
cash
flow
$
1,166.7
$
926.7
The
following
table
provides
a
reconciliation
of
adjusted
cash
flow
for
the
periods
presented:
Management
uses
these
measures
to
monitor
and
evaluate
the
performance
of
its
operating
properties.
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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.
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)
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
Years
ended
December
31,
2017
2016
$
1,757.4
$
1,983.8
(20.0)
(19.0)
$
1,737.4
$
1,964.8
2,621,875
(25,121)
2,596,754
2,778,902
(20,596)
2,758,306
$
670
$
714
$
669
$
712
52
53 KINROSS ANNUAL REPORT MDA
53
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Attributable
Production
Cost
of
Sales
per
Ounce
Sold
on
a
By-‐Product
Basis
Attributable
All-‐In
Sustaining
Cost
and
All-‐In
Cost
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,
2017
2016
$
1,757.4
$
1,983.8
(20.0)
(86.5)
(19.0)
(102.5)
Attributable
production
cost
of
sales
net
of
silver
by-‐product
revenue
$
1,650.9
$
1,862.3
Gold
ounces
sold
Less:
portion
attributable
to
Chirano
non-‐controlling
interest
Attributable
gold
ounces
sold
2,553,178
(25,070)
2,528,108
2,697,912
(20,545)
2,677,367
Attributable
production
cost
of
sales
per
ounce
sold
on
a
by-‐product
basis
$
653
$
696
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
Years
ended
December
31,
2017
2016
$
1,757.4
$
1,983.8
(20.0)
(86.5)
(19.0)
(102.5)
$
1,650.9
$
1,862.3
$
2,390.6
$
2,610.4
132.6
43.3
82.9
59.4
421.5
39.5
17.4
45.8
448.7
143.7
18.6
94.9
50.8
440.1
25.6
34.9
42.6
160.1
$
2,942.0
$
2,873.6
2,553,178
(25,070)
2,528,108
2,697,912
(20,545)
2,677,367
$
946
$
975
$
1,164
$
1,073
54
KINROSS ANNUAL REPORT MDA 54
55
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
Attributable
Production
Cost
of
Sales
per
Ounce
Sold
on
a
By-‐Product
Basis
Attributable
All-‐In
Sustaining
Cost
and
All-‐In
Cost
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-‐
The
following
table
provides
a
reconciliation
of
attributable
production
cost
of
sales
per
ounce
sold
on
a
by-‐product
basis
for
the
product
accounting.
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
Gold
ounces
sold
Less:
portion
attributable
to
Chirano
non-‐controlling
interest
Attributable
gold
ounces
sold
Years
ended
December
31,
2017
2016
$
1,757.4
$
1,983.8
(20.0)
(86.5)
2,553,178
(25,070)
2,528,108
(19.0)
(102.5)
2,697,912
(20,545)
2,677,367
Attributable
production
cost
of
sales
net
of
silver
by-‐product
revenue
$
1,650.9
$
1,862.3
Attributable
production
cost
of
sales
per
ounce
sold
on
a
by-‐product
basis
$
653
$
696
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
Years
ended
December
31,
2017
2016
$
1,757.4
$
1,983.8
(20.0)
(86.5)
(19.0)
(102.5)
$
1,650.9
$
1,862.3
132.6
43.3
82.9
59.4
421.5
143.7
18.6
94.9
50.8
440.1
$
2,390.6
$
2,610.4
39.5
17.4
45.8
448.7
25.6
34.9
42.6
160.1
$
2,942.0
$
2,873.6
2,553,178
(25,070)
2,528,108
2,697,912
(20,545)
2,677,367
$
946
$
975
$
1,164
$
1,073
54
55 KINROSS ANNUAL REPORT MDA
55
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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,
2017
2016
$
1,757.4
$
1,983.8
(20.0)
(19.0)
$
1,737.4
$
1,964.8
132.6
43.3
82.9
59.4
421.5
143.7
18.6
94.9
50.8
440.1
$
2,477.1
$
2,712.9
39.5
17.4
45.8
448.7
25.6
34.9
42.6
160.1
$
3,028.5
$
2,976.1
2,621,875
(25,121)
2,596,754
2,778,902
(20,596)
2,758,306
$
954
$
984
$
1,166
$
1,079
(a) The 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” expenses is as reported on the consolidated statement of operations, net of certain severance expenses.
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.
(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), 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,
2017,
primarily
relate
to
projects
at
Tasiast.
(i) “Portion attributable to Chirano non-‐controlling interest” represents the non-‐controlling interest (10%) in the ounces sold from the
Chirano
mine.
(j) Average realized gold price is a non-‐GAAP financial measure and is defined as gold metal sales divided by the total number of gold ounces
sold. This measure is intended to enable Management to better understand the price realized in each reporting period. The realized price
measure does not have any standardized definition under IFRS and should not be considered a substitute for measure of performance
prepared
in
accordance
with
IFRS.
56
KINROSS ANNUAL REPORT MDA 56
57
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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,
2017
2016
$
1,757.4
$
1,983.8
(20.0)
(19.0)
$
1,737.4
$
1,964.8
$
2,477.1
$
2,712.9
132.6
43.3
82.9
59.4
421.5
39.5
17.4
45.8
448.7
143.7
18.6
94.9
50.8
440.1
25.6
34.9
42.6
160.1
$
3,028.5
$
2,976.1
2,621,875
(25,121)
2,596,754
2,778,902
(20,596)
2,758,306
$
954
$
984
$
1,166
$
1,079
(a) The 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” expenses is as reported on the consolidated statement of operations, net of certain severance expenses.
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.
(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), 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,
2017,
primarily
relate
to
projects
at
Tasiast.
(i) “Portion attributable to Chirano non-‐controlling interest” represents the non-‐controlling interest (10%) in the ounces sold from the
Chirano
mine.
(j) Average realized gold price is a non-‐GAAP financial measure and is defined as gold metal sales divided by the total number of gold ounces
sold. This measure is intended to enable Management to better understand the price realized in each reporting period. The realized price
measure does not have any standardized definition under IFRS and should not be considered a substitute for measure of performance
prepared
in
accordance
with
IFRS.
56
57 KINROSS ANNUAL REPORT MDA
57
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
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
MD&A.
Forward-‐looking
statements
contained
in
this
MD&A,
include,
but
are
not
limited
to,
those
under
the
headings
(or
headings
that
include):
“Project
Updates
and
New
Developments”
and
“Outlook”
and
include,
without
limitation,
statements
with
respect
to
our
guidance
for
production,
production
costs
of
sales,
all-‐in
sustaining
cost
and
capital
expenditures;
the
schedules
and
budgets
for
the
Company’s
development
projects;
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
“advance”,
“anticipate”,
“assumption”,
“believe”,
“estimates”,
‘‘expects’’,
“forecast”,
“focus”,
“forward”,
“guidance”,
“initiative”,
“measures”,
“on
budget”,
“outlook”,
“opportunity”,
“plan”,
“potential”,
“progress”,
“project”,
“projection”,
“well
positioned”,
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
and
our
Management’s
Discussion
and
Analysis
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,
in
particular,
the
potential
for
further
production
curtailments
at
Paracatu
resulting
from
insufficient
rainfall)
and
other
or
related
natural
disasters,
labour
disruptions
(including
but
not
limited
to
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,
the
maintenance
of
existing
permits
and
approvals
and
the
timely
receipt
of
all
permits
and
authorizations
necessary
for
the
development
and
operation
of
the
Tasiast
Phase
Two
expansion
and
the
Round
Mountain
Phase
W
expansion
including,
without
limitation,
work
permits,
necessary
import
authorizations
for
goods
and
equipment
and
exploration
license
conversions
at
Tasiast;
and
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
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,
energy
levies
laws,
and
dam
safety
regulation
in
Ghana,
potential
amendments
to
customs
and
mining
laws
(including
but
not
limited
amendments
to
the
VAT)
and
regulations
relating
to
work
permits
in
Mauritania,
the
potential
passing
of
Environmental
Protection
Agency
regulations
in
the
US
relating
to
the
provision
of
financial
assurances
under
the
Comprehensive
Environmental
Response,
Compensation
and
Liability
Act,
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)
and
mine
plans
for
the
Company’s
mining
operations
(including
but
not
limited
to
throughput
and
recoveries
being
affected
by
metallurgical
characteristics
at
Paracatu);
(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;
(12)
the
regulatory
and
legislative
regime
regarding
mining,
electricity
production
and
transmission
(including
rules
related
to
power
tariffs)
in
Brazil
being
consistent
with
Kinross’
current
expectations;
and
(13)
access
to
capital
markets,
including
but
not
limited
to
maintaining
a
debt
rating
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;
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
58
KINROSS ANNUAL REPORT MDA 58
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
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.
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.
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
$17
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
$19
impact
on
Russian
production
cost
of
sales
Specific
to
the
Brazilian
real,
a
10%
change
in
the
exchange
rate
would
be
expected
to
result
in
an
approximate
$38
impact
on
Brazilian
production
cost
of
sales
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
$4
impact
on
production
cost
of
sales
per
ounce
as
a
result
of
a
change
in
Key
Sensitivities
per
ounce.
per
ounce.
royalties.
Other
information
may
be
applicable.
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
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.
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.
59
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
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
MD&A.
Forward-‐looking
statements
contained
in
this
MD&A,
include,
but
are
not
limited
to,
those
under
the
headings
(or
headings
that
include):
“Project
Updates
and
New
Developments”
and
“Outlook”
and
include,
without
limitation,
statements
with
respect
to
our
guidance
for
production,
production
costs
of
sales,
all-‐in
sustaining
cost
and
capital
expenditures;
the
schedules
and
budgets
for
the
Company’s
development
projects;
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
“advance”,
“anticipate”,
“assumption”,
“believe”,
“estimates”,
‘‘expects’’,
“forecast”,
“focus”,
“forward”,
“guidance”,
“initiative”,
“measures”,
“on
budget”,
“outlook”,
“opportunity”,
“plan”,
“potential”,
“progress”,
“project”,
“projection”,
“well
positioned”,
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
and
our
Management’s
Discussion
and
Analysis
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,
in
particular,
the
potential
for
further
production
curtailments
at
Paracatu
resulting
from
insufficient
rainfall)
and
other
or
related
natural
disasters,
labour
disruptions
(including
but
not
limited
to
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,
the
maintenance
of
existing
permits
and
approvals
and
the
timely
receipt
of
all
permits
and
authorizations
necessary
for
the
development
and
operation
of
the
Tasiast
Phase
Two
expansion
and
the
Round
Mountain
Phase
W
expansion
including,
without
limitation,
work
permits,
necessary
import
authorizations
for
goods
and
equipment
and
exploration
license
conversions
at
Tasiast;
and
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
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,
energy
levies
laws,
and
dam
safety
regulation
in
Ghana,
potential
amendments
to
customs
and
mining
laws
(including
but
not
limited
amendments
to
the
VAT)
and
regulations
relating
to
work
permits
in
Mauritania,
the
potential
passing
of
Environmental
Protection
Agency
regulations
in
the
US
relating
to
the
provision
of
financial
assurances
under
the
Comprehensive
Environmental
Response,
Compensation
and
Liability
Act,
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)
and
mine
plans
for
the
Company’s
mining
operations
(including
but
not
limited
to
throughput
and
recoveries
being
affected
by
metallurgical
characteristics
at
Paracatu);
(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;
(12)
the
regulatory
and
legislative
regime
regarding
mining,
electricity
production
and
transmission
(including
rules
related
to
power
tariffs)
in
Brazil
being
consistent
with
Kinross’
current
expectations;
and
(13)
access
to
capital
markets,
including
but
not
limited
to
maintaining
a
debt
rating
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;
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
58
KINROSS
GOLD
CORPORATION
MANAGEMENT’S
DISCUSSION
AND
ANALYSIS
For
the
year
ended
December
31,
2017
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
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.
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
currency
exchange
rates
would
be
expected
to
result
in
an
approximate
$17
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
$19
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
$38
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
$4
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.
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.
59 KINROSS ANNUAL REPORT MDA
59
KINROSS
GOLD
CORPORATION
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 14, 2018
TONY
S.
GIARDINI
Executive Vice-President and Chief Financial Officer
Toronto, Canada
February 14, 2018
KINROSS ANNUAL REPORT 2017 FS 1
MANAGEMENT’S
REPORT
ON
INTERNAL
CONTROL
OVER
FINANCIAL
REPORTING
The management of Kinross Gold Corporation (“Kinross”) is responsible for establishing and maintaining adequate internal control over financial
reporting, and have designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board.
Management has used the Internal Control—Integrated Framework (2013) to evaluate the effectiveness of internal control over financial reporting, which
is a recognized and suitable framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Management has evaluated the design and operation of Kinross’ internal control over financial reporting as of December 31, 2017, and has concluded
that such internal control over financial reporting is effective.
The effectiveness of Kinross’ internal control over financial reporting as of December 31, 2017 has been audited by KPMG LLP, Chartered Professional
Accountants, as stated in their report that appears therein.
J.
PAUL
ROLLINSON
President and Chief Executive Officer
Toronto, Canada
February 14, 2018
TONY
S.
GIARDINI
Executive Vice-President and Chief Financial Officer
Toronto, Canada
February 14, 2018
KINROSS ANNUAL REPORT 2017 FS 2
REPORT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
To the Shareholders and Board of Directors of Kinross Gold Corporation
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated financial statements of Kinross Gold Corporation (the “Entity”), which comprise the consolidated
balance sheets as at December 31, 2017 and December 31, 2016, the consolidated statements of operations, comprehensive income (loss), cash flows
and equity for the years then ended, and the related notes, comprising a summary of significant accounting policies and other explanatory information
(collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at
December 31, 2017 and December 31, 2016, 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.
Report on Internal Control Over Financial Reporting
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Entity’s internal control
over financial reporting as of December 31, 2017, based on the criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 14, 2018 expressed an unqualified (unmodified)
opinion on the effectiveness of the Entity’s internal control over financial reporting.
Basis for Opinion
A - 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.
B - 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) (“PCAOB”).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free from material misstatement, whether due to error or fraud. Those standards also require that we comply with ethical requirements, including
independence. We are required to be independent with respect to the Entity in accordance with the ethical requirements that are relevant to our audit of
the consolidated financial statements in Canada, the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB. We are a public accounting firm registered with the PCAOB.
An audit includes performing procedures to assess the risks of material misstatements of the consolidated financial statements, whether due to error or
fraud, and performing procedures to respond to those risks. Such procedures included obtaining and examining, on a test basis, audit evidence
regarding 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 and principles 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 reasonable basis for our audit opinion.
Chartered Professional Accountants, Licensed Public Accountants
We have served as the Entity's auditor since 2005.
Toronto, Canada
February 14, 2018
KINROSS ANNUAL REPORT 2017 FS 3
REPORT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
To the Shareholders and the Board of Directors of Kinross Gold Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Kinross Gold Corporation’s (the “Company”) internal control over financial reporting as of December 31, 2017, based on the criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on
the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
Report on the Consolidated Financial Statements
We also have audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting
Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company, which comprise the consolidated balance sheets as
at December 31, 2017 and December 31, 2016, the consolidated statements of operations, comprehensive income (loss), cash flows and equity for the
years then ended, and the related notes, comprising a summary of significant accounting policies and other explanatory information (collectively referred
to as the “consolidated financial statements”), and our report dated February 14, 2018 expressed an unqualified opinion on those consolidated financial
statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in the accompanying management’s report on internal control over financial reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB and in accordance with the
ethical requirements that are relevant to our audit of the financial statements in Canada.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
February 14, 2018
KINROSS ANNUAL REPORT 2017 FS 4
KINROSS
GOLD
CORPORATION
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
Unrealized
fair
value
of
derivative
assets
Non-‐current
assets
Property,
plant
and
equipment
Goodwill
Long-‐term
investments
Investments
in
associate
and
joint
ventures
Unrealized
fair
value
of
derivative
assets
Other
long-‐term
assets
Deferred
tax
assets
Total
assets
Liabilities
Current
liabilities
Accounts
payable
and
accrued
liabilities
Current
income
tax
payable
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
income
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,
2017
December
31,
2016
$
1,025.8
12.1
91.3
43.9
1,094.3
17.0
2,284.4
$
827.0
11.6
127.3
111.9
986.8
16.1
2,080.7
4,887.2
162.7
188.0
23.7
3.9
574.0
33.3
8,157.2
$
4,917.6
162.7
142.9
163.6
6.0
411.3
94.5
7,979.3
$
$
482.6
35.1
66.5
1.1
585.3
$
464.8
72.6
93.2
7.1
637.7
1,732.6
830.5
134.0
255.6
3,538.0
1,733.2
861.2
172.2
390.7
3,795.0
$
14,902.5
240.7
(10,580.7)
21.1
4,583.6
35.6
4,619.2
$
14,894.2
238.3
(11,026.1)
39.1
4,145.5
38.8
4,184.3
$
8,157.2
$
7,979.3
Note
7
Note
7
Note
7
Note
7
Note
10
Note
7
Note
7
Note
7
Note
9
Note
10
Note
7
Note
17
Note
7
Note
13
Note
10
Note
12
Note
13
Note
17
Note
14
Note
7
Note
19
Note
6
Note
14
Unlimited
1,247,003,940
Unlimited
1,245,049,712
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Signed
on
behalf
of
the
Board:
John
A.
Brough
Una
M.
Power
Director
Director
KINROSS ANNUAL REPORT 2017 FS 5
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,
net
of
reversals
Total
cost
of
sales
Gross
profit
Other
operating
expense
Exploration
and
business
development
General
and
administrative
Operating
earnings
Other
income
(expense)
-‐
net
Equity
in
losses
of
associate
and
joint
ventures
Finance
income
Finance
expense
Earnings
(loss)
before
tax
Income
tax
recovery
(expense)
-‐
net
Net
earnings
(loss)
Net
earnings
(loss)
attributable
to:
Non-‐controlling
interest
Common
shareholders
Earnings
(loss)
per
share
attributable
to
common
shareholders
Basic
Diluted
Weighted
average
number
of
common
shares
outstanding
(millions)
Basic
Diluted
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
Years
ended
December
31,
December
31,
2017
2016
$
3,303.0
$
3,472.0
1,757.4
819.4
21.5
2,598.3
704.7
129.6
106.0
132.6
336.5
188.1
(1.3)
13.5
(117.8)
419.0
23.2
1,983.8
855.0
139.6
2,978.4
493.6
209.3
94.3
143.7
46.3
22.5
(1.2)
7.5
(134.6)
(59.5)
(49.6)
$
442.2
$
(109.1)
$
(3.2)
$
(5.1)
$
445.4
$
(104.0)
$
$
0.36
0.35
$
$
(0.08)
(0.08)
1,246.6
1,257.0
1,227.0
1,227.0
Note
8
Note
7
Note
7
Note
9
Note
7
Note
17
Note
16
KINROSS ANNUAL REPORT 2017 FS 6
KINROSS
GOLD
CORPORATION
CONSOLIDATED
STATEMENTS
OF
COMPREHENSIVE
INCOME
(LOSS)
(expressed
in
millions
of
United
States
dollars)
Years
ended
December
31,
December
31,
2017
2016
Net
earnings
(loss)
$
442.2
$
(109.1)
Other
comprehensive
income
(loss),
net
of
tax:
Items
to
be
reclassified
to
profit
or
loss
in
subsequent
periods:
Note
7
Changes
in
fair
value
of
investments
(a)
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
loss
related
to
derivatives
settled
(d)
(13.6)
(3.1)
11.9
(13.2)
(18.0)
50.8
(8.5)
29.2
(1.1)
70.4
Total
comprehensive
income
(loss)
$
424.2
$
(38.7)
Attributable
to
non-‐controlling
interest
Attributable
to
common
shareholders
(a) Net
of
tax
of
$0.3
million
(2016
-‐
$nil).
(b) Net
of
tax
of
$nil
(2016
-‐
$nil).
(c) Net
of
tax
of
$4.8
million
(2016
-‐
$10.6
million).
(d) Net
of
tax
of
$(5.9)
million
(2016
-‐
$(1.1)
million).
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
$
(3.2)
$
(5.1)
$
427.4
$
(33.6)
KINROSS ANNUAL REPORT 2017 FS 7
CONSOLIDATED
STATEMENTS
OF
CASH
FLOWS
(expressed
in
millions
of
United
States
dollars)
Net
inflow
(outflow)
of
cash
related
to
the
following
activities:
Operating:
Net
earnings
(loss)
Adjustments
to
reconcile
net
earnings
(loss)
to
net
cash
provided
from
operating
activities:
Depreciation,
depletion
and
amortization
Gain
on
disposition
of
associate
and
other
interests
-‐
net
Impairment,
net
of
reversals
Equity
in
losses
of
associate
and
joint
ventures
Share-‐based
compensation
expense
Finance
expense
Deferred
tax
recovery
Foreign
exchange
losses
(gains)
and
other
Reclamation
expense
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
provided
from
operating
activities
Investing:
Additions
to
property,
plant
and
equipment
Business
acquisition
Net
additions
to
long-‐term
investments
and
other
assets
Net
proceeds
from
the
sale
of
property,
plant
and
equipment
Net
proceeds
from
disposition
of
associate
and
other
interests
Increase
in
restricted
cash
Interest
received
and
other
Net
cash
flow
used
in
investing
activities
Financing:
Issuance
of
common
shares
on
exercise
of
options
Net
proceeds
from
issuance
of
equity
Net
proceeds
from
issuance
of
debt
Repayment
of
debt
Interest
paid
Other
Net
cash
flow
used
in
financing
activities
Effect
of
exchange
rate
changes
on
cash
and
cash
equivalents
Increase
(decrease)
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,
2017
2016
$
442.2
$
(109.1)
819.4
(55.2)
(75.5)
1.3
13.6
117.8
(76.4)
(31.9)
11.4
108.6
(86.7)
(48.5)
1,140.1
(188.5)
951.6
(897.6)
-‐
(73.8)
8.5
269.6
(0.5)
6.6
(687.2)
0.8
-‐
494.7
(500.0)
(62.9)
(1.6)
(69.0)
3.4
198.8
827.0
855.0
-‐
139.6
1.2
13.5
134.6
(149.7)
14.4
27.2
(21.2)
79.5
239.9
1,224.9
(125.7)
1,099.2
(633.8)
(588.0)
(59.8)
9.1
-‐
(1.1)
3.5
(1,270.1)
2.8
275.7
175.0
(425.0)
(73.5)
(3.3)
(48.3)
2.3
(216.9)
1,043.9
$
1,025.8
$
827.0
KINROSS ANNUAL REPORT 2017 FS 8
KINROSS
GOLD
CORPORATION
CONSOLIDATED
STATEMENTS
OF
EQUITY
(expressed
in
millions
of
United
States
dollars)
Common
share
capital
Balance
at
the
beginning
of
the
period
Shares
issued
on
equity
offering
Transfer
from
contributed
surplus
on
exercise
of
restricted
shares
Options
exercised,
including
cash
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
Balance
at
the
end
of
the
period
Accumulated
deficit
Balance
at
the
beginning
of
the
period
Net
earnings
(loss)
attributable
to
common
shareholders
Balance
at
the
end
of
the
period
Accumulated
other
comprehensive
income
(loss)
Balance
at
the
beginning
of
the
period
Other
comprehensive
income
(loss)
Balance
at
the
end
of
the
period
Years
ended
December
31,
2017
December
31,
2016
$
$
14,894.2
-‐
7.2
1.1
14,902.5
14,603.5
275.7
12.2
2.8
14,894.2
$
$
$
238.3
13.6
(11.2)
$
239.2
14.2
(15.1)
$
240.7
$
238.3
$
$
(11,026.1)
445.4
(10,580.7)
(10,922.1)
(104.0)
(11,026.1)
$
$
$
39.1
(18.0)
$
(31.3)
70.4
$
21.1
$
39.1
Total
accumulated
deficit
and
accumulated
other
comprehensive
income
(loss)
$
(10,559.6)
$
(10,987.0)
Total
common
shareholders'
equity
$
4,583.6
$
4,145.5
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
$
38.8
$
43.9
(3.2)
(5.1)
$
35.6
$
38.8
$
4,619.2
$
4,184.3
The
accompanying
notes
are
an
integral
part
of
these
consolidated
financial
statements.
KINROSS ANNUAL REPORT 2017 FS 9
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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,
2017
were
authorized
for
issue
in
accordance
with
a
resolution
of
the
board
of
directors
on
February
14,
2018.
2.
BASIS
OF
PRESENTATION
These
consolidated
financial
statements
for
the
year
ended
December
31,
2017
(“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.
KINROSS ANNUAL REPORT 2017 FS 10
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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
Property/
Segment
Location
2017
2016
As
at
December
31,
December
31,
Fort
Knox
Paracatu
Maricunga
and
Lobo
Marte
/
Maricunga
and
Corporate
and
Other
La
Coipa
/
Corporate
and
Other
USA
Brazil
Chile
100%
100%
100%
100%
100%
100%
Chile
100%
100%
Echo
Bay
Minerals
Company
Chukotka
Mining
and
Geological
Company
Northern
Gold
LLC
Kettle
River
-‐
Buckhorn
Kupol
Dvoinoye/
Kupol
Selene
Holdings
LP
(b)
Tasiast
Mauritanie
Ltd.
S.A.
Chirano
Gold
Mines
Ltd.
(Ghana)
(a)
KG
Mining
(Bald
Mountain)
Inc.
Round
Mountain
Gold
Corporation
/
KG
Mining
(Round
Mountain)
Inc.
Investment
in
associate:
(Equity
accounted)
Compania
Minera
Casale
(c)
Interest
in
joint
ventures:
(Equity
accounted)
Sociedad
Contractual
Minera
Puren
Bald
Mountain
Exploration
LLC
USA
Russian
Federation
Russian
Federation
Canada
Mauritania
Ghana
USA
USA
100%
100%
100%
-‐
(b)
100%
90%
100%
100%
100%
100%
100%
100%
100%
90%
100%
100%
White
Gold/
Corporate
and
Other
Tasiast
Chirano
Bald
Mountain
Round
Mountain
Cerro
Casale/
Corporate
and
Other
Chile
-‐
(c)
25%
Puren/
Corporate
and
Other
Bald
Mountain
Exploration
Joint
Venture/
Bald
Mountain
Chile
USA
65%
50%
65%
50%
(a)
The
Company
holds
a
90%
interest
in
the
Chirano
Gold
Mine
with
the
Government
of
Ghana
having
the
right
to
the
remaining
10%
interest.
(b) On
June
14,
2017,
the
Company
completed
the
sale
of
its
interest
in
Selene
Holdings
LP
and
the
White
Gold
exploration
project
in
the
Yukon
Territory
to
White
Gold
Corp.
See
Note
6
ii.
(c) On
June
9,
2017,
the
Company
completed
the
sale
of
its
interest
in
Compania
Minera
Casale
and
the
Cerro
Casale
project
in
Chile
to
Goldcorp
Inc.
See
Note
6
i.
KINROSS ANNUAL REPORT 2017 FS 11
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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
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
its
investment
in
the
joint
arrangement
using
the
equity
method
of
accounting
in
the
consolidated
financial
statements.
(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.
KINROSS ANNUAL REPORT 2017 FS 12
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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
and
estimated
costs
to
sell.
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.
KINROSS ANNUAL REPORT 2017 FS 13
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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.
KINROSS ANNUAL REPORT 2017 FS 14
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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.
KINROSS ANNUAL REPORT 2017 FS 15
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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
ready
for
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.
Valuation
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
or
reversal
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.
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
KINROSS ANNUAL REPORT 2017 FS 16
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
recognized.
The
reversal
is
limited
to
the
carrying
value
that
would
have
been
determined,
net
of
any
applicable
depreciation,
had
no
impairment
charge
been
recognized
in
prior
years.
The
recoverable
amount
of
a
CGU
or
asset
is
the
higher
of
its
fair
value
less
cost
of
disposal
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
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
9
year
to
25
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
2017
annual
analysis,
estimated
2018,
2019
and
long-‐term
prices
of
gold
and
silver
of
$1,300
per
ounce
and
$19.00
per
ounce,
respectively,
were
used.
For
the
2016
annual
analysis,
estimated
2017,
2018
and
long-‐term
gold
prices
of
$1,200,
$1,250
and
$1,250
per
ounce,
respectively,
and
estimated
2017,
2018
and
long-‐term
silver
prices
of
$18.50,
$18.70
and
$20.00
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
2017
annual
analysis,
an
estimated
short-‐term
and
long-‐term
oil
price
of
$55
per
barrel
was
used.
For
the
2016
annual
analysis,
an
estimated
short-‐term
and
long-‐term
oil
price
of
$60
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
2017
annual
analysis,
real
discount
rates
of
between
4.35%
and
7.10%
were
used
for
the
CGUs
tested.
For
the
CGUs
tested
in
the
2016
annual
analysis,
real
discount
rates
of
between
5.05%
and
5.18%
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.
KINROSS ANNUAL REPORT 2017 FS 17
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
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,
2017
in
respect
of
the
fair
value
determinations
at
that
date,
which
ranged
from
0.8
to
1.6.
NAV
multiples
observed
at
December
31,
2016
were
in
the
range
of
0.7
to
1.5.
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.
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
in
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
classified
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.
KINROSS ANNUAL REPORT 2017 FS 18
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
(c)
Impairment
of
financial
assets
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
recorded
at
fair
value
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
recorded
at
fair
value
as
follows:
The
portion
of
the
RPSUs
related
to
market
conditions
are
recorded
at
fair
value
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;
KINROSS ANNUAL REPORT 2017 FS 19
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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
more
likely
than
not
to
exist
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
KINROSS ANNUAL REPORT 2017 FS 20
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
net
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
from
Contracts
with
Customers
In
May
2014,
the
IASB
issued
IFRS
15
“Revenue
from
Contracts
with
Customers”
(“IFRS
15”).
IFRS
15
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”,
and
is
effective
for
annual
periods
beginning
on
or
after
January
1,
2018.
The
standard
contains
a
single
model
that
applies
to
contracts
with
customers
and
two
approaches
to
recognizing
revenue:
at
a
point
in
time
or
over
time.
The
model
features
a
contract-‐based
five-‐step
analysis
of
transactions
to
determine
whether,
how
much
and
when
revenue
is
recognized.
New
estimates
and
judgmental
thresholds
have
been
introduced,
which
may
affect
the
amount
and/or
timing
of
revenue
recognized.
The
Company
will
adopt
IFRS
15
for
the
annual
period
beginning
January
1,
2018
using
the
modified
retrospective
approach.
The
Company
has
completed
its
assessment
of
the
impact
of
IFRS
15
and
does
not
expect
the
new
standard
to
have
a
material
impact
on
the
consolidated
financial
statements.
Financial
instruments
In
July
2014,
the
IASB
issued
the
final
version
of
IFRS
9
“Financial
Instruments”
(“IFRS
9”),
which
replaces
IAS
39
“Financial
Instruments:
Recognition
and
Measurement”
(“IAS
39”).
IFRS
9
is
effective
for
annual
periods
beginning
on
or
after
January
1,
2018.
The
Company
will
adopt
IFRS
9
for
the
annual
period
beginning
January
1,
2018
on
a
retrospective
basis,
using
certain
available
transitional
provisions.
IFRS
9
provides
a
revised
model
for
classification
and
measurement
of
financial
assets,
including
a
new
“expected
credit
loss”
(ECL)
impairment
model.
The
revised
model
for
classifying
financial
assets
results
in
classification
according
to
their
contractual
cash
flow
characteristics
and
the
business
models
under
which
they
are
held.
IFRS
9
introduces
a
reformed
approach
to
hedge
accounting.
IFRS
9
also
largely
retains
the
existing
requirements
in
IAS
39
for
the
classification
of
financial
liabilities.
The
Company
has
completed
its
assessment
of
the
impact
of
IFRS
9
and
expects
the
following
impacts
upon
adoption:
i)
ii)
The
Company
will
make
the
irrevocable
election
available
under
IFRS
9
to
continue
to
measure
its
long-‐term
investments
in
equity
securities
at
fair
value
through
OCI.
Under
the
new
standard,
all
realized
and
unrealized
gains
and
losses
will
be
recognized
permanently
in
OCI
with
no
reclassification
to
profit
or
loss.
On
adoption
of
IFRS
9,
the
Company
expects
to
make
an
adjustment
to
opening
retained
earnings
of
$56.3
million
with
a
corresponding
adjustment
to
accumulated
other
comprehensive
income.
The
new
classification
and
measurement
requirements
under
IFRS
9
are
not
expected
to
have
a
material
impact
on
the
Company’s
other
financial
assets
and
financial
liabilities.
The
Company
expects
that
its
existing
hedge
accounting
relationships
that
qualified
for
hedge
accounting
under
IAS
39
will
continue
to
qualify
for
hedge
accounting
under
IFRS
9,
following
planned
changes
to
its
internal
documentation
and
monitoring
processes.
iii) The
other
changes
under
IFRS
9,
including
the
new
ECL
impairment
model,
are
not
expected
to
have
a
material
impact
on
the
Company’s
financial
statements.
KINROSS ANNUAL REPORT 2017 FS 21
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Leases
In
January
2016,
the
IASB
issued
IFRS
16
“Leases”
(“IFRS
16”),
which
replaces
IAS
17
“Leases”.
The
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
on
its
balance
sheet,
as
well
as
corresponding
depreciation
and
interest
expense.
The
Company
will
adopt
IFRS
16
for
the
annual
period
beginning
January
1,
2019.
The
Company
expects
IFRS
16
will
result
in
the
recognition
of
additional
assets
and
liabilities
on
the
balance
sheet,
and
a
corresponding
increase
in
depreciation
and
interest
expense.
The
Company
also
expects
cash
flow
from
operating
activities
to
increase
under
IFRS
16
as
lease
payments
for
most
leases
will
be
recorded
as
financing
outflows
in
the
statement
of
cash
flows.
The
extent
of
the
impact
of
adopting
the
standard
has
not
yet
been
determined.
The
Company
has
completed
the
development
of
its
implementation
plan
and
expects
to
report
more
detailed
information,
including
estimated
quantitative
financial
impacts,
if
material,
in
its
consolidated
financial
statements
as
the
effective
date
approaches.
Foreign
Currency
Transactions
and
Advance
Consideration
In
December
2016,
the
IASB
issued
IFRIC
Interpretation
22
“Foreign
Currency
Transactions
and
Advance
Consideration”
(“IFRIC
22”).
IFRIC
22
is
applicable
for
annual
periods
beginning
on
or
after
January
1,
2018,
and
permits
early
adoption.
IFRIC
22
clarifies
which
date
should
be
used
for
translation
when
a
foreign
currency
transaction
involves
an
advance
payment
or
receipt.
The
interpretation
clarifies
that
the
date
of
the
transaction
for
the
purpose
of
determining
the
exchange
rate
to
use
on
initial
recognition
of
the
related
asset,
expense
or
income
(or
part
of
it)
is
the
date
on
which
an
entity
initially
recognizes
the
non-‐monetary
asset
or
non-‐monetary
liability
arising
from
the
payment
or
receipt
of
the
advance
consideration.
The
Company
will
adopt
IFRIC
22
in
its
financial
statements
for
the
annual
period
beginning
January
1,
2018
on
a
prospective
basis.
The
Company
has
completed
its
assessment
of
the
impact
of
IFRIC
22
and
does
not
expect
the
interpretation
to
have
a
material
impact
on
the
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.
KINROSS ANNUAL REPORT 2017 FS 22
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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) Valuation
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
or
reversal
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.
For
property,
plant
and
equipment
and
other
long-‐lived
assets,
a
reversal
of
previously
recognized
impairment
losses
is
recognized
in
the
consolidated
statement
of
operations
if
there
has
been
a
change
in
the
estimates
used
to
determine
the
asset’s
KINROSS ANNUAL REPORT 2017 FS 23
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
recoverable
amount
since
the
last
impairment
loss
was
recognized.
The
assessment
of
fair
values,
including
those
of
the
CGUs
for
purposes
of
testing
goodwill
and
long-‐lived
assets,
require
the
use
of
estimates
and
assumptions
for
recoverable
production,
future
and
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
long-‐lived
assets
could
impact
the
impairment
analysis.
(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.
KINROSS ANNUAL REPORT 2017 FS 24
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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.
6.
i.
ACQUISITIONS
AND
DISPOSITIONS
Disposition
of
interest
in
Cerro
Casale
On
March
28,
2017,
the
Company
announced
that
it
had
entered
into
an
agreement
with
Goldcorp
Inc.
(“Goldcorp”)
to
sell
its
25%
interest
in
the
Cerro
Casale
project
and
its
100%
interest
in
the
Quebrada
Seca
exploration
project
in
Chile.
On
June
9,
2017,
the
Company
completed
the
sale
for
gross
cash
proceeds
of
$260.0
million
(which
includes
$20.0
million
for
Quebrada
Seca),
a
contingent
payment
of
$40.0
million
following
a
construction
decision
for
Cerro
Casale,
the
assumption
by
Goldcorp
of
a
$20.0
million
contingent
payment
obligation
payable
to
Barrick
Gold
Corporation
when
production
at
Cerro
Casale
commences,
and
a
1.25%
royalty
on
25%
of
gross
revenues
from
all
metals
sold
at
the
properties
(with
the
Company
foregoing
the
first
$10.0
million).
Additionally
on
closing,
the
Company
entered
into
a
water
supply
agreement
with
the
Cerro
Casale
joint
venture
to
have
certain
rights
to
access,
up
to
a
fixed
amount,
water
not
required
by
the
Cerro
Casale
joint
venture.
In
connection
with
the
sale,
the
Company
recognized,
in
other
income
(expense),
an
impairment
reversal
of
$97.0
million
related
to
its
investment
in
Cerro
Casale,
and
a
gain
on
disposition
of
$12.7
million.
See
Note
7
xi.
ii.
Disposition
of
interest
in
White
Gold
On
May
18,
2017,
the
Company
entered
into
an
agreement
with
White
Gold
Corp.
to
sell
its
100%
interest
in
the
White
Gold
exploration
project
in
the
Yukon
Territory.
On
June
14,
2017,
the
Company
completed
the
sale
for
gross
cash
proceeds
of
$7.6
million
(CDN$10.0
million),
17.5
million
common
shares
of
White
Gold
Corp.
representing
19.9%
of
the
issued
and
outstanding
shares
of
White
Gold
Corp.,
and
deferred
payments
of
$11.4
million
(CDN$15.0
million),
payable
in
three
equal
payments
of
$3.8
million
(CDN$5.0
million)
upon
completion
of
specific
milestones.
The
Company
recognized
a
loss
on
disposition
of
$1.7
million
in
other
income
(expense)
in
connection
with
the
sale.
See
Note
7
xi.
The
investment
in
White
Gold
Corp.
has
been
accounted
for
as
an
available-‐for-‐sale
investment
as
the
Company
determined
it
does
not
have
significant
influence
over
White
Gold
Corp.
iii.
Disposition
of
interest
in
DeLamar
On
September
18,
2017,
the
Company
entered
into
an
agreement
with
Integra
Resources
Corp.
(“Integra”)
to
sell
its
100%
interest
in
the
DeLamar
reclamation
property.
On
November
3,
2017,
the
Company
completed
the
sale
for
cash
consideration
and
a
non-‐interest
bearing
promissory
note,
payable
18
months
after
closing,
totaling
$5.6
million
(CDN$7.2
million),
common
shares
representing
9.9%
of
the
issued
and
outstanding
shares
of
Integra,
and
a
2.5%
net
smelter
return
royalty
that
will
be
reduced
to
1%
when
royalty
payments
have
accumulated
to
$7.8
million
(CDN$10.0
million).
In
connection
with
the
sale,
the
Company
recognized
a
gain
on
disposition
of
$44.2
million
in
other
income
(expense).
See
Note
7
xi.
iv.
Acquisition
of
La
Coipa
mining
concessions
Compania
Minera
de
Oro
(“MDO”),
a
subsidiary
of
the
Company,
currently
holds
a
50%
ownership
interest
in
the
Phase
7
deposit
through
its
50%
ownership
of
Minera
La
Coipa
(“MLC”),
with
the
remaining
50%
held
by
Salmones
de
Chile
Alimentos
S.A.
(“SDCA”).
Pursuant
to
an
agreement
signed
on
February
2,
2018,
MDO,
MLC
and
SDCA
have
agreed,
among
KINROSS ANNUAL REPORT 2017 FS 25
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
other
things,
to
spin
out
the
Phase
7
concessions
into
a
new
company
and
MDO
has
agreed
to
purchase
SDCA’s
50%
interest
in
such
company
in
exchange
for
payments
to
SDCA
totaling
$65
million
($35
million
on
closing
and
$30
million
on
or
before
January
31,
2019).
Following
completion
of
the
transaction,
MDO
will
have
a
100%
ownership
interest
in
the
Phase
7
deposit.
The
transaction
is
subject
to
certain
conditions
and
is
expected
to
close
within
90
days.
v.
Acquisition
of
power
plants
in
Brazil
On
February
14,
2018,
Kinross
Brasil
Mineração
(“KBM”),
a
subsidiary
of
the
Company,
signed
an
agreement
to
acquire
two
hydroelectric
power
plants
in
the
State
of
Goias,
Brazil
from
a
subsidiary
of
Gerdau
SA
for
$257.0
million.
The
two
plants
are
expected
to
secure
a
long-‐term
supply
of
power
and
lower
production
costs
over
the
life
of
the
mine
at
Paracatu.
The
transaction
is
subject
to
regulatory
approvals
and
is
expected
to
close
in
approximately
three
to
six
months.
KINROSS ANNUAL REPORT 2017 FS 26
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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)
(a)
Restricted
cash
relates
to
loan
escrow
judicial
deposits
and
environmental
indemnities.
ii.
Accounts
receivable
and
other
assets:
Trade
receivables
Prepaid
expenses
VAT
receivable
Deposits
Other
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,
2017
December
31,
2016
$
$
600.8
425.0
1,025.8
514.0
313.0
827.0
$
$
December
31,
2017
December
31,
2016
$
12.1
$
11.6
December
31,
2017
December
31,
2016
$
$
$
$
December
31,
2017
December
31,
2016
$
$
4.5
19.8
36.2
11.1
19.7
91.3
242.6
358.5
122.3
91.5
519.3
1,334.2
(239.9)
1,094.3
20.1
21.9
59.3
11.4
14.6
127.3
242.3
301.6
78.6
49.1
534.1
1,205.7
(218.9)
986.8
$
$
(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
Tasiast,
Fort
Knox,
Round
Mountain
and
Bald
Mountain
mines.
Based
on
current
mine
plans,
the
Company
expects
to
place
the
last
tonne
of
ore
on
its
leach
pads
at
Tasiast
in
2018,
Fort
Knox
in
2021,
Bald
Mountain
in
2023
and
Round
Mountain
in
2024.
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
year
ended
December
31,
2016,
inventory
impairment
charges
of
$71.3
million
were
recorded
within
cost
of
sales
to
reduce
the
carrying
value
of
inventory
to
its
net
realizable
value.
See
Note
8
ii.
KINROSS ANNUAL REPORT 2017 FS 27
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
iv.
Property,
plant
and
equipment:
Cost
Balance
at
January
1,
2017
Additions
Capitalized
interest
Disposals
Other
Balance
at
December
31,
2017
Mineral
Interests
(a)
Land,
plant
and
equipment
Development
and
operating
properties
Pre-‐development
properties
$
7,791.3
626.9
13.8
(44.5)
(12.8)
8,374.7
$
7,970.2
298.5
11.3
-‐
31.5
8,311.5
$
164.3
-‐
-‐
(133.2)
(15.6)
15.5
Accumulated
depreciation,
depletion,
amortization
and
impairment
Balance
at
January
1,
2017
Depreciation,
depletion
and
amortization
Impairment,
net
of
reversals
(b)
Disposals
Other
Balance
at
December
31,
2017
$
(5,076.4)
(529.3)
260.9
38.8
(2.4)
(5,308.4)
$
(5,852.4)
(371.5)
(282.4)
-‐
0.2
(6,506.1)
$
(79.4)
-‐
-‐
79.2
0.2
-‐
Total
$
15,925.8
925.4
25.1
(177.7)
3.1
16,701.7
$
(11,008.2)
(900.8)
(21.5)
118.0
(2.0)
(11,814.5)
Net
book
value
$
3,066.3
$
1,805.4
$
15.5
$
4,887.2
Amount
included
above
as
at
December
31,
2017:
Assets
under
construction
Assets
not
being
depreciated
(c)
$
$
534.2
723.3
$
$
116.4
342.8
$
-‐
$
15.5
$
$
650.6
1,081.6
(a) At
December
31,
2017,
the
significant
development
and
operating
properties
include
Fort
Knox,
Round
Mountain,
Bald
Mountain,
Paracatu,
Kupol,
Tasiast,
Chirano
and
Lobo-‐Marte.
(b) At
December
31,
2017,
an
impairment
charge
was
recorded
at
Paracatu
and
impairment
reversals
were
recorded
at
Fort
Knox
and
Tasiast,
entirely
related
to
property,
plant
and
equipment.
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.
KINROSS ANNUAL REPORT 2017 FS 28
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Mineral
Interests
(a)
Land,
plant
and
equipment
Development
and
operating
properties
Pre-‐development
properties
Total
$
7,332.2
445.6
417.4
$
7,651.4
207.7
400.1
$
164.3
-‐
-‐
$
15,147.9
653.3
817.5
(359.4)
10.4
(57.8)
2.9
7,791.3
(294.7)
4.8
(0.7)
1.6
7,970.2
-‐
-‐
-‐
-‐
164.3
(654.1)
15.2
(58.5)
4.5
15,925.8
Cost
Balance
at
January
1,
2016
Additions
Acquisitions
(b)
Book
value
of
Round
Mountain
prior
to
remeasurement
on
acquisition
Capitalized
interest
Disposals
Other
Balance
at
December
31,
2016
Accumulated
depreciation,
depletion,
amortization
and
impairment
Balance
at
January
1,
2016
$
(4,835.1)
$
(5,639.7)
$
(79.4)
$
(10,554.2)
Depreciation,
depletion
and
amortization
Impairment,
net
of
reversals
(c)
Book
value
of
Round
Mountain
prior
to
remeasurement
on
acquisition
Disposals
Other
Balance
at
December
31,
2016
(528.1)
(68.3)
305.4
50.4
(0.7)
(5,076.4)
(399.4)
-‐
187.6
-‐
(0.9)
(5,852.4)
-‐
-‐
-‐
-‐
-‐
(79.4)
(927.5)
(68.3)
493.0
50.4
(1.6)
(11,008.2)
Net
book
value
$
2,714.9
$
2,117.8
$
84.9
$
4,917.6
Amount
included
above
as
at
December
31,
2016:
Assets
under
construction
Assets
not
being
depreciated
(d)
$
$
373.5
545.3
$
$
119.4
322.3
$
-‐
$
84.9
$
$
492.9
952.5
(a) At
December
31,
2016,
the
significant
development
and
operating
properties
include
Fort
Knox,
Round
Mountain,
Bald
Mountain,
Paracatu,
Kupol,
Tasiast,
Chirano
and
Lobo-‐Marte.
Included
in
pre-‐development
properties
are
White
Gold
and
other
exploration
properties.
(b) Bald
Mountain
and
the
remaining
50%
interest
in
Round
Mountain
were
acquired
on
January
11,
2016.
(c) At
September
30,
2016,
an
impairment
charge
was
recorded
against
property,
plant
and
equipment
at
Maricunga.
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
qualifying
capital
expenditures
at
Fort
Knox,
Round
Mountain,
Kupol,
Paracatu,
and
Tasiast
and
had
a
weighted
average
borrowing
rate
of
5.54%
and
4.9%
during
the
years
ended
December
31,
2017
and
2016,
respectively.
At
December
31,
2017,
$164.4
million
of
exploration
and
evaluation
(“E&E”)
assets
were
included
in
mineral
interests
(December
31,
2016
–
$216.8
million).
During
the
year
ended
December
31,
2017,
the
Company
acquired
$nil
E&E
assets,
disposed
of
$54.1
million
E&E
assets
and
transferred
$0.2
million
E&E
assets
to
capitalized
development
(year
ended
December
31,
2016
–
$nil,
$nil
and
$nil,
respectively).
During
the
year
ended
December
31,
2017,
the
Company
capitalized
$1.9
million
and
expensed
$6.7
million
of
E&E
costs,
respectively
(year
ended
December
31,
2016
–
$1.2
million
and
$6.8
million,
respectively).
Expensed
E&E
costs
are
included
in
operating
cash
flows.
KINROSS ANNUAL REPORT 2017 FS 29
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
v.
Goodwill:
As
at
December
31,
2017
and
December
31,
2016,
goodwill
of
$162.7
million
is
comprised
of
goodwill
for
Kupol
of
$158.8
million
(net
of
accumulated
impairment
of
$668.4
million)
and
for
other
operations
of
$3.9
million
(net
of
accumulated
impairment
of
$nil).
vi.
Long-‐term
investments:
Unrealized
gains
and
losses
on
investments
classified
as
available-‐for-‐sale
are
recorded
in
AOCI
as
follows:
December
31,
2017
December
31,
2016
Investments
in
an
unrealized
gain
position
Investments
in
an
unrealized
loss
position
vii.
Other
long-‐term
assets:
Fair
value
125.1
62.9
188.0
$
$
Gains
(losses)
in
AOCI
26.6
(19.7)
6.9
$
$
Fair
value
Gains
(losses)
in
AOCI
$
110.2
$
30.3
(6.7)
32.7
$
23.6
$
142.9
December
31,
2017
December
31,
2016
$
$
Long-‐term
portion
of
ore
in
stockpiles
and
ore
on
leach
pads
(a)
Deferred
charges,
net
of
amortization
Long-‐term
receivables
(b)
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,
2017,
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,
Round
Mountain,
and
Tasiast
mines.
(b)
Long-‐term
receivables
includes
an
estimated
benefit
of
$124.4
million
related
to
the
enactment
of
U.S.
Tax
Reform
legislation
in
December
2017.
See
Note
17.
viii.
Accounts
payable
and
accrued
liabilities:
December
31,
2017
December
31,
2016
239.9
8.9
272.8
6.4
46.0
574.0
77.4
274.2
131.0
482.6
Trade
payables
Accrued
liabilities
Employee
related
accrued
liabilities
ix.
Accumulated
other
comprehensive
income:
Balance
at
December
31,
2015
Other
comprehensive
income
before
tax
Tax
Balance
at
December
31,
2016
Other
comprehensive
loss
before
tax
Tax
Balance
at
December
31,
2017
KINROSS ANNUAL REPORT 2017 FS 30
$
$
$
$
$
$
$
$
$
$
Long-‐term
Investments
(18.7)
42.3
-‐
23.6
(16.4)
(0.3)
Derivative
Contracts
(12.6)
37.6
(9.5)
15.5
(2.4)
1.1
$
6.9
$
14.2
$
21.1
218.9
8.6
147.2
2.8
33.8
411.3
86.8
251.4
126.6
464.8
Total
(31.3)
79.9
(9.5)
39.1
(18.8)
0.8
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Consolidated
Statements
of
Operations
x.
Other
operating
expense:
Other
operating
expense
Years
ended
December
31,
2017
2016
$
$
$
$
129.6
129.6
209.3
209.3
Other
operating
expense
for
the
year
ended
December
31,
2017
includes
the
write-‐off
of
value-‐added
tax
(“VAT”)
receivables
and
settlement
of
VAT
disputes,
costs
related
to
the
temporary
curtailment
of
mining
activities
at
Paracatu,
costs
related
to
the
Fort
Knox
Gilmore
Feasibility
study,
reclamation
expenses
related
to
properties
where
mining
activities
have
ceased
or
are
in
reclamation,
and
care
and
maintenance
and
other
costs.
Other
operating
expense
for
the
year
ended
December
31,
2016
includes
the
write-‐off
of
VAT
receivables
and
settlement
of
VAT
disputes
due
to
regulatory
changes
in
Brazil,
costs
related
to
the
suspension
of
mining
activities
at
Maricunga
and
Tasiast,
reclamation
expenses
related
to
properties
where
mining
activities
have
ceased
or
are
in
reclamation,
and
care
and
maintenance
and
other
costs.
xi.
Other
income
(expense)
–
net:
Gain
on
disposition
of
associate
and
other
interests
-‐
net (a)
Gain
on
disposition
of
other
assets
-‐
net
Reversal
of
impairment
charges
(b)
Foreign
exchange
losses
Net
non-‐hedge
derivative
gains
(losses)
Other
(c)
Years
ended
December
31,
2017
2016
$
55.2
1.9
97.0
(4.9)
0.3
38.6
188.1
-‐
$
9.7
-‐
(6.3)
(0.4)
19.5
22.5
$
$
(a) During
the
year
ended
December
31,
2017,
the
Company
recognized
a
gain
on
disposition
of
its
interests
in
Cerro
Casale
and
Quebrada
Seca
of
$12.7
million,
a
loss
on
disposition
of
its
interest
in
White
Gold
of
$1.7
million,
and
a
gain
on
disposition
of
its
interest
in
DeLamar
of
$44.2
million.
See
Note
6.
(b) During
the
year
ended
December
31,
2017,
the
Company
recognized
a
reversal
of
impairment
charges
related
to
the
sale
of
its
interest
in
Cerro
Casale.
See
Note
6
i.
(c) Other
includes
insurance
recoveries
of
$17.5
million
and
$9.9
million
related
to
a
settlement
of
a
royalty
agreement.
xii.
Finance
expense:
Accretion
on
reclamation
and
remediation
obligations
Interest
expense,
including
accretion
on
debt
(a)
Years
ended
December
31,
2017
2016
$
$
(31.3)
(86.5)
(117.8)
(34.2)
(100.4)
(134.6)
$
$
(a) During
the
years
ended
December
31,
2017
and
2016,
$25.1
million
and
$15.2
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,
2017
was
$80.9
million
(year
ended
December
31,
2016
-‐
$95.3
million).
KINROSS ANNUAL REPORT 2017 FS 31
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
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,
2017
2016
Salaries,
short-‐term
incentives,
and
other
benefits
Share-‐based
payments
Other
8.
IMPAIRMENT,
NET
OF
REVERSALS
Property,
plant
and
equipment
(i)
Inventory
and
other
assets
(ii)
i.
Property,
plant
and
equipment
$
$
678.5
25.9
11.2
715.6
665.7
26.8
19.2
711.7
$
$
Years
ended
December
31,
2017
2016
$
$
21.5
-‐
21.5
68.3
71.3
139.6
$
$
At
December
31,
2017,
upon
completion
of
the
annual
assessment
of
the
carrying
values
of
its
CGUs,
the
Company
recorded
a
net
impairment
charge
of
$21.5
million.
The
impairment
charge
was
entirely
related
to
property,
plant
and
equipment
and
included
an
impairment
charge
of
$253.0
million
at
Paracatu,
partially
offset
by
impairment
reversals
at
Tasiast
and
Fort
Knox
of
$142.9
million
and
$88.6
million,
respectively.
The
impairment
reversals
at
Tasiast
and
Fort
Knox
were
mainly
due
to
an
increase
in
the
Company’s
short-‐term
and
long-‐term
gold
price
estimates,
as
well
as
Tasiast
Phase
Two
progressing
as
planned
and
additions
to
Fort
Knox’s
mineral
reserve
estimates.
For
Tasiast,
the
reversal
represents
a
partial
reversal
of
the
total
impairment
charges
previously
recorded.
For
Fort
Knox,
the
reversal
represents
a
full
reversal
of
the
remaining
impairment
charge
recorded
in
2015.
The
impairment
charge
at
Paracatu
was
mainly
a
result
of
changes
in
the
fiscal
regime
in
Brazil
that
were
considered
in
the
cash
flow
analysis
used
to
assess
its
recoverable
amount.
The
tax
impact
on
the
impairment
reversal
at
Paracatu
was
a
recovery
of
$86.0
million.
The
tax
impact
on
the
impairment
reversal
at
Fort
Knox
was
an
expense
of
$2.4
million.
There
was
no
tax
impact
on
the
impairment
reversal
at
Tasiast.
The
net
tax
recovery
of
$83.6
million
was
recorded
within
income
tax
expense.
After
giving
effect
to
the
impairment
charge
and
impairment
reversals,
the
carrying
values
of
Paracatu,
Tasiast,
and
Fort
Knox
were
$1,275.6
million,
$1,417.5
million,
and
$420.2
million,
respectively,
as
at
December
31,
2017.
The
significant
estimates
and
assumptions
used
in
the
impairment
assessment
are
disclosed
in
Note
3
to
the
financial
statements.
As
at
September
30,
2016,
the
Company
identified
the
suspension
of
mining
at
Maricunga
as
an
indication
of
impairment
and
performed
an
impairment
assessment
to
determine
the
recoverable
amount
of
the
Maricunga
CGU.
The
recoverable
amount
was
determined
by
considering
observable
market
values
for
comparable
assets.
As
the
recoverable
amount
was
lower
than
the
carrying
amount,
an
impairment
charge
of
$68.3
million
was
recorded
against
property,
plant
and
equipment,
resulting
in
a
carrying
amount
of
$(10.9)
million
for
the
Maricunga
CGU.
The
carrying
amount
was
negative
as
a
result
of
reclamation
and
remediation
obligations.
No
impairment
charges
were
recorded
as
a
result
of
the
annual
assessment
of
the
carrying
value
of
the
Company’s
CGUs
at
December
31,
2016.
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.
KINROSS ANNUAL REPORT 2017 FS 32
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
ii.
Inventory
and
other
assets
In
2016,
the
Company
recognized
impairment
charges
of
$71.3
million
related
to
metals
and
supplies
inventory
at
Maricunga,
resulting
from
the
suspension
of
mining
during
the
year.
9.
INVESTMENTS
IN
ASSOCIATE
AND
JOINT
VENTURES
The
investments
in
associate
and
joint
ventures
are
accounted
for
under
the
equity
method
and
had
the
following
carrying
values:
Cerro
Casale
(a)
Puren
Bald
Mountain
Exploration
Joint
Venture
(b)
December
31,
2017
$
-‐
18.2
5.5
23.7
$
December
31,
2016
$
$
139.5
18.6
5.5
163.6
(a) On
June
9,
2017,
the
Company
completed
the
sale
of
its
interest
in
the
Cerro
Casale
project
in
Chile
to
Goldcorp
Inc.
See
Note
6i.
(b) As
part
of
the
Company’s
acquisition
of
Bald
Mountain
on
January
11,
2016,
it
acquired
an
associated
land
package,
of
which
approximately
40%
is
subject
to
a
50/50
joint
venture
between
the
Company
and
Barrick.
There
are
no
publicly
quoted
market
prices
for
Puren
or
the
Bald
Mountain
Exploration
Joint
Venture.
The
equity
in
losses
of
associate
and
joint
ventures
is
as
follows:
Years
ended
December
31,
2017
2016
Cerro
Casale
(a),
(b)
Puren
(a)
Bald
Mountain
Exploration
Joint
Venture
(a)
$
$
(0.5)
(0.1)
(0.7)
(1.3)
(0.6)
(0.2)
(0.4)
(1.2)
$
$
(a) Represents
Kinross’
share
of
the
net
earnings
(loss)
and
other
comprehensive
income
(loss).
(b) On
June
9,
2017,
the
Company
completed
the
sale
of
its
interest
in
Cerro
Casale
project
in
Chile
to
Goldcorp
Inc.
See
Note
6i.
KINROSS ANNUAL REPORT 2017 FS 33
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
10.
(a)
FAIR
VALUE
MEASUREMENT
Recurring
fair
value
measurement:
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,
2017
include:
Available-‐for-‐sale
investments
Derivative
contracts:
Foreign
currency
forward
and
collar
contracts
Energy
swap
contracts
Total
return
swap
contracts
$
Level
1
188.0
Level
2
$
-‐
Level
3
$
-‐
Aggregate
Fair
Value
188.0
$
-‐
-‐
-‐
$
188.0
6.1
12.9
0.6
$
19.6
-‐
-‐
-‐
$
-‐
6.1
12.9
0.6
$
207.6
During
the
year
ended
December
31,
2017,
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,
quoted
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.
KINROSS ANNUAL REPORT 2017 FS 34
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
The
following
table
summarizes
information
about
derivative
contracts
outstanding
at
December
31,
2017
and
2016:
Currency
contracts
Foreign
currency
forward
and
collar
contracts
(a)
(i)
Commodity
contracts
Energy
swap
contracts
(b)
(ii)
Other
contracts
Total
return
swap
contracts
(iii)
December
31,
2017
December
31,
2016
Asset
/
(Liability)
Fair
Value
Asset
/
(Liability)
Fair
Value
AOCI
AOCI
6.1
12.9
0.6
4.4
8.9
5.9
9.8
12.3
-‐
(6.2)
9.6
-‐
Total
all
contracts
$
19.6
$
14.2
$
15.0
$
15.5
Unrealized
fair
value
of
derivative
assets
Current
Non-‐current
Unrealized
fair
value
of
derivative
liabilities
Current
Non-‐current
Total
net
fair
value
17.0
3.9
$
20.9
(1.1)
(0.2)
$
(1.3)
$
19.6
16.1
6.0
$
22.1
(7.1)
-‐
$
(7.1)
$
15.0
(a) Of
the
total
amount
recorded
in
AOCI
at
December
31,
2017,
$4.2
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,
2017,
$7.3
million
will
be
reclassified
to
net
earnings
within
the
next
12
months
as
a
result
of
settling
the
contracts.
KINROSS ANNUAL REPORT 2017 FS 35
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
(i)
Foreign
currency
forward
and
collar
contracts
The
following
table
provides
a
summary
of
foreign
currency
forward
and
collar
contracts
outstanding
at
December
31,
2017,
maturing
in
2018
and
2019:
Foreign
currency
Brazilian
real
forward
buy
contracts
(in
millions
of
U.S.
dollars)
Average
price
(Brazilian
reais)
Brazilian
real
zero
cost
collars
(in
millions
of
U.S.
dollars)
Average
put
strike
(Brazilian
reais)
Average
call
strike
(Brazilian
reais)
Canadian
dollar
forward
buy
contracts
(in
millions
of
U.S.
dollars)
Average
rate
(Canadian
dollars)
Russian
rouble
zero
cost
collars
(in
millions
of
U.S.
dollars)
Average
put
strike
(Russian
roubles)
Average
call
strike
(Russian
roubles)
2018
2019
2020
$
69.6
3.32
-‐
$
-‐
-‐
$
-‐
$
25.2
3.75
4.12
$
60.0
3.45
3.64
-‐
$
-‐
-‐
$
40.5
1.35
$
18.0
1.28
$
-‐
-‐
$
24.0
60.0
71.2
-‐
$
-‐
-‐
-‐
$
-‐
-‐
During
2017,
the
Company
entered
into
the
following
new
forward
buy
and
zero
cost
collar
derivative
contracts:
•
•
•
•
$58.5
million
Canadian
dollars
at
an
average
rate
of
1.33
maturing
in
2018
to
2019;
$24.0
million
Russian
roubles
with
an
average
put
strike
of
60.00
and
an
average
call
strike
of
71.24
maturing
in
2018;
$69.6
million
Brazilian
reais
at
an
average
rate
of
3.32
maturing
in
2018;
and
$60.0
million
Brazilian
reais
with
an
average
put
strike
of
3.45
and
an
average
call
strike
of
3.64
maturing
in
2019.
At
December
31,
2017,
the
unrealized
gain
or
loss
on
the
derivative
contracts
recorded
in
AOCI
is
as
follows:
•
•
•
•
Brazilian
real
forward
buy
contracts
–
unrealized
loss
of
$0.7
million
(December
31,
2016
–
$nil);
Brazilian
real
zero
cost
collar
contracts
–
unrealized
gain
of
$1.8
million
(December
31,
2016
–
$6.0
million
gain);
Canadian
dollar
forward
buy
contracts
–
unrealized
gain
of
$2.6
million
(December
31,
2016
–
$0.2
million
loss);
and
Russian
rouble
zero
cost
collar
contracts
–
unrealized
gain
of
$0.7
million
(December
31,
2016
–
$0.1
million
gain).
(ii)
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,
2017,
maturing
in
2018
to
2020:
Energy
WTI
oil
swap
contracts
(barrels)
Average
price
2018
2019
2020
907,482
48.48
$
594,451
49.86
$
90,000
52.40
$
During
2017,
the
following
new
commodity
derivative
contracts
were
entered
into:
•
1,048,000
barrels
of
WTI
oil
at
an
average
rate
of
$49.46
per
barrel
maturing
from
2017
to
2020.
At
December
31,
2017,
the
unrealized
gain
or
loss
on
these
derivative
contracts
recorded
in
AOCI
is
as
follows:
• WTI
oil
swap
contracts
–
unrealized
gain
of
$9.8
million
(December
31,
2016
–
$9.6
million
gain).
KINROSS ANNUAL REPORT 2017 FS 36
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
(iii)
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,
2017,
5,695,000
TRS
units
were
outstanding.
At
December
31,
2017,
74%
of
the
DSUs
were
economically
hedged
(December
31,
2016
–
90%)
and
102%
of
cash-‐settled
RSUs
were
economically
hedged
(December
31,
2016
–
84%),
although
hedge
accounting
was
not
applied.
Non-‐recurring
fair
value
measurement:
(b)
Property,
plant
and
equipment
was
written
down
to
its
recoverable
amount
at
Paracatu
during
the
year
ended
December
31,
2017
and
at
Maricunga
during
the
year
ended
December
2016.
In
addition,
the
Company
recognized
a
reversal
of
impairment
charges
related
to
the
property,
plant
and
equipment
at
Tasiast
and
Fort
Knox
due
to
changes
in
the
estimates
used
to
determine
the
recoverable
amount
of
the
Tasiast
and
Fort
Knox
CGUs
since
the
last
impairment
loss
was
recognized.
Certain
assumptions
used
in
the
calculation
of
the
recoverable
amount
are
categorized
as
Level
3
in
the
fair
value
hierarchy.
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.
KINROSS ANNUAL REPORT 2017 FS 37
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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
No
derivatives
to
hedge
metal
sales
were
outstanding
in
2017
and
2016.
December
31,
2017
$
1,732.6
December
31,
2016
$
1,733.2
-‐
1,732.6
4,583.6
27.4%
0
–
30%
-‐
1,733.2
4,145.5
29.5%
0
–
30%
KINROSS ANNUAL REPORT 2017 FS 38
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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
hedging
contracts
to
lock
in
the
exchange
rates
on
future
non-‐U.S.
denominated
currency
cash
outflows.
The
Company
has
entered
into
hedging
contracts
to
purchase
Canadian
dollars,
Brazilian
reais,
and
Russian
roubles
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,
2017,
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.
Canadian
dollars
Brazilian
reais
Chilean
pesos
Russian
roubles
Euros
Mauritanian
ouguiya
Ghanaian
cedi
Other
(b)
Foreign
currency
net
working
capital
10%
strengthening
in
U.S.
dollar
Effect
on
earnings
before
taxes,
gain
(loss)
(a)
10%
weakening
in
U.S.
dollar
Effect
on
earnings
before
taxes,
gain
(loss)
(a)
(24.5)
(37.2)
(15.5)
14.9
(3.1)
(21.8)
12.9
(0.8)
2.2
3.4
1.4
(1.4)
0.3
2.0
(1.2)
0.1
(2.7)
(4.1)
(1.7)
1.7
(0.3)
(2.4)
1.4
(0.1)
(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.
Includes
British
pounds,
Australian
dollars
and
South
African
rand.
(b)
At
December
31,
2017,
with
other
variables
unchanged,
the
following
represents
the
effect
of
the
Company's
foreign
currency
hedging
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
Russian
rouble.
Canadian
dollars
Brazilian
reais
Russian
roubles
10%
strengthening
in
U.S.
dollar
Effect
on
OCI
before
taxes,
gain
(loss)
(a)
$
$
$
(5.6)
(12.5)
(1.1)
10%
weakening
in
U.S.
dollar
Effect
on
OCI
before
taxes,
gain
(loss)
(a)
$
$
$
6.8
15.6
2.2
(a) Upon
maturity
of
these
contracts,
the
amounts
in
OCI
before
taxes
will
reverse
against
hedged
items
that
the
contracts
relate
to,
which
may
be
to
earnings
or
property,
plant
and
equipment.
KINROSS ANNUAL REPORT 2017 FS 39
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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
partially
protect
against
the
risk
of
fuel
price
increases.
Fuel
is
consumed
in
the
operation
of
mobile
equipment
and
electricity
generation.
At
December
31,
2017,
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
WTI
oil
prices.
WTI
oil
10%
increase
in
price
Effect
on
OCI
before
taxes,
gain
(loss)
(a)
$
9.0
10%
decrease
in
price
Effect
on
OCI
before
taxes,
gain
(loss)
(a)
$
(8.9)
(a) Upon
maturity
of
these
contracts,
the
amounts
in
OCI
before
taxes
will
reverse
against
hedged
items
that
the
contracts
relate
to,
which
will
be
to
earnings.
v.
Liquidity
risk
The
Company
manages
liquidity
risk
by
maintaining
adequate
cash
and
cash
equivalent
balances
(December
31,
2017
-‐
$1,025.8
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,
2017
are
as
follows:
Long-‐term
debt
(a)
Total
$
2,684.0
2018
Within
1
year
2019,
2020
2
to
3
years
2021,
2022
4
to
5
years
$
95.6
$
190.2
$
664.5
2023+
More
than
5
years
$
1,733.7
(a)
vi.
Includes
long-‐term
debt,
interest
and
the
full
face
value
of
the
senior
notes.
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
generally
transacts
with
highly-‐rated
counterparties
and
a
limit
on
contingent
exposure
has
been
established
for
counterparties
based
on
their
credit
ratings.
As
at
December
31,
2017,
the
Company’s
maximum
exposure
to
credit
risk
was
the
carrying
value
of
cash
and
cash
equivalents,
accounts
receivable
and
derivative
contracts.
KINROSS ANNUAL REPORT 2017 FS 40
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
12.
LONG-‐TERM
DEBT
AND
CREDIT
FACILITIES
Interest
Rates
Nominal
Amount
December
31,
2017
Deferred
Financing
Costs
Carrying
Amount
(a)
December
31,
2016
Fair
Value
(b)
Carrying
Amount
(a)
Fair
Value
(b)
Corporate
term
loan
facility
Senior
notes
Long-‐term
debt
Variable
(i)
(ii) 4.50%-‐6.875%
$
-‐
1,745.7
1,745.7
$
-‐
$
(13.1)
(13.1)
$
-‐
$
1,732.6
1,732.6
$
-‐
$
1,848.4
1,848.4
$
(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
$
497.4
1,235.8
1,733.2
$
497.4
1,245.7
1,743.1
$
$
Senior
notes
Total
debt
payable
2018
$
-‐
$
-‐
2019
$
-‐
$
-‐
2020
2021
$
-‐
$
$
500.0
500.0
2022
$
-‐
$
-‐
2023
and
thereafter
$
$
1,250.0
1,250.0
Total
1,750.0
1,750.0
$
$
(i)
Corporate
revolving
credit
and
term
loan
facilities
On
July
12,
2017,
the
Company
fully
repaid
the
outstanding
balance
on
the
term
loan
with
proceeds
from
the
$500.0
million
offering
of
debt
securities
completed
on
July
6,
2017.
On
July
28,
2017,
the
Company
amended
its
$1,500.0
million
revolving
credit
facility
to
extend
the
maturity
date
by
one
year
from
August
10,
2021
to
August
10,
2022.
As
at
December
31,
2017,
the
Company
had
utilized
$21.0
million
(December
31,
2016
–
$104.5
million)
of
its
$1,500.0
million
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,
and
repaid
the
amount
in
full
on
March
4,
2016.
Loan
interest
on
the
revolving
credit
facility
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,
2017,
interest
charges
and
fees
are
as
follows:
Type
of
credit
Dollar
based
LIBOR
loan:
Revolving
credit
facility
Letters
of
credit
Standby
fee
applicable
to
unused
availability
LIBOR
plus
2.00%
1.33-‐2.00%
0.40%
The
revolving
credit
facility’s
credit
agreement
contains
various
covenants
including
limits
on
indebtedness,
asset
sales
and
liens.
The
Company
is
in
compliance
with
its
financial
covenant
in
the
credit
agreement
at
December
31,
2017.
KINROSS ANNUAL REPORT 2017 FS 41
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
(ii)
Senior
notes
On
July
6,
2017,
the
Company
completed
a
$500.0
million
offering
of
debt
securities
consisting
of
4.50%
senior
notes
due
2027.
The
Company
received
net
proceeds
of
$494.7
million
from
the
offering,
after
payment
of
related
fees
and
expenses.
The
notes
rank
equally
with
the
Company’s
existing
senior
notes.
As
at
December
31,
2017,
the
Company’s
$1,750.0
million
of
senior
notes
consisted
of
$500.0
million
principal
amount
of
5.125%
notes
due
2021,
$500.0
million
principal
amount
of
5.950%
notes
due
2024,
$500.0
million
principal
amount
of
4.50%
notes
due
2027
and
$250.0
million
principal
amount
of
6.875%
notes
due
2041.
In
September
2016,
the
Company
repaid
its
$250.0
million
3.625%
notes
in
full
on
the
maturity
date.
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,
2024
and
2027,
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)
Other
The
maturity
date
for
the
Company’s
Letter
of
Credit
guarantee
facility
with
Export
Development
Canada
(“EDC”)
was
extended
by
one
year
to
June
30,
2018,
effective
July
1,
2017.
Effective
December
5,
2017,
the
Company
entered
into
an
amendment
to
increase
the
amount
of
its
Letter
of
Credit
guarantee
facility
with
EDC
from
$250.0
million
to
$300.0
million.
Letters
of
credit
guaranteed
under
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
0.95%
to
1.00%.
As
at
December
31,
2017,
$215.2
million
(December
31,
2016
-‐
$215.1
million)
was
utilized
under
this
facility.
In
addition,
at
December
31,
2017,
the
Company
had
$230.2
million
(December
31,
2016
-‐
$117.7
million)
in
letters
of
credit
and
surety
bonds
outstanding
in
respect
of
its
operations
in
Brazil,
Mauritania,
Ghana
and
Chile.
These
have
been
issued
pursuant
to
arrangements
with
certain
international
banks.
As
at
December
31,
2017,
$254.7
million
(December
31,
2016
-‐
$216.7
million)
of
surety
bonds
were
outstanding
with
respect
to
Kinross’
operations
in
the
United
States.
The
surety
bonds
were
issued
pursuant
to
arrangements
with
international
insurance
companies.
(iv)
Changes
in
liabilities
arising
from
financing
activities
Changes
from
financing
cash
flows
Other
changes
Year
ended
December
31,
2017
Balance
as
at
January
1,
2017
Debt
issued
Debt
repayments
Long-‐term
debt
Accrued
interest
payable
(a)
$
1,733.2
23.4
$
494.7
-‐
$
(500.0)
-‐
Interest
paid
-‐
$
(62.9)
$
1,756.6
Included
in
Accounts
Payable
and
Accrued
Liabilities.
$
(500.0)
$
494.7
$
(62.9)
(a)
Interest
expense
Capitalized
interest
Capitalized
interest
paid
Other
cash
changes
Other
non-‐
cash
changes
Balance
as
at
December
31,
2017
-‐
$
86.5
-‐
$
25.1
$
-‐
(18.0)
-‐
$
4.7
(8.3)
(12.0)
$
1,732.6
33.8
$
86.5
$
25.1
$
(18.0)
$
(12.0)
$
(3.6)
$
1,766.4
Other
-‐$
-‐
-‐$
KINROSS ANNUAL REPORT 2017 FS 42
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Year
ended
December
31,
2016
Balance
as
at
January
1,
2016
Changes
from
financing
cash
flows
Debt
issued
Debt
repayments
Interest
paid
Other
Interest
expense
Capitalized
interest
Other
changes
Capitalized
interest
paid
Other
cash
changes
Other
non-‐
cash
changes
Balance
as
at
December
31,
2016
Long-‐term
debt
Accrued
interest
payable
(a)
$
1,981.4
$
175.0
$
(425.0)
$
-‐
-‐$
$
-‐
$
-‐
$
-‐
$
(1.2)
$
3.0
$
1,733.2
26.7
-‐
-‐
(73.5)
-‐
100.4
15.2
(21.8)
(12.3)
(11.3)
23.4
2,008.1
$
Included
in
Accounts
Payable
and
Accrued
Liabilities.
$
(425.0)
$
175.0
$
(73.5)
(a)
-‐$
$
100.4
$
15.2
$
(21.8)
$
(13.5)
$
(8.3)
$
1,756.6
KINROSS ANNUAL REPORT 2017 FS 43
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
13.
PROVISIONS
Balance
at
January
1,
2017
Additions
Reductions
Reclamation
spending
Accretion
Reclamation
expense
Dispositions
(a)
Balance
at
December
31,
2017
Current
portion
Non-‐current
portion
$
Reclamation
and
remediation
obligations
(i)
908.3
9.7
(19.4)
(42.6)
31.3
11.4
(37.3)
$
Other
46.1
6.2
(16.4)
-‐
-‐
-‐
(0.3)
$
Total
954.4
15.9
(35.8)
(42.6)
31.3
11.4
(37.6)
$
861.4
$
35.6
$
897.0
62.3
799.1
$
861.4
$
35.6
4.2
66.5
31.4
830.5
$
897.0
(a) On
November
3,
2017,
the
Company
completed
the
sale
of
its
interest
in
the
DeLamar
reclamation
property.
See
Note
6
iii.
(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
expense
for
the
year
ended
December
31,
2017
is
a
$11.4
million
expense
(year
ended
December
31,
2016
–
$27.2
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
2018
and
2041.
The
discount
rates
used
in
estimating
the
site
restoration
cost
obligation
were
between
1.8%
and
11.6%
for
the
year
ended
December
31,
2017
(year
ended
December
31,
2016
–
0.9%
and
13.9%),
and
the
inflation
rate
used
was
between
1.8%
and
5.0%
for
the
year
ended
December
31,
2017
(year
ended
December
31,
2016
–
2.4%
and
5.6%).
Regulatory
authorities
in
certain
jurisdictions
require
that
security
be
provided
to
cover
the
estimated
reclamation
and
remediation
obligations.
As
at
December
31,
2017,
letters
of
credit
totaling
$411.5
million
(December
31,
2016
–
$402.0
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.
As
at
December
31,
2017,
$254.7
million
(December
31,
2016
–
$216.7
million)
of
surety
bonds
were
issued
with
respect
to
Kinross’
operations
in
the
United
States.
The
surety
bonds
were
issued
pursuant
to
arrangements
with
international
insurance
companies.
KINROSS ANNUAL REPORT 2017 FS 44
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
14.
COMMON
SHARE
CAPITAL
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,
2017
and
2016
is
as
follows:
Years
ended
Year
ended
December
31,
2017
December
31,
2016
Number
of
shares
(000's)
Amount
Number
of
shares
(000's)
Amount
Common
shares
Balance
at
January
1,
Equity
issuance
(a)
Under
share
option
and
restricted
share
plans
Balance
at
end
of
period
1,245,050
-‐
1,954
1,247,004
$
$
14,894.2
-‐
8.3
14,902.5
1,146,540
95,910
2,600
1,245,050
14,603.5
275.7
15.0
14,894.2
$
$
Total
common
share
capital
$
14,902.5
$
14,894.2
(a) On
March
4,
2016,
the
Company
completed
a
public
equity
offering
of
83.4
million
common
shares
at
a
price
of
$3.00
per
common
share
for
gross
proceeds
of
approximately
$250.0
million.
On
March
15,
2016,
the
underwriters
elected
to
exercise
an
option
to
purchase
up
to
an
additional
15%
of
the
offering
to
cover
over-‐allotments,
and
as
a
result,
an
additional
12.5
million
common
shares
were
issued
at
a
price
of
$3.00
per
common
share.
The
sale
was
completed
on
March
18,
2016
and
increased
the
gross
proceeds
from
the
offering
to
$287.7
million.
Transaction
costs
of
$12.0
million
resulted
in
net
proceeds
of
$275.7
million.
KINROSS ANNUAL REPORT 2017 FS 45
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
15.
SHARE-‐BASED
PAYMENTS
Share-‐based
compensation
recorded
during
the
years
ended
December
31,
2017
and
2016
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,
2017
2016
$
2.4
$
23.4
1.2
2.0
$
29.0
$
2.8
24.0
1.2
2.0
30.0
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
31.2
million
common
shares.
Additionally,
the
aggregate
number
of
Common
Shares
reserved
for
issuance
under
the
share
option
plan
to
insiders,
at
any
one
time
upon
the
exercise
of
Options
and
pursuant
to
all
other
compensation
arrangements
of
the
Company
shall
not
exceed
10%
of
the
total
number
of
Common
Shares
then
outstanding.
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,
2017
expire
at
various
dates
to
2024.
The
number
of
common
shares
available
for
the
granting
of
options
as
at
December
31,
2017
was
12.5
million.
The
following
table
summarizes
the
status
of
the
share
option
plan
and
changes
during
the
years
ended
December
31,
2017
and
2016:
2017
2016
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
Exercisable
at
end
of
period
12,429
1,669
(265)
(1,567)
(93)
12,173
8,539
6.95
5.06
4.09
8.74
7.38
6.52
7.41
13,513
1,872
(708)
(1,300)
(948)
12,429
7,911
7.57
4.17
5.17
6.57
12.17
6.95
8.51
$
$
$
$
For
the
year
ended
December
31,
2017,
the
weighted
average
share
price
at
the
date
of
exercise
was
CDN$5.51.
KINROSS ANNUAL REPORT 2017 FS 46
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
The
following
table
summarizes
information
about
the
stock
options
outstanding
and
exercisable
at
December
31,
2017:
Options
outstanding
Options
exercisable
Exercise
price
range
in
CDN$:
$
4.22
$
2.96
4.23
9.53
9.54
14.31
16.25
14.32
Number
of
options
(000’s)
Weighted
average
exercise
price
(CDN$)
Weighted
average
remaining
contractual
life
(years)
Number
of
options
(000’s)
Weighted
average
exercise
price
(CDN$)
4,169
6,145
1,140
719
12,173
$
3.87
6.41
10.70
16.25
6.52
$
4.12
3.32
1.20
0.15
3.21
2,151
4,528
1,141
719
8,539
$
3.81
6.89
10.70
16.25
7.41
$
Weighted
average
remaining
contractual
life
(years)
3.81
2.31
1.20
0.15
2.36
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,
2017
and
2016:
2017
2016
Weighted
average
share
price
(CDN$)
Expected
dividend
yield
Expected
volatility
Risk-‐free
interest
rate
Expected
option
life
(in
years)
Weighted
average
fair
value
per
stock
option
granted
(CDN$)
$
$
5.06
0.0%
49.3%
1.1%
4.5
2.09
$
4.17
0.0%
56.9%
0.6%
4.5
$
1.92
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
12.3
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,
2017
and
2016:
Balance
at
January
1
Granted
Redeemed
Forfeited
Outstanding
at
end
of
period
2017
2016
Number
of
units
(000's)
Weighted
average
fair
value
(CDN$/unit)
Number
of
units
(000's)
Weighted
average
fair
value
(CDN$/unit)
9,219
$
4.01
9,041
$
4.41
5,128
(4,847)
(1,223)
8,277
5.07
4.01
$
4.24
4.63
5,502
(4,435)
(889)
9,219
4.14
4.96
$
4.11
4.01
As
at
December
31,
2017,
the
Company
had
recognized
a
liability
of
$11.3
million
(December
31,
2016
-‐
$11.4
million)
in
respect
of
its
cash-‐settled
RSUs.
KINROSS ANNUAL REPORT 2017 FS 47
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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,
2017
and
2016:
2017
2016
Balance
at
January
1
Granted
Redeemed
Forfeited
Outstanding
at
end
of
period
(iii)
Deferred
share
unit
plan
Number
of
units
(000's)
4,993
1,209
(889)
(427)
4,886
$
Weighted
average
fair
value
(CDN$/unit)
4.51
5.32
5.39
4.81
4.52
$
Number
of
units
(000's)
4,313
1,887
(495)
(712)
4,993
$
Weighted
average
fair
value
(CDN$/unit)
4.88
4.47
6.55
5.20
4.51
$
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
business
day
immediately
preceding
the
DSU
issue
date.
At
such
time
as
an
outside
director
ceases
to
be
a
director,
the
Company
will
make
a
cash
payment
on
the
outstanding
DSUs
to
the
outside
director
in
accordance
with
the
redemption
election
made
by
the
departing
director
or
in
the
absence
of
an
election
to
defer
redemption,
in
accordance
with
the
default
redemption
provisions
provided
in
the
Deferred
Share
Unit
Plan.
The
number
of
DSUs
granted
by
the
Company
and
the
weighted
average
fair
value
per
unit
issued
for
the
years
ended
December
31,
2017
and
2016
are
as
follows:
DSUs
granted
(000's)
Weighted
average
grant-‐date
fair
value
(CDN$/
unit)
Years
ended
December
31,
2017
2016
$
297
5.15
308
$
4.97
There
were
1,618,348
DSUs
outstanding,
for
which
the
Company
had
recognized
a
liability
of
$7.0
million,
as
at
December
31,
2017
(December
31,
2016
-‐
$4.1
million).
(iv)
Employee
share
purchase
plan
(“SPP”)
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,
2017
was
$2.0
million
(year
ended
December
31,
2016
–
$2.0
million).
KINROSS ANNUAL REPORT 2017 FS 48
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
16.
EARNINGS
(LOSS)
PER
SHARE
Basic
and
diluted
net
earnings
attributable
to
common
shareholders
of
Kinross
for
the
year
ended
December
31,
2017
was
$445.4
million
(year
ended
December
31,
2016
–
$104.0
million
loss).
Earnings
(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
Restricted
shares
Restricted
performance
shares
Diluted
weighted
average
shares
outstanding
Weighted
average
shares
dilution
adjustments
-‐
exclusions:
(a)
Stock
options
(b)
Restricted
shares
Restricted
performance
shares
Years
ended
December
31,
2017
2016
1,246,619
1,227,007
1,606
3,905
4,915
1,257,045
7,199
-‐
-‐
-‐
-‐
-‐
1,227,007
12,429
3,625
4,786
(a) These
adjustments
were
excluded,
as
they
are
anti-‐dilutive.
(b) Anti-‐dilutive
stock
options
were
determined
using
the
Company’s
average
share
price
for
the
year.
For
the
years
ended
December
31,
2017
and
2016,
the
average
share
price
used
was
$4.00
and
$3.91,
respectively.
KINROSS ANNUAL REPORT 2017 FS 49
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
17.
INCOME
TAX
EXPENSE
(RECOVERY)
The
following
table
shows
the
components
of
the
current
and
deferred
tax
expense:
Current
tax
expense
(recovery)
Current
period
Adjustment
for
prior
period
Deferred
tax
expense
(recovery)
Origination
and
reversal
of
temporary
differences
Impact
of
changes
in
tax
rate
Change
in
unrecognized
deductible
temporary
differences
Recognition
of
previously
unrecognized
tax
losses
Total
tax
expense
(recovery)
Years
ended
December
31,
2017
2016
$
63.2
(10.0)
$
223.9
(24.6)
(83.0)
(0.1)
7.5
(0.8)
(23.2)
$
(143.6)
-‐
(6.7)
0.6
49.6
$
The
$23.2
million
income
tax
recovery
recognized
in
2017
includes
a
net
benefit
of
$93.4
million
due
to
the
enactment
of
U.S.
Tax
Reform
legislation
on
December
22,
2017.
The
estimated
net
benefit
includes
a
benefit
of
$124.4
million
in
respect
of
the
collectability
of
the
Alternative
Minimum
Tax
(“AMT”)
credit,
which
is
partially
offset
by
the
write-‐down
of
net
deferred
tax
assets
to
reflect
the
reduction
in
the
U.S.
corporate
tax
rate
from
35%
to
21%
beginning
January
1,
2018.
Further
guidance
on
the
implementation
and
application
of
the
U.S.
Tax
Reform
legislation
will
be
forthcoming
in
regulations
to
be
issued
by
the
Department
of
the
Treasury,
legislation
or
guidance
from
the
states
in
which
the
Company
operates,
and
directions
from
the
Office
of
Management
and
Budget.
Such
legislation,
regulations,
directions,
and
additional
guidance
may
require
changes
to
the
estimated
net
benefit
recorded
and
the
impact
of
such
changes
will
be
accounted
for
in
the
period
in
which
the
legislation,
regulations,
directions,
and
additional
guidance
are
enacted
or
released
by
the
relevant
authorities.
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-‐taxable
impairment
reversal
Enacted
rate
change
Accounting
expenses
disallowed
for
tax
Taxes
on
repatriation
of
foreign
earnings
AMT
Credit
recovery
due
to
U.S.
Tax
Reform
Other
Effective
tax
rate
2017
2016
26.5%
26.5%
5.0%
0.0%
(19.1%)
33.9%
(3.5%)
(8.9%)
(3.0%)
(17.6%)
0.1%
9.8%
3.8%
(29.7%)
(2.8%)
(5.5%)
4.4%
1.1%
94.0%
(160.1%)
(44.0%)
(8.2%)
109.2%
0.0%
0.0%
(17.2%)
(79.9%)
0.0%
(9.2%)
(83.4%)
KINROSS ANNUAL REPORT 2017 FS 50
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
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
Deferred
tax
liabilities
Accrued
expenses
and
other
Property,
plant
and
equipment
Inventory
capitalization
Deferred
tax
liabilities
-‐
net
December
31,
2017
December
31,
2016
$
28.3
43.3
50.2
3.4
6.2
131.4
$
39.3
25.5
118.1
8.8
-‐
191.7
4.9
316.8
32.0
222.3
$
14.5
442.0
31.4
296.2
$
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.
Movement
in
net
deferred
tax
liabilities:
December
31,
2017
December
31,
2016
Balance
at
the
beginning
of
the
period
Recognized
in
profit/loss
Recognized
in
OCI
Other
Balance
at
the
end
of
the
period
$
$
296.2
(76.4)
(0.8)
3.3
222.3
$
422.5
(149.7)
9.5
13.9
296.2
$
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,
2017
is
$6.5
billion
(December
31,
2016
–
$6.5
billion).
Deferred
tax
assets
have
not
been
recognized
in
respect
of
the
following
items:
Deductible
temporary
differences
Tax
losses
December
31,
2017
$
777.0
505.4
December
31,
2016
$
721.4
458.5
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.
KINROSS ANNUAL REPORT 2017 FS 51
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
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
Mauritania
Other
Type
Amount
Expiry
Date
Net
operating
losses
Net
operating
losses
Net
operating
losses
Net
operating
losses
Net
operating
losses
$
804.2
42.8
171.4
21.2
59.9
2018
-‐
2037
2018
-‐
2037
No
expiry
2018
-‐
2021
Various
(a)
Utilization
of
the
United
States
loss
carry
forwards
will
be
limited
in
any
year
as
a
result
of
the
previous
changes
in
ownership.
KINROSS ANNUAL REPORT 2017 FS 52
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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
two
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
until
its
disposal
on
June
9,
2017,
shutdown
and
other
non-‐operating
assets
(including
La
Coipa,
Lobo-‐Marte
and
White
Gold
until
its
disposal
on
June
14,
2017)
and
non-‐mining
and
other
operations.
These
have
been
aggregated
into
one
reportable
segment
as
they
do
not
generate
revenues
for
the
Company.
Finance
income,
finance
expense,
other
income
(expense),
and
equity
in
earnings
(losses)
of
associate
and
joint
ventures
are
managed
on
a
consolidated
basis
and
are
not
allocated
to
operating
segments.
KINROSS ANNUAL REPORT 2017 FS 53
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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:
Years
ended
December
31,
2017:
Revenue
Metal
sales
Cost
of
sales
Production
cost
of
sales
Depreciation,
depletion
and
amortization
Impairment,
net
of
reversals
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
ventures
Finance
income
Finance
expense
Earnings
before
tax
Years
ended
December
31,
2016:
Revenue
Metal
sales
Cost
of
sales
Production
cost
of
sales
Depreciation,
depletion
and
amortization
Impairment,
net
of
reversals
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
before
tax
Operating
segments
Fort
Knox
Round
Mountain
Bald
Mountain
Paracatu
Maricunga
Kupol
Kettle
River-‐
Buckhorn
Tasiast
Chirano
Non-‐operating
segments
(a)
Corporate
and
other
(b)
Total
$
481.1
552.2
331.5
447.0
239.9
86.6
(88.6)
237.9
243.2
9.5
9.0
-‐
224.7
$
$
302.5
107.4
-‐
409.9
142.3
-‐
2.6
-‐
139.7
168.9
83.5
-‐
252.4
79.1
1.1
9.5
-‐
68.5
310.2
127.0
253.0
690.2
(243.2)
20.1
-‐
-‐
(263.3)
52.0
19.9
4.6
-‐
24.5
27.5
6.1
0.1
-‐
21.3
726.9
300.9
184.2
-‐
485.1
241.8
(0.3)
17.1
-‐
225.0
96.3
36.8
0.6
-‐
37.4
58.9
10.9
4.6
-‐
43.4
298.4
317.6
-‐
$
3,303.0
178.2
78.6
(142.9)
113.9
184.5
60.0
5.7
-‐
118.8
200.1
138.6
-‐
338.7
(21.1)
(1.8)
8.2
-‐
(27.5)
-‐
8.3
-‐
8.3
(8.3)
24.0
49.2
132.6
(214.1)
$
$
1,757.4
819.4
21.5
2,598.3
704.7
129.6
106.0
132.6
336.5
188.1
(1.3)
13.5
(117.8)
Operating
segments
Fort
Knox
Round
Mountain
Bald
Mountain
Paracatu
Maricunga
Kupol
Kettle
River-‐
Buckhorn
Tasiast
Chirano
$
419.0
Non-‐operating
segments
(a)
Corporate
and
other
(b)
Total
$
510.8
477.1
139.6
599.6
219.4
919.2
139.8
208.0
258.5
-‐
$
3,472.0
302.2
88.7
-‐
390.9
119.9
1.0
8.9
-‐
110.0
$
$
292.0
94.7
-‐
386.7
90.4
-‐
4.6
-‐
85.8
131.7
38.6
-‐
170.3
(30.7)
2.0
4.7
-‐
(37.4)
346.4
142.7
-‐
489.1
110.5
74.3
-‐
-‐
36.2
145.2
34.4
139.6
319.2
(99.8)
50.8
-‐
-‐
(150.6)
324.3
236.8
-‐
561.1
358.1
(0.5)
13.3
-‐
345.3
73.0
1.3
-‐
74.3
65.5
(0.7)
2.2
-‐
64.0
179.3
96.4
-‐
275.7
(67.7)
46.3
5.9
-‐
(119.9)
189.7
109.9
-‐
299.6
(41.1)
8.0
8.9
-‐
(58.0)
-‐
11.5
-‐
11.5
(11.5)
28.1
45.8
143.7
(229.1)
$
$
1,983.8
855.0
139.6
2,978.4
493.6
209.3
94.3
143.7
46.3
22.5
(1.2)
7.5
(134.6)
$
(59.5)
KINROSS ANNUAL REPORT 2017 FS 54
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Operating
segments
Fort
Knox
Round
Mountain
Bald
Mountain
Paracatu
Maricunga
Kupol
Kettle
River-‐
Buckhorn
Tasiast
Chirano
Non-‐operating
segments(a)
Corporate
and
other
(b)
Total
$
354.1
286.2
422.2
1,383.1
39.5
474.7
1.3
1,296.0
332.6
297.5
$
4,887.2
$
559.1
460.2
612.2
1,646.5
171.3
1,164.5
9.2
1,580.3
516.4
1,437.5
$
8,157.2
Property,
plant
and
equipment
at:
December
31,
2017
Total
assets
at:
December
31,
2017
Capital
expenditures
for
year
ended
December
31,
2017
(c)
$
110.2
97.1
90.4
121.6
1.4
54.1
-‐
434.5
46.0
5.0
$
960.3
Property,
plant
and
equipment
at:
December
31,
2016
Total
assets
at:
December
31,
2016
Operating
segments
Fort
Knox
Round
Mountain
Bald
Mountain
Paracatu
Maricunga
Kupol
Kettle
River-‐
Buckhorn
Tasiast
Chirano
Non-‐operating
segments(a)
Corporate
and
other
(b)
Total
$
248.4
307.1
440.9
1,647.5
37.6
599.5
2.0
826.9
416.6
391.1
$
4,917.6
$
457.7
430.8
598.9
1,880.4
145.3
1,417.0
15.9
1,122.8
581.5
1,329.0
$
7,979.3
Capital
expenditures
for
year
ended
December
31,
2016
(c)
$
67.2
70.1
41.2
113.8
5.1
88.0
-‐
200.4
48.2
11.1
$
645.1
(a) Non-‐operating
segments
include
development
properties.
(b) Corporate
and
other
includes
corporate,
Cerro
Casale
until
its
disposal
on
June
9,
2017,
shutdown
and
other
non-‐operating
assets
(c)
(including
La
Coipa,
Lobo-‐Marte
and
White
Gold
until
its
disposal
on
June
14,
2017).
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
Years
ended
December
31,
2017
2016
Property,
plant
and
equipment
As
at
December
31,
2017
2016
Geographic
information
(a)
United
States
Russian
Federation
Brazil
Chile
Mauritania
Ghana
Canada
Total
$
$
$
$
1,461.1
726.9
447.0
52.0
298.4
317.6
-‐
3,303.0
1,267.3
919.2
599.6
219.4
208.0
258.5
-‐
3,472.0
1,067.4
482.3
1,383.1
308.8
1,302.1
343.5
-‐
4,887.2
1,002.1
630.8
1,647.5
306.6
832.5
427.9
70.2
4,917.6
$
$
$
$
(a)
Geographic
location
is
determined
based
on
location
of
the
mining
assets.
KINROSS ANNUAL REPORT 2017 FS 55
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(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,
2017:
Fort
Knox
Round
Mountain
Bald
Mountain Paracatu Maricunga
Kupol
Kettle
River-‐
Buckhorn
Tasiast
Chirano
Total
Customer
1
2
3
%
of
total
metal
sales
$
-‐
54.4
6.4
-‐
60.2
19.0
-‐
64.8
16.4
-‐
48.8
6.8
11.6
157.9
-‐
694.5
16.4
-‐
-‐
-‐
16.9
146.9
-‐
31.7
-‐
116.3
99.1
For
the
year
ended
December
31,
2016:
Fort
Knox
Round
Mountain
Bald
Mountain Paracatu Maricunga
Kupol
Kettle
River-‐
Buckhorn
Tasiast
Chirano
Customer
1
2
3
%
of
total
metal
sales
$
101.8
75.9
22.0
-‐
-‐
-‐
-‐
-‐
-‐
130.1
41.8
20.5
66.6
80.2
72.5
-‐
-‐
-‐
-‐
-‐
473.5
-‐
405.5
-‐
-‐
-‐
-‐
694.5
531.5
342.1
1,568.1
47.5%
Total
611.4
473.5
405.5
1,490.4
42.9%
$
$
$
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
$25.9
million,
$12.5
million,
$4.9
million,
$2.9
million
and
$2.9
million
for
each
year
from
2018
to
2022,
respectively,
and
$0.8
million
thereafter.
Purchase
commitments
At
December
31,
2017,
the
Company
had
future
commitments
of
approximately
$192.7
million
(December
31,
2016
–
$108.9
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.
KINROSS ANNUAL REPORT 2017 FS 56
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Other
legal
matters
The
Company
is
from
time
to
time
involved
in
legal
proceedings,
arising
in
the
ordinary
course
of
its
business.
Typically,
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.
Maricunga
regulatory
proceedings
In
late
2013,
Compania
Minera
Maricunga
(“CMM”)
was
fined
approximately
$40,000
in
respect
of
the
degradation
of
the
Pantanillo
wetland
located
near
the
Maricunga
mine’s
water
pumping
wells.
CMM
paid
the
fine,
as
required,
and
sought
governmental
approval
of
remedial
action
plans
aimed
at
addressing
the
degradation.
CMM’s
remedial
action
plans
were
not
fully
approved
and
only
a
subset
of
CMM’s
planned
activities
were
allowed
to
be
implemented.
In
May
2015,
the
Chile
environmental
enforcement
authority
(“the
SMA”)
issued
a
resolution
alleging
that
CMM
had
irreparably
harmed
portions
of
the
Pantanillo
wetland
and
two
other
downstream
wetlands
known
respectively
as
Valle
Ancho
and
Barros
Negros,
and
that
the
mine’s
continuing
water
use
poses
an
imminent
risk
to
those
wetlands.
In
response,
CMM
submitted
legal
and
technical
defenses,
expert
reports
and
other
materials
challenging
the
SMA’s
allegations,
and,
complied
with
various
information
requests
from
the
SMA.
On
March
18,
2016,
the
SMA
issued
a
resolution
against
CMM
in
respect
of
the
SMA’s
May
2015
allegations
regarding
the
Valle
Ancho
wetland,
located
approximately
7
kilometres
downgradient
from
CMM’s
groundwater
wells,
seeking
to
impose
a
sanction
of
an
immediate
complete
curtailment
of
water
use
from
the
groundwater
wells
and
related
aquifer
(the
“sanction
proceedings”).
The
Maricunga
mine
relies
solely
on
water
from
the
Pantanillo
area
groundwater
wells
to
support
its
operations.
Beginning
in
May
2016,
the
SMA
issued
a
series
of
resolutions
ordering
CMM
to
“temporarily”
curtail
the
pumping
of
water
from
the
groundwater
wells.
In
response,
CMM
suspended
mining
and
crushing
activities
and
reduced
water
consumption
to
minimal
levels.
CMM
contested
these
resolutions
by
seeking
reconsideration
with
the
SMA
and
appealing
to
Chile’s
Environmental
Tribunal,
but
its
efforts
were
unsuccessful
and,
except
for
a
short
period
of
time
in
July
2016,
the
Company’s
operations
have
remained
suspended.
On
June
24,
2016,
the
SMA
amended
its
initial
sanction
(the
“Amended
Sanction”).
The
terms
of
the
Amended
Sanction
effectively
required
CMM
to
cease
operations
and
close
the
mine,
with
water
use
curtailed
to
levels
far
below
those
required
for
closure
in
compliance
with
the
mine’s
government-‐approved
plan.
On
July
9,
2016,
CMM
filed
its
appeal
in
the
sanction
proceedings.
As
part
of
its
appeal,
CMM
submitted
legal
and
technical
arguments
and
reports
by
experts
on
wetland
vegetation,
analysis
of
long-‐term
satellite
imagery
and
groundwater
hydrology
criticizing
the
evidence
relied
upon
by
the
SMA
and
concluding
that
current
data
does
not
support
an
assertion
that
CMM’s
pumping
is
negatively
impacting
water
levels
7
kilometres
downgradient
at
the
Valle
Ancho
wetland.
On
August
30,
2016,
CMM
submitted
a
request
to
the
Environmental
Tribunal
that
it
issue
an
injunction
suspending
the
effectiveness
of
the
Amended
Sanction
pending
a
final
decision
on
the
merits
of
CMM’s
appeal
of
the
Amended
Sanction.
On
September
16,
2016,
the
Environmental
Tribunal
rejected
CMM’s
injunction
request.
On
August
7,
2017,
the
Environmental
Tribunal
upheld
the
SMA’s
Amended
Sanction
and
curtailment
orders
on
purely
procedural
grounds.
No
findings
were
made
by
the
Tribunal
on
the
issue
of
whether
CMM’s
pumping
caused
damage
to
area
wetlands,
as
alleged
by
the
SMA.
On
September
27,
2017,
CMM
appealed
the
matter
to
the
Supreme
Court
of
Chile,
which
accepted
the
appeal
on
December
14,
2017.
The
timing
of
any
substantive
decision
by
the
Supreme
Court
is
uncertain.
On
June
2,
2016,
CMM
was
served
with
two
separate
lawsuits
filed
by
the
Chilean
State
Defense
Counsel.
Both
lawsuits
are
based
upon
allegations
that
CMM’s
pumping
from
its
Pantanillo
area
groundwater
wells
has
caused
damage
to
area
wetlands.
One
action
relates
to
the
Pantanillo
wetland,
and
is
based
upon
the
sanction
imposed
upon
CMM
in
late
2013
(as
described
above).
The
other
action
relates
to
the
Valle
Ancho
wetland,
and
is
largely
based
upon
the
same
factual
assertions
at
issue
in
the
SMA
sanction
proceedings.
These
lawsuits
seek,
among
other
things,
to
require
CMM
to
cease
pumping
from
the
groundwater
wells,
finance
various
investigations
and
conduct
restoration
activities.
On
June
20,
2016,
CMM
filed
its
defenses.
Evidentiary
hearings
before
the
Environmental
Tribunal
occurred
in
2016
and
early
2017,
and
closing
arguments
occurred
in
December
2017.
The
timing
of
any
substantive
decision
by
the
Environmental
Tribunal
is
uncertain.
Sunnyside
litigation
The
Sunnyside
Mine
is
an
inactive
mine
situated
in
the
so-‐called
Bonita
Peak
Mining
District
(“District”)
near
Silverton,
Colorado.
A
subsidiary
of
Kinross,
Sunnyside
Gold
Corporation
("SGC"),
was
involved
in
operations
at
the
mine
from
1985
through
1991
and
subsequently
conducted
various
reclamation
and
closure
activities
at
the
mine
and
in
the
surrounding
area.
In
the
third
quarter
of
2016,
the
Environmental
Protection
Agency
(the
“EPA”)
listed
the
District,
including
areas
impacted
by
SGC’s
operations
and
closure
activities,
on
the
National
Priorities
List
pursuant
to
the
Comprehensive
KINROSS ANNUAL REPORT 2017 FS 57
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Environmental
Response,
Compensation,
and
Liability
Act
(“CERCLA”).
SGC
has
challenged
portions
of
the
CERCLA
listing
in
the
United
States
Court
of
Appeals
for
District
of
Columbia
Circuit.
The
EPA
has
notified
SGC
that
SGC
is
a
potentially
responsible
party
under
CERCLA
and
may
be
jointly
and
severally
liable
for
cleanup
of
the
District
or
cleanup
costs
incurred
by
the
EPA
in
the
District.
The
EPA
may
in
the
future
provide
similar
notification
to
Kinross.
On
August
5,
2015,
while
working
in
another
mine
in
the
District
known
as
the
Gold
King,
the
EPA
caused
a
release
of
approximately
three
million
gallons
of
contaminated
water
into
a
tributary
of
the
Animas
River.
In
the
second
quarter
of
2016,
the
State
of
New
Mexico
filed
a
Complaint
naming
the
EPA,
SGC,
Kinross
and
others
alleging
violations
of
CERCLA,
the
Resource
Conservation
and
Recovery
Act
(“RCRA”),
and
the
Clean
Water
Act
(“CWA”)
and
claiming
negligence,
gross
negligence,
public
nuisance
and
trespass.
The
Complaint
seeks
cost
recovery,
damages,
injunctive
relief,
and
attorney’s
fees.
In
the
third
quarter
of
2016,
the
Navajo
Nation
initiated
litigation
against
the
EPA,
SGC
and
Kinross,
alleging
entitlement
to
cost
recovery
under
CERCLA
for
past
and
future
costs
incurred,
negligence,
gross
negligence,
trespass,
and
public
and
private
nuisance,
and
seeking
reimbursement
of
past
and
future
costs,
compensatory,
consequential
and
punitive
damages,
injunctive
relief
and
attorneys’
fees.
The
suits
brought
by
New
Mexico
and
the
Navajo
Nation
have
been
consolidated.
In
the
third
quarter
of
2017,
the
State
of
Utah
filed
a
Complaint
naming
SGC,
Kinross
and
others
alleging
negligence,
gross
negligence,
public
nuisance,
trespass,
and
violation
of
the
Utah
Water
Quality
Act
and
the
Utah
Solid
and
Hazardous
Waste
Act.
The
Complaint
seeks
cost
recovery,
compensatory,
consequential
and
punitive
damages,
penalties,
disgorgement
of
profits,
declaratory,
injunctive
and
other
relief
under
CERCLA,
attorney’s
fees,
and
costs.
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.
KINROSS ANNUAL REPORT 2017 FS 58
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
20.
RELATED
PARTY
TRANSACTIONS
There
were
no
material
related
party
transactions
in
2017
and
2016
other
than
compensation
of
key
management
personnel.
The
Company
received
no
dividends
from
Puren
during
the
year
ended
December
31,
2017
(year
ended
December
31,
2016
–
$nil).
Key
management
personnel
Compensation
of
key
management
personnel
of
the
Company
is
as
follows:
Years
ended
December
31,
2017
2016
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
$
$
9.1
8.7
-‐
17.8
7.3
9.3
3.9
20.5
$
$
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.,
Fairbanks
Gold
Mining,
Inc.,
Melba
Creek
Mining,
Inc.,
KG
Mining
(Round
Mountain)
Inc.,
KG
Mining
(Bald
Mountain)
Inc.,
Red
Back
Mining
B.V.,
Red
Back
Mining
(Ghana)
Limited,
White
Ice
Ventures
Limited,
KG
Far
East
(Luxembourg)
Sarl.
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.
The
following
tables
contain
separate
financial
information
related
to
the
guarantor
subsidiaries
as
set
out
in
the
consolidating
balance
sheets
as
at
December
31,
2017
and
December
31,
2016
and
the
consolidating
statements
of
operations,
statements
of
comprehensive
income
(loss)
and
statements
of
cash
flows
for
the
years
ended
December
31,
2017
and
2016.
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.
KINROSS ANNUAL REPORT 2017 FS 59
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Consolidating
balance
sheet
as
at
December
31,
2017
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Guarantors
Non-
guarantors
Eliminations
Consolidated
$
267.6
$
122.7
$
-
$
390.3
$
635.5
$
-
$
1,025.8
-
10.4
518.6
-
2.1
23.0
821.7
27.6
-
180.8
-
3,535.2
14.8
11.7
3,206.4
-
5.6
26.6
-
-
5.6
37.0
6.5
54.3
-
-
1,297.9
(245.7)
1,570.8
4,256.8
(5,827.6)
17.1
560.6
(10.7)
-
-
-
17.1
562.7
12.3
26.8
531.6
4.7
-
-
-
2,019.8
(245.7)
2,595.8
5,516.2
(5,827.6)
2,506.5
2,380.7
2,478.9
158.8
-
5.5
-
-
-
-
3,269.1
(6,202.6)
(12.3)
133.2
-
-
158.8
180.8
5.5
601.7
2.5
144.9
2,414.3
(1,819.9)
3,800.8
0.1
-
0.1
3.9
7.2
18.2
-
-
-
-
14,693.0
(15,294.7)
1.4
429.1
3,171.3
33.2
-
-
(6,972.1)
-
12.1
91.3
-
43.9
1,094.3
17.0
2,284.4
4,887.2
162.7
188.0
23.7
-
3.9
574.0
-
33.3
$
7,798.2
$
10,467.4
$
(8,268.2)
$
9,997.4
$
26,254.2
$
(28,094.4)
$
8,157.2
$
88.5
$
218.0
$
-
$
306.5
$
176.1
$
-
$
482.6
184.4
-
-
-
272.9
1,732.6
9.8
-
1,199.3
-
3,214.6
643.0
19.5
13.5
1.1
895.1
-
367.5
67.6
2,777.2
157.4
4,264.8
(245.7)
-
-
-
(245.7)
-
-
-
(1,819.9)
-
(2,065.6)
581.7
19.5
13.5
1.1
922.3
1,732.6
377.3
67.6
2,156.6
157.4
5,413.8
5,245.9
(5,827.6)
15.6
53.0
-
-
-
-
-
35.1
66.5
1.1
5,490.6
(5,827.6)
585.3
-
453.2
66.4
4,815.5
98.2
-
-
-
(6,972.1)
-
10,923.9
(12,799.7)
1,732.6
830.5
134.0
-
255.6
3,538.0
$
14,902.5
$
1,713.3
$
(1,713.3)
$
14,902.5
$
18,702.5
$
(18,702.5)
$
14,902.5
240.7
(10,580.7)
21.1
4,583.6
-
4,583.6
3,464.9
1,038.6
(14.2)
(3,464.9)
(1,038.6)
14.2
240.7
(10,580.7)
21.1
6,271.9
(9,660.3)
(19.4)
(6,271.9)
240.7
9,660.3
(10,580.7)
19.4
6,202.6
(6,202.6)
4,583.6
15,294.7
(15,294.7)
-
-
-
35.6
-
6,202.6
(6,202.6)
4,583.6
15,330.3
(15,294.7)
21.1
4,583.6
35.6
4,619.2
$
7,798.2
$
10,467.4
$
(8,268.2)
$
9,997.4
$
26,254.2
$
(28,094.4)
$
8,157.2
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable and other assets
Intercompany receivables
Current income tax recoverable
Inventories
Unrealized fair value of derivative assets
Non-current assets
Property, plant and equipment
Goodwill
Long-term investments
Investments in associate and joint ventures
Intercompany investments
Unrealized fair value of derivative assets
Other long-term assets
Long-term intercompany receivables
Deferred tax assets
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Intercompany payables
Current income tax payable
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 income (loss)
Total common shareholders' equity
Non-controlling interest
Total equity
Total liabilities and equity
KINROSS ANNUAL REPORT 2017 FS 60
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Consolidating
balance
sheet
as
at
December
31,
2016
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable and other assets
Intercompany receivables
Current income tax recoverable
Inventories
Unrealized fair value of derivative assets
Non-current assets
Property, plant and equipment
Goodwill
Long-term investments
Investments in associate and joint ventures
Intercompany investments
Unrealized fair value of derivative assets
Other long-term assets
Long-term intercompany receivables
Deferred tax assets
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Intercompany payables
Current income tax payable
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 income (loss)
Total common shareholders' equity
Non-controlling interest
Total equity
Total liabilities and equity
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Guarantors
Non-
guarantors
Eliminations
Consolidated
$
126.2
$
145.6
$
-
$
271.8
$
555.2
$
-
$
827.0
-
6.4
541.5
-
5.7
12.6
692.4
26.8
-
141.5
-
3,150.2
19.0
8.6
3,250.6
-
4.6
42.3
-
-
4.6
48.7
7.0
78.6
-
-
1,277.3
(175.5)
1,643.3
4,384.9
(6,028.2)
12.0
440.3
(1.6)
-
-
-
12.0
446.0
11.0
99.9
540.8
5.1
-
-
-
11.6
127.3
-
111.9
986.8
16.1
1,920.5
(175.5)
2,437.4
5,671.5
(6,028.2)
2,080.7
2,704.0
2,213.6
2,677.2
158.8
-
5.5
-
-
-
-
1,699.7
(4,360.2)
(14.7)
121.6
-
-
158.8
141.5
5.5
489.7
4.3
130.2
2,084.3
(1,758.8)
3,576.1
0.7
-
0.7
3.9
1.4
158.1
-
-
-
-
11,787.5
(12,277.2)
1.7
281.1
3,396.9
93.8
-
-
(6,973.0)
-
4,917.6
162.7
142.9
163.6
-
6.0
411.3
-
94.5
$
7,289.1
$
8,653.6
$
(6,294.5)
$
9,648.2
$
23,609.5
$
(25,278.4)
$
7,979.3
$
72.9
$
207.0
$
-
$
279.9
$
184.9
$
-
$
464.8
120.1
-
-
7.1
200.1
1,733.2
11.1
-
1,199.2
-
3,143.6
601.0
10.9
13.2
-
832.1
-
367.4
85.0
2,779.0
229.9
4,293.4
(175.5)
-
-
-
(175.5)
-
-
-
(1,758.8)
-
(1,934.3)
545.6
10.9
13.2
7.1
856.7
1,733.2
378.5
85.0
2,219.4
229.9
5,502.7
5,482.6
(6,028.2)
61.7
80.0
-
-
-
-
-
72.6
93.2
7.1
5,809.2
(6,028.2)
637.7
-
482.7
87.2
4,753.6
160.8
-
-
-
(6,973.0)
-
11,293.5
(13,001.2)
1,733.2
861.2
172.2
-
390.7
3,795.0
$
14,894.2
$
1,713.3
$
(1,713.3)
$
14,894.2
$
18,053.2
$
(18,053.2)
$
14,894.2
238.3
(11,026.1)
39.1
4,145.5
-
4,145.5
2,396.0
(2,396.0)
238.3
4,402.0
(4,402.0)
238.3
243.5
7.4
(243.5)
(11,026.1)
(10,157.4)
10,157.4
(11,026.1)
(7.4)
39.1
(20.6)
20.6
4,360.2
(4,360.2)
4,145.5
12,277.2
(12,277.2)
-
-
-
38.8
-
4,360.2
(4,360.2)
4,145.5
12,316.0
(12,277.2)
39.1
4,145.5
38.8
4,184.3
$
7,289.1
$
8,653.6
$
(6,294.5)
$
9,648.2
$
23,609.5
$
(25,278.4)
$
7,979.3
KINROSS ANNUAL REPORT 2017 FS 61
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Consolidating
statement
of
operations
for
the
year
ended
December
31,
2017
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment, net of reversals
Total cost of sales
Gross profit
Other operating expense
Exploration and business development
General and administrative
Operating earnings (loss)
Other income (expense) - net
Equity in earnings (losses) of associate, joint ventures and intercompany
investments
Finance income
Finance expense
Earnings (loss) before tax
Income tax recovery (expense) - net
Net earnings (loss)
Net earnings (loss) attributable to:
Non-controlling interest
Common shareholders
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Non-guarantors
Eliminations
Consolidated
$
1,945.9
$
1,781.1
$
(1,771.4)
$
1,955.6
$
1,347.4
$
-
$
3,303.0
1,918.8
1,019.9
(1,772.0)
1,166.7
4.9
-
1,923.7
22.2
3.4
21.8
75.1
(78.1)
(127.9)
679.4
50.6
(80.1)
443.9
1.5
404.0
164.4
1,588.3
192.8
30.7
22.1
4.7
135.3
(22.3)
232.9
27.1
(45.9)
327.1
65.4
0.6
-
(1,771.4)
-
-
-
-
-
-
(392.5)
(1.9)
1.9
(392.5)
-
409.5
164.4
1,740.6
215.0
34.1
43.9
79.8
57.2
(150.2)
519.8
75.8
(124.1)
378.5
66.9
590.7
409.9
(142.9)
857.7
489.7
95.5
62.1
52.8
279.3
654.4
(0.6)
79.5
(135.5)
877.1
(43.7)
-
-
-
-
-
-
-
-
-
(316.1)
(520.5)
(141.8)
141.8
(836.6)
-
1,757.4
819.4
21.5
2,598.3
704.7
129.6
106.0
132.6
336.5
188.1
(1.3)
13.5
(117.8)
419.0
23.2
$
445.4
$
392.5
$
(392.5)
$
445.4
$
833.4
$
(836.6)
$
442.2
$
-
$
-
$
-
$
-
$
(3.2)
$
-
$
(3.2)
$
445.4
$
392.5
$
(392.5)
$
445.4
$
836.6
$
(836.6)
$
445.4
KINROSS ANNUAL REPORT 2017 FS 62
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Consolidating
statement
of
operations
for
the
year
ended
December
31,
2016
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment, net of reversals
Total cost of sales
Gross profit
Other operating expense
Exploration and business development
General and administrative
Operating earnings (loss)
Other income (expense) - net
Equity in earnings (losses) of associate, joint ventures and intercompany
investments
Finance income
Finance expense
Earnings (loss) before tax
Income tax recovery (expense) - net
Net earnings (loss)
Net earnings (loss) attributable to:
Non-controlling interest
Common shareholders
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Non-guarantors
Eliminations
Consolidated
$
2,036.4
$
1,699.8
$
(1,653.3)
$
2,082.9
$
1,389.1
$
-
$
3,472.0
1,999.1
8.2
-
2,007.3
29.1
7.5
20.9
93.0
(92.3)
94.6
(44.4)
25.8
(89.1)
(105.4)
1.4
1,075.4
365.4
-
1,440.8
259.0
77.3
18.5
4.0
159.2
3.6
36.6
16.0
(47.5)
167.9
4.8
(1,652.7)
(0.6)
-
(1,653.3)
-
-
-
-
-
-
(172.7)
(5.7)
5.7
(172.7)
-
1,421.8
373.0
-
1,794.8
288.1
84.8
39.4
97.0
66.9
98.2
(180.5)
36.1
(130.9)
(110.2)
6.2
562.0
482.0
139.6
1,183.6
205.5
124.5
54.9
46.7
(20.6)
234.2
(0.8)
74.2
(106.5)
180.5
(55.8)
-
-
-
-
-
-
-
-
-
(309.9)
180.1
(102.8)
102.8
(129.8)
-
1,983.8
855.0
139.6
2,978.4
493.6
209.3
94.3
143.7
46.3
22.5
(1.2)
7.5
(134.6)
(59.5)
(49.6)
$
(104.0)
$
172.7
$
(172.7)
$
(104.0)
$
124.7
$
(129.8)
$
(109.1)
$
-
$
-
$
-
$
-
$
(5.1)
$
-
$
(5.1)
$
(104.0)
$
172.7
$
(172.7)
$
(104.0)
$
129.8
$
(129.8)
$
(104.0)
KINROSS ANNUAL REPORT 2017 FS 63
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Consolidating
statement
of
comprehensive
income
(loss)
for
the
year
ended
December
31,
2017
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Guarantors
Non-
guarantors
Eliminations
Consolidated
Net earnings (loss)
$
445.4
392.5
(392.5)
445.4
833.4
(836.6)
442.2
Other comprehensive income (loss), net of tax:
Items to be reclassified to profit or loss in subsequent
periods:
Changes in fair value of investments (a)
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 (loss) related
to derivatives settled (d)
Equity in other comprehensive income (loss) of
intercompany investments
Total comprehensive income (loss)
Attributable to non-controlling interest
Attributable to common shareholders
(a) Net of tax of
(b) Net of tax of
(c) Net of tax of
(d) Net of tax of
(15.4)
(3.1)
6.8
(2.6)
(14.3)
(3.7)
-
-
5.1
(10.6)
(5.5)
-
-
-
-
-
-
5.5
(15.4)
(3.1)
11.9
(13.2)
(19.8)
1.8
1.8
-
-
-
1.8
-
-
-
-
-
-
(1.8)
427.4
$
387.0
$
(387.0)
$
427.4
$
835.2
$
(838.4)
$
-
427.4
-
-
2.5
(1.0)
$
$
$
$
$
$
-
387.0
-
-
2.3
(4.9)
$
$
$
$
$
$
-
(387.0)
-
-
-
-
$
$
$
$
$
$
-
427.4
-
-
4.8
(5.9)
$
$
$
$
$
$
(3.2)
838.4
0.3
-
-
-
$
$
$
$
$
$
-
(838.4)
-
-
-
-
$
$
$
$
$
$
$
$
$
$
$
$
$
(13.6)
(3.1)
11.9
(13.2)
(18.0)
-
424.2
(3.2)
427.4
0.3
-
4.8
(5.9)
KINROSS ANNUAL REPORT 2017 FS 64
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Consolidating
statement
of
comprehensive
income
(loss)
for
the
year
ended
December
31,
2016
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Guarantors
Non-
guarantors
Eliminations
Consolidated
Net earnings (loss)
$
(104.0)
172.7
(172.7)
(104.0)
124.7
(129.8)
(109.1)
Other comprehensive income (loss), net of tax:
Items to be reclassified to profit or loss in subsequent
periods:
Changes in fair value of investments (a)
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 (loss) related
to derivatives settled (d)
Equity in other comprehensive income (loss) of
intercompany investments
Total comprehensive income (loss)
Attributable to non-controlling interest
Attributable to common shareholders
(a) Net of tax of
(b) Net of tax of
(c) Net of tax of
(d) Net of tax of
49.8
(8.5)
7.4
0.5
49.2
21.2
-
-
20.4
(2.7)
17.7
-
-
-
-
-
-
(17.7)
49.8
(8.5)
27.8
(2.2)
66.9
3.5
1.0
-
1.4
1.1
3.5
-
-
-
-
-
-
(3.5)
(33.6)
$
190.4
$
(190.4)
$
(33.6)
$
128.2
$
(133.3)
$
-
(33.6)
-
-
1.3
0.2
$
$
$
$
$
$
-
190.4
-
-
8.9
(1.7)
$
$
$
$
$
$
-
(190.4)
-
-
-
-
$
$
$
$
$
$
-
(33.6)
-
-
10.2
(1.5)
$
$
$
$
$
$
(5.1)
133.3
-
-
0.4
0.4
$
$
$
$
$
$
-
(133.3)
-
-
-
-
$
$
$
$
$
$
$
$
$
$
$
$
$
50.8
(8.5)
29.2
(1.1)
70.4
-
(38.7)
(5.1)
(33.6)
-
-
10.6
(1.1)
KINROSS ANNUAL REPORT 2017 FS 65
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Consolidating
statement
of
cash
flows
for
the
year
ended
December
31,
2017
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Non-
guarantors
Eliminations
Consolidated
$
445.4
$
392.5
$
(392.5)
$
445.4
$
833.4
$
(836.6)
$
442.2
4.9
5.4
-
404.0
-
164.4
(679.4)
(232.9)
13.6
80.1
(1.5)
132.8
-
(1.7)
3.5
(4.9)
(1.8)
-
(1.8)
(5.7)
-
-
45.9
(69.3)
(1.3)
-
3.0
(69.1)
23.0
660.2
(10.9)
649.3
(410.8)
-
(26.2)
(24.2)
-
7.5
-
1.5
1.8
-
(0.9)
1.9
0.8
-
494.7
(500.0)
(62.9)
-
235.1
(1.6)
166.1
-
141.4
126.2
-
-
-
-
-
-
(240.0)
-
(240.0)
-
(22.9)
145.6
0.6
-
-
392.5
-
(1.9)
-
-
-
-
(0.6)
-
(1.9)
-
(1.9)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.9
-
1.9
-
0.0
-
409.5
5.4
164.4
(519.8)
13.6
124.1
(70.8)
131.5
-
1.3
(66.2)
18.1
656.5
(10.9)
645.6
409.9
(60.6)
(239.9)
0.6
-
135.5
(5.6)
(163.4)
11.4
107.3
(20.5)
(66.6)
941.5
(177.6)
763.9
-
-
-
520.5
-
(141.8)
-
-
-
-
-
-
819.4
(55.2)
(75.5)
1.3
13.6
117.8
(76.4)
(31.9)
11.4
-
108.6
(86.7)
(48.5)
(457.9)
-
(457.9)
1,140.1
(188.5)
951.6
(416.5)
(481.1)
-
-
(50.4)
(23.4)
1.8
7.5
(0.9)
3.4
6.7
262.1
0.4
3.2
(455.1)
(232.1)
0.8
-
494.7
(500.0)
(62.9)
-
(3.0)
(1.6)
(72.0)
-
118.5
271.8
-
-
-
-
-
(316.1)
(138.8)
-
(454.9)
3.4
80.3
555.2
-
-
-
-
-
-
-
-
-
-
-
-
-
316.1
141.8
-
457.9
-
-
-
(897.6)
-
(73.8)
8.5
269.6
(0.5)
6.6
(687.2)
0.8
-
494.7
(500.0)
(62.9)
-
-
(1.6)
(69.0)
3.4
198.8
827.0
$
267.6
$
122.7
$
0.0
$
390.3
$
635.5
$
-
$
1,025.8
Net cash flow used in investing activities
(22.9)
(432.2)
Net inflow (outflow) of cash related to the following activities:
Operating:
Net earnings (loss)
Adjustments to reconcile net earnings (loss) to net cash provided
from (used in) operating activities:
Depreciation, depletion and amortization
Loss (gain) on disposition of associate and other interests - net
Impairment, net of reversals
Equity in losses (earnings) of associate, joint ventures and
intercompany investments
Share-based compensation expense
Finance expense
Deferred tax expense (recovery)
Foreign exchange losses (gains) and other
Reclamation expense
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 paid
Net cash flow provided from (used in) operating activities
Investing:
Additions to property, plant and equipment
Business acquisition
Net additions to long-term investments and
other assets
Net proceeds from the sale of property, plant and
equipment
Net proceeds from disposition of associate and other interests
Decrease (increase) in restricted cash
Interest received and other
Financing:
Issuance of common shares on exercise of options
Net proceeds from issuance of equity
Net proceeds from issuance of debt
Repayment of debt
Interest paid
Dividends received from (paid to) common shareholders and
subsidiaries
Intercompany advances
Other
Net cash flow provided from (used in) financing activities
Effect of exchange rate changes on cash and cash
equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
KINROSS ANNUAL REPORT 2017 FS 66
NOTES
TO
THE
CONSOLIDATED
FINANCIAL
STATEMENTS
For
the
years
ended
December
31,
2017
and
2016
(Tabular
amounts
in
millions
of
United
States
dollars)
Consolidating
statement
of
cash
flows
for
the
year
ended
December
31,
2016
Net inflow (outflow) of cash related to the following activities:
Operating:
Net earnings (loss)
Adjustments to reconcile net earnings (loss) to net cash provided
from (used in) operating activities:
Depreciation, depletion and amortization
Loss (gain) on disposition of associate and other interests - net
Impairment, net of reversals
Equity in losses (earnings) of associate, joint ventures and
intercompany investments
Share-based compensation expense
Finance expense
Deferred tax expense (recovery)
Foreign exchange losses (gains) and other
Reclamation expense
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 paid
Net cash flow provided from (used in) operating activities
Investing:
Additions to property, plant and equipment
Business acquisition
Net additions to long-term investments and
other assets
Net proceeds from the sale of property, plant and
equipment
Net proceeds from disposition of associate and other interests
Decrease (increase) in restricted cash
Interest received and other
Net cash flow used in investing activities
Financing:
Issuance of common shares on exercise of options
Proceeds from issuance of equity
Proceeds from issuance of debt
Repayment of debt
Interest paid
Dividends received from (paid to) common shareholders and
subsidiaries
Intercompany advances
Other
Net cash flow provided from (used in) financing activities
Effect of exchange rate changes on cash and cash
equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Non-
guarantors
Eliminations
Consolidated
$
(104.0)
$
172.7
$
(172.7)
$
(104.0)
$
124.7
$
(129.8)
$
(109.1)
365.4
(0.6)
373.0
8.2
-
-
44.4
13.5
89.1
(1.5)
(67.3)
-
(2.3)
(4.1)
0.5
(23.5)
-
(23.5)
(5.5)
-
(8.7)
-
-
-
0.7
(13.5)
2.8
275.7
175.0
(425.0)
(73.5)
-
97.7
(3.3)
49.4
-
12.4
113.8
-
-
(36.6)
-
47.5
(57.5)
70.2
-
(23.3)
(22.6)
112.3
628.1
(20.5)
607.6
(291.2)
(588.0)
(28.5)
0.6
-
(1.6)
1.2
(907.5)
-
-
-
-
-
-
318.5
-
318.5
-
18.6
127.0
-
-
172.7
-
(5.7)
-
-
-
-
0.6
-
(5.7)
-
(5.7)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5.7
-
5.7
-
-
-
-
-
180.5
13.5
130.9
(59.0)
2.9
-
(25.6)
(26.1)
112.8
598.9
(20.5)
578.4
(296.7)
(588.0)
482.0
-
139.6
0.8
-
106.5
(90.7)
11.5
27.2
4.4
105.6
127.1
1,038.7
(105.2)
933.5
(337.1)
-
(37.2)
(22.6)
0.6
-
(1.6)
1.9
8.5
-
0.5
1.6
(921.0)
(349.1)
2.8
275.7
175.0
(425.0)
(73.5)
-
421.9
(3.3)
373.6
-
31.0
240.8
-
-
-
-
-
(309.9)
(524.7)
-
(834.6)
2.3
(247.9)
803.1
-
-
-
(180.1)
-
(102.8)
-
-
-
-
-
-
(412.7)
-
(412.7)
-
-
-
-
-
-
-
-
-
-
-
-
-
309.9
102.8
-
412.7
-
-
-
855.0
-
139.6
1.2
13.5
134.6
(149.7)
14.4
27.2
(21.2)
79.5
239.9
1,224.9
(125.7)
1,099.2
(633.8)
(588.0)
(59.8)
9.1
-
(1.1)
3.5
(1,270.1)
2.8
275.7
175.0
(425.0)
(73.5)
-
-
(3.3)
(48.3)
2.3
(216.9)
1,043.9
$
126.2
$
145.6
$
-
$
271.8
$
555.2
$
-
$
827.0
KINROSS ANNUAL REPORT 2017 FS 67
MINERAL RESERVE AND
MINERAL RESOURCE STATEMENT
PROVEN AND PROBABLE MINERAL RESERVES
Gold
Proven and Probable Mineral Reserves (1, 3, 4, 5, 6, 8)
Kinross Gold Corporation’s Share at December 31, 2017
Property
Location
Kinross
Interest
(%)
NORTH AMERICA
Bald Mountain
Fort Knox Area
Round Mountain Area
Subtotal
SOUTH AMERICA
La Coipa 8
Paracatu
USA
USA
USA
100.0%
100.0%
100.0%
Chile
Brazil
100.0%
100.0%
Subtotal
AFRICA
Chirano
Tasiast
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Gold
Ghana
Mauritania
90.0%
100.0%
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)
6,490
23,671
49,266
79,427
59
511,127
511,186
3,639
30,535
34,174
1,287
770
2,057
626,844
0.7
0.5
0.5
0.5
1.6
0.4
0.4
1.0
1.2
1.2
5.2
6.2
5.6
0.5
143
357
853
88,726
65,187
75,116
1,353
229,029
3
6,805
15,603
131,194
6,808
146,797
122
1,191
4,662
94,254
1,313
98,916
216
155
371
1,296
4,808
6,104
9,845
480,846
0.5
0.4
0.8
0.6
1.7
0.5
0.6
3.0
2.2
2.2
8.6
8.3
8.4
1.0
1,555
888
2,031
95,216
88,858
124,382
4,474
308,456
841
2,019
15,662
642,321
2,860
657,983
445
6,670
8,301
124,789
7,115
133,090
360
1,280
1,640
2,583
5,578
8,161
16,089
1,107,690
0.6
0.4
0.7
0.6
1.7
0.4
0.5
2.1
2.0
2.0
6.9
8.0
7.7
0.7
1,698
1,245
2,884
5,827
844
8,824
9,668
567
7,861
8,428
576
1,435
2,011
25,934
Silver
Proven and Probable Mineral Reserves (1, 3, 4, 5, 6, 8)
Kinross Gold Corporation’s Share at December 31, 2017
Property
Location
Kinross
Interest
(%)
NORTH AMERICA
Round Mountain Area
Subtotal
SOUTH AMERICA
La Coipa 8
USA
100.0%
Chile
100.0%
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
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)
3,652
3,652
6.1
6.1
59
59
152.9
152.9
1,287
770
2,057
5,768
9.7
81.8
36.7
18.5
713
713
291
291
3,641
3,641
5.6
5.6
658
658
7,293
7,293
5.8
5.8
1,371
1,371
15,603
67.6
33,897
15,662
67.9
34,188
15,603
67.6
33,897
15,662
67.9
34,188
402
2,025
2,427
1,296
4,808
6,104
13.1
91.1
544
14,086
74.6
14,630
2,583
5,578
8,161
11.4
89.8
946
16,111
65.0
17,057
3,431
25,348
60.4
49,185
31,116
52.6
52,616
68 KINROSS ANNUAL REPORT 2017
MEASURED AND INDICATED MINERAL RESOURCES
Gold
Measured and Indicated Mineral Resources (Excludes Proven and Probable Mineral Reserves) (2, 3, 4, 5, 6, 7, 8)
Kinross Gold Corporation’s Share at December 31, 2017
Property
Location
Kinross
Interest
(%)
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)
NORTH AMERICA
Bald Mountain
Fort Knox Area
Round Mountain Area
Subtotal
SOUTH AMERICA
La Coipa 8
Lobo Marte
Maricunga
Paracatu
USA
USA
USA
100.0%
100.0%
100.0%
Chile
Chile
Chile
Brazil
100.0%
100.0%
100.0%
100.0%
Subtotal
AFRICA
Chirano
Tasiast
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Gold
Ghana
Mauritania
90.0%
100.0%
Russia
Russia
100.0%
100.0%
21,853
24,606
2,378
48,837
5,305
96,646
35,908
164,286
302,145
3,075
4,936
8,011
–
75
75
359,068
0.7
0.4
0.4
0.5
1.8
1.1
0.8
0.3
0.6
1.7
0.7
1.1
–
8.9
8.9
0.6
465
320
30
158,485
213,425
102,683
815
474,593
304
3,525
937
1,530
9,849
88,720
209,097
158,541
6,296
466,207
7,900
69,655
77,555
166
113
279
–
21
21
0.6
0.4
0.7
0.5
1.9
1.2
0.7
0.3
0.7
2.3
1.3
1.4
2,884
2,909
2,363
180,338
238,031
105,061
8,156
523,430
599
3,489
4,492
1,719
15,154
185,366
245,005
322,827
10,299
768,352
580
2,846
10,975
74,591
3,426
85,566
0.6
0.4
0.7
0.5
1.9
1.2
0.7
0.3
0.7
2.1
1.2
1.3
3,349
3,229
2,393
8,971
903
7,014
5,429
3,249
16,595
746
2,959
3,705
6
317
323
28
826
854
6.2
11.2
11.0
6
296
302
28
901
929
6.2
11.0
10.8
7,411
1,019,209
0.7
22,183
1,378,277
0.7
29,594
Silver
Measured and Indicated Mineral Resources (Excludes Proven and Probable Mineral Reserves) (2, 3, 4, 5, 6, 7, 8)
Kinross Gold Corporation’s Share at December 31, 2017
Property
Location
Kinross
Interest
(%)
NORTH AMERICA
Round Mountain Area
Subtotal
SOUTH AMERICA
La Coipa 8
USA
100.0%
Chile
100.0%
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
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)
2,378
2,378
5,305
5,305
8.7
8.7
37.1
37.1
–
75
75
–
126.4
126.4
667
667
6,330
6,330
–
303
303
5,309
5,309
9,849
9,849
28
826
854
6.8
6.8
1,160
1,160
7,687
7,687
7.4
7.4
1,827
1,827
74.0
23,445
15,154
61.1
29,775
74.0
23,445
15,154
61.1
29,775
6.0
135.5
5
3,598
131.3
3,603
28
901
929
6.0
134.8
5
3,901
130.9
3,906
7,758
29.3
7,300
16,012
54.8
28,208
23,770
46.5
35,508
KINROSS ANNUAL REPORT 2017 69
INFERRED MINERAL RESOURCES
Gold
Inferred Mineral Resources (2, 3, 4, 5, 6, 7, 8)
Kinross Gold Corporation’s Share at December 31, 2017
Property
NORTH AMERICA
Bald Mountain
Fort Knox Area
Round Mountain Area
Subtotal
SOUTH AMERICA
La Coipa 8
Lobo Marte
Maricunga
Paracatu
Subtotal
AFRICA
Chirano
Tasiast
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Gold
Silver
Inferred Mineral Resources (2, 3, 4, 5, 6, 7, 8)
Kinross Gold Corporation’s Share at December 31, 2017
Property
NORTH AMERICA
Round Mountain Area
Subtotal
SOUTH AMERICA
La Coipa 8
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
70 KINROSS ANNUAL REPORT 2017
Kinross
Interest
(%)
Location
Inferred
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
USA
USA
USA
100.0%
100.0%
100.0%
Chile
Chile
Chile
Brazil
100.0%
100.0%
100.0%
100.0%
Ghana
Mauritania
90.0%
100.0%
Russia
Russia
100.0%
100.0%
43,305
56,458
89,078
188,841
2,121
2,003
53,133
31,033
88,290
1,590
41,771
43,361
14
489
503
320,995
0.4
0.4
0.7
0.6
1.5
1.1
0.6
0.2
0.5
3.0
0.9
1.0
11.8
9.3
9.4
0.6
597
689
2,115
3,401
101
69
1,044
227
1,441
152
1,237
1,389
5
146
151
6,382
Inferred
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Kinross
Interest
(%)
Location
USA
100.0%
960
960
Chile
100.0%
2,121
Russia
Russia
100.0%
100.0%
2,121
14
489
503
1.7
1.7
45.2
45.2
54
54
3,081
3,081
10.7
131.2
5
2,062
127.8
2,067
3,584
45.1
5,202
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 and a silver price of $US 17.00 per ounce. 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 60
Chilean Peso to $US 650
Brazilian Real to $US 3.25
Ghanaian Cedi to $US 4.00
Mauritanian Ouguiya to $US 330
(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
and a silver price of $US 20.00 per ounce. 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, 2017 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)
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)
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. Kinross currently holds a 50% interest in the Phase 7 project but has entered into an agreement whereby it has agreed to purchase the
other 50% that it does not currently own.
KINROSS ANNUAL REPORT 2017 71
MINERAL RESERVE AND MINERAL RESOURCE DEFINITIONS
A ‘Mineral Resource’ is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in
such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location,
quantity, grade or quality, continuity and other geological characteristics of a Mineral Resource are known, estimated or
interpreted from specific geological evidence and knowledge, including sampling.
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality are estimated on
the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and
grade or quality continuity. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated
Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of Inferred
Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and
physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient
detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from
adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality
continuity between points of observation. An Indicated Mineral Resource has a lower level of confidence than that applying to
a Measured Mineral Resource and may only be converted to a Probable Mineral Reserve.
A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and
physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support
detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from
detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity
between points of observation. A Measured Mineral Resource has a higher level of confidence than that applying to either an
Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to a Probable
Mineral Reserve.
A ‘Mineral Reserve’ is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting
materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at
Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that,
at the time of reporting, extraction could reasonably be justified. The reference point at which Mineral Reserves are defined,
usually the point where the ore is delivered to the processing plant, must be stated. It is important that, in all situations where
the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader
is fully informed as to what is being reported. The public disclosure of a Mineral Reserve must be demonstrated by a Pre-
Feasibility Study or Feasibility Study.
A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated, and in some circumstances, a Measured
Mineral Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying
to a Proven Mineral Reserve.
A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve
implies a high degree of confidence in the Modifying Factors.
72 KINROSS ANNUAL REPORT 2017
SUMMARIZED FIVE-YEAR REVIEW (5, 6)
(in millions, except per share amounts)
Operating results from continuing operations
2017
2016
2015
2014
2013
Production (attributable) (Au eq. oz.)
2,673,533
2,789,150
2,594,652
2,710,390
2,631,092
Revenue
Production cost of sales (per Au eq. oz.)
Net earnings (loss) attributable to common shareholders
Net cash flow provided from operating activities
Capital expenditures
Financial position
$
$
$
$
$
3,303.0
$
3,472.0
669
445.4
951.6
897.6
$
$
$
$
712
(104.0)
1,099.2
633.8
$
$
$
$
$
3,052.2
696
(984.5)
831.6
610.0
$
$
$
$
$
3,466.3
720
(1,400.0)
858.1
631.8
Cash, cash equivalents and short-term investments
$
1,025.8
$
827.0
$
1,043.9
$
983.5
$
$
$
$
$
$
$
3,779.5
743
(3,012.6)
796.6
1,262.4
734.5
1,692.9
Working capital
Total assets
Long-term debt (including current portion)
Common shareholders’ equity
Per share data
$
$
$
$
1,699.1
8,157.2
1,732.6
4,583.6
$
$
$
$
1,443.0
7,979.3
1,733.2
4,145.5
$
$
$
$
1,590.3
7,735.4
1,981.4
3,889.3
$
$
$
$
1,982.7
8,951.4
$ 10,286.7
2,058.1
4,843.0
$
$
2,119.6
6,014.0
Net earnings (loss) attributable to common shareholders – basic
$
0.36
$
(0.08)
$
(0.86)
$
(1.22)
$
(2.64)
Market
Average realized gold price per ounce
$
1,260.0
$
1,249.0
$
1,159.0
$
1,263.0
$
1,402.0
2017 KINROSS SHARE TRADING DATA
TSX (Cdn dollars)
First quarter
Second quarter
Third quarter
Fourth quarter
NYSE (U.S. dollars)
First quarter
Second quarter
Third quarter
Fourth quarter
High
Low
$
$
$
$
$
$
$
$
5.55
6.30
5.96
5.70
4.23
4.66
4.91
4.52
$
$
$
$
$
$
$
$
4.20
4.56
4.81
4.85
3.13
3.35
3.73
3.78
KINROSS ANNUAL REPORT 2017 73
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, but are not limited to, those under the headings (or headings that include):
“CEO Letter to Shareholders”, 2017 Achievements”, “Our History” and include, without limitation, statements with respect to
our guidance for production, production costs of sales, all-in sustaining cost and capital expenditures; the schedules and
budgets for the Company’s development projects; 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; and resolution of pending litigation. The words “advance”, “anticipate”, “assumption”, “believe”,
“estimates”, ‘‘expects’’, “forecast”, “focus”, “forward”, “guidance”, “initiative”, “measures”, “on budget”, “outlook”,
“opportunity”, “plan”, “potential”, “progress”, “project”, “projection”, “well positioned”, 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 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, in particular, the potential for further production curtailments at Paracatu resulting from insufficient
rainfall) and other or related natural disasters, labour disruptions (including but not limited to 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, the
maintenance of existing permits and approvals and the timely receipt of all permits and authorizations necessary for the
development and operation of the Tasiast Phase Two expansion and the Round Mountain Phase W expansion including,
without limitation, work permits, necessary import authorizations for goods and equipment and exploration licence conversions
at Tasiast; and 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
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, energy levies laws, and dam
safety regulation in Ghana, potential amendments to customs and mining laws (including, but not limited, amendments to the
VAT) and regulations relating to work permits in Mauritania, the potential passing of Environmental Protection Agency
regulations in the U.S. relating to the provision of financial assurances under the Comprehensive Environmental Response,
Compensation and Liability Act, 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) and mine plans for the Company’s mining operations (including, but not limited to,
throughput and recoveries being affected by metallurgical characteristics at Paracatu); (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; (12) the regulatory and legislative regime regarding mining,
electricity production and transmission (including rules related to power tariffs) in Brazil being consistent with Kinross’ current
74 KINROSS ANNUAL REPORT 2017
expectations; and (13) access to capital markets including, but not limited to, maintaining a debt rating 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; 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 licences 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 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 full year 2017 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.
KINROSS ANNUAL REPORT 2017 75
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 $17 impact on production cost of sales per ounce.7 Specific to the Russian
rouble, a 10% change in the exchange rate would be expected to result in an approximate $19 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 $38 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 $4 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 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.
ENDNOTES
1 These figures are non-GAAP financial measures and are defined and reconciled in Section 11, Supplemental Information of Management’s Discussion
and Analysis.
2 Unless otherwise stated, production figures in this Annual Report are based on Kinross’ 90% share of Chirano production.
3 Kinross’ guidance and outlook for 2018 represents forward-looking information and users are cautioned that actual results may vary. Forecasts for
production, production cost of sales, all-in sustaining costs and capital expenditures are + or – 5 %. Please refer to the Cautionary Statement on page 74, as
well as the Company’s News Release dated February 14, 2018, available on our website at Kinross.com.
4 See Mineral Reserve and Mineral Resource Statement in this 2017 Annual Report, page 68, and news release dated February 14, 2018 titled “Kinross
provides update on organic development projects and full-year 2017 exploration results”.
5 Reported net earnings includes a non-cash impairment charge, net of reversals, of $21.5 million in 2017 (2016: $139.6 million; 2015: $699.0 million).
6 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 sold its interest in FDN. The comparative results exclude FDN.
7 Refers to all 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.
8 Average realized gold price is a non-GAAP financial measure and is defined in Section 11, Supplemental Information of Management’s Discussion and Analysis.
76 KINROSS ANNUAL REPORT 2017
Publications
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.
Corporate Responsibility Report
Kinross publishes its corporate
responsibility performance data
annually and a comprehensive
Global Reporting Initiative Report
every two years. In 2018, we
will publish our 2017 Corporate
Responsibility Report online at
2017corporateresponsibilityreport.
kinross.com.
Corporate Information
Corporate Information
Transfer Agent and Registrar
Computershare
Investor Services Inc.
Toronto, Ontario, Canada
Toll-free: 1-800-564-6253
Proxy Solicitation Agent
Kingsdale Advisors
Toronto, Ontario, Canada
Annual Shareholders Meeting
Wednesday, May 9th, 2018
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
Contact Information
General
Kinross Gold Corporation
25 York Street, 17th Floor
Toronto, Ontario, Canada M5J 2V5
Website: Kinross.com
Telephone: 416-365-5123
Toll-freee: 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
Corporate Responsibility
Ed Opitz, Vice-President,
Safety and Sustainabillity
Telephone: 416-369-6476
Email: ed.opitz@kinross.com
Shareholder Inquiries
Computershare Investor Services Inc.
9th Floor, 100 University Avenue
Toronto, Ontario, Canada, M5J 2Y1
Toll-free: 1-800-564-6253
Toll-free facsimile: 1-888-453-0330
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KINROSS GOLD CORPORATION
25 York Street, 17th Floor
Toronto, Ontario M5J 2V5
Canada