2020
Kinross Gold
Annual Report
Strong
Foundation
Delivering
Value
Promising
Future
Letter to Shareholders
2020 Achievements
Directors + Senior Leadership
Financial Summary
Financial Review
Cautionary Statement on
Forward-Looking Information 69
1
4
6
7
7
TSX: K
Toronto Stock Exchange
NYSE: KGC
New York Stock Exchange
Kinross is a global gold mining company with strong and consistent operating results driven by a
high performance culture. With a balanced portfolio of mines and projects in three regions, our focus
is delivering value based on the core principles of operational excellence, financial discipline and
responsible mining.
Expected Production Growth1,2
(Million Au eq. oz.)
Expected 2021 Gold Production1,2
(Au eq. oz.)
+/- 5%
2.4
2.7
2.9
20%
• Americas
• Russia
• West Africa
2.4M
2021
2022
2023
58%
22%
Our Core Values
——
Putting people first.
Outstanding corporate citizenship.
High performance culture.
Rigorous financial discipline.
——
Kinross Operations and Projects
Kupol-Dvoinoye
Fort Knox
Manh Choh
Chulbatkan-Udinsk
Toronto
(Head Office)
Bald Mountain
Round Mountain
Tasiast
Chirano
Approximate Annual Production (koz.)*
<300
300-400
>400
Operating
Assets
Development
Projects
Paracatu
La Coipa
Lobo-Marte
All figures in the report are in U.S. dollars unless otherwise stated.
Endnotes can be found on page 73 of this report.
*Annual production level for “Operating Assets” based on 2020 gold equivalent production. Annual production level for “Development Projects” based on previously disclosed expected total life-of-
mine production divided by total mine-life.
Letter to Shareholders
In 2020, the world was profoundly tested by the massive
disruption of the COVID-19 pandemic, and Kinross was
no exception.
I am extremely proud of how our employees rose to this
challenge. Across Kinross’ diverse operating jurisdictions,
our people took early and decisive action to establish
rigorous new protocols and operating systems that have
protected the health of our employees while allowing our
sites to continue operating. Thanks to their adaptability and
discipline, Kinross delivered a year of remarkably strong
performance in virtually every area of our business in 2020.
We finished the year by meeting the original guidance for
production, cost of sales and capital expenditures that we set
before the pandemic began, marking the ninth straight year
we have met or exceeded guidance. Backed by disciplined
cost and capital management, and by a strong gold price,
our operations generated record free cash flow3 of over
$1 billion. With an expectation of strong sustained cash flow
in future years, we were also able to return capital to our
shareholders by instituting a sustainable quarterly dividend.
We confirmed our strong outlook by announcing that, over
the next three years, we expect production to grow by
approximately 20% to 2.9 million gold equivalent ounces
(Au eq. oz.). We also provided longer term visibility into
Highlights
Mitigated impact of COVID-19 on employee health and
operations through early implementation of rigorous
safety protocols, while providing significant support to
host communities.
——
Despite the pandemic, delivered on original annual
production1, cost of sales and capital expenditures
guidance for the ninth straight year.
——
Delivered record free cash flow3 of over $1 billion and
strengthened our investment grade balance sheet.
——
Provided strong outlook of 20% increase in production
over the next three years, and average annual production
of 2.5 million Au eq. oz. through to 2029, with additional
upside opportunities.2
——
Outperformed S&P TSX Gold Index over past five years
and generated a total shareholder return of 56% in 2020.
——
Three largest mines – Paracatu, Kupol and Tasiast –
represented 62% of production and were the lowest cost
mines in the portfolio, with record production and cost
performance at Tasiast.
——
All development projects advanced on schedule with
Fort Knox Gilmore construction completed on time and
under budget.
——
J. Paul Rollinson
President and Chief Executive Officer
our business, forecasting average annual production of
2.5 million Au eq. oz. through the end of the decade, and
additional upside opportunities beyond that.
Responsible mining is a cornerstone of both our culture
and strategy, and, in 2020, we continued our strong envi-
ronmental, social and governance (ESG) performance,
with a particular focus on helping host communities deal
with the critical public health and economic challenges
stemming from COVID-19. We were gratified to again be
ranked in the top quartile of our mining group peers by
the leading independent ESG rating agencies, reflecting
our consistent performance on key metrics and history of
mutually beneficial relationships with our host communities.
Instituted sustainable quarterly dividend of $0.03 per share.
——
Acquired bolt-on Manh Choh project (formerly known as
the ‘Peak’ project), near Fort Knox, and new exploration
licenses proximal to Kupol and around Chulbatkan.
——
Increased mineral reserves by a net 5.7 million ounces
and extended mine life at Kupol, Chirano and Paracatu.
——
Reached agreement in principle with Government
of Mauritania to enhance partnership.
——
Maintained top-quartile peer group ranking with all
major third-party ESG rating agencies and advanced
climate change strategy and disclosure.
——
Contributed approximately $3 billion4 in economic
benefits through taxes, wages, procurement and
community investments to host countries.
——
Despite limitations of COVID-19, carried out over
100,000 stakeholder interactions and supported
programs with over 900,000 beneficiaries in
host communities.
——
Highest ranked Canadian mining company surveyed in
The Globe and Mail’s annual governance review.
——
1
2020 ANNUAL REPORT KINROSS GOLD While 2020 challenged Kinross, it also affirmed our culture of
operational excellence and commitment to Putting People
First, which unites our global workforce and continues to
benefit our stakeholders.
We continued to strengthen our investment grade balance
sheet, ending the year with just over $1.2 billion of cash and
cash equivalents, compared with $575 million at the end of
2019, and with total liquidity of approximately $2.8 billion.
A strong year of production with an outlook for growth
In 2020, Kinross’ eight operating mines produced approxi-
mately 2.4 million Au eq. oz.1,3 at a production cost of sales
of $723 per Au eq. oz.1,3, and an all-in sustaining cost of $987
per Au eq. oz.1,3, which were within the original guidance we
set at the beginning of the year. Despite pandemic-related
impacts, we kept our cost of sales and all-in sustaining costs
nearly level with 2019.
Once again, our production was driven by strong results
from our three largest mines – Paracatu, Kupol and Tasiast –
which together accounted for 62% of our production, and
were also our lowest cost operations.
Highlights from the portfolio included another year of record
production at Tasiast, which also had the lowest cost of sales
in the portfolio, averaging $584 per Au eq. oz. for the year,
and delivered record free cash flow in 2020. Paracatu was
again Kinross’ largest producer, with output of over 542,000
Au eq. oz. Kupol and Dvoinoye had another excellent year
with strong production and costs below $600 per Au eq. oz.
The Company expects strong production of approximately
2.4 million Au eq. oz. in 2021, in line with 2020.1,2 In 2022, we
expect production to increase to approximately 2.7 million
Au eq. oz., ramping up to approximately 2.9 million Au eq. oz.
in 2023, with a downward trend in production cost of sales.1,2
We expect the production increase to be driven largely by
life-of-mine extensions and projects, enhancements to pro-
ductivity and operational efficiency, and exploration success
identifying new ounces around existing operations.
Longer term, through the end of the decade, and as projects
in our current pipeline come online, we forecast average
annual production of 2.5 million Au eq. oz., with additional
upside opportunities.1,2
Record cash flow increases our financial strength
The combination of strong production, disciplined cost and
capital management, and a strong gold price led to out-
standing financial results in 2020.
Adjusted operating cash flow 3 increased by 59% over the
previous year, while free cash flow3 grew to over $1 billion,
a six-fold increase compared with 2019. Our attributable
margins 5 increased by 53% to $1,051 per ounce sold, out-
pacing the increase in the average realized gold price8 of
27%. Our adjusted net earnings 3,6 more than doubled to
approximately $970 million.
Given the strength of our financial position, and our continued
prospects for strong cash flow, we were pleased to institute
a sustainable quarterly dividend of $0.03 per share.
2
We ended 2020 well positioned to fund our growth, contin-
ue to reduce our debt, and return capital to our sharehold-
ers. With our growing production profile and costs trending
downwards, we expect to have a peer-leading free cash flow
yield over the next three years.
A robust pipeline of development projects
and opportunities
Kinross successfully advanced its portfolio of low-risk devel-
opment projects in 2020 while expanding our project pipeline
with attractive new opportunities in our existing jurisdictions.
The Tasiast 24k project advanced on budget and on sched-
ule in 2020. The project is expected to increase throughput
capacity to 21,000 tonnes per day (t/d) by the end of 2021,
and to 24,000 t/d by mid-2023, to increase production, re-
duce costs, and generate significant cash flow and attractive
returns. We also reached an agreement in principle with the
Government of Mauritania to enhance our partnership.
In early 2020, Kinross completed the acquisition of the
Chulbatkan property in Russia, a large and highly prospec-
tive license area. In 2020, drilling focused on the Udinsk
resource pit, the first project expected to be developed at
Chulbatkan, supporting the advancement of a pre-feasi-
bility study which is expected to be completed in Q4 2021.
Kinross is targeting a declaration of mineral reserves at
year-end 2021, and anticipates first production at Udinsk in
2025. Kinross also acquired additional exploration licenses
around Chulbatkan and proximal to Kupol.
The La Coipa Restart project made good progress, with pre-
stripping starting in early January 2021, and first production
remaining on track for mid-2022.
The Lobo-Marte feasibility study advanced on schedule,
with expected completion in Q4 2021. The Company is tar-
geting production at Lobo-Marte to begin in 2027 following
permitting and the completion of mining at La Coipa.
Construction for the Fort Knox Gilmore project was com-
pleted on schedule and under budget, with first gold poured
from the new heap leach pad in January 2021.
In September 2020, Kinross acquired 70% of the Manh Choh
project (formerly known as ‘Peak’), a synergistic, bolt-on proj-
ect that allows us to leverage existing mill and infrastructure
at Fort Knox. We expect to complete a scoping study in Q2
2021 and a feasibility study by the end of 2022, with a target
for first production in 2024. The project was renamed Manh
Choh, a culturally significant name for the local indigenous
village, in early 2021 after close consultation with the local
tribal council.
2020 ANNUAL REPORT KINROSS GOLD Adding reserves and mine life through exploration
At year-end 2020, we were pleased to add 5.7 million gold
ounces to our mineral reserve estimates, net of depletion,
for a reserve increase of 23% compared with year-end
2019. We have maintained our $1,200 per ounce gold
price assumption for determining reserves in order to
maximize margins and remain well positioned throughout
the commodity price cycle.
Once again, we had good success in 2020 extending the life
of our existing operations. Through successful exploration
and mine optimization programs, we added an additional
year of mine life at Kupol and Paracatu and three years
at Chirano.
We have an exciting and expanded exploration program
planned for 2021. With the goal of adding to our mineral
reserve and resource estimates, and further extending the
life of our existing mines, we will be following up on other
promising targets across the portfolio, including newly
acquired advanced exploration projects in Russia and Alaska.
Delivering on our ESG commitments
Responsible mining is enshrined as a first priority in our annu-
al plan, and, in 2020, the Company was again acknowledged
for our ESG performance. We ranked in the top quartile of
our peer group, as measured by Sustainalytics, MSCI, ISS,
Vigeo Eiris, Refinitiv and S&P Global ESG scores. Our inclu-
sion in the S&P Global Sustainability Yearbook 2021 marked
the Company’s eighth consecutive year in the industry’s top
tier for ESG performance, as did its “A” level rating by MSCI.
Despite the impact of COVID-19, our overall 2020 safety
performance was in line with three-year averages, with injury
frequency rates among the lowest in the industry. Tragically,
this was overshadowed by a mine site fatality at Round
Mountain, the first for the Company since 2017. Immediately
following the incident, we held global Safety Stand-downs
to reflect, refocus, and review protocols to ensure we
continue to improve our safety processes and systems to
eliminate risks.
Helping host communities manage the impact of COVID-19
was a key 2020 priority. We provided approximately $6 mil-
lion in COVID-19 support for local health services, food
security, and to bolster local economies. Despite the limita-
tions imposed by the pandemic, we maintained our strong
overall focus on stakeholder engagement and community
investment, with approximately 105,000 stakeholder inter-
actions, and community investments supporting approxi-
mately 938,000 beneficiaries.
In 2020, we improved disclosure on climate, including bench-
marking against the recommendations made by the Task
Force on Climate-related Financial Disclosures (TCFD), and
conducted a climate risk and opportunity assessment across
all sites. The Company’s performance in environmental
stewardship was recognized with a top ranking by the World
Wildlife Fund (WWF) Russia’s environmental transparency
rating of mining companies. The Alaska Department of Nat-
ural Resources also publicly endorsed our successful recla-
mation of the True North mine, the first large metal mine to
be returned to the State and opened for public access.
In the important area of inclusion and diversity, we continued
to advance our goals by achieving 33% women representa-
tion on the Board and committed to Canada’s BlackNorth
Initiative and its anti-racism pledge. We also maintained our
strong performance in corporate governance, ranking high-
est among Canadian mining companies in The Globe and
Mail’s annual corporate governance ranking.
Positioned to deliver future value
We are gratified that in 2020 our market performance reflect-
ed our achievements and exciting prospects, generating an
impressive 56% total shareholder return (TSR) in 2020. While
the entire sector benefited from a strong gold price, Kinross
has significantly outperformed, with a TSR of 306% over
the past five years compared with 166% for the S&P TSX
Gold Index.
We believe we are well positioned to continue generating
value through responsible mining based on our compelling
strengths, which include:
• A nine-year track record of consistently meeting guidance
on production, costs, and capital spending;
• Large annual production of approximately 2.4 million Au
eq. oz. in 2021, forecast to increase to approximately 2.9
million Au eq. oz. by 2023 2, with a downward trend in
production cost of sales;
• A robust pipeline of development projects and
exploration opportunities which is expected to deliver
annual average production of 2.5 million Au eq. oz. until
the end of the decade;
• A sizable reserve and resource base, with mineral reserves
increasing by 5.7 million gold ounces, or 23%, net of
depletion in 2020;
• Strong cash flow, which continues to strengthen
our balance sheet, enabling us to return capital to
shareholders through a sustainable dividend as we
invest in our future;
• Synergistic and disciplined acquisitions that continue to
add value to our portfolio; and
• Leading ESG performance in the mining sector.
In closing, let me again acknowledge the outstanding efforts
of our employees, and the support of our suppliers, local
communities, and host governments, as we continue to
manage our way together through a challenging time.
To our shareholders, thank you for your continued support.
We look forward to sharing an exciting and rewarding future.
J. Paul Rollinson
President and Chief Executive Officer
3
2020 ANNUAL REPORT KINROSS GOLD 2020 PERFORMANCE HIGHLIGHTS
Kinross had an exceptionally strong 2020, despite the challenges of the global pandemic. We took actions to prioritize
the health and safety of our workforce and put in place comprehensive protocols to help prevent exposure to COVID-19
at our operations and provide support for our employees. We also implemented a prudent business continuity plan,
including maintaining our global supply chain, managing metal shipments and maintaining our financial flexibility to
successfully mitigate risks across our business. Against these headwinds, we delivered on guidance, advanced our
growth projects and provided strong returns to our shareholders.
Operational and Technical Excellence
MET GUIDANCE
Nine consecutive years of meeting or exceeding our
guidance targets for production, cost of sales and capital
expenditures, despite impacts of COVID-19.1,3
Produced 2.4 million Au eq. oz.
Realized cost of sales per Au eq. oz. sold of $723
Delivered all-in sustaining cost of $987 per Au eq. oz. sold
Reported capital expenditures of $916 million
Financial Discipline and Strength
OUTSTANDING
FINANCIAL RESULTS
Generated record free cash
flow3 of over $1 billion
and more than doubled
adjusted net earnings3,6
from 2019.
STRENGTHENED
INVESTMENT GRADE
BALANCE SHEET
Strengthened our balance
sheet, ending the year
with over $1.2 billion in
cash and cash equivalents
with available liquidity of
approximately $2.8 billion.
+$1B
free cash flow
+$1.2B
cash and cash
equivalents
3 LARGEST MINES WITH
LOWEST COSTS
ADVANCED PROJECT
PORTFOLIO
Our three largest mines
— Paracatu, Kupol and
Tasiast — delivered 62%
of total production and
achieved the lowest costs.
Fort Knox Gilmore
construction completed on
time and under budget.
Advanced all projects in all
three regions on schedule:
62%
of production
Tasiast 24k
La Coipa
Lobo-Marte
Udinsk
Manh Choh
INCREASED MARGIN
Improved attributable margins5 by 53% to $1,051 per gold
ounce sold, outpacing the rise in average realized
gold price.8
53%
$1,051
per Au eq.
oz. sold
27%
Average
Realized
Gold
Price
Increase8
Kinross
Margin5
Increase
Strong Future
RISING PRODUCTION
Production expected to grow 20% to
approximately 2.9 million Au eq. oz. in 2023,
with an annual average of 2.5 million Au
eq. oz. over the decade.1,2
2.7
2.9
2.4
SIGNIFICANT RESERVE
GROWTH
Increased reserves by
23%, adding 5.7 million
gold ounces, net of
depletion in 2020, for a
total of approximately
30 million gold ounces.
EXTENDED MINE LIFE
Extended mine life at each of Kupol and
Paracatu by one year, and Chirano by three
years, as a result of successful exploration
and mine plan optimization.
Kupol
Chirano
2025
2025
Paracatu
2032
2021
2022
2023
4
2020 ANNUAL REPORT KINROSS GOLD
2020 ENVIRONMENTAL, SOCIAL AND GOVERNANCE HIGHLIGHTS
Our response to the COVID-19 pandemic has been guided by our core values and prioritizing health and safety. We
provided approximately $6 million towards local efforts to combat COVID-19 focused on health, food security and
bolstering local economies. Our success in maintaining operations enabled us to provide ongoing economic benefits
to our host communities, an especially critical contribution in a challenging year. Kinross also continued to deliver on
its environmental, social and governance commitments in 2020, with our performance attributable to our values,
strong policies and leading governance system.
Environmental Stewardship
ADVANCED CLIMATE
STRATEGY
STRONG ENVIRONMENTAL
PERFORMANCE
BEST PRACTICES TAILINGS MANAGEMENT
Advanced our climate
change strategy
and disclosures and
benchmarked against the
recommendations of the
Task Force on Climate-
related Financial Disclosures.
Top-ranked company
in World Wildlife Fund
(WWF) Russia’s rating
of mining and metals
companies, and True North
mine in Alaska successfully
reclaimed with land returned
to State for public use.
TCFD
Maintained record of zero tailings breaches for the 28th
consecutive year through best-in-class tailings management
program at all sites.
Independent geotechnical reviews
Quarterly executive and Board level oversight
Zero tailings breaches in the Company’s 28-year history
Program meets or exceeds the highest global standards
Social Contributions
BENEFIT FOOTPRINT
Continued to provide
approximately $3
billion4 in economic
benefits through taxes,
wages, procurement and
community investments
to host countries.
~$3B
spent in host
countries
Robust Governance
PROACTIVE STAKEHOLDER
ENGAGEMENT
Recorded approximately
105,000 stakeholder
interactions despite
COVID-19 restrictions
and received more than
3,500 positive expressions
of community support,
which is 23 times higher
than negative expressions.
LOCAL EMPLOYMENT AND SUPPORT
99% of total workforce from within host countries over past
two years, with management roles increasing to 87% in 2020,
and Kinross community programs supporting approximately
938,000 beneficiaries globally.
98
98
99
99
87
85
85
80
(%)
Management
Workforce
2017
2018
2019
2020
LEADING PERFORMANCE
BOARD SUCCESSION
DIVERSITY COMMITMENTS
Recognized as the top ranked
Canadian mining company in The
Globe and Mail’s annual corporate
governance survey with a score of 90
out of a total of 100 points.
Focused succession program has
brought on seven new directors since
2015, keeping Board vital, enabling
effective succession planning and
lowering average tenure to 5 years
from 6.9 in 2019.
Maintained 33% women
representation on the Board, and
increased the number of women
across our global workforce.
Committed to Canada’s BlackNorth
Initiative and its anti-racism pledge.
TOP
tier ranking
5 years
average tenure
33%
women directors
5
2020 ANNUAL REPORT KINROSS GOLD
Board of Directors
(left to right)
Catherine McLeod-Seltzer CR,H
Independent Chair
Glenn A. Ives A,H
Corporate Director
Kelly J. Osborne CGN,CR
Corporate Director
Ian Atkinson CGN,CR,H
Corporate Director
Kerry D. Dyte A,CGN
Corporate Director
Ave G. Lethbridge CGN,H
Corporate Director
David A. Scott A,CR
Corporate Director
Elizabeth D. McGregor A,CR
Corporate Director
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 Resources and
Compensation Committee
Senior Leadership Team
(left to right)
J. Paul Rollinson
President and
Chief Executive Officer
Geoffrey P. Gold
Executive Vice-President,
Corporate Development, External
Relations and Chief Legal Officer
Andrea S. Freeborough
Senior Vice-President and
Chief Financial Officer
Paul B. Tomory
Executive Vice-President and
Chief Technical Officer
Leadership Advisory Team
Kinross’ Leadership Advisory Team consists of experienced leaders with diverse perspectives and functional expertise
who provide input and insight to the Senior Leadership Team.
Laurence Davies
Vice-President, Finance,
Operations and Projects
Benny Guidoni
Vice-President
and Treasurer
Andreas Mittler
Senior Vice-President, West
Africa Operations
Mike Sylvestre
Senior Vice-President,
Americas Operations
Graeme Davis
Senior Vice-President,
Exploration
Tom Elliott
Senior Vice-President,
Investor Relations
Kathleen Grandy
Vice-President,
Human Resources
6
Scott Hicks
Senior Vice-President,
Technical Services,
Geology and Mining
Nathan Longenecker
Senior Vice-President,
Legal, and General Counsel
Ed Opitz
Senior Vice-President,
Safety and Sustainability
Claude Schimper
Senior Vice-President,
Russia Operations
David Shaver
Senior Vice-President,
Corporate Development
Hélène Timpano
Senior Vice-President,
Operations
Mike van Akkooi
Senior Vice-President,
Government Relations
2020 ANNUAL REPORT KINROSS GOLD
Financial Summary
(In millions of United States dollars, except ounces, per share amounts, gold price and per ounce amounts)
Revenue
Net cash flow provided from operating activities
Adjusted operating cash flow 3
Reversals of impairment charges – net 7
Net earnings (loss) attributable to common shareholders 6,7
Net earnings (loss) per share attributable to common shareholders 6,7
Basic
Diluted
Adjusted net earnings attributable to common shareholders 3
Adjusted net earnings per share 3
Attributable production cost of sales per equivalent ounce sold 1,3
All-in sustaining cost per gold equivalent ounce sold 1,3
Capital expenditures 10
Free cash flow 3
Average realized gold price per ounce 8
2020
4,213.4
1,957.6
1,912.7
(650.9)
1,342.4
1.07
1.06
966.8
0.77
723
987
916.1
1,041.5
1,774
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2019
3,497.3
1,224.9
1,201.5
(361.8)
718.6
0.57
0.57
422.9
0.34
706
983
1,060.2
164.7
1,392
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2018
3,212.6
788.7
874.2
–
(23.6)
(0.02)
(0.02)
128.1
0.10
734
965
1,005.2
(216.5)
1,268
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Attributable gold equivalent ounces produced 1
2,366,648
2,507,659
2,452,398
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 6
63
68
68
Note to reader: Subsequent to the February 10, 2021 filing of the Management’s Discussion and Analysis and the Consolidated Financial Statements
and Notes, as well as the release of our Mineral Reserve and Resource Statement, the Peak Project has been renamed Manh Choh.
7
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
This management's discussion and analysis ("MD&A"), prepared as of February 10, 2021, relates to the financial condition and results
of operations of Kinross Gold Corporation together with its wholly owned subsidiaries, as at December 31, 2020 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, 2020 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 2020 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, 2020, 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 55 – 56 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, 2019, 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 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 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.
Many of these factors have been or may be influenced by the continued economic and business uncertainties caused by the COVID-
19 pandemic. 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 along with
political changes and uncertainties, including as a result of the impacts of the COVID-19 pandemic. 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
Paracatu
Kupol(a)
Tasiast
Chirano
Ownership percentage at December 31,
Operator
Kinross
Kinross
Kinross
Kinross
Kinross
Kinross
Kinross
Location
USA
USA
USA
Brazil
Russian Federation
Mauritania
Ghana
2020
100%
100%
100%
100%
100%
100%
90%
2019
100%
100%
100%
100%
100%
100%
90%
(a) The Kupol segment includes the Kupol and Dvoinoye mines.
1
1 MDA
2020 ANNUAL REPORT KINROSS GOLD
Years ended December 31,
2020 vs. 2019
2020
2019
2018
Change
% Change(e)
2019 vs. 2018
Change % Change(e)
2020 vs. 2019
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Consolidated Financial Performance
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Consolidated Financial and Operating Highlights
(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
Depreciation, depletion and amortization
Reversals of impairment charges ‐ net
Operating earnings
Net earnings (loss) attributable to common shareholders
2,383,307
2,527,788
2,475,068
(144,481)
2,375,548
2,512,758
2,532,912
(137,210)
(6%)
(5%)
52,720
(20,154)
2,366,648
2,507,659
2,452,398
(141,011)
2,358,927
2,492,572
2,510,419
(133,645)
(6%)
(5%)
55,261
(17,847)
$
4,213.4
$
3,497.3
$
3,212.6
$
716.1
$
1,725.7
$
1,778.9
$
1,860.5
$
(53.2)
$
842.3
$
731.3
$
772.4
$
111.0
$
(650.9)
$
(361.8)
$
‐
$
(289.1)
$
1,899.4
$
991.1
$
200.5
$
908.3
$
1,342.4
$
718.6
$
(23.6)
$
623.8
20%
$
284.7
(3%)
$
(81.6)
15%
$
(41.1)
nm
$
(361.8)
92%
$
790.6
87%
$
742.2
88%
$
0.59
86%
$
0.59
2%
(1%)
2%
(1%)
9%
(4%)
(5%)
nm
nm
nm
nm
nm
nm
nm
55%
37%
5%
Basic earnings (loss) per share attributable to common shareholders
$
1.07
$
0.57
$
(0.02)
$
0.50
Diluted earnings (loss) per share attributable to common shareholders
Adjusted net earnings attributable to common shareholders (b)
Adjusted net earnings per share (b)
Net cash flow provided from operating activities
Adjusted operating cash flow(b)
Capital expenditures (d)
Free cash flow(b)
Average realized gold price per ounce (b)
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)
$
1.06
$
0.57
$
(0.02)
$
0.49
$
966.8
$
422.9
$
128.1
$
543.9
129%
$
294.8
$
0.77
$
0.34
$
0.10
$
0.43
126%
$
0.24
$
1,957.6
$
1,224.9
$
788.7
$
732.7
$
1,912.7
$
1,201.5
$
874.2
$
711.2
60%
$
436.2
59%
$
327.3
$
916.1
$
1,060.2
$
1,005.2
$
(144.1)
(14%)
$
55.0
$
1,041.5
$
164.7
$
(216.5)
$
876.8
nm
$
381.2
(176%)
$
1,774
$
1,392
$
1,268
$
382
27%
$
124
$
726
$
708
$
735
$
18
$
723
$
706
$
734
$
17
$
700
$
691
$
723
$
9
3%
2%
1%
$
(27)
$
(28)
$
(32)
$
970
$
974
$
959
$
(4)
(0%)
$
15
$
987
$
983
$
965
$
4
$
$
1,248
1,260
$
$
1,282
1,284
$
$
1,275
1,274
$
$
(34)
(24)
0%
$
18
(3%)
(2%)
$
7
$
10
10%
(4%)
(4%)
(4%)
2%
2%
1%
1%
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production and costs, and Peak (70%) costs.
(a)
(b) The definition and reconciliation of these non-GAAP financial measures is included in Section 11.
(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 2020 was 86.32:1 (2019 - 85.99:1 and 2018 - 80.74:1).
“Capital expenditures” for the years ended December 31, 2020 and 2019 are as reported as “Additions to property, plant and equipment” on the
consolidated statements of cash flows and exclude “Interest paid capitalized to property, plant and equipment”. “Capital expenditures” for the
year ended December 31, 2018 is calculated as $1,043.4 million of “Additions to property, plant and equipment”, as reported on the consolidated
statement of cash flows for the year ended December 31, 2018, less $38.2 million of capitalized interest paid, as reported.
"nm" means not meaningful.
(d)
(e)
2
MDA 2
Although the Company was impacted by the COVID-19 pandemic, in particular at Tasiast where the mining rate was impacted,
production remained consistent with plan, with a 6% decrease compared to 2019. The reduction compared to 2019 was as a result of
lower production at Paracatu and Chirano due to decreases in mill recoveries and throughput, Round Mountain primarily due to lower
mill grade and at Maricunga as production activities transitioned to care and maintenance in the fourth quarter of 2019. These
decreases were partially offset by higher production at Fort Knox and Tasiast due to increases in mill grades and throughput.
Metal sales increased by 20% in 2020 compared to 2019, due to an increase in average realized gold price, partially offset by a decrease
in gold equivalent ounces sold. The average realized gold price increased to $1,774 per ounce in 2020 from $1,392 per ounce in 2019.
Total gold equivalent ounces sold in 2020 decreased to 2,375,548 ounces from 2,512,758 ounces in 2019, primarily due to the decrease
in production as described above.
Production cost of sales decreased by 3% in 2020 compared to 2019, primarily due to decreases at Paracatu, Round Mountain, and
Maricunga due to lower gold equivalent ounces sold. These decreases were partially offset by increases in production cost of sales at
Fort Knox and Bald Mountain as a result of increased gold equivalent ounces sold.
In 2020, attributable production cost of sales per equivalent ounce sold and per equivalent ounce sold on a by-product basis increased
slightly, compared to 2019, mainly due to increases in costs per ounce at Chirano and Bald Mountain.
Depreciation, depletion and amortization increased by 15% in 2020 compared to 2019, primarily due to increases in depreciable asset
bases and higher gold equivalent ounces sold at Bald Mountain and Tasiast. These increases were partially offset by a decrease at
Chirano due to an increase in mineral reserves at the end of 2019 and a decrease in gold equivalent ounces sold.
During the year ended December 31, 2020, the Company recorded after‐tax impairment reversals of $612.8 million, related entirely
to property, plant and equipment at Tasiast ($299.5 million), Chirano ($132.9 million) and Lobo-Marte ($180.4 million, which included
$48.3 million for the impairment reversal recorded at June 30, 2020). These impairment reversals were mainly due to increases in the
Company’s long‐term gold price estimate, the mine life extension at Chirano and the increase in mineral reserves at Lobo-Marte. The
tax impacts of the impairment reversals at Chirano and Lobo-Marte were income tax expenses of $71.6 million and $4.6 million,
respectively. There was no tax impact on the impairment reversal at Tasiast. At December 31, 2019, the Company recorded after‐tax
impairment reversals of $293.6 million, related entirely to property, plant and equipment at Tasiast ($161.1 million) and Paracatu
($132.5 million), and were mainly due to an increase in the Company’s long‐term gold price estimate. The impairment reversal at
Paracatu was net of a tax expense of $68.2 million. There was no tax impact on the impairment reversal at Tasiast.
Operating earnings were $1,899.4 million in 2020 compared to $991.1 million in 2019. The increase was primarily due to the increase
in margins (metal sales less production cost of sales) and higher impairment reversals, partially offset by the increase in depreciation,
depletion and amortization as described above.
In 2020, the Company recorded income tax expense of $439.8 million, compared to income tax expense of $246.7 million in 2019. The
$439.8 million of income tax expense in 2020 was the result of higher operating mine profitability compared to 2019, an additional
deferred tax expense of $76.2 million related to the reversal of impairment charges at Chirano and Lobo-Marte, as well as $101.2
million of deferred tax expense resulting from the net foreign currency translation of the tax deductions related to the Company’s
operations in Brazil and the Russian Federation. In 2020, the Company also recorded a $25.4 million net tax benefit from U.S. tax law
changes legislated through the U.S. Cares Act, partially offsetting these increases. The $246.7 million income tax expense recognized
in 2019 included an additional deferred tax expense of $68.2 million related to the reversal of impairment charges at Paracatu, as well
as $1.6 million of deferred tax expense resulting from the net foreign currency translation of tax deductions related to the Company’s
operations in Brazil and the Russian Federation. Kinross' combined federal and provincial statutory tax rate for both 2020 and 2019
was 26.5%.
Net earnings attributable to common shareholders in 2020 were $1,342.4 million, or $1.07 per share, compared to $718.6 million, or
$0.57 per share, in 2019. The increase is primarily as a result of the increase in operating earnings, including the increase in net
impairment reversals, partially offset by the increase in income tax expense, as described above.
Adjusted net earnings attributable to common shareholders in 2020 were $966.8 million, or $0.77 per share, compared to $422.9
million, or $0.34 per share, in 2019. The increase is primarily as a result of the increase in margins, partially offset by the increase in
depreciation, depletion and amortization and income tax expense, as described above.
3
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Consolidated Financial and Operating Highlights
Operating Highlights
Total gold equivalent ounces (a)
Produced(c)
Sold(c)
Produced(c)
Sold(c)
Attributable gold equivalent ounces (a)
Financial Highlights
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Reversals of impairment charges ‐ net
Operating earnings
Net earnings (loss) attributable to common shareholders
2,383,307
2,527,788
2,475,068
(144,481)
2,375,548
2,512,758
2,532,912
(137,210)
(6%)
(5%)
52,720
(20,154)
2,366,648
2,507,659
2,452,398
(141,011)
2,358,927
2,492,572
2,510,419
(133,645)
(6%)
(5%)
55,261
(17,847)
$
4,213.4
$
3,497.3
$
3,212.6
$
716.1
$
1,725.7
$
1,778.9
$
1,860.5
$
(53.2)
$
842.3
$
731.3
$
772.4
$
111.0
$
(650.9)
$
(361.8)
$
‐
$
(289.1)
$
1,899.4
$
991.1
$
200.5
$
908.3
$
1,342.4
$
718.6
$
(23.6)
$
623.8
20%
$
284.7
(3%)
$
(81.6)
15%
$
(41.1)
nm
$
(361.8)
92%
$
790.6
87%
$
742.2
88%
$
0.59
86%
$
0.59
Basic earnings (loss) per share attributable to common shareholders
$
1.07
$
0.57
$
(0.02)
$
0.50
Diluted earnings (loss) per share attributable to common shareholders
$
1.06
$
0.57
$
(0.02)
$
0.49
Adjusted net earnings attributable to common shareholders (b)
$
966.8
$
422.9
$
128.1
$
543.9
129%
$
294.8
Adjusted net earnings per share (b)
Net cash flow provided from operating activities
Adjusted operating cash flow(b)
Capital expenditures (d)
Free cash flow(b)
Average realized gold price per ounce (b)
$
0.77
$
0.34
$
0.10
$
0.43
126%
$
0.24
$
1,957.6
$
1,224.9
$
788.7
$
732.7
$
1,912.7
$
1,201.5
$
874.2
$
711.2
60%
$
436.2
59%
$
327.3
$
916.1
$
1,060.2
$
1,005.2
$
(144.1)
(14%)
$
55.0
$
1,041.5
$
164.7
$
(216.5)
$
876.8
nm
$
381.2
(176%)
$
1,774
$
1,392
$
1,268
$
382
27%
$
124
Consolidated production cost of sales per equivalent ounce (c) sold(b)
Attributable(a) production cost of sales per equivalent ounce (c) sold(b)
$
726
$
708
$
735
$
18
$
723
$
706
$
734
$
17
Attributable(a) production cost of sales per ounce sold on a by‐product basis (b)
$
700
$
691
$
723
$
9
3%
2%
1%
$
(27)
$
(28)
$
(32)
Attributable(a) all‐in sustaining cost per ounce sold on a by‐product basis (b)
$
970
$
974
$
959
$
(4)
(0%)
$
15
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)
$
987
$
983
$
965
$
4
$
1,248
$
1,282
$
1,275
$
(34)
$
1,260
$
1,284
$
1,274
$
(24)
0%
$
18
(3%)
(2%)
$
7
$
10
(a)
(c)
(d)
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production and costs, and Peak (70%) costs.
(b) The definition and reconciliation of these non-GAAP financial measures is included in Section 11.
"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 2020 was 86.32:1 (2019 - 85.99:1 and 2018 - 80.74:1).
“Capital expenditures” for the years ended December 31, 2020 and 2019 are as reported as “Additions to property, plant and equipment” on the
consolidated statements of cash flows and exclude “Interest paid capitalized to property, plant and equipment”. “Capital expenditures” for the
year ended December 31, 2018 is calculated as $1,043.4 million of “Additions to property, plant and equipment”, as reported on the consolidated
statement of cash flows for the year ended December 31, 2018, less $38.2 million of capitalized interest paid, as reported.
(e)
"nm" means not meaningful.
2%
(1%)
2%
(1%)
9%
(4%)
(5%)
nm
nm
nm
nm
nm
nm
nm
55%
37%
5%
10%
(4%)
(4%)
(4%)
2%
2%
1%
1%
(in millions, except ounces, per share amounts and per ounce amounts)
2020
2019
2018
Change
% Change(e)
Change % Change(e)
Years ended December 31,
2020 vs. 2019
2019 vs. 2018
2020 vs. 2019
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Consolidated Financial Performance
Although the Company was impacted by the COVID-19 pandemic, in particular at Tasiast where the mining rate was impacted,
production remained consistent with plan, with a 6% decrease compared to 2019. The reduction compared to 2019 was as a result of
lower production at Paracatu and Chirano due to decreases in mill recoveries and throughput, Round Mountain primarily due to lower
mill grade and at Maricunga as production activities transitioned to care and maintenance in the fourth quarter of 2019. These
decreases were partially offset by higher production at Fort Knox and Tasiast due to increases in mill grades and throughput.
Metal sales increased by 20% in 2020 compared to 2019, due to an increase in average realized gold price, partially offset by a decrease
in gold equivalent ounces sold. The average realized gold price increased to $1,774 per ounce in 2020 from $1,392 per ounce in 2019.
Total gold equivalent ounces sold in 2020 decreased to 2,375,548 ounces from 2,512,758 ounces in 2019, primarily due to the decrease
in production as described above.
Production cost of sales decreased by 3% in 2020 compared to 2019, primarily due to decreases at Paracatu, Round Mountain, and
Maricunga due to lower gold equivalent ounces sold. These decreases were partially offset by increases in production cost of sales at
Fort Knox and Bald Mountain as a result of increased gold equivalent ounces sold.
In 2020, attributable production cost of sales per equivalent ounce sold and per equivalent ounce sold on a by-product basis increased
slightly, compared to 2019, mainly due to increases in costs per ounce at Chirano and Bald Mountain.
Depreciation, depletion and amortization increased by 15% in 2020 compared to 2019, primarily due to increases in depreciable asset
bases and higher gold equivalent ounces sold at Bald Mountain and Tasiast. These increases were partially offset by a decrease at
Chirano due to an increase in mineral reserves at the end of 2019 and a decrease in gold equivalent ounces sold.
During the year ended December 31, 2020, the Company recorded after‐tax impairment reversals of $612.8 million, related entirely
to property, plant and equipment at Tasiast ($299.5 million), Chirano ($132.9 million) and Lobo-Marte ($180.4 million, which included
$48.3 million for the impairment reversal recorded at June 30, 2020). These impairment reversals were mainly due to increases in the
Company’s long‐term gold price estimate, the mine life extension at Chirano and the increase in mineral reserves at Lobo-Marte. The
tax impacts of the impairment reversals at Chirano and Lobo-Marte were income tax expenses of $71.6 million and $4.6 million,
respectively. There was no tax impact on the impairment reversal at Tasiast. At December 31, 2019, the Company recorded after‐tax
impairment reversals of $293.6 million, related entirely to property, plant and equipment at Tasiast ($161.1 million) and Paracatu
($132.5 million), and were mainly due to an increase in the Company’s long‐term gold price estimate. The impairment reversal at
Paracatu was net of a tax expense of $68.2 million. There was no tax impact on the impairment reversal at Tasiast.
Operating earnings were $1,899.4 million in 2020 compared to $991.1 million in 2019. The increase was primarily due to the increase
in margins (metal sales less production cost of sales) and higher impairment reversals, partially offset by the increase in depreciation,
depletion and amortization as described above.
In 2020, the Company recorded income tax expense of $439.8 million, compared to income tax expense of $246.7 million in 2019. The
$439.8 million of income tax expense in 2020 was the result of higher operating mine profitability compared to 2019, an additional
deferred tax expense of $76.2 million related to the reversal of impairment charges at Chirano and Lobo-Marte, as well as $101.2
million of deferred tax expense resulting from the net foreign currency translation of the tax deductions related to the Company’s
operations in Brazil and the Russian Federation. In 2020, the Company also recorded a $25.4 million net tax benefit from U.S. tax law
changes legislated through the U.S. Cares Act, partially offsetting these increases. The $246.7 million income tax expense recognized
in 2019 included an additional deferred tax expense of $68.2 million related to the reversal of impairment charges at Paracatu, as well
as $1.6 million of deferred tax expense resulting from the net foreign currency translation of tax deductions related to the Company’s
operations in Brazil and the Russian Federation. Kinross' combined federal and provincial statutory tax rate for both 2020 and 2019
was 26.5%.
Net earnings attributable to common shareholders in 2020 were $1,342.4 million, or $1.07 per share, compared to $718.6 million, or
$0.57 per share, in 2019. The increase is primarily as a result of the increase in operating earnings, including the increase in net
impairment reversals, partially offset by the increase in income tax expense, as described above.
Adjusted net earnings attributable to common shareholders in 2020 were $966.8 million, or $0.77 per share, compared to $422.9
million, or $0.34 per share, in 2019. The increase is primarily as a result of the increase in margins, partially offset by the increase in
depreciation, depletion and amortization and income tax expense, as described above.
2
3 MDA
3
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
In 2020, net cash flow provided from operating activities increased to $1,957.6 million, from $1,224.9 million in 2019, mainly due to
the increase in margins as described above and favourable working capital changes. Adjusted operating cash flow in 2020 increased
to $1,912.7 million, from $1,201.5 million in 2019, primarily due to the increase in margins as described above.
Capital expenditures decreased to $916.1 million in 2020, compared with $1,060.2 million in 2019, primarily due to the completion of
projects at Bald Mountain and Round Mountain and less capital stripping at Tasiast in 2020, which was lower than planned as a result
of the impacts of COVID-19 and the strike in the second quarter of 2020.
Free cash flow increased to $1,041.5 million in 2020, compared with $164.7 million in 2019, due to the increase in net cash flow
provided from operating activities and the decrease in capital expenditures, as described above.
deferred tax expense resulting from the devaluation in U.S. dollar terms of the tax deductions of the Company’s operations in Brazil
and Russia. Kinross' combined federal and provincial statutory tax rate for both 2019 and 2018 was 26.5%.
Net earnings attributable to common shareholders in 2019 were $718.6 million, or $0.57 per share, compared to net loss attributable
to common shareholders of $23.6 million, or $0.02 per share, in 2018. The increase was primarily as a result of the increase in operating
earnings as described above.
Adjusted net earnings attributable to common shareholders in 2019 were $422.9 million, or $0.34 per share, compared to $128.1
million, or $0.10 per share, in 2018. The increase was primarily as a result of the increase in margins and the decrease in depreciation,
depletion and amortization, as described above.
Attributable all-in sustaining cost per equivalent ounce sold and per ounce sold on a by-product basis in 2020 were both comparable
to 2019. Attributable all-in cost per equivalent ounce sold and per ounce sold on a by-product basis in 2020 decreased by 2% and 3%,
respectively, compared to 2019, primarily due to decreases in non-sustaining capital expenditures.
In 2019, net cash flow provided from operating activities increased to $1,224.9 million, from $788.7 million in 2018, mainly due to the
increase in margins as described above and favourable working capital changes. Adjusted operating cash flow in 2019 increased to
$1,201.5 million, from $874.2 million in 2018, primarily due to the increase in margins as described above.
Capital expenditures increased to $1,060.2 million in 2019, compared with $1,005.2 million in 2018, primarily due to increased
spending on projects at Bald Mountain, Fort Knox and Round Mountain, partially offset by lower spending at Tasiast.
Free cash flow increased to $164.7 million in 2019, compared with an outflow of $216.5 million in 2018, due to an increase in net cash
flow provided from operating activities as a result of increased margins, partially offset by the increase in capital expenditures.
Attributable all‐in sustaining cost per equivalent ounce sold and per ounce sold on a by‐product basis in 2019 both increased by 2%,
respectively, compared to 2018. The slight increases were primarily due to the decrease in production cost of sales, partially offset by
the decrease in gold equivalent ounces sold. Attributable all‐in cost per equivalent ounce sold and per ounce sold on a by‐product
basis in 2019 were comparable to 2018.
Mineral Reserves1
Kinross’ total estimated proven and probable gold reserves at December 31, 2020 were approximately 30.0 million ounces. The
increase of 5.7 million ounces in estimated gold reserves compared to December 31, 2019 was mainly a result of the conversion of 6.4
million ounces of resources to probable reserves at Lobo‐Marte. Amongst the operating sites, 2.2 million ounces were also added to
proven and probable reserves to partially offset production depletion.
Proven and probable silver reserves at year‐end 2020 were estimated at approximately 59.2 million ounces, an increase of 3.5 million
ounces compared with year‐end 2019, primarily due to reserve additions at Kupol and La Coipa.
2019 vs. 2018
Kinross’ attributable production in 2019 increased by 2%, compared to 2018. Higher production at Tasiast and Paracatu due to
increases in mill throughput, grade and recoveries was partially offset by lower production at Bald Mountain due to the timing of
ounces recovered from the heap leach pads, at Fort Knox due to a decrease in mill throughput, at Round Mountain due to a decrease
in mill grade, and at Maricunga as activities continued to ramp down.
Metal sales increased by 9% in 2019 compared to 2018, due to an increase in average realized gold price. The average realized gold
price increased to $1,392 per ounce in 2019 from $1,268 per ounce in 2018. Total gold equivalent ounces sold in 2019 decreased to
2,512,758 ounces from 2,532,912 ounces in 2018, primarily due to the timing of sales.
Production cost of sales decreased by 4% in 2019 compared to 2018, primarily due to decreases at Bald Mountain, Maricunga and
Round Mountain due to lower gold equivalent ounces sold. These decreases were partially offset by an increase in production cost of
sales at Kupol, as a result of increased gold equivalent ounces sold, and at Chirano, related to the restart of open pit mining during
2019.
In 2019, both attributable production cost of sales per equivalent ounce sold and per ounce sold on a by-product basis decreased by
4%, compared to 2018, mainly due to decreases in costs per ounce at Tasiast, due to higher mill throughput, and a decrease in
operating waste mined, and at Paracatu, primarily due to higher mill throughput and grade, as well as favourable foreign exchange
movements and a decrease in power costs.
Depreciation, depletion and amortization decreased by 5% in 2019 compared to 2018, primarily due to decreases at Chirano, Bald
Mountain and Fort Knox due to lower gold equivalent ounces sold. These decreases were partially offset by an increase at Tasiast as
a result of an increase in depreciable asset base, mainly related to the completion of the Phase One project in the third quarter of
2018, and the increase in gold equivalent ounces sold, and at Paracatu, mainly due to the increase in gold equivalent ounces sold and
an increase in depreciable asset base.
At December 31, 2019, upon completion of the Company’s assessment of the carrying values of its Cash Generating Units (“CGUs”),
the Company recorded after‐tax impairment reversals of $293.6 million. The impairment reversals were entirely related to property,
plant and equipment and included after‐tax impairment reversals at Tasiast and Paracatu of $161.1 million and $132.5 million,
respectively, and were mainly due to an increase in the Company’s long‐term gold price estimates. The impairment reversal at Paracatu
was net of a tax expense of $68.2 million. There was no tax impact on the impairment reversal at Tasiast. No impairment charges or
reversals were recorded as a result of the assessment of the carrying value of the Company’s CGUs at December 31, 2018.
Operating earnings were $991.1 million in 2019 compared to $200.5 million in 2018. The increase was primarily due to the increase in
margins, the reversals of impairment charges, and the decrease in depreciation, depletion and amortization.
In 2019, the Company recorded income tax expense of $246.7 million, compared to income tax expense of $138.8 million in 2018. The
$246.7 million income tax expense recognized in 2019 was largely as a result of higher operating mine profitability, compared to the
same period in 2018, and included an additional deferred tax expense of $68.2 million related to the reversal of impairment charges
at Paracatu, as well as $1.6 million of deferred tax expense resulting from the net foreign currency translation of the tax deductions
of the Company’s operations in Brazil and Russia. The $138.8 million income tax expense recorded in 2018 included $62.0 million of
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1 For details concerning mineral reserve and mineral resource estimates, refer to the Mineral Reserves and Mineral Resources tables and notes in the Company's news
release filed with Canadian and U.S. regulators on February 10, 2021.
5
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
In 2020, net cash flow provided from operating activities increased to $1,957.6 million, from $1,224.9 million in 2019, mainly due to
the increase in margins as described above and favourable working capital changes. Adjusted operating cash flow in 2020 increased
to $1,912.7 million, from $1,201.5 million in 2019, primarily due to the increase in margins as described above.
Capital expenditures decreased to $916.1 million in 2020, compared with $1,060.2 million in 2019, primarily due to the completion of
projects at Bald Mountain and Round Mountain and less capital stripping at Tasiast in 2020, which was lower than planned as a result
of the impacts of COVID-19 and the strike in the second quarter of 2020.
Free cash flow increased to $1,041.5 million in 2020, compared with $164.7 million in 2019, due to the increase in net cash flow
provided from operating activities and the decrease in capital expenditures, as described above.
deferred tax expense resulting from the devaluation in U.S. dollar terms of the tax deductions of the Company’s operations in Brazil
and Russia. Kinross' combined federal and provincial statutory tax rate for both 2019 and 2018 was 26.5%.
Net earnings attributable to common shareholders in 2019 were $718.6 million, or $0.57 per share, compared to net loss attributable
to common shareholders of $23.6 million, or $0.02 per share, in 2018. The increase was primarily as a result of the increase in operating
earnings as described above.
Adjusted net earnings attributable to common shareholders in 2019 were $422.9 million, or $0.34 per share, compared to $128.1
million, or $0.10 per share, in 2018. The increase was primarily as a result of the increase in margins and the decrease in depreciation,
depletion and amortization, as described above.
Attributable all-in sustaining cost per equivalent ounce sold and per ounce sold on a by-product basis in 2020 were both comparable
to 2019. Attributable all-in cost per equivalent ounce sold and per ounce sold on a by-product basis in 2020 decreased by 2% and 3%,
respectively, compared to 2019, primarily due to decreases in non-sustaining capital expenditures.
In 2019, net cash flow provided from operating activities increased to $1,224.9 million, from $788.7 million in 2018, mainly due to the
increase in margins as described above and favourable working capital changes. Adjusted operating cash flow in 2019 increased to
$1,201.5 million, from $874.2 million in 2018, primarily due to the increase in margins as described above.
Capital expenditures increased to $1,060.2 million in 2019, compared with $1,005.2 million in 2018, primarily due to increased
spending on projects at Bald Mountain, Fort Knox and Round Mountain, partially offset by lower spending at Tasiast.
Free cash flow increased to $164.7 million in 2019, compared with an outflow of $216.5 million in 2018, due to an increase in net cash
flow provided from operating activities as a result of increased margins, partially offset by the increase in capital expenditures.
Attributable all‐in sustaining cost per equivalent ounce sold and per ounce sold on a by‐product basis in 2019 both increased by 2%,
respectively, compared to 2018. The slight increases were primarily due to the decrease in production cost of sales, partially offset by
the decrease in gold equivalent ounces sold. Attributable all‐in cost per equivalent ounce sold and per ounce sold on a by‐product
basis in 2019 were comparable to 2018.
Mineral Reserves1
Kinross’ total estimated proven and probable gold reserves at December 31, 2020 were approximately 30.0 million ounces. The
increase of 5.7 million ounces in estimated gold reserves compared to December 31, 2019 was mainly a result of the conversion of 6.4
million ounces of resources to probable reserves at Lobo‐Marte. Amongst the operating sites, 2.2 million ounces were also added to
proven and probable reserves to partially offset production depletion.
Proven and probable silver reserves at year‐end 2020 were estimated at approximately 59.2 million ounces, an increase of 3.5 million
ounces compared with year‐end 2019, primarily due to reserve additions at Kupol and La Coipa.
2019 vs. 2018
Kinross’ attributable production in 2019 increased by 2%, compared to 2018. Higher production at Tasiast and Paracatu due to
increases in mill throughput, grade and recoveries was partially offset by lower production at Bald Mountain due to the timing of
ounces recovered from the heap leach pads, at Fort Knox due to a decrease in mill throughput, at Round Mountain due to a decrease
in mill grade, and at Maricunga as activities continued to ramp down.
Metal sales increased by 9% in 2019 compared to 2018, due to an increase in average realized gold price. The average realized gold
price increased to $1,392 per ounce in 2019 from $1,268 per ounce in 2018. Total gold equivalent ounces sold in 2019 decreased to
2,512,758 ounces from 2,532,912 ounces in 2018, primarily due to the timing of sales.
Production cost of sales decreased by 4% in 2019 compared to 2018, primarily due to decreases at Bald Mountain, Maricunga and
Round Mountain due to lower gold equivalent ounces sold. These decreases were partially offset by an increase in production cost of
sales at Kupol, as a result of increased gold equivalent ounces sold, and at Chirano, related to the restart of open pit mining during
2019.
In 2019, both attributable production cost of sales per equivalent ounce sold and per ounce sold on a by-product basis decreased by
4%, compared to 2018, mainly due to decreases in costs per ounce at Tasiast, due to higher mill throughput, and a decrease in
operating waste mined, and at Paracatu, primarily due to higher mill throughput and grade, as well as favourable foreign exchange
movements and a decrease in power costs.
Depreciation, depletion and amortization decreased by 5% in 2019 compared to 2018, primarily due to decreases at Chirano, Bald
Mountain and Fort Knox due to lower gold equivalent ounces sold. These decreases were partially offset by an increase at Tasiast as
a result of an increase in depreciable asset base, mainly related to the completion of the Phase One project in the third quarter of
2018, and the increase in gold equivalent ounces sold, and at Paracatu, mainly due to the increase in gold equivalent ounces sold and
an increase in depreciable asset base.
At December 31, 2019, upon completion of the Company’s assessment of the carrying values of its Cash Generating Units (“CGUs”),
the Company recorded after‐tax impairment reversals of $293.6 million. The impairment reversals were entirely related to property,
plant and equipment and included after‐tax impairment reversals at Tasiast and Paracatu of $161.1 million and $132.5 million,
respectively, and were mainly due to an increase in the Company’s long‐term gold price estimates. The impairment reversal at Paracatu
was net of a tax expense of $68.2 million. There was no tax impact on the impairment reversal at Tasiast. No impairment charges or
reversals were recorded as a result of the assessment of the carrying value of the Company’s CGUs at December 31, 2018.
Operating earnings were $991.1 million in 2019 compared to $200.5 million in 2018. The increase was primarily due to the increase in
margins, the reversals of impairment charges, and the decrease in depreciation, depletion and amortization.
In 2019, the Company recorded income tax expense of $246.7 million, compared to income tax expense of $138.8 million in 2018. The
$246.7 million income tax expense recognized in 2019 was largely as a result of higher operating mine profitability, compared to the
same period in 2018, and included an additional deferred tax expense of $68.2 million related to the reversal of impairment charges
at Paracatu, as well as $1.6 million of deferred tax expense resulting from the net foreign currency translation of the tax deductions
of the Company’s operations in Brazil and Russia. The $138.8 million income tax expense recorded in 2018 included $62.0 million of
4
1 For details concerning mineral reserve and mineral resource estimates, refer to the Mineral Reserves and Mineral Resources tables and notes in the Company's news
release filed with Canadian and U.S. regulators on February 10, 2021.
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2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
2.
IMPACT OF KEY ECONOMIC TRENDS AND THE COVID-19 PANDEMIC
COVID-19 Pandemic
In anticipation of and response to the global COVID-19 pandemic, Kinross’ protocols and contingency plans, which the Company began
implementing in late January 2020, have mitigated impacts of the pandemic to its global portfolio. All of Kinross’ mines continued
production during the year, as the Company’s ongoing response to the COVID-19 pandemic continued to maintain the safety of its
global workforce and host communities while mitigating operational impacts. However, COVID-19 did partially affect overall
performance, productivity rates and costs, mainly as a result of global travel constraints and the implementation of rigorous safety
protocols and measures at all mines and projects.
Price of Gold
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Source: London Bullion Marketing Association London PM Fix
1 Average realized gold price per ounce is a non‐GAAP financial measure and is defined in Section 11.
In 2020, the Company realized an average gold price of $1,774 per ounce compared to the average PM Fix of $1,770 per ounce.
Source: Bloomberg – based on daily closing prices
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 2020, the price of gold fluctuated between a low of $1,471 per ounce in March to a high of $2,064 per
ounce in August, based on daily closing prices. The average price for the year based on the London Bullion Market Association PM Fix
was $1,770 per ounce, a $377 per ounce increase over the 2019 average price of $1,393 per ounce. In 2020, gold prices benefited
from the financial and economic uncertainties generated by the COVID‐19 pandemic together with the trend of lower real interest
rates.
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7
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
2.
IMPACT OF KEY ECONOMIC TRENDS AND THE COVID-19 PANDEMIC
COVID-19 Pandemic
In anticipation of and response to the global COVID-19 pandemic, Kinross’ protocols and contingency plans, which the Company began
implementing in late January 2020, have mitigated impacts of the pandemic to its global portfolio. All of Kinross’ mines continued
production during the year, as the Company’s ongoing response to the COVID-19 pandemic continued to maintain the safety of its
global workforce and host communities while mitigating operational impacts. However, COVID-19 did partially affect overall
performance, productivity rates and costs, mainly as a result of global travel constraints and the implementation of rigorous safety
protocols and measures at all mines and projects.
Price of Gold
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Source: London Bullion Marketing Association London PM Fix
1 Average realized gold price per ounce is a non‐GAAP financial measure and is defined in Section 11.
In 2020, the Company realized an average gold price of $1,774 per ounce compared to the average PM Fix of $1,770 per ounce.
Source: Bloomberg – based on daily closing prices
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 2020, the price of gold fluctuated between a low of $1,471 per ounce in March to a high of $2,064 per
ounce in August, based on daily closing prices. The average price for the year based on the London Bullion Market Association PM Fix
was $1,770 per ounce, a $377 per ounce increase over the 2019 average price of $1,393 per ounce. In 2020, gold prices benefited
from the financial and economic uncertainties generated by the COVID‐19 pandemic together with the trend of lower real interest
rates.
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7
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Gold Supply and Demand Fundamentals
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Source: World Gold Council 2020 Gold Demand Trends report
According to the World Gold Council, total gold supply in 2020 decreased by approximately 4% compared to 2019, largely due to a
decrease in global mine production, slightly offset by higher recycling. Mine production and recycled gold remain the dominant sources
of gold supply, and in 2020 they represented approximately 73% and 27% of total supply, respectively.
Source: World Gold Council 2020 Gold Demand Trends report
According to the World Gold Council, total demand for gold in 2020 decreased by 14%, compared to 2019. Jewelry demand decreased
by approximately 33%, largely due to economic weakness caused by the COVD-19 pandemic and high gold prices. Central bank net
buying continued in 2020, but buying slowed during the year and decreased by approximately 59%. The decrease in demand was
partially offset by an increase in gold exchange traded funds by approximately 120%.
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9
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Gold Supply and Demand Fundamentals
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Source: World Gold Council 2020 Gold Demand Trends report
According to the World Gold Council, total gold supply in 2020 decreased by approximately 4% compared to 2019, largely due to a
decrease in global mine production, slightly offset by higher recycling. Mine production and recycled gold remain the dominant sources
of gold supply, and in 2020 they represented approximately 73% and 27% of total supply, respectively.
Source: World Gold Council 2020 Gold Demand Trends report
According to the World Gold Council, total demand for gold in 2020 decreased by 14%, compared to 2019. Jewelry demand decreased
by approximately 33%, largely due to economic weakness caused by the COVD-19 pandemic and high gold prices. Central bank net
buying continued in 2020, but buying slowed during the year and decreased by approximately 59%. The decrease in demand was
partially offset by an increase in gold exchange traded funds by approximately 120%.
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9
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Cost Sensitivity
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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 experienced fuel price decreases in 2020, compared to 2019, as global fuel demand
weakened due to the ongoing effects of the COVID-19 pandemic. 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, the Russian
Federation, Ghana, Mauritania, and Canada, a portion of operating costs and capital expenditures are denominated in their respective
local currencies. Generally, as the U.S. dollar strengthens, these currencies weaken, and as the U.S. dollar weakens, these foreign
currencies strengthen. These currencies were subject to high market volatility over the course of the year. Approximately 65% of the
Company’s expected attributable production in 2021 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.
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11
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Cost Sensitivity
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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 experienced fuel price decreases in 2020, compared to 2019, as global fuel demand
weakened due to the ongoing effects of the COVID-19 pandemic. 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, the Russian
Federation, Ghana, Mauritania, and Canada, a portion of operating costs and capital expenditures are denominated in their respective
local currencies. Generally, as the U.S. dollar strengthens, these currencies weaken, and as the U.S. dollar weakens, these foreign
currencies strengthen. These currencies were subject to high market volatility over the course of the year. Approximately 65% of the
Company’s expected attributable production in 2021 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.
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11
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
3. OUTLOOK
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Capital Expenditures Guidance
Total capital expenditures for 2021 are forecast to be approximately $900 million (+/‐ 5%). Of this amount, sustaining capital
expenditures are expected to be approximately $340 million, with non‐sustaining capital expenditures of approximately $560 million
for the La Coipa Restart project, Tasiast’s West Branch stripping and 24k expansion project, the Round Mountain Phase W project,
Fort Knox Gilmore stripping, and other development and growth projects and studies. Kinross’ capital expenditures outlook for 2022
and 2023 are $800 million and $700 million, respectively, and is based on Kinross’ current baseline production guidance. However, as
previously indicated, capital expenditures for 2022 and 2023 exclude additional opportunities in the Company’s pipeline and is
therefore expected to increase to approximate 2021 levels if additional projects are approved, including Round Mountain Phase S,
Peak, Lobo‐Marte and other projects.
Other Guidance
The 2021 forecast for exploration is approximately $120 million, all of which is expected to be expensed. The increase compared to
2020 will facilitate an enhanced program to follow‐up on 2020’s exploration success and exploration projects acquired in 2020, such
as the Kayenmyvaam and Kavralyanskaya projects near Kupol, Chulbatkan, and the Peak development project in Alaska.
The 2021 forecast for overhead (general and administrative and business development expenses) is approximately $155 million, in
line with 2020, primarily as a result of Kinross’ cost improvements over recent years, with 2021 annual overhead guidance down $50
million over the past five years.
pandemic‐related mitigation measures.
Other operating costs expected to be incurred in 2021 are approximately $150 million, which are principally due to $70 million in
Based on an assumed gold price of $1,500 per ounce and other budget assumptions, tax expense is expected to be $140 million and
taxes paid is expected to be $200 million. Adjusting the Brazilian real and Russian rouble to the respective exchange rates of 5.20 and
74 to the U.S. dollar in effect at December 31, 2020, tax expense would be expected to be $160 million. Tax expense is expected to
increase by 26% of any profit resulting from higher gold prices. Taxes paid is expected to increase by a range of $20 million to $26
million for every $100 increase in the realized gold price.
Depreciation, depletion and amortization is forecast to be approximately $390 (+/‐ 5%) per gold equivalent ounce sold.
Interest paid is forecast to be approximately $110 million, which includes $55 million of capitalized interest.
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.
Unless otherwise stated, production, production cost of sales per equivalent ounce sold, and all-in sustaining costs in this Outlook
section include only Kinross' share of Chirano (90%) production and costs, and Peak (70%) costs. The definitions of these non-GAAP
measures are included in Section 11 of this MD&A.
Production Guidance
In 2021, the Company expects to produce 2.4 million gold equivalent ounces (+/- 5%) from its operations, which is consistent with
2020 production. In 2022 and 2023, annual production is expected to increase to approximately 2.7 million gold equivalent ounces
and 2.9 million gold equivalent ounces, respectively.
In 2021, production is expected to progressively increase quarter-over-quarter, largely driven by higher expected production in the
second half of the year at Tasiast. The Company’s three largest mines – Paracatu, Kupol and Tasiast – are expected to account for
approximately 60% of the total production in 2021 and are expected to be the lowest cost mines in the portfolio.
The expected production growth in 2022 and 2023 represents additional ounces enabled by planned life of mine extensions and
projects resulting from the Company’s previous three-year major capital reinvestment phase, which established a low-risk and timely
platform for growth in the current gold price environment. Kinross’ comprehensive continuous improvement programs, which have
enhanced productivity and operational efficiencies, and its exploration strategy focused on promising prospects around existing
operations, also contributed to the anticipated production increase.
Cost of Sales Guidance
Production cost of sales per gold equivalent ounce sold is expected to be $790 (+/- 5%) for 2021. The increase from 2020 is mainly due
to higher operating waste mined as a result of planned mine sequencing, particularly at the U.S. mines and at Tasiast in the second
half of the year. The delayed access to higher grade ore at Tasiast as a result of COVID-19 impacts and a decrease in low-cost ounces
from Dvoinoye, which completed mining in November 2020 as planned, also affected 2021 production cost of sales per equivalent
ounce sold guidance. Production cost of sales per equivalent ounce sold is expected to increase quarter-over-quarter during the year,
largely driven by anticipated increases in operating waste mined. Production cost of sales per equivalent ounce sold is expected to
decrease in 2022 and return to levels that are largely in line with 2020. The decrease is expected to be driven by lower-cost ounces
from Tasiast and La Coipa in 2022 and higher total production.
The Company expects all-in sustaining cost to be $1,025 (+/- 5%) per ounce sold on both a gold equivalent and by-product basis for
2021, which is higher than 2020, mainly due to the expected higher production cost of sales per equivalent ounce sold.
Material assumptions used to forecast 2021 production costs are: a gold price of $1,500 per ounce, a silver price of $20 per ounce, an
oil price of $55 per barrel, and foreign exchange rates of 5.0 Brazilian reais to the U.S. dollar, 1.30 Canadian dollars to the U.S. dollar,
70 Russian roubles to the U.S. dollar, 725 Chilean pesos to the U.S. dollar, 5.50 Ghanaian cedis to the U.S. dollar, 35 Mauritanian
ouguiyas to the U.S. dollar, and 0.90 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 $14 impact on our production cost of sales per equivalent ounce sold, and specific to the Russian rouble and Brazilian
real, a 10% change in these exchange rates would be expected to result in impacts of approximately $15 and $25 on Russian and
Brazilian production cost of sales per equivalent ounce sold, 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 equivalent ounce sold, and a $100 change in the price of
gold would be expected to result in an approximate $5 impact on our production cost of sales per equivalent ounce sold as a result of
a change in royalties owing.
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13
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Capital Expenditures Guidance
Total capital expenditures for 2021 are forecast to be approximately $900 million (+/‐ 5%). Of this amount, sustaining capital
expenditures are expected to be approximately $340 million, with non‐sustaining capital expenditures of approximately $560 million
for the La Coipa Restart project, Tasiast’s West Branch stripping and 24k expansion project, the Round Mountain Phase W project,
Fort Knox Gilmore stripping, and other development and growth projects and studies. Kinross’ capital expenditures outlook for 2022
and 2023 are $800 million and $700 million, respectively, and is based on Kinross’ current baseline production guidance. However, as
previously indicated, capital expenditures for 2022 and 2023 exclude additional opportunities in the Company’s pipeline and is
therefore expected to increase to approximate 2021 levels if additional projects are approved, including Round Mountain Phase S,
Peak, Lobo‐Marte and other projects.
In 2021, the Company expects to produce 2.4 million gold equivalent ounces (+/- 5%) from its operations, which is consistent with
2020 production. In 2022 and 2023, annual production is expected to increase to approximately 2.7 million gold equivalent ounces
Other Guidance
The 2021 forecast for exploration is approximately $120 million, all of which is expected to be expensed. The increase compared to
2020 will facilitate an enhanced program to follow‐up on 2020’s exploration success and exploration projects acquired in 2020, such
as the Kayenmyvaam and Kavralyanskaya projects near Kupol, Chulbatkan, and the Peak development project in Alaska.
The 2021 forecast for overhead (general and administrative and business development expenses) is approximately $155 million, in
line with 2020, primarily as a result of Kinross’ cost improvements over recent years, with 2021 annual overhead guidance down $50
million over the past five years.
Other operating costs expected to be incurred in 2021 are approximately $150 million, which are principally due to $70 million in
pandemic‐related mitigation measures.
Based on an assumed gold price of $1,500 per ounce and other budget assumptions, tax expense is expected to be $140 million and
taxes paid is expected to be $200 million. Adjusting the Brazilian real and Russian rouble to the respective exchange rates of 5.20 and
74 to the U.S. dollar in effect at December 31, 2020, tax expense would be expected to be $160 million. Tax expense is expected to
increase by 26% of any profit resulting from higher gold prices. Taxes paid is expected to increase by a range of $20 million to $26
million for every $100 increase in the realized gold price.
Depreciation, depletion and amortization is forecast to be approximately $390 (+/‐ 5%) per gold equivalent ounce sold.
Interest paid is forecast to be approximately $110 million, which includes $55 million of capitalized interest.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
3. OUTLOOK
measures are included in Section 11 of this MD&A.
Production Guidance
and 2.9 million gold equivalent ounces, respectively.
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.
Unless otherwise stated, production, production cost of sales per equivalent ounce sold, and all-in sustaining costs in this Outlook
section include only Kinross' share of Chirano (90%) production and costs, and Peak (70%) costs. The definitions of these non-GAAP
In 2021, production is expected to progressively increase quarter-over-quarter, largely driven by higher expected production in the
second half of the year at Tasiast. The Company’s three largest mines – Paracatu, Kupol and Tasiast – are expected to account for
approximately 60% of the total production in 2021 and are expected to be the lowest cost mines in the portfolio.
The expected production growth in 2022 and 2023 represents additional ounces enabled by planned life of mine extensions and
projects resulting from the Company’s previous three-year major capital reinvestment phase, which established a low-risk and timely
platform for growth in the current gold price environment. Kinross’ comprehensive continuous improvement programs, which have
enhanced productivity and operational efficiencies, and its exploration strategy focused on promising prospects around existing
operations, also contributed to the anticipated production increase.
Cost of Sales Guidance
Production cost of sales per gold equivalent ounce sold is expected to be $790 (+/- 5%) for 2021. The increase from 2020 is mainly due
to higher operating waste mined as a result of planned mine sequencing, particularly at the U.S. mines and at Tasiast in the second
half of the year. The delayed access to higher grade ore at Tasiast as a result of COVID-19 impacts and a decrease in low-cost ounces
from Dvoinoye, which completed mining in November 2020 as planned, also affected 2021 production cost of sales per equivalent
ounce sold guidance. Production cost of sales per equivalent ounce sold is expected to increase quarter-over-quarter during the year,
largely driven by anticipated increases in operating waste mined. Production cost of sales per equivalent ounce sold is expected to
decrease in 2022 and return to levels that are largely in line with 2020. The decrease is expected to be driven by lower-cost ounces
from Tasiast and La Coipa in 2022 and higher total production.
The Company expects all-in sustaining cost to be $1,025 (+/- 5%) per ounce sold on both a gold equivalent and by-product basis for
2021, which is higher than 2020, mainly due to the expected higher production cost of sales per equivalent ounce sold.
Material assumptions used to forecast 2021 production costs are: a gold price of $1,500 per ounce, a silver price of $20 per ounce, an
oil price of $55 per barrel, and foreign exchange rates of 5.0 Brazilian reais to the U.S. dollar, 1.30 Canadian dollars to the U.S. dollar,
70 Russian roubles to the U.S. dollar, 725 Chilean pesos to the U.S. dollar, 5.50 Ghanaian cedis to the U.S. dollar, 35 Mauritanian
ouguiyas to the U.S. dollar, and 0.90 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 $14 impact on our production cost of sales per equivalent ounce sold, and specific to the Russian rouble and Brazilian
real, a 10% change in these exchange rates would be expected to result in impacts of approximately $15 and $25 on Russian and
Brazilian production cost of sales per equivalent ounce sold, 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 equivalent ounce sold, and a $100 change in the price of
gold would be expected to result in an approximate $5 impact on our production cost of sales per equivalent ounce sold as a result of
a change in royalties owing.
12
13 MDA
13
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
4. PROJECT UPDATES AND NEW DEVELOPMENTS
Tasiast 24k
The Tasiast 24k project remains on budget and on schedule with Tasiast expected to increase throughput capacity to 21,000 tonnes
per day (“t/d”) by the end of 2021, and then to 24,000 t/d by mid-2023. The project is now approximately 60% complete, with
mechanical work on the processing plant and construction of the power plant both proceeding well.
The Company drew down $200 million from the $300 million Tasiast project financing facility on April 9, 2020. The financing, which
was signed on December 16, 2019, is an asset recourse loan with the International Finance Corporation (“IFC”) (a member of the
World Bank Group), Export Development Canada (“EDC”), ING Bank and Société Générale.
Chulbatkan – Udinsk project
On July 31, 2019, the Company announced an agreement to acquire the Chulbatkan license, containing the Udinsk development
project, located in Khabarovsk Krai, Far East Russia, from N-Mining Limited (“N-Mining”), for total fixed consideration of $283.0 million.
In addition, N-Mining will be entitled to receive an economic participation equivalent to a 1.5% Net Smelter Return (“NSR”) royalty on
future production from this Chulbatkan license, as well as $50 per ounce of future proven and probable reserves beyond the first 3.25
million of declared proven and probable ounces. Kinross will retain the right to buy-back one third of the 1.5% NSR royalty for $10.0
million, subject to certain gold price related adjustments, at any time within 24 months of closing.
On January 16, 2020, the Company closed the acquisition. In accordance with an amended acquisition agreement, the first installment
of $141.5 million, representing 50% of the $283.0 million fixed purchase, plus ordinary course net working capital adjustments of $3.1
million, were paid in cash. On January 15, 2021, in accordance with a further amended acquisition agreement to settle 100% of the
final installment in cash instead of 60-100% in Kinross shares, the Company paid the remaining $141.5 million in cash.
In 2020, drilling at the Chulbatkan license was focused within the Udinsk resource pit – the first project the Company expects to
develop on the Chulbatkan license – with a total of more than 60,000 metres of infill drilling completed. The drilling program supported
advancement of the Udinsk pre-feasibility study (“PFS”) and confirmed the layout of the Udinsk deposit within the larger Chulbatkan
area. As a result of 2020 optimization and engineering work using a $1,600 per ounce gold price, approximately 259,0001 gold ounces
were added to measured and indicated resources and 94,0001 gold ounces to inferred resources in 2020.
The Udinsk PFS commenced in partnership with a global engineering, procurement and construction management firm with in-country
experience and is expected to be completed in the fourth quarter of 2021. The PFS will focus on an initial three-stage crush heap leach
process flow and potential early works related to infrastructure, with the goal of fast tracking construction. Kinross is targeting a
declaration of mineral reserves at year-end following the expected completion of the PFS. The Company is also studying the viability
of a power line connecting the project into the regional grid. First production at Udinsk is anticipated in 2025.
On the larger Chulbatkan license, surface exploration activities such as soil geochemical sampling, induced polarization and magnetic
and gravity geophysical surveys were carried out during 2020. These programs resulted in encouraging results which confirmed known
targets and led to the discovery of new target areas, with new anomalies identified near the Udinsk resource pit to the northeast and
southwest. As a result, the 2021 drilling program will prioritize the soil and geophysics anomalies as part of the first phase of the
drilling program and is planned to be subsequently drilled for strike and depth extensions.
Kinross also acquired the land package surrounding the Chulbatkan license in 2020, which increased the total Chulbatkan license area
from 120 km2 to approximately 450 km2. The Company is planning to commence greenfields exploration activities in 2021 in these
new areas.
La Coipa Restart and Lobo-Marte
The La Coipa Restart project is progressing well, with pre-stripping starting in early January 2021 as scheduled, and first production
remaining on-track for mid-2022. Camp refurbishments were completed in December 2020 and fleet refurbishments are more than
half complete. The mobilization of the project management team and of the first major contractors for plant refurbishments have
started on schedule.
Kinross added approximately 103,0001 gold ounces and 3,266,0001 silver ounces in estimated mineral reserves at La Coipa primarily
as a result of optimization of the Phase 7 mine plan. The Company also added approximately 206,0001 gold ounces and 1,702,0001
silver ounces in estimated measured and indicated resources, mainly as a result of the change in gold price assumption for resources.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Kinross continues to study opportunities to incorporate adjacent deposits with existing mineral reserves and resources into the La
Coipa mine plan and potentially extend mine life.
At the Lobo-Marte project, the feasibility study continues to advance on schedule and is expected to be completed in the fourth
quarter of 2021. The Company is targeting production at Lobo-Marte to commence in 2027 following permitting and after the
completion of mining at La Coipa, with construction potentially starting in 2025. Kinross continues to believe that Lobo-Marte has the
potential to be a long-life, cornerstone asset with attractive costs.
Alaska projects
At the Fort Knox Gilmore project, the first gold ounces from the new Barnes Creek heap leach pad were poured in January 2021.
Infrastructure and processing facilities for the project were completed on schedule and under budget, and the project was fully
transferred to the Operations team.
On September 30, 2020, the Company acquired a 70% interest in the open pit Peak project in Alaska, which was 40% owned by Royal
Alaska, LLC (“Royal Alaska”), a subsidiary of Royal Gold, Inc. (“Royal Gold”) and 60% owned by CORE Alaska, LLC (“CORE Alaska”), a
subsidiary of Contango ORE, Inc. (“Contango”), for total cash consideration of $93.7 million. Kinross purchased 40% of Peak by
acquiring Royal Alaska from Royal Gold for total cash consideration of $49.2 million, and purchased an additional 30% of Peak from
CORE Alaska for total consideration of $44.5 million. The cash consideration paid to Contango includes a $1.2 million reimbursement
prepayment for a new royalty on Peak’s silver revenues. As the project operator, Kinross expects to process Peak ore at its Fort Knox
mill. Processing ore at Fort Knox avoids mill construction at Peak and is expected to decrease execution risk, lower capital expenditures,
drive attractive returns, and reduce the project’s environmental footprint and permitting requirements. Blending the higher grade ore
from Peak with Fort Knox ore is expected to extend mill operation at Fort Knox, reduce overall costs and increase cash flow. The project
is expected to benefit the state and local communities, in particular, the Upper Tanana Athabascan Village of Tetlin.
Kinross has made good progress advancing the Peak project since its acquisition. A metallurgical and geotechnical drilling program has
commenced, along with engineering and environmental studies for permitting. A close working relationship has also been established
with the local Upper Tanana Athabascan Village of Tetlin. A scoping study is expected to be completed in the second quarter of 2021
and a feasibility study is expected to be completed by the end of 2022, with a target for first production in 2024.
Agreement in principle with Government of Mauritania
On June 15, 2020, Kinross reached an agreement in principle with the Government of Mauritania to resolve outstanding matters
between the parties. The terms are subject to finalizing definitive agreements and provide Kinross with a 30-year exploitation license
for Tasiast Sud, with expedited permitting and the possibility of early mining. The terms also provide for the reinstatement of a tax
exemption on fuel duties and repayment by the Government of Mauritania to Kinross of outstanding value added tax (“VAT”) refunds.
Kinross also volunteered to update the royalty structure for Tasiast so it is tied to the gold price, is in line with Mauritania’s current
mining conventions and codes, and further aligns interests by ensuring the country receives an appropriate share of economic benefits
from the Tasiast mine. Preparation of the definitive documentation is ongoing.
On December 2, 2019, the Company entered into an agreement with Maverix Metals Inc. (“Maverix”) to sell a royalty portfolio of
On December 19, 2019, the Company completed the sale for total consideration of $73.9 million, including $25.0 million in cash and
approximately 11.2 million common shares, representing 9.4% of the issued and outstanding common shares, of Maverix. The
Company recognized a gain on disposition of $72.7 million in other income in connection with the sale.
On December 9, 2019, as part of its portfolio management strategy and to further strengthen its liquidity, the Company sold its
investment in common shares of Lundin Gold Inc. to a syndicate of buyers for proceeds of $113.2 million.
Other Recent Transactions
Disposition of royalty portfolio
precious metals royalties.
Sale of Lundin Gold shares
Other Developments
Board of Directors update
1 For details concerning mineral reserve and mineral resource estimates, refer to the Mineral Reserves and Mineral Resources tables and notes in the Company's news
release filed with Canadian and U.S. regulators on February 10, 2021.
2020.
14
MDA 14
15
Mr. Glenn Ives was appointed to Kinross’ Board of Directors, and assumed the role of Chair of the Audit and Risk Committee, in May
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
4. PROJECT UPDATES AND NEW DEVELOPMENTS
Tasiast 24k
The Tasiast 24k project remains on budget and on schedule with Tasiast expected to increase throughput capacity to 21,000 tonnes
per day (“t/d”) by the end of 2021, and then to 24,000 t/d by mid-2023. The project is now approximately 60% complete, with
mechanical work on the processing plant and construction of the power plant both proceeding well.
The Company drew down $200 million from the $300 million Tasiast project financing facility on April 9, 2020. The financing, which
was signed on December 16, 2019, is an asset recourse loan with the International Finance Corporation (“IFC”) (a member of the
World Bank Group), Export Development Canada (“EDC”), ING Bank and Société Générale.
Chulbatkan – Udinsk project
On July 31, 2019, the Company announced an agreement to acquire the Chulbatkan license, containing the Udinsk development
project, located in Khabarovsk Krai, Far East Russia, from N-Mining Limited (“N-Mining”), for total fixed consideration of $283.0 million.
In addition, N-Mining will be entitled to receive an economic participation equivalent to a 1.5% Net Smelter Return (“NSR”) royalty on
future production from this Chulbatkan license, as well as $50 per ounce of future proven and probable reserves beyond the first 3.25
million of declared proven and probable ounces. Kinross will retain the right to buy-back one third of the 1.5% NSR royalty for $10.0
million, subject to certain gold price related adjustments, at any time within 24 months of closing.
On January 16, 2020, the Company closed the acquisition. In accordance with an amended acquisition agreement, the first installment
of $141.5 million, representing 50% of the $283.0 million fixed purchase, plus ordinary course net working capital adjustments of $3.1
million, were paid in cash. On January 15, 2021, in accordance with a further amended acquisition agreement to settle 100% of the
final installment in cash instead of 60-100% in Kinross shares, the Company paid the remaining $141.5 million in cash.
In 2020, drilling at the Chulbatkan license was focused within the Udinsk resource pit – the first project the Company expects to
develop on the Chulbatkan license – with a total of more than 60,000 metres of infill drilling completed. The drilling program supported
advancement of the Udinsk pre-feasibility study (“PFS”) and confirmed the layout of the Udinsk deposit within the larger Chulbatkan
area. As a result of 2020 optimization and engineering work using a $1,600 per ounce gold price, approximately 259,0001 gold ounces
were added to measured and indicated resources and 94,0001 gold ounces to inferred resources in 2020.
The Udinsk PFS commenced in partnership with a global engineering, procurement and construction management firm with in-country
experience and is expected to be completed in the fourth quarter of 2021. The PFS will focus on an initial three-stage crush heap leach
process flow and potential early works related to infrastructure, with the goal of fast tracking construction. Kinross is targeting a
declaration of mineral reserves at year-end following the expected completion of the PFS. The Company is also studying the viability
of a power line connecting the project into the regional grid. First production at Udinsk is anticipated in 2025.
On the larger Chulbatkan license, surface exploration activities such as soil geochemical sampling, induced polarization and magnetic
and gravity geophysical surveys were carried out during 2020. These programs resulted in encouraging results which confirmed known
targets and led to the discovery of new target areas, with new anomalies identified near the Udinsk resource pit to the northeast and
southwest. As a result, the 2021 drilling program will prioritize the soil and geophysics anomalies as part of the first phase of the
drilling program and is planned to be subsequently drilled for strike and depth extensions.
Kinross also acquired the land package surrounding the Chulbatkan license in 2020, which increased the total Chulbatkan license area
from 120 km2 to approximately 450 km2. The Company is planning to commence greenfields exploration activities in 2021 in these
new areas.
La Coipa Restart and Lobo-Marte
The La Coipa Restart project is progressing well, with pre-stripping starting in early January 2021 as scheduled, and first production
remaining on-track for mid-2022. Camp refurbishments were completed in December 2020 and fleet refurbishments are more than
half complete. The mobilization of the project management team and of the first major contractors for plant refurbishments have
started on schedule.
Kinross added approximately 103,0001 gold ounces and 3,266,0001 silver ounces in estimated mineral reserves at La Coipa primarily
as a result of optimization of the Phase 7 mine plan. The Company also added approximately 206,0001 gold ounces and 1,702,0001
silver ounces in estimated measured and indicated resources, mainly as a result of the change in gold price assumption for resources.
1 For details concerning mineral reserve and mineral resource estimates, refer to the Mineral Reserves and Mineral Resources tables and notes in the Company's news
release filed with Canadian and U.S. regulators on February 10, 2021.
14
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Kinross continues to study opportunities to incorporate adjacent deposits with existing mineral reserves and resources into the La
Coipa mine plan and potentially extend mine life.
At the Lobo-Marte project, the feasibility study continues to advance on schedule and is expected to be completed in the fourth
quarter of 2021. The Company is targeting production at Lobo-Marte to commence in 2027 following permitting and after the
completion of mining at La Coipa, with construction potentially starting in 2025. Kinross continues to believe that Lobo-Marte has the
potential to be a long-life, cornerstone asset with attractive costs.
Alaska projects
At the Fort Knox Gilmore project, the first gold ounces from the new Barnes Creek heap leach pad were poured in January 2021.
Infrastructure and processing facilities for the project were completed on schedule and under budget, and the project was fully
transferred to the Operations team.
On September 30, 2020, the Company acquired a 70% interest in the open pit Peak project in Alaska, which was 40% owned by Royal
Alaska, LLC (“Royal Alaska”), a subsidiary of Royal Gold, Inc. (“Royal Gold”) and 60% owned by CORE Alaska, LLC (“CORE Alaska”), a
subsidiary of Contango ORE, Inc. (“Contango”), for total cash consideration of $93.7 million. Kinross purchased 40% of Peak by
acquiring Royal Alaska from Royal Gold for total cash consideration of $49.2 million, and purchased an additional 30% of Peak from
CORE Alaska for total consideration of $44.5 million. The cash consideration paid to Contango includes a $1.2 million reimbursement
prepayment for a new royalty on Peak’s silver revenues. As the project operator, Kinross expects to process Peak ore at its Fort Knox
mill. Processing ore at Fort Knox avoids mill construction at Peak and is expected to decrease execution risk, lower capital expenditures,
drive attractive returns, and reduce the project’s environmental footprint and permitting requirements. Blending the higher grade ore
from Peak with Fort Knox ore is expected to extend mill operation at Fort Knox, reduce overall costs and increase cash flow. The project
is expected to benefit the state and local communities, in particular, the Upper Tanana Athabascan Village of Tetlin.
Kinross has made good progress advancing the Peak project since its acquisition. A metallurgical and geotechnical drilling program has
commenced, along with engineering and environmental studies for permitting. A close working relationship has also been established
with the local Upper Tanana Athabascan Village of Tetlin. A scoping study is expected to be completed in the second quarter of 2021
and a feasibility study is expected to be completed by the end of 2022, with a target for first production in 2024.
Agreement in principle with Government of Mauritania
On June 15, 2020, Kinross reached an agreement in principle with the Government of Mauritania to resolve outstanding matters
between the parties. The terms are subject to finalizing definitive agreements and provide Kinross with a 30-year exploitation license
for Tasiast Sud, with expedited permitting and the possibility of early mining. The terms also provide for the reinstatement of a tax
exemption on fuel duties and repayment by the Government of Mauritania to Kinross of outstanding value added tax (“VAT”) refunds.
Kinross also volunteered to update the royalty structure for Tasiast so it is tied to the gold price, is in line with Mauritania’s current
mining conventions and codes, and further aligns interests by ensuring the country receives an appropriate share of economic benefits
from the Tasiast mine. Preparation of the definitive documentation is ongoing.
Other Recent Transactions
Disposition of royalty portfolio
On December 2, 2019, the Company entered into an agreement with Maverix Metals Inc. (“Maverix”) to sell a royalty portfolio of
precious metals royalties.
On December 19, 2019, the Company completed the sale for total consideration of $73.9 million, including $25.0 million in cash and
approximately 11.2 million common shares, representing 9.4% of the issued and outstanding common shares, of Maverix. The
Company recognized a gain on disposition of $72.7 million in other income in connection with the sale.
Sale of Lundin Gold shares
On December 9, 2019, as part of its portfolio management strategy and to further strengthen its liquidity, the Company sold its
investment in common shares of Lundin Gold Inc. to a syndicate of buyers for proceeds of $113.2 million.
Other Developments
Board of Directors update
Mr. Glenn Ives was appointed to Kinross’ Board of Directors, and assumed the role of Chair of the Audit and Risk Committee, in May
2020.
15 MDA
15
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
5. CONSOLIDATED RESULTS OF OPERATIONS
Operating Highlights
(in millions, except ounces and per ounce amounts)
2020
2019
2018
Change
% Change
Years ended December 31,
2020 vs. 2019
2019 vs. 2018
Change % Change(d)
Operating Statistics
Total gold equivalent ounces (a)
Produced(b)
Sold(b)
Attributable gold equivalent ounces (a)
Produced(b)
Sold(b)
Gold ounces - sold
Silver ounces - sold (000's)
Average realized gold price per ounce (c)
Financial data
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Reversals of impairment charges - net
Operating earnings
Net earnings (loss) attributable to common shareholders
2,383,307
2,527,788
2,475,068
(144,481)
2,375,548
2,512,758
2,532,912
(137,210)
(6%)
(5%)
52,720
(20,154)
2,366,648
2,507,659
2,452,398
(141,011)
2,358,927
2,492,572
2,510,419
(133,645)
2,324,324
4,429
1,774
$
2,458,839
4,636
1,392
$
2,480,529
4,232
1,268
$
(134,515)
(207)
382
$
(6%)
(5%)
55,261
(17,847)
(5%)
(4%)
27%
(21,690)
404
124
$
$
$
$
$
$
$
4,213.4
1,725.7
842.3
(650.9)
1,899.4
1,342.4
$
$
$
$
$
$
3,497.3
1,778.9
731.3
(361.8)
991.1
718.6
3,212.6
$
1,860.5
$
$
772.4
$
-
$
200.5
$
(23.6)
$
$
$
$
$
$
716.1
(53.2)
111.0
(289.1)
908.3
623.8
20%
(3%)
15%
(80%)
92%
87%
$
$
$
$
$
$
284.7
(81.6)
(41.1)
(361.8)
790.6
742.2
2%
(1%)
2%
(1%)
(1%)
10%
10%
9%
(4%)
(5%)
nm
nm
nm
(a)
(b)
(c)
(d)
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
"Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market
prices for the commodities for each period. The ratio for 2020 was 86.32:1 (2019 - 85.99:1 and 2018 - 80.74:1).
“Average realized gold price per ounce” is a non-GAAP financial measure and is defined in Section 11.
"nm" means not meaningful.
Operating Earnings (Loss) by Segment
(in millions)
Operating segments
Fort Knox
Round Mountain
Bald Mountain
Paracatu
Kupol(a)
Tasiast
Chirano
Non-operating segment
Corporate and other(b)(c)
Total
Years ended December 31,
2020 vs. 2019
2020
2019
2018
Change
% Change(d)
2019 vs. 2018
Change % Change(d)
$
67.0
286.8
34.6
407.0
410.5
504.3
238.1
$
(52.9)
207.3
12.7
492.2
281.1
285.1
(7.8)
$
(41.5)
154.1
110.7
69.9
187.2
(85.9)
(6.2)
$
119.9
79.5
21.9
(85.2)
129.4
219.2
245.9
nm
38%
172%
(17%)
46%
77%
nm
(11.4)
53.2
(98.0)
422.3
93.9
371.0
(1.6)
(48.9)
1,899.4
$
(226.6)
991.1
$
(187.8)
$
200.5
177.7
908.3
$
78%
92%
(38.8)
790.6
$
(27%)
35%
(89%)
nm
50%
nm
(26%)
(21%)
nm
(a) The Kupol segment includes the Kupol and Dvoinoye mines.
(b)
"Corporate and other" includes operating costs which are not directly related to individual mining properties such as overhead expenses, gains
and losses on disposal of assets and investments, and other costs relating to corporate, shutdown, and other non-operating assets (including
Chulbatkan, Kettle River-Buckhorn, La Coipa, Lobo-Marte, Maricunga and Peak).
(c) The Company suspended mining and crushing activities at Maricunga in the third quarter of 2016, however there was continued production
through 2019 as ounces continued to be recovered from heap leach pads until the fourth quarter of 2019 when all processing activities transitioned
to care and maintenance. As such the Maricunga segment was reclassified as non-operating within the Corporate and other segment in 2020.
"nm" means not meaningful.
(d)
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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
Other operating expense
Exploration and business development
Segment operating earnings (loss)
Years ended December 31,
2020
2019
Change
% Change(c)
28,568
32,150
0.65
81.4%
25,367
26,562
0.55
82.2%
3,201
5,588
0.10
(0.8%)
237,925
238,349
200,263
200,323
37,662
38,026
$
422.9
$
279.6
$
143.3
251.3
97.2
74.4
2.6
4.8
213.7
90.3
(24.4)
25.1
3.4
37.6
6.9
98.8
(22.5)
1.4
$
67.0
$
(52.9)
$
119.9
13%
21%
18%
(1%)
19%
19%
51%
18%
8%
nm
(90%)
41%
nm
(a)
Includes 22,994,000 tonnes placed on the heap leach pads during 2020 (2019 - 18,482,000 tonnes).
(b) Amount represents mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.21 grams per tonne during 2020
(2019 - 0.21 grams per tonne). Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
(c)
"nm" means not meaningful.
The Company has been operating the Fort Knox mine, located near Fairbanks, Alaska, since it was acquired in 1998.
2020 vs. 2019
Tonnes of ore mined in 2020 increased by 13%, compared to 2019, largely due to planned mine sequencing and completion of capital
development activity related to Phase 8 East at the end of 2019. Tonnes of ore processed in 2020 increased by 21%, compared to
2019, primarily due to the increase in tonnes of ore mined and placed on the heap leach pads, and higher mill throughput. During the
fourth quarter of 2020, the first ore was placed on the new Barnes Creek heap leach facility, which was constructed as part of the
Gilmore project. In 2020, mill grade increased by 18% compared to 2019, due to mine sequencing. Gold equivalent ounces produced
and sold in 2020 each increased by 19%, compared to 2019, largely due to the increase in mill grades and higher mill throughput. Gold
equivalent ounces sold exceeded production due to timing of sales.
Metal sales in 2020 increased by 51%, compared to 2019, due to the increase in gold equivalent ounces sold and the increase in
average metal prices realized. Production cost of sales in 2020 increased by 18%, compared to 2019, primarily due to the increase in
gold equivalent ounces sold. Depreciation, depletion, and amortization in 2020 increased by 8%, compared to 2019, primarily due to
the increase in gold equivalent ounces sold. Other operating expenses in 2019 included costs associated with the impact of the pit
wall slide that occurred in 2018.
16
MDA 16
17
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
5. CONSOLIDATED RESULTS OF OPERATIONS
Operating Highlights
(in millions, except ounces and per ounce amounts)
Operating Statistics
Total gold equivalent ounces (a)
Produced(b)
Sold(b)
Produced(b)
Sold(b)
Attributable gold equivalent ounces (a)
Gold ounces - sold
Silver ounces - sold (000's)
Average realized gold price per ounce (c)
Financial data
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Reversals of impairment charges - net
Operating earnings
Net earnings (loss) attributable to common shareholders
Years ended December 31,
2020 vs. 2019
2019 vs. 2018
2020
2019
2018
Change
% Change
Change % Change(d)
2,383,307
2,527,788
2,475,068
(144,481)
2,375,548
2,512,758
2,532,912
(137,210)
(6%)
(5%)
52,720
(20,154)
2,366,648
2,507,659
2,452,398
(141,011)
2,358,927
2,492,572
2,510,419
(133,645)
2,324,324
2,458,839
2,480,529
(134,515)
4,429
4,636
4,232
(207)
$
1,774
$
1,392
$
1,268
$
382
(6%)
(5%)
(5%)
(4%)
27%
55,261
(17,847)
(21,690)
404
$
124
$
4,213.4
$
3,497.3
$
3,212.6
$
716.1
$
1,725.7
$
1,778.9
$
1,860.5
$
(53.2)
$
842.3
$
731.3
$
772.4
$
111.0
20%
(3%)
15%
$
284.7
$
(81.6)
$
(41.1)
$
(650.9)
$
(361.8)
$
-
$
(289.1)
(80%)
$
(361.8)
$
1,899.4
$
991.1
$
200.5
$
908.3
$
1,342.4
$
718.6
$
(23.6)
$
623.8
92%
87%
$
790.6
$
742.2
2%
(1%)
2%
(1%)
(1%)
10%
10%
9%
(4%)
(5%)
nm
nm
nm
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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
Other operating expense
Exploration and business development
Segment operating earnings (loss)
Years ended December 31,
2020
2019
Change
% Change(c)
28,568
32,150
0.65
81.4%
25,367
26,562
0.55
82.2%
3,201
5,588
0.10
(0.8%)
237,925
238,349
200,263
200,323
37,662
38,026
$
$
$
422.9
251.3
97.2
74.4
2.6
4.8
67.0
279.6
213.7
90.3
(24.4)
25.1
3.4
(52.9)
143.3
37.6
6.9
98.8
(22.5)
1.4
119.9
$
$
$
13%
21%
18%
(1%)
19%
19%
51%
18%
8%
nm
(90%)
41%
nm
(a)
(b)
(c)
(d)
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
"Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market
prices for the commodities for each period. The ratio for 2020 was 86.32:1 (2019 - 85.99:1 and 2018 - 80.74:1).
“Average realized gold price per ounce” is a non-GAAP financial measure and is defined in Section 11.
"nm" means not meaningful.
Includes 22,994,000 tonnes placed on the heap leach pads during 2020 (2019 - 18,482,000 tonnes).
(a)
(b) Amount represents mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.21 grams per tonne during 2020
(2019 - 0.21 grams per tonne). Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
"nm" means not meaningful.
(c)
The Company has been operating the Fort Knox mine, located near Fairbanks, Alaska, since it was acquired in 1998.
Operating Earnings (Loss) by Segment
2020 vs. 2019
Tonnes of ore mined in 2020 increased by 13%, compared to 2019, largely due to planned mine sequencing and completion of capital
development activity related to Phase 8 East at the end of 2019. Tonnes of ore processed in 2020 increased by 21%, compared to
2019, primarily due to the increase in tonnes of ore mined and placed on the heap leach pads, and higher mill throughput. During the
fourth quarter of 2020, the first ore was placed on the new Barnes Creek heap leach facility, which was constructed as part of the
Gilmore project. In 2020, mill grade increased by 18% compared to 2019, due to mine sequencing. Gold equivalent ounces produced
and sold in 2020 each increased by 19%, compared to 2019, largely due to the increase in mill grades and higher mill throughput. Gold
equivalent ounces sold exceeded production due to timing of sales.
Metal sales in 2020 increased by 51%, compared to 2019, due to the increase in gold equivalent ounces sold and the increase in
average metal prices realized. Production cost of sales in 2020 increased by 18%, compared to 2019, primarily due to the increase in
gold equivalent ounces sold. Depreciation, depletion, and amortization in 2020 increased by 8%, compared to 2019, primarily due to
the increase in gold equivalent ounces sold. Other operating expenses in 2019 included costs associated with the impact of the pit
wall slide that occurred in 2018.
(in millions)
Operating segments
Fort Knox
Round Mountain
Bald Mountain
Paracatu
Kupol(a)
Tasiast
Chirano
Non-operating segment
Corporate and other(b)(c)
Total
Years ended December 31,
2020 vs. 2019
2019 vs. 2018
2020
2019
2018
Change
% Change(d)
Change % Change(d)
$
67.0
$
(52.9)
$
(41.5)
$
119.9
286.8
34.6
407.0
410.5
504.3
238.1
207.3
12.7
492.2
281.1
285.1
(7.8)
154.1
110.7
69.9
187.2
(85.9)
(6.2)
79.5
21.9
(85.2)
129.4
219.2
245.9
nm
38%
172%
(17%)
46%
77%
nm
(11.4)
53.2
(98.0)
422.3
93.9
371.0
(27%)
35%
(89%)
nm
50%
nm
(1.6)
(26%)
(48.9)
(226.6)
(187.8)
177.7
$
1,899.4
$
991.1
$
200.5
$
908.3
78%
92%
(38.8)
$
790.6
(21%)
nm
(a) The Kupol segment includes the Kupol and Dvoinoye mines.
(b)
"Corporate and other" includes operating costs which are not directly related to individual mining properties such as overhead expenses, gains
and losses on disposal of assets and investments, and other costs relating to corporate, shutdown, and other non-operating assets (including
Chulbatkan, Kettle River-Buckhorn, La Coipa, Lobo-Marte, Maricunga and Peak).
(c) The Company suspended mining and crushing activities at Maricunga in the third quarter of 2016, however there was continued production
through 2019 as ounces continued to be recovered from heap leach pads until the fourth quarter of 2019 when all processing activities transitioned
to care and maintenance. As such the Maricunga segment was reclassified as non-operating within the Corporate and other segment in 2020.
(d)
"nm" means not meaningful.
16
17 MDA
17
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Round Mountain (100% ownership and operator) – USA
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Bald Mountain (100% ownership and operator) – USA
Years ended December 31,
2020
2019
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
Other operating expense (income)
Exploration and business development
Segment operating earnings
20,758
23,975
0.83
83.3%
22,514
25,804
1.13
84.9%
(1,756)
(1,829)
(0.30)
(1.6%)
324,277
319,228
361,664
360,739
(37,387)
(41,511)
$
$
$
565.5
219.6
49.6
296.3
3.9
5.6
286.8
502.2
250.6
39.8
211.8
(0.3)
4.8
207.3
63.3
(31.0)
9.8
84.5
4.2
0.8
79.5
$
$
$
(8%)
(7%)
(27%)
(2%)
(10%)
(12%)
13%
(12%)
25%
40%
nm
17%
38%
Includes 20,151,000 tonnes placed on the heap leach pads during 2020 (2019 - 22,164,000 tonnes).
(a)
(b) Amounts represent mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.42 grams per tonne during 2020
(2019 - 0.34 grams per tonne). Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
"nm" means not meaningful.
(c)
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. On October 2, 2018, the Company acquired the remaining 50% interest in the Bald Mountain
exploration joint venture that it did not already own from Barrick, giving Kinross 100% ownership of the Bald Mountain land package.
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. 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.
2020 vs. 2019
2020 vs. 2019
Tonnes of ore mined and processed in 2020 decreased by 8% and 7%, respectively, compared to 2019, primarily due to an increase in
capital development activity related to the Phase W project and planned mine sequencing. Mill grade in 2020 decreased by 27%,
compared to 2019, due to mine sequencing. Gold equivalent ounces produced and sold in 2020 decreased by 10% and 12%,
respectively, compared to 2019, primarily due to lower mill grade.
In 2020, metal sales increased by 13%, compared to 2019, due to the increase in average metal prices realized, partially offset by the
decrease in gold equivalent ounces sold. Production cost of sales decreased by 12%, compared to 2019, largely due to lower gold
equivalent ounces sold and lower operating waste mined, partially offset by increases in labour, maintenance costs and royalties due
to higher average metal prices. Depreciation, depletion and amortization in 2020 increased by 25%, compared to 2019, mainly due to
an increase in the depreciable asset base relating to the completion of Phase W construction, which was partially offset by a decrease
in gold equivalent ounces sold.
18
MDA 18
19
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
Other operating expense
Exploration and business development
Segment operating earnings
Years ended December 31,
2020
2019
Change
% Change
18,303
18,303
0.51
15,806
16,475
0.42
191,282
186,549
187,961
177,802
155.9
128.3
46.3
5.2
6.5
136.6
79.5
33.1
7.8
12.6
2,497
1,828
0.09
3,321
8,747
19.3
48.8
13.2
(2.6)
(6.1)
$
330.5
$
249.2
$
81.3
$
34.6
$
12.7
$
21.9
16%
11%
21%
2%
5%
33%
14%
61%
40%
(33%)
(48%)
172%
(a) Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
Tonnes of ore mined and processed in 2020 increased by 16% and 11%, respectively, compared to 2019, primarily due to a decrease
in capital development activity in 2020 related to the Vantage project and planned mine sequencing, as mining activities were
increased at the North Area in the third and fourth quarters of 2020. Grades in 2020 increased by 21%, compared to 2019, due to mine
sequencing. Gold equivalent ounces produced and sold in 2020 increased by 2% and 5%, respectively, compared to 2019, largely due
to the increase in grades and tonnes processed.
Metal sales in 2020 increased by 33%, compared to 2019, due to the increases in average metal prices realized and gold equivalent
ounces sold. Production cost of sales in 2020 increased by 14% compared to 2019, primarily due to the increase in gold equivalent
ounces sold, higher operating waste mined, and increases in maintenance costs and royalties due to higher average metal prices. In
2020, depreciation, depletion and amortization increased by 61%, compared to 2019, due to the increase in the depreciable asset
base, primarily related to the completion of the Vantage project, and an increase in gold equivalent ounces sold.
2020 ANNUAL REPORT KINROSS GOLD
$
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Round Mountain (100% ownership and operator) – USA
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Bald Mountain (100% ownership and operator) – USA
Years ended December 31,
2020
2019
Change
% Change
18,303
18,303
0.51
15,806
16,475
0.42
191,282
186,549
187,961
177,802
2,497
1,828
0.09
3,321
8,747
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
Other operating expense
Exploration and business development
Segment operating earnings
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
Other operating expense (income)
Exploration and business development
Segment operating earnings
Years ended December 31,
2020
2019
Change
% Change(c)
20,758
23,975
0.83
83.3%
22,514
25,804
1.13
84.9%
(1,756)
(1,829)
(0.30)
(1.6%)
324,277
319,228
361,664
360,739
(37,387)
(41,511)
$
565.5
$
502.2
$
63.3
219.6
49.6
296.3
3.9
5.6
250.6
39.8
211.8
(0.3)
4.8
(31.0)
9.8
84.5
4.2
0.8
$
286.8
$
207.3
$
79.5
(8%)
(7%)
(27%)
(2%)
(10%)
(12%)
13%
(12%)
25%
40%
nm
17%
38%
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. 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.
2020 vs. 2019
Tonnes of ore mined and processed in 2020 decreased by 8% and 7%, respectively, compared to 2019, primarily due to an increase in
capital development activity related to the Phase W project and planned mine sequencing. Mill grade in 2020 decreased by 27%,
compared to 2019, due to mine sequencing. Gold equivalent ounces produced and sold in 2020 decreased by 10% and 12%,
respectively, compared to 2019, primarily due to lower mill grade.
In 2020, metal sales increased by 13%, compared to 2019, due to the increase in average metal prices realized, partially offset by the
decrease in gold equivalent ounces sold. Production cost of sales decreased by 12%, compared to 2019, largely due to lower gold
equivalent ounces sold and lower operating waste mined, partially offset by increases in labour, maintenance costs and royalties due
to higher average metal prices. Depreciation, depletion and amortization in 2020 increased by 25%, compared to 2019, mainly due to
an increase in the depreciable asset base relating to the completion of Phase W construction, which was partially offset by a decrease
in gold equivalent ounces sold.
(a)
Includes 20,151,000 tonnes placed on the heap leach pads during 2020 (2019 - 22,164,000 tonnes).
(b) Amounts represent mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.42 grams per tonne during 2020
(2019 - 0.34 grams per tonne). Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
(c)
"nm" means not meaningful.
The Company 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. On October 2, 2018, the Company acquired the remaining 50% interest in the Bald Mountain
exploration joint venture that it did not already own from Barrick, giving Kinross 100% ownership of the Bald Mountain land package.
(a) Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
2020 vs. 2019
Tonnes of ore mined and processed in 2020 increased by 16% and 11%, respectively, compared to 2019, primarily due to a decrease
in capital development activity in 2020 related to the Vantage project and planned mine sequencing, as mining activities were
increased at the North Area in the third and fourth quarters of 2020. Grades in 2020 increased by 21%, compared to 2019, due to mine
sequencing. Gold equivalent ounces produced and sold in 2020 increased by 2% and 5%, respectively, compared to 2019, largely due
to the increase in grades and tonnes processed.
Metal sales in 2020 increased by 33%, compared to 2019, due to the increases in average metal prices realized and gold equivalent
ounces sold. Production cost of sales in 2020 increased by 14% compared to 2019, primarily due to the increase in gold equivalent
ounces sold, higher operating waste mined, and increases in maintenance costs and royalties due to higher average metal prices. In
2020, depreciation, depletion and amortization increased by 61%, compared to 2019, due to the increase in the depreciable asset
base, primarily related to the completion of the Vantage project, and an increase in gold equivalent ounces sold.
18
19 MDA
19
16%
11%
21%
2%
5%
33%
14%
61%
40%
(33%)
(48%)
172%
249.2
136.6
79.5
33.1
7.8
12.6
12.7
330.5
155.9
128.3
46.3
5.2
6.5
34.6
81.3
19.3
48.8
13.2
(2.6)
(6.1)
21.9
$
$
$
$
$
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Paracatu (100% ownership and operator) – Brazil
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Kupol (100% ownership and operator) – Russian Federation(a)
Years ended December 31,
2020
2019
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
Reversal of impairment charges
Other operating expense (income)
Segment operating earnings
(a)
"nm" means not meaningful.
52,653
54,255
0.42
75.1%
49,535
57,621
0.40
78.7%
3,118
(3,366)
0.02
(3.6%)
542,435
541,506
619,563
619,009
(77,128)
(77,503)
$
$
$
960.7
358.9
183.5
-
418.3
11.3
407.0
856.3
412.3
163.4
(200.7)
481.3
(10.9)
492.2
104.4
(53.4)
20.1
200.7
(63.0)
22.2
(85.2)
$
$
$
6%
(6%)
5%
(5%)
(12%)
(13%)
12%
(13%)
12%
nm
(13%)
nm
(17%)
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.
2020 vs. 2019
Tonnes of ore mined in 2020 increased by 6%, compared to 2019, largely due to planned mine sequencing. Tonnes of ore processed
decreased by 6% compared to 2019, mainly due to decreases in mill throughput in the first quarter of 2020 as a result of temporary
downtime at the crusher, planned mill maintenance in the third quarter and hardness of the ore in the fourth quarter of 2020. Grades
increased by 5% in 2020, compared to 2019, largely due to planned mine sequencing. Recoveries decreased by 5% in 2020, compared
to 2019, largely due to the characteristics of the ore mined. Gold equivalent ounces produced and sold in 2020 decreased by 12% and
13%, respectively, compared to 2019, largely due to the decreases in mill recoveries and throughput, partially offset by the increase
in grades.
Metal sales in 2020 increased by 12%, compared to 2019, due to the increase in average metal prices realized, partially offset by the
decrease in gold equivalent ounces sold. In 2020, production cost of sales decreased by 13%, compared to 2019, largely due to the
decrease in gold equivalent ounces sold and favourable foreign exchange movements, partially offset by higher contractor costs and
maintenance supplies. Depreciation, depletion and amortization in 2020 increased by 12%, compared to 2019, primarily due to the
increase in the depreciable asset base, mainly related to the impairment reversal of property, plant and equipment at the end of 2019,
partially offset by the decrease in gold equivalent ounces sold.
At December 31, 2019, the Company recognized a reversal of previously recorded impairment charges of $200.7 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. The tax impact on the impairment reversal was an expense of $68.2 million recorded within income tax expense.
In 2020, other operating expense of $11.3 included $7.5 million of labour, health and safety and other support program costs
associated with the COVID‐19 pandemic. In 2019, other operating income of $10.9 million primarily included $17.5 million of additional
federal VAT credits as a result of changes in Brazil’s tax regulations related to prior period expenditures.
20
MDA 20
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
Depreciation, depletion and amortization
Impairment charges
Other operating expense (income)
Exploration and business development
Segment operating earnings
Years ended December 31,
2020
2019
Change
% Change(d)
1,544
1,704
9.17
68.07
94.8%
85.7%
1,599
1,723
9.41
69.49
94.1%
84.9%
(55)
(19)
(0.24)
(1.42)
0.7%
0.8%
510,743
510,973
527,343
526,458
(16,600)
(15,485)
3,169
3,177
3,296
3,368
(127)
(191)
$
904.6
$
734.4
$
170.2
304.5
123.5
27.8
448.8
32.5
5.8
314.1
125.1
‐
295.2
(8.9)
23.0
(9.6)
(1.6)
27.8
153.6
41.4
(17.2)
$
410.5
$
281.1
$
129.4
(3%)
(1%)
(3%)
(2%)
1%
1%
(3%)
(3%)
(4%)
(6%)
23%
(3%)
(1%)
nm
52%
nm
(75%)
46%
(a) The Kupol segment includes the Kupol and Dvoinoye mines.
Includes 326,000 tonnes of ore mined from Dvoinoye during 2020 (2019 - 435,000).
(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 2020 was 86.32:1 (2019 - 85.99:1).
(d)
"nm" means not meaningful.
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.
2020 vs. 2019
grades.
Tonnes of ore mined in 2020 decreased by 3%, compared to 2019, primarily due to reduced mining activity at Dvoinoye, as per the
mine plan. Tonnes processed in 2020 decreased slightly compared to 2019, primarily due to planned mill maintenance in the second
quarter of 2020. Mill grade in 2020 decreased by 3% compared to 2019, primarily due to lower grades at Kupol, consistent with the
mine plan. Gold equivalent ounces produced and sold in 2020 each decreased by 3%, compared to 2019, largely due to the lower
Metal sales in 2020 increased by 23%, compared to 2019, due to the increase in average metal prices, partially offset by the decrease
in gold equivalent ounces sold. In 2020, production cost of sales decreased by 3%, compared to 2019, largely due to a decrease in gold
equivalent ounces sold and favourable foreign exchange movements, partially offset by higher royalty expenses resulting from the
increase in average metal prices realized. Depreciation, depletion and amortization in 2020 decreased slightly, compared to 2019,
primarily due to the decrease in gold equivalent ounces sold. The Company recorded impairment charges of $27.8 million to reduce
the carrying value of certain supplies inventories to their net realizable value.
In 2020, other operating expense included $31.0 million of labour, health and safety, donations and other support program costs
associated with the COVID‐19 pandemic. Exploration and business development costs decreased by 75% in 2020 compared to 2019,
primarily due to reduced regional exploration activity as a result of the COVID‐19 pandemic.
21
2020 ANNUAL REPORT KINROSS GOLD
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
Reversal of impairment charges
Other operating expense (income)
Segment operating earnings
(a)
"nm" means not meaningful.
Years ended December 31,
2020
2019
Change
% Change(a)
52,653
54,255
0.42
75.1%
49,535
57,621
0.40
78.7%
3,118
(3,366)
0.02
(3.6%)
542,435
541,506
619,563
619,009
(77,128)
(77,503)
$
960.7
$
856.3
$
104.4
358.9
183.5
-
418.3
11.3
412.3
163.4
(200.7)
481.3
(10.9)
(53.4)
20.1
200.7
(63.0)
22.2
$
407.0
$
492.2
$
(85.2)
6%
(6%)
5%
(5%)
(12%)
(13%)
12%
(13%)
12%
nm
(13%)
nm
(17%)
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.
2020 vs. 2019
in grades.
Tonnes of ore mined in 2020 increased by 6%, compared to 2019, largely due to planned mine sequencing. Tonnes of ore processed
decreased by 6% compared to 2019, mainly due to decreases in mill throughput in the first quarter of 2020 as a result of temporary
downtime at the crusher, planned mill maintenance in the third quarter and hardness of the ore in the fourth quarter of 2020. Grades
increased by 5% in 2020, compared to 2019, largely due to planned mine sequencing. Recoveries decreased by 5% in 2020, compared
to 2019, largely due to the characteristics of the ore mined. Gold equivalent ounces produced and sold in 2020 decreased by 12% and
13%, respectively, compared to 2019, largely due to the decreases in mill recoveries and throughput, partially offset by the increase
Metal sales in 2020 increased by 12%, compared to 2019, due to the increase in average metal prices realized, partially offset by the
decrease in gold equivalent ounces sold. In 2020, production cost of sales decreased by 13%, compared to 2019, largely due to the
decrease in gold equivalent ounces sold and favourable foreign exchange movements, partially offset by higher contractor costs and
maintenance supplies. Depreciation, depletion and amortization in 2020 increased by 12%, compared to 2019, primarily due to the
increase in the depreciable asset base, mainly related to the impairment reversal of property, plant and equipment at the end of 2019,
partially offset by the decrease in gold equivalent ounces sold.
At December 31, 2019, the Company recognized a reversal of previously recorded impairment charges of $200.7 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. The tax impact on the impairment reversal was an expense of $68.2 million recorded within income tax expense.
In 2020, other operating expense of $11.3 included $7.5 million of labour, health and safety and other support program costs
associated with the COVID‐19 pandemic. In 2019, other operating income of $10.9 million primarily included $17.5 million of additional
federal VAT credits as a result of changes in Brazil’s tax regulations related to prior period expenditures.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Paracatu (100% ownership and operator) – Brazil
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Kupol (100% ownership and operator) – Russian Federation(a)
Years ended December 31,
2020
2019
Change
% Change(d)
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)
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges
Other operating expense (income)
Exploration and business development
Segment operating earnings
1,544
1,704
9.17
68.07
94.8%
85.7%
1,599
1,723
9.41
69.49
94.1%
84.9%
(55)
(19)
(0.24)
(1.42)
0.7%
0.8%
510,743
510,973
527,343
526,458
(16,600)
(15,485)
3,169
3,177
3,296
3,368
(127)
(191)
$
$
$
904.6
304.5
123.5
27.8
448.8
32.5
5.8
410.5
734.4
314.1
125.1
‐
295.2
(8.9)
23.0
281.1
170.2
(9.6)
(1.6)
27.8
153.6
41.4
(17.2)
129.4
$
$
$
(3%)
(1%)
(3%)
(2%)
1%
1%
(3%)
(3%)
(4%)
(6%)
23%
(3%)
(1%)
nm
52%
nm
(75%)
46%
(a) The Kupol segment includes the Kupol and Dvoinoye mines.
(b)
(c)
Includes 326,000 tonnes of ore mined from Dvoinoye during 2020 (2019 - 435,000).
"Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent based on a ratio of the average spot market
prices for the commodities for each period. The ratio for 2020 was 86.32:1 (2019 - 85.99:1).
"nm" means not meaningful.
(d)
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.
2020 vs. 2019
Tonnes of ore mined in 2020 decreased by 3%, compared to 2019, primarily due to reduced mining activity at Dvoinoye, as per the
mine plan. Tonnes processed in 2020 decreased slightly compared to 2019, primarily due to planned mill maintenance in the second
quarter of 2020. Mill grade in 2020 decreased by 3% compared to 2019, primarily due to lower grades at Kupol, consistent with the
mine plan. Gold equivalent ounces produced and sold in 2020 each decreased by 3%, compared to 2019, largely due to the lower
grades.
Metal sales in 2020 increased by 23%, compared to 2019, due to the increase in average metal prices, partially offset by the decrease
in gold equivalent ounces sold. In 2020, production cost of sales decreased by 3%, compared to 2019, largely due to a decrease in gold
equivalent ounces sold and favourable foreign exchange movements, partially offset by higher royalty expenses resulting from the
increase in average metal prices realized. Depreciation, depletion and amortization in 2020 decreased slightly, compared to 2019,
primarily due to the decrease in gold equivalent ounces sold. The Company recorded impairment charges of $27.8 million to reduce
the carrying value of certain supplies inventories to their net realizable value.
In 2020, other operating expense included $31.0 million of labour, health and safety, donations and other support program costs
associated with the COVID‐19 pandemic. Exploration and business development costs decreased by 75% in 2020 compared to 2019,
primarily due to reduced regional exploration activity as a result of the COVID‐19 pandemic.
20
21 MDA
21
2020 ANNUAL REPORT KINROSS GOLD
Years ended December 31,
2020
2019
Change
% Change(b)
3,053
3,275
1.80
87.9%
2,569
3,457
1.98
91.6%
484
(182)
(0.18)
(3.7%)
166,590
166,207
201,296
201,868
(34,706)
(35,661)
$
295.1
$
281.6
$
13.5
196.1
58.2
(204.5)
245.3
(2.2)
9.4
189.7
92.6
‐
(0.7)
(0.9)
8.0
6.4
(34.4)
(204.5)
246.0
(1.3)
1.4
$
238.1
$
(7.8)
$
245.9
19%
(5%)
(9%)
(4%)
(17%)
(18%)
(37%)
5%
3%
nm
nm
(144%)
18%
nm
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
Reversals of impairment charges ‐ net
Other operating income
Exploration and business development
Segment operating earnings (loss)
(a) Operating statistics and financial data are at 100% for all periods.
(b)
"nm" means not meaningful.
interest is held by the government of Ghana.
2020 vs. 2019
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Tasiast (100% ownership and operator) – Mauritania
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Chirano (90% ownership and operator) – Ghana(a)
Years ended December 31,
2020
2019
Change
% Change(b)
Operating Statistics
Tonnes ore mined (000's)
Tonnes processed (000's)
Grade (grams/tonne)(a)
Recovery(a)
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Reversals of impairment charges ‐ net
Other operating expense
Exploration and business development
Segment operating earnings
(a) Amount represents mill grade and recovery only.
(b)
"nm" means not meaningful.
4,838
5,349
2.49
94.4%
4,920
5,226
2.33
96.6%
(82)
123
0.16
(2.2%)
406,509
403,789
391,097
382,803
15,412
20,986
$
$
$
718.0
235.7
191.8
(289.2)
579.7
73.4
2.0
504.3
532.8
230.4
130.2
(161.1)
333.3
46.4
1.8
285.1
185.2
5.3
61.6
(128.1)
246.4
27.0
0.2
219.2
$
$
$
(2%)
2%
7%
(2%)
4%
5%
35%
2%
47%
nm
74%
58%
11%
77%
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.
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
2020 vs. 2019
Although ramping back up during the second half of the year, the overall mining rate in 2020 was affected by the COVID‐19 pandemic
and the temporary suspension of site activities as a result of the strike in the second quarter of 2020. Tonnes of ore mined were
therefore lower than planned in 2020 and also 2% lower than in 2019. In 2020, tonnes of ore processed increased by 2%, compared
to 2019, mainly due to an increase in mill throughout in the first quarter of 2020 as a result of better availability of the SAG mill. Mill
grade in 2020 increased by 7%, compared to 2019, mainly due to mine sequencing related to higher grade ore processed from West
Branch 3. Gold equivalent ounces produced and sold increased by 4% and 5%, respectively, in 2020, compared to 2019, due to the
increases in mill throughput and grade, partially offset by lower ounces recovered from the dump leach pad and lower mill recovery.
Metal sales in 2020 increased by 35%, compared to 2019, due to the increases in average metal prices realized and gold equivalent
ounces sold. In 2020, production cost of sales increased by 2%, compared to 2019, primarily due to increases in gold equivalent ounces
sold and royalty expenses, partially offset by lower fuel, contractor and site overhead costs. Depreciation, depletion and amortization
in 2020 increased by 47%, compared to 2019, primarily due to the increase in the depreciable asset base largely related to the
impairment reversal recognized at the end of 2019, the increase in gold equivalent ounces sold, and reduced capitalized stripping
activities in 2020. At December 31, 2020, the Company recognized a non‐cash reversal of previously recorded impairment charges of
$299.5 million related to property, plant and equipment, primarily due to an increase in the Company’s estimates of future metal
prices, partially offset by impairment charges of $10.3 million to reduce the carrying value of certain supplies inventories to their net
realizable value. At December 31, 2019, the Company recognized a reversal of previously recorded impairment charges of $161.1
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.
In 2020, Other operating expenses included $16.2 million of labour, health and safety, donations and other support program costs
associated with the COVID‐19 pandemic and $8.3 million of costs relating to the temporary suspension of site activities as a result of
the strike in the second quarter of 2020.
Tonnes of ore mined in 2020 increased by 19%, compared to 2019, mainly due to the restart of open pit mining late in the first quarter
of 2019, partially offset by lower tonnes of ore mined from the Paboase and Akwaaba underground deposits. Tonnes of ore processed
decreased by 5% in 2020, compared to 2019, largely due to reduced availability of the processing plant in 2020 and the characteristics
of the ore mined. Mill grade and recoveries in 2020 decreased by 9% and 4%, respectively, compared to 2019, mainly due to lower
grade ore mined at the Paboase and Akoti underground deposits. Gold equivalent ounces produced and sold in 2020 decreased by
17% and 18%, respectively, compared to 2019, largely due to the decreases in mill grade, throughput and recovery.
Metal sales in 2020 increased by 5%, compared to 2019, due to the increase in average metal prices realized, partially offset by the
decrease in gold equivalent ounces sold. Production cost of sales in 2020 increased by 3%, compared to 2019, mainly due to an increase
in milling and maintenance supplies, largely offset by the decrease in gold equivalent ounces sold. Depreciation, depletion and
amortization in 2020 decreased by 37%, compared to 2019, largely due to an increase in mineral reserves at the end of 2019 and the
decrease in gold equivalent ounces sold.
At December 31, 2020, the Company recognized a reversal of previously recorded impairment charges of $204.5 million. The non‐cash
impairment reversal related to property, plant and equipment was primarily due to the extension of Chirano’s life of mine to 2025 and
an increase in the Company’s estimates of future metal prices. No such impairment reversal was recognized in 2019.
As previously reported, Kinross’ operating subsidiary Chirano Gold Mines Ltd. (“CGML”), was recently audited by Ghana’s Ministry of
Lands and Natural Resources and the Ghana Mineral Commission pursuant to a country‐wide audit of mining activities, including
historical mineral sales, exports and related taxes. In connection with this process, CGML received an audit report and provided a
comprehensive response clarifying various issues addressed in the report. Following ongoing communications among the parties
respecting the audit, the Government appointed an ombudsman to analyze the audit report and provide an independent assessment
of the issues addressed in the report. CGML is fully cooperating with the Government in connection with this ongoing process.
22
MDA 22
23
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Tasiast (100% ownership and operator) – Mauritania
Operating Statistics
Tonnes ore mined (000's)
Tonnes processed (000's)
Grade (grams/tonne)(a)
Recovery(a)
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Reversals of impairment charges ‐ net
Other operating expense
Exploration and business development
Segment operating earnings
(a) Amount represents mill grade and recovery only.
(b)
"nm" means not meaningful.
of the capital, Nouakchott.
2020 vs. 2019
Years ended December 31,
2020
2019
Change
% Change(b)
4,838
5,349
2.49
94.4%
4,920
5,226
2.33
96.6%
(82)
123
0.16
(2.2%)
406,509
403,789
391,097
382,803
15,412
20,986
$
718.0
$
532.8
$
185.2
235.7
191.8
(289.2)
579.7
73.4
2.0
230.4
130.2
(161.1)
333.3
46.4
1.8
5.3
61.6
(128.1)
246.4
27.0
0.2
$
504.3
$
285.1
$
219.2
(2%)
2%
7%
(2%)
4%
5%
35%
2%
47%
nm
74%
58%
11%
77%
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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
Reversals of impairment charges ‐ net
Other operating income
Exploration and business development
Segment operating earnings (loss)
(a) Operating statistics and financial data are at 100% for all periods.
(b)
"nm" means not meaningful.
Years ended December 31,
2020
2019
Change
% Change(b)
3,053
3,275
1.80
87.9%
2,569
3,457
1.98
91.6%
484
(182)
(0.18)
(3.7%)
166,590
166,207
201,296
201,868
(34,706)
(35,661)
$
$
$
295.1
196.1
58.2
(204.5)
245.3
(2.2)
9.4
238.1
281.6
189.7
92.6
‐
(0.7)
(0.9)
8.0
(7.8)
13.5
6.4
(34.4)
(204.5)
246.0
(1.3)
1.4
245.9
$
$
$
19%
(5%)
(9%)
(4%)
(17%)
(18%)
5%
3%
(37%)
nm
nm
(144%)
18%
nm
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
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.
Although ramping back up during the second half of the year, the overall mining rate in 2020 was affected by the COVID‐19 pandemic
and the temporary suspension of site activities as a result of the strike in the second quarter of 2020. Tonnes of ore mined were
therefore lower than planned in 2020 and also 2% lower than in 2019. In 2020, tonnes of ore processed increased by 2%, compared
to 2019, mainly due to an increase in mill throughout in the first quarter of 2020 as a result of better availability of the SAG mill. Mill
grade in 2020 increased by 7%, compared to 2019, mainly due to mine sequencing related to higher grade ore processed from West
Branch 3. Gold equivalent ounces produced and sold increased by 4% and 5%, respectively, in 2020, compared to 2019, due to the
increases in mill throughput and grade, partially offset by lower ounces recovered from the dump leach pad and lower mill recovery.
Metal sales in 2020 increased by 35%, compared to 2019, due to the increases in average metal prices realized and gold equivalent
ounces sold. In 2020, production cost of sales increased by 2%, compared to 2019, primarily due to increases in gold equivalent ounces
sold and royalty expenses, partially offset by lower fuel, contractor and site overhead costs. Depreciation, depletion and amortization
in 2020 increased by 47%, compared to 2019, primarily due to the increase in the depreciable asset base largely related to the
impairment reversal recognized at the end of 2019, the increase in gold equivalent ounces sold, and reduced capitalized stripping
activities in 2020. At December 31, 2020, the Company recognized a non‐cash reversal of previously recorded impairment charges of
$299.5 million related to property, plant and equipment, primarily due to an increase in the Company’s estimates of future metal
prices, partially offset by impairment charges of $10.3 million to reduce the carrying value of certain supplies inventories to their net
realizable value. At December 31, 2019, the Company recognized a reversal of previously recorded impairment charges of $161.1
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.
In 2020, Other operating expenses included $16.2 million of labour, health and safety, donations and other support program costs
associated with the COVID‐19 pandemic and $8.3 million of costs relating to the temporary suspension of site activities as a result of
the strike in the second quarter of 2020.
2020 vs. 2019
Tonnes of ore mined in 2020 increased by 19%, compared to 2019, mainly due to the restart of open pit mining late in the first quarter
of 2019, partially offset by lower tonnes of ore mined from the Paboase and Akwaaba underground deposits. Tonnes of ore processed
decreased by 5% in 2020, compared to 2019, largely due to reduced availability of the processing plant in 2020 and the characteristics
of the ore mined. Mill grade and recoveries in 2020 decreased by 9% and 4%, respectively, compared to 2019, mainly due to lower
grade ore mined at the Paboase and Akoti underground deposits. Gold equivalent ounces produced and sold in 2020 decreased by
17% and 18%, respectively, compared to 2019, largely due to the decreases in mill grade, throughput and recovery.
Metal sales in 2020 increased by 5%, compared to 2019, due to the increase in average metal prices realized, partially offset by the
decrease in gold equivalent ounces sold. Production cost of sales in 2020 increased by 3%, compared to 2019, mainly due to an increase
in milling and maintenance supplies, largely offset by the decrease in gold equivalent ounces sold. Depreciation, depletion and
amortization in 2020 decreased by 37%, compared to 2019, largely due to an increase in mineral reserves at the end of 2019 and the
decrease in gold equivalent ounces sold.
At December 31, 2020, the Company recognized a reversal of previously recorded impairment charges of $204.5 million. The non‐cash
impairment reversal related to property, plant and equipment was primarily due to the extension of Chirano’s life of mine to 2025 and
an increase in the Company’s estimates of future metal prices. No such impairment reversal was recognized in 2019.
As previously reported, Kinross’ operating subsidiary Chirano Gold Mines Ltd. (“CGML”), was recently audited by Ghana’s Ministry of
Lands and Natural Resources and the Ghana Mineral Commission pursuant to a country‐wide audit of mining activities, including
historical mineral sales, exports and related taxes. In connection with this process, CGML received an audit report and provided a
comprehensive response clarifying various issues addressed in the report. Following ongoing communications among the parties
respecting the audit, the Government appointed an ombudsman to analyze the audit report and provide an independent assessment
of the issues addressed in the report. CGML is fully cooperating with the Government in connection with this ongoing process.
22
23 MDA
23
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Maricunga (100% ownership and operator) – Chile
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. 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.
As a result of the suspension of mining and crushing activities at Maricunga, there was no new ore mined and processed in both 2020
and 2019. Production continued through 2019 as ounces continued to be recovered from the heap leach pads until the fourth quarter
of 2019 when production activities transitioned to care and maintenance.
In 2020, gold equivalent ounces sold of 8,947 decreased by 80% compared to gold equivalent ounces sold of 43,756 in 2019. No further
production is expected while Maricunga continues to sell its remaining finished metals inventories. Metal sales and operating losses
were $16.1 million and $12.5 million, respectively, in 2020, compared to metal sales and operating earnings of $61.2 million and $10.9
million, respectively, in 2019.
Reversals of impairment charges - net
(in millions)
Property, plant and equipment (i)
Inventories (ii)
Reversals of impairment charges ‐ net
(a)
"nm" means not meaningful.
i.
Property, plant and equipment
Years ended December 31,
2020
2019
$
$
(689.0)
38.1
(650.9)
$
$
(361.8)
‐
(361.8)
Change % Change(a)
nm
$
nm
nm
(327.2)
38.1
(289.1)
$
During the year ended December 31, 2020, the Company recorded reversals of previous impairment charges of $689.0 million, related
entirely to property, plant and equipment at Tasiast ($299.5 million), Chirano ($204.5 million) and Lobo‐Marte ($185.0 million, which
includes $48.3 million for the impairment reversal recorded at June 30, 2020). These impairment reversals were mainly a result of
increases in the Company’s long‐term gold price estimate, the mine life extension at Chirano and the increase in mineral reserves at
Lobo‐Marte. For Tasiast and Chirano, the reversals were limited to a full reversal of the remaining impairment charges previously
recorded. For Lobo‐Marte, the reversal represents a partial reversal of the total impairment charges previously recorded. The tax
impacts of the impairment reversals at Chirano and Lobo‐Marte were income tax expenses of $71.6 million and $4.6 million,
respectively. There was no tax impact on the impairment reversal at Tasiast.
At December 31, 2019, the Company recorded reversals of impairment charges totaling $361.8 million, related entirely to property,
plant and equipment at Paracatu ($200.7 million) and Tasiast ($161.1 million), and were mainly due to an increase in the Company’s
long‐term gold price estimate. For Paracatu, the reversal was limited to a full reversal of the remaining impairment charge recorded
in 2017. For Tasiast, the reversal represents a partial reversal of impairment charges previously recorded. The tax impact on the
impairment reversal at Paracatu was an expense of $68.2 million recorded within income tax expense. There was no tax impact related
to the impairment reversal at Tasiast.
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.
Inventories
During 2020, the Company recognized impairment charges of $38.1 million related to inventories. The inventory impairment charges
were recorded to reduce the carrying value of certain materials and supplies inventories to net realizable value.
24
MDA 24
25
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Other Operating Expense
(in millions)
Other operating expense
Years ended December 31,
2020
2019
Change
% Change
$
186.5
$
108.5
$
78.0
72%
In 2020, other operating expense included $64.1 million of labour, health and safety, donations and other support program costs
associated with the COVID-19 pandemic, $8.3 million of costs relating to the temporary suspension of site activities as a result of the
Tasiast strike in the second quarter of 2020, as well as environmental and other operating expenses for non-operating mining sites of
$46.0 million. The increase in other operating expense, compared to 2019 and 2020 expectation, is primarily a result of the above
noted impact of the pandemic.
In 2019, other operating expense included $25.1 million of costs as a result of production issues associated with the pit wall slide at
Fort Knox, and environmental and other operating expenses for non-operating mining sites of $35.6 million, and was reduced by $17.5
million as a result of additional federal VAT credits at Paracatu due to changes in Brazil’s tax regulations.
Exploration and Business Development
(in millions)
Exploration and business development
Years ended December 31,
2020
2019
Change
% Change
$
92.5
$
113.5
$
(21.0)
(19%)
Of the total Exploration and Business Development expense, expenditures on exploration totaled $64.5 million in 2020, a decrease
compared to $80.0 million in 2019, and compared to 2020 expectation, primarily as a result of impacts of the global COVID-19
pandemic. Capitalized exploration expenses, including capitalized evaluation expenditures, totaled $35.9 million in 2020, compared
to $20.7 million in 2019.
Kinross was active on more than 19 mine sites, near-mine and greenfield initiatives in 2020, with a total of 170,963 metres drilled. In
2019, Kinross was active on more than 16 mine sites, near-mine and greenfield initiatives, with a total 300,460 metres drilled.
General and Administrative
(in millions)
General and administrative
Years ended December 31,
2020
2019
Change
% Change
$
117.9
$
135.8
$
(17.9)
(13%)
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, the United States, Brazil, the Russian
Federation, Chile, the Netherlands, and the Canary Islands.
In 2020, general and administrative costs decreased compared to 2019, primarily as a result of impacts of the global COVID-19
pandemic and restructuring costs incurred in 2019.
Other Income – Net
(in millions)
Net gains on dispositions of assets
Foreign exchange (losses) gains - net
Net non-hedge derivative gains
Equity in (losses) earnings of joint venture
Other - net
Other income - net
(a)
"nm" means not meaningful.
Years ended December 31,
2020
2019
Change % Change(a)
1.2
(7.3)
1.0
(0.1)
12.6
70.4
0.6
1.4
0.1
0.2
(69.2)
(7.9)
(0.4)
(0.2)
12.4
(98%)
nm
(29%)
nm
nm
$
7.4
$
72.7
$
(65.3)
(90%)
Other income – net decreased to $7.4 million in 2020 from $72.7 million in 2019. In 2019, the Company sold a portfolio of precious
metals royalties, recognizing a gain on disposition of $72.7 million.
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Maricunga (100% ownership and operator) – Chile
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. 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.
As a result of the suspension of mining and crushing activities at Maricunga, there was no new ore mined and processed in both 2020
and 2019. Production continued through 2019 as ounces continued to be recovered from the heap leach pads until the fourth quarter
of 2019 when production activities transitioned to care and maintenance.
In 2020, gold equivalent ounces sold of 8,947 decreased by 80% compared to gold equivalent ounces sold of 43,756 in 2019. No further
production is expected while Maricunga continues to sell its remaining finished metals inventories. Metal sales and operating losses
were $16.1 million and $12.5 million, respectively, in 2020, compared to metal sales and operating earnings of $61.2 million and $10.9
million, respectively, in 2019.
Reversals of impairment charges - net
(in millions)
Inventories (ii)
Property, plant and equipment (i)
Reversals of impairment charges ‐ net
(a)
"nm" means not meaningful.
i.
Property, plant and equipment
Years ended December 31,
2020
2019
Change % Change(a)
$
(689.0)
$
(361.8)
$
(327.2)
38.1
‐
38.1
$
(650.9)
$
(361.8)
$
(289.1)
nm
nm
nm
During the year ended December 31, 2020, the Company recorded reversals of previous impairment charges of $689.0 million, related
entirely to property, plant and equipment at Tasiast ($299.5 million), Chirano ($204.5 million) and Lobo‐Marte ($185.0 million, which
includes $48.3 million for the impairment reversal recorded at June 30, 2020). These impairment reversals were mainly a result of
increases in the Company’s long‐term gold price estimate, the mine life extension at Chirano and the increase in mineral reserves at
Lobo‐Marte. For Tasiast and Chirano, the reversals were limited to a full reversal of the remaining impairment charges previously
recorded. For Lobo‐Marte, the reversal represents a partial reversal of the total impairment charges previously recorded. The tax
impacts of the impairment reversals at Chirano and Lobo‐Marte were income tax expenses of $71.6 million and $4.6 million,
respectively. There was no tax impact on the impairment reversal at Tasiast.
At December 31, 2019, the Company recorded reversals of impairment charges totaling $361.8 million, related entirely to property,
plant and equipment at Paracatu ($200.7 million) and Tasiast ($161.1 million), and were mainly due to an increase in the Company’s
long‐term gold price estimate. For Paracatu, the reversal was limited to a full reversal of the remaining impairment charge recorded
in 2017. For Tasiast, the reversal represents a partial reversal of impairment charges previously recorded. The tax impact on the
impairment reversal at Paracatu was an expense of $68.2 million recorded within income tax expense. There was no tax impact related
to the impairment reversal at Tasiast.
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.
Inventories
During 2020, the Company recognized impairment charges of $38.1 million related to inventories. The inventory impairment charges
were recorded to reduce the carrying value of certain materials and supplies inventories to net realizable value.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Other Operating Expense
(in millions)
Other operating expense
Years ended December 31,
2020
2019
$
186.5
$
108.5
Change
$
78.0
% Change
72%
In 2020, other operating expense included $64.1 million of labour, health and safety, donations and other support program costs
associated with the COVID-19 pandemic, $8.3 million of costs relating to the temporary suspension of site activities as a result of the
Tasiast strike in the second quarter of 2020, as well as environmental and other operating expenses for non-operating mining sites of
$46.0 million. The increase in other operating expense, compared to 2019 and 2020 expectation, is primarily a result of the above
noted impact of the pandemic.
In 2019, other operating expense included $25.1 million of costs as a result of production issues associated with the pit wall slide at
Fort Knox, and environmental and other operating expenses for non-operating mining sites of $35.6 million, and was reduced by $17.5
million as a result of additional federal VAT credits at Paracatu due to changes in Brazil’s tax regulations.
Exploration and Business Development
(in millions)
Exploration and business development
Years ended December 31,
2020
2019
$
92.5
$
113.5
Change
$
(21.0)
% Change
(19%)
Of the total Exploration and Business Development expense, expenditures on exploration totaled $64.5 million in 2020, a decrease
compared to $80.0 million in 2019, and compared to 2020 expectation, primarily as a result of impacts of the global COVID-19
pandemic. Capitalized exploration expenses, including capitalized evaluation expenditures, totaled $35.9 million in 2020, compared
to $20.7 million in 2019.
Kinross was active on more than 19 mine sites, near-mine and greenfield initiatives in 2020, with a total of 170,963 metres drilled. In
2019, Kinross was active on more than 16 mine sites, near-mine and greenfield initiatives, with a total 300,460 metres drilled.
General and Administrative
(in millions)
General and administrative
Years ended December 31,
2020
2019
$
117.9
$
135.8
Change
$
(17.9)
% Change
(13%)
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, the United States, Brazil, the Russian
Federation, Chile, the Netherlands, and the Canary Islands.
In 2020, general and administrative costs decreased compared to 2019, primarily as a result of impacts of the global COVID-19
pandemic and restructuring costs incurred in 2019.
Other Income – Net
(in millions)
Net gains on dispositions of assets
Foreign exchange (losses) gains - net
Net non-hedge derivative gains
Equity in (losses) earnings of joint venture
Other - net
Other income - net
(a)
"nm" means not meaningful.
Years ended December 31,
2020
2019
1.2
(7.3)
1.0
(0.1)
12.6
7.4
$
70.4
0.6
1.4
0.1
0.2
72.7
$
Change % Change(a)
(98%)
nm
(29%)
nm
nm
(90%)
(69.2)
(7.9)
(0.4)
(0.2)
12.4
(65.3)
$
Other income – net decreased to $7.4 million in 2020 from $72.7 million in 2019. In 2019, the Company sold a portfolio of precious
metals royalties, recognizing a gain on disposition of $72.7 million.
24
25 MDA
25
2020 ANNUAL REPORT KINROSS GOLD
Years ended December 31,
2020
2019
Change % Change(a)
$
1,957.6
$
1,224.9
$
732.7
(1,249.1)
(1,026.6)
(222.5)
(67.7)
(5.0)
635.8
575.1
25.1
2.7
226.1
349.0
(92.8)
(7.7)
409.7
226.1
$
1,210.9
$
575.1
$
635.8
60%
(22%)
nm
nm
181%
65%
111%
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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) provided from financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
(a)
“nm” means not meaningful.
Operating Activities
2020 vs. 2019
Investing Activities
2020 vs. 2019
Cash and cash equivalents balances increased by $635.8 million in 2020 compared to an increase of $226.1 million in 2019. Detailed
discussions regarding cash flow movements are noted below.
Net cash flow provided from operating activities increased by $732.7 million in 2020 compared to 2019, mainly due to an increase in
margins and favourable working capital changes.
Net cash flow used in investing activities was $1,249.1 million in 2020, compared to $1,026.6 million in 2019. The primary use of cash
in 2020 was for capital expenditures of $916.1 million and payments for acquisitions of $267.0 million, primarily related to the
acquisitions of the Chulbatkan license area and a 70% interest in the Peak development project.
The primary use of cash in 2019 was for capital expenditures of $1,060.2 million, partially offset by net proceeds from the sale of long-
term investments and other assets.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Finance Expense
(in millions)
Accretion of reclamation and remediation obligations
Interest expense, including accretion of debt and lease liabilities
Finance expense
Years ended December 31,
2020
2019
Change
% Change
$
$
$
23.0
89.6
112.6
31.0
76.9
107.9
$
$
$
(8.0)
12.7
4.7
(26%)
17%
4%
Interest expense in 2020 increased to $89.6 million, compared to $76.9 million in 2019, primarily as a result of an increase in interest
incurred from the Tasiast loan and revolving credit facility. Interest expense capitalized in 2020 was $49.1 million, compared to $47.4
million in 2019.
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.
In 2020, the Company recorded income tax expense of $439.8 million, compared to income tax expense of $246.7 million in 2019. The
$439.8 million of income tax expense in 2020 was the result of higher operating mine profitability compared to 2019, an additional
deferred tax expense of $76.2 million related to the reversal of impairment charges at Chirano and Lobo-Marte, as well as $101.2
million of deferred tax expense resulting from the net foreign currency translation of tax deductions related to the Company’s
operations in Brazil and the Russian Federation. This increase was partially offset by a net tax benefit of $25.4 million resulting from
the enactment of the U.S. CARES Act. The $246.7 million income tax expense recognized in 2019 included an additional deferred tax
expense of $68.2 million related to the reversal of impairment charges at Paracatu, as well as $1.6 million of deferred tax expense
resulting from the net foreign currency translation of tax deductions with respect to the Company’s operations in Brazil and the Russian
Federation. Kinross' combined federal and provincial statutory tax rate for both 2020 and 2019 was 26.5%.
There are a number of factors that can significantly impact the Company’s effective tax rate, including geographical distribution of
income, varying rates in different jurisdictions, the non-recognition of tax assets, mining allowance, mining specific taxes, foreign
currency exchange movements, changes in tax laws, and the impact of specific transactions and assessments.
The Company benefitted from two significant changes in U.S. tax law included in the U.S. CARES Act. First, $33.1 million of federal
Alternative Minimum Tax (“AMT”) credits that were previously expected to be received after 2020, were refunded in 2020. Second,
the amendment to U.S. tax law provided for new tax loss carry-back opportunities that created additional federal AMT credits of $73.7
million, which were also refunded in 2020. The carry-back of the U.S. net operating losses also resulted in a net tax benefit of $25.4
million to 2020 tax expense, as a result of the higher federal corporate tax rates applicable in the carry-back period.
On January 1, 2020, the New Tax Code in Mauritania, previously approved and promulgated in April 2019, became effective. In the
fourth quarter of 2019, the Mauritanian Tax Agency released draft administrative guidance for comment and held consultative
sessions with taxpayers for feedback. Final administrative guidance on the application of the new tax law has not yet been released.
On January 10, 2020, the Mauritanian Legislature passed the Financial Law for the Year 2020, amending the 2019 New Tax Code. Based
on draft administrative guidance available to date and other analysis, the Company does not expect the New Tax Code to have a
material impact on the Company’s ongoing operations in Mauritania. The Company notes that its Mining Convention with the State
of Mauritania contains tax stability provisions applicable to its current operations and mining concessions.
Kinross’ tax records, transactions and filing positions may be subject to examination by the tax authorities in the countries in which
the Company has operations. The tax authorities may review the Company’s transactions in respect of the year, or multiple years,
which they have chosen for examination. The tax authorities may interpret the tax implications of a transaction, in form or in fact,
differently from the interpretation reached by the Company.
In circumstances where the Company and the tax authority cannot reach a consensus on the tax impact, there are processes and
procedures which both parties may undertake in order to reach a resolution, which may span many years in the future. The Company
assesses the expected outcome of examination of transactions by the tax authorities, and accrues the expected outcome in accordance
with IFRS.
Uncertainty in the interpretation and application of applicable tax laws, regulations or the relevant sections of Mining Conventions by
the tax authorities, or the failure of relevant Governments or tax authorities to honour tax laws, regulations or the relevant sections
of Mining Conventions could adversely affect Kinross.
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.
26
MDA 26
27
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Finance Expense
(in millions)
Accretion of reclamation and remediation obligations
Interest expense, including accretion of debt and lease liabilities
Finance expense
Years ended December 31,
2020
2019
Change
% Change
$
23.0
$
31.0
$
(8.0)
89.6
76.9
12.7
$
112.6
$
107.9
$
4.7
(26%)
17%
4%
Interest expense in 2020 increased to $89.6 million, compared to $76.9 million in 2019, primarily as a result of an increase in interest
incurred from the Tasiast loan and revolving credit facility. Interest expense capitalized in 2020 was $49.1 million, compared to $47.4
million in 2019.
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,
In 2020, the Company recorded income tax expense of $439.8 million, compared to income tax expense of $246.7 million in 2019. The
$439.8 million of income tax expense in 2020 was the result of higher operating mine profitability compared to 2019, an additional
deferred tax expense of $76.2 million related to the reversal of impairment charges at Chirano and Lobo-Marte, as well as $101.2
million of deferred tax expense resulting from the net foreign currency translation of tax deductions related to the Company’s
operations in Brazil and the Russian Federation. This increase was partially offset by a net tax benefit of $25.4 million resulting from
the enactment of the U.S. CARES Act. The $246.7 million income tax expense recognized in 2019 included an additional deferred tax
expense of $68.2 million related to the reversal of impairment charges at Paracatu, as well as $1.6 million of deferred tax expense
resulting from the net foreign currency translation of tax deductions with respect to the Company’s operations in Brazil and the Russian
Federation. Kinross' combined federal and provincial statutory tax rate for both 2020 and 2019 was 26.5%.
There are a number of factors that can significantly impact the Company’s effective tax rate, including geographical distribution of
income, varying rates in different jurisdictions, the non-recognition of tax assets, mining allowance, mining specific taxes, foreign
currency exchange movements, changes in tax laws, and the impact of specific transactions and assessments.
The Company benefitted from two significant changes in U.S. tax law included in the U.S. CARES Act. First, $33.1 million of federal
Alternative Minimum Tax (“AMT”) credits that were previously expected to be received after 2020, were refunded in 2020. Second,
the amendment to U.S. tax law provided for new tax loss carry-back opportunities that created additional federal AMT credits of $73.7
million, which were also refunded in 2020. The carry-back of the U.S. net operating losses also resulted in a net tax benefit of $25.4
million to 2020 tax expense, as a result of the higher federal corporate tax rates applicable in the carry-back period.
On January 1, 2020, the New Tax Code in Mauritania, previously approved and promulgated in April 2019, became effective. In the
fourth quarter of 2019, the Mauritanian Tax Agency released draft administrative guidance for comment and held consultative
sessions with taxpayers for feedback. Final administrative guidance on the application of the new tax law has not yet been released.
On January 10, 2020, the Mauritanian Legislature passed the Financial Law for the Year 2020, amending the 2019 New Tax Code. Based
on draft administrative guidance available to date and other analysis, the Company does not expect the New Tax Code to have a
material impact on the Company’s ongoing operations in Mauritania. The Company notes that its Mining Convention with the State
of Mauritania contains tax stability provisions applicable to its current operations and mining concessions.
Kinross’ tax records, transactions and filing positions may be subject to examination by the tax authorities in the countries in which
the Company has operations. The tax authorities may review the Company’s transactions in respect of the year, or multiple years,
which they have chosen for examination. The tax authorities may interpret the tax implications of a transaction, in form or in fact,
differently from the interpretation reached by the Company.
In circumstances where the Company and the tax authority cannot reach a consensus on the tax impact, there are processes and
procedures which both parties may undertake in order to reach a resolution, which may span many years in the future. The Company
assesses the expected outcome of examination of transactions by the tax authorities, and accrues the expected outcome in accordance
with IFRS.
Uncertainty in the interpretation and application of applicable tax laws, regulations or the relevant sections of Mining Conventions by
the tax authorities, or the failure of relevant Governments or tax authorities to honour tax laws, regulations or the relevant sections
of Mining Conventions could adversely affect Kinross.
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, 2020
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) provided from financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
(a)
“nm” means not meaningful.
Years ended December 31,
2020
2019
Change % Change(a)
$
$
$
1,957.6
(1,249.1)
(67.7)
(5.0)
635.8
575.1
1,210.9
1,224.9
(1,026.6)
25.1
2.7
226.1
349.0
575.1
$
$
$
732.7
(222.5)
(92.8)
(7.7)
409.7
226.1
635.8
60%
(22%)
nm
nm
181%
65%
111%
Cash and cash equivalents balances increased by $635.8 million in 2020 compared to an increase of $226.1 million in 2019. Detailed
discussions regarding cash flow movements are noted below.
Operating Activities
2020 vs. 2019
Net cash flow provided from operating activities increased by $732.7 million in 2020 compared to 2019, mainly due to an increase in
margins and favourable working capital changes.
Investing Activities
2020 vs. 2019
Net cash flow used in investing activities was $1,249.1 million in 2020, compared to $1,026.6 million in 2019. The primary use of cash
in 2020 was for capital expenditures of $916.1 million and payments for acquisitions of $267.0 million, primarily related to the
acquisitions of the Chulbatkan license area and a 70% interest in the Peak development project.
The primary use of cash in 2019 was for capital expenditures of $1,060.2 million, partially offset by net proceeds from the sale of long-
term investments and other assets.
26
27 MDA
27
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
The following table presents a breakdown of capital expenditures(a) on a cash basis:
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
(in millions)
Operating segments
Fort Knox
Round Mountain
Bald Mountain
Paracatu
Kupol(b)
Tasiast
Chirano
Non-operating segment
Corporate and other(c)
Total
Years ended December 31,
2020
2019
Change
% Change(d)
$
138.7
159.1
103.8
152.3
32.7
224.8
27.2
$
135.4
221.4
211.1
107.7
39.3
301.1
18.7
$
3.3
(62.3)
(107.3)
44.6
(6.6)
(76.3)
8.5
77.5
916.1
$
25.5
1,060.2
$
52.0
(144.1)
$
2%
(28%)
(51%)
41%
(17%)
(25%)
45%
nm
(14%)
(a)
(b)
(c)
(d)
“Capital expenditures” is as reported as “Additions to property, plant and equipment” on the condensed consolidated statement of cash flows
which, starting in 2020 excludes, “Interest paid capitalized to property, plant and equipment”, now reported as a separate item on the consolidated
statement of cash flows.
Includes $2.3 million of capital expenditures at Dvoinoye during 2020 (2019 - $8.9 million).
“Corporate and other” includes corporate and other non-operating assets (including Chulbatkan, Kettle River-Buckhorn, La Coipa, Lobo-Marte,
Maricunga and Peak).
“nm” means not meaningful.
In 2020, capital expenditures decreased by $144.1 million, compared 2019, primarily a result of the completion of the Vantage
Complex project at Bald Mountain and Phase W construction at Round Mountain in 2019 and less capital stripping at Tasiast in 2020
as a result of impacts of the global COVID-19 pandemic, partially offset by additional mining equipment purchased at Paracatu in 2020.
Financing Activities
2020 vs. 2019
Net cash flow used in financing activities was $67.7 million in 2020, compared to the net cash flow provided from financing activities
of $25.1 million in 2019. The $100.0 million outstanding on the revolving credit facility as at December 31, 2019 was repaid in early
February 2020. On March 20, 2020, the Company drew down $750.0 million from the $1.5 billion revolving credit facility as a
precautionary measure to protect against economic and business uncertainties caused by the COVID-19 pandemic and repaid $250.0
million of the drawn amount on July 24, 2020 and the remaining $500.0 million balance on September 18, 2020. On April 9, 2020 the
Company drew down $200.0 million from the $300.0 million Tasiast loan. Total interest paid was $111.0 million in 2020, of which
$63.1 million was included in financing activities. The Company reinstated and declared dividends in September and November 2020,
resulting in payments of $75.5 million in the fourth quarter of 2020.
In 2019, net cash flow provided from financing activities included a net drawdown of $100.0 million on the revolving credit facility.
Total interest paid was $100.6 million in 2019, of which $55.6 million was included in financing activities. No dividends were paid in
2019.
Balance Sheet
(in millions)
Current assets
Total assets
Cash and cash equivalents
Total liabilities
Common shareholders' equity
Non-controlling interests
Statistics
Working capital(b)
Working capital ratio(c)
Current liabilities, including current portion of long-term debt
$
1,348.4
$
615.5
$
612.4
Total long-term financial liabilities (a)
$
2,331.6
$
2,714.9
$
2,551.4
Total debt and credit facilities, including current portion
$
1,923.9
$
1,837.4
$
1,735.0
As at December 31,
2020
2019
2018
$
1,210.9
$
575.1
$
349.0
$
2,449.7
$
1,824.7
$
1,597.9
$
10,933.2
$
9,076.0
$
8,063.8
$
4,270.2
$
3,743.4
$
3,536.5
$
6,596.5
$
5,318.5
$
4,506.7
$
66.5
$
14.1
$
20.6
$
1,101.3
$
1,209.2
$
985.5
1.82:1
2.96:1
2.61:1
(a)
Includes long-term debt and credit facilities, provisions, and long-term lease liabilities.
(b) Calculated as current assets less current liabilities.
(c) Calculated as current assets divided by current liabilities.
At December 31, 2020, Kinross had cash and cash equivalents of $1,210.9 million, an increase of $635.8 million from the balance as at
December 31, 2019, primarily due to net operating cash inflows of $1,957.6 million and a $200.0 million drawdown on the Tasiast
loan. These increases were partially offset by $267.0 million of payments for acquisitions made in 2020, primarily for the acquisitions
of the Chulbatkan license area and a 70% interest in the Peak development project, total interest payments of $111.0 million, net
repayments of $100.0 million on the revolving credit facility, and dividends paid of $75.5 million. Current assets increased to $2,449.7
million, from $1,824.7 million mainly due to the increase in cash and cash equivalents. Total assets increased by $1,857.2 million to
$10,933.2 million, primarily due to increases in current assets, and in property, plant and equipment, primarily as a result of additions
of $1,077.9 million, reversals of impairment charges of $689.0 million, acquisitions of $465.4 million, mainly related to the Chulbatkan
license area and a 70% interest in the Peak development project, partially offset by depreciation, depletion and amortization of $970.2
million. Current liabilities increased by $732.9 million to $1,348.4 million, mainly due to the $499.7 million increase in the current
portion of long-term debt reflecting the reclassification of the senior notes due in September 2021 and the $141.5 million deferred
payment obligation related to the final installment of the purchase price of the Chulbatkan license area that was paid on January 15,
2021. Total liabilities increased by $526.8 million, mainly due to the $200.0 million drawdown on the Tasiast loan, increases in deferred
tax liabilities, and the increase in deferred payment obligation, as noted above.
At December 31, 2019, Kinross had cash and cash equivalents of $575.1 million, an increase of $226.1 million from the balance as at
December 31, 2018, primarily due to net operating cash inflows of $1,224.9 million and a net drawdown on the revolving credit facility
of $100.0 million, partially offset by capital expenditures of $1,105.2 million. Current assets increased to $1,824.7 million, mainly due
to the increase in cash and cash equivalents, partially offset by a decrease in current income tax recoverable. Total assets increased
by $1,012.2 million to $9,076.0 million, due to the increases in property, plant and equipment and cash and cash equivalents, partially
offset by the decreases in long-term investments and current income tax recoverable. Total liabilities were higher by $206.9 million,
primarily due to an increase in long-term debt and credit facilities, primarily as a result of $100.0 million net drawdown on the revolving
credit facility, as well as increases in deferred tax liabilities and the recognition of lease liabilities upon the Company’s adoption of IFRS
16 “Leases”.
As of February 9, 2021, there were 1,258.4 million common shares of the Company issued and outstanding. In addition, at the same
date, the Company had 5.6 million share purchase options outstanding under its share option plan.
On February 10, 2021, the Board of Directors declared a dividend of $0.03 per common share payable on March 18, 2021 to
shareholders of record on March 3, 2021.
28
MDA 28
29
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
The following table presents a breakdown of capital expenditures(a) on a cash basis:
Years ended December 31,
2020
2019
Change
% Change(d)
$
138.7
$
135.4
$
3.3
159.1
103.8
152.3
32.7
224.8
27.2
221.4
211.1
107.7
39.3
301.1
18.7
(62.3)
(107.3)
44.6
(6.6)
(76.3)
8.5
77.5
25.5
52.0
$
916.1
$
1,060.2
$
(144.1)
2%
(28%)
(51%)
41%
(17%)
(25%)
45%
nm
(14%)
(in millions)
Operating segments
Fort Knox
Round Mountain
Bald Mountain
Paracatu
Kupol(b)
Tasiast
Chirano
Non-operating segment
Corporate and other(c)
Total
(a)
(b)
(c)
Maricunga and Peak).
(d)
“nm” means not meaningful.
Financing Activities
2020 vs. 2019
“Capital expenditures” is as reported as “Additions to property, plant and equipment” on the condensed consolidated statement of cash flows
which, starting in 2020 excludes, “Interest paid capitalized to property, plant and equipment”, now reported as a separate item on the consolidated
statement of cash flows.
Includes $2.3 million of capital expenditures at Dvoinoye during 2020 (2019 - $8.9 million).
“Corporate and other” includes corporate and other non-operating assets (including Chulbatkan, Kettle River-Buckhorn, La Coipa, Lobo-Marte,
In 2020, capital expenditures decreased by $144.1 million, compared 2019, primarily a result of the completion of the Vantage
Complex project at Bald Mountain and Phase W construction at Round Mountain in 2019 and less capital stripping at Tasiast in 2020
as a result of impacts of the global COVID-19 pandemic, partially offset by additional mining equipment purchased at Paracatu in 2020.
Net cash flow used in financing activities was $67.7 million in 2020, compared to the net cash flow provided from financing activities
of $25.1 million in 2019. The $100.0 million outstanding on the revolving credit facility as at December 31, 2019 was repaid in early
February 2020. On March 20, 2020, the Company drew down $750.0 million from the $1.5 billion revolving credit facility as a
precautionary measure to protect against economic and business uncertainties caused by the COVID-19 pandemic and repaid $250.0
million of the drawn amount on July 24, 2020 and the remaining $500.0 million balance on September 18, 2020. On April 9, 2020 the
Company drew down $200.0 million from the $300.0 million Tasiast loan. Total interest paid was $111.0 million in 2020, of which
$63.1 million was included in financing activities. The Company reinstated and declared dividends in September and November 2020,
resulting in payments of $75.5 million in the fourth quarter of 2020.
In 2019, net cash flow provided from financing activities included a net drawdown of $100.0 million on the revolving credit facility.
Total interest paid was $100.6 million in 2019, of which $55.6 million was included in financing activities. No dividends were paid in
2019.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Balance Sheet
(in millions)
Cash and cash equivalents
Current assets
Total assets
2020
As at December 31,
2019
2018
$
1,210.9
$
575.1
$
349.0
$
2,449.7
$
1,824.7
$
1,597.9
$
10,933.2
$
9,076.0
$
8,063.8
Current liabilities, including current portion of long-term debt
$
1,348.4
$
615.5
$
612.4
Total long-term financial liabilities (a)
$
2,331.6
$
2,714.9
$
2,551.4
Total debt and credit facilities, including current portion
$
1,923.9
$
1,837.4
$
1,735.0
Total liabilities
Common shareholders' equity
Non-controlling interests
Statistics
Working capital(b)
Working capital ratio(c)
$
4,270.2
$
3,743.4
$
3,536.5
$
6,596.5
$
5,318.5
$
4,506.7
$
66.5
$
14.1
$
20.6
$
1,101.3
$
1,209.2
$
985.5
1.82:1
2.96:1
2.61:1
Includes long-term debt and credit facilities, provisions, and long-term lease liabilities.
(a)
(b) Calculated as current assets less current liabilities.
(c) Calculated as current assets divided by current liabilities.
At December 31, 2020, Kinross had cash and cash equivalents of $1,210.9 million, an increase of $635.8 million from the balance as at
December 31, 2019, primarily due to net operating cash inflows of $1,957.6 million and a $200.0 million drawdown on the Tasiast
loan. These increases were partially offset by $267.0 million of payments for acquisitions made in 2020, primarily for the acquisitions
of the Chulbatkan license area and a 70% interest in the Peak development project, total interest payments of $111.0 million, net
repayments of $100.0 million on the revolving credit facility, and dividends paid of $75.5 million. Current assets increased to $2,449.7
million, from $1,824.7 million mainly due to the increase in cash and cash equivalents. Total assets increased by $1,857.2 million to
$10,933.2 million, primarily due to increases in current assets, and in property, plant and equipment, primarily as a result of additions
of $1,077.9 million, reversals of impairment charges of $689.0 million, acquisitions of $465.4 million, mainly related to the Chulbatkan
license area and a 70% interest in the Peak development project, partially offset by depreciation, depletion and amortization of $970.2
million. Current liabilities increased by $732.9 million to $1,348.4 million, mainly due to the $499.7 million increase in the current
portion of long-term debt reflecting the reclassification of the senior notes due in September 2021 and the $141.5 million deferred
payment obligation related to the final installment of the purchase price of the Chulbatkan license area that was paid on January 15,
2021. Total liabilities increased by $526.8 million, mainly due to the $200.0 million drawdown on the Tasiast loan, increases in deferred
tax liabilities, and the increase in deferred payment obligation, as noted above.
At December 31, 2019, Kinross had cash and cash equivalents of $575.1 million, an increase of $226.1 million from the balance as at
December 31, 2018, primarily due to net operating cash inflows of $1,224.9 million and a net drawdown on the revolving credit facility
of $100.0 million, partially offset by capital expenditures of $1,105.2 million. Current assets increased to $1,824.7 million, mainly due
to the increase in cash and cash equivalents, partially offset by a decrease in current income tax recoverable. Total assets increased
by $1,012.2 million to $9,076.0 million, due to the increases in property, plant and equipment and cash and cash equivalents, partially
offset by the decreases in long-term investments and current income tax recoverable. Total liabilities were higher by $206.9 million,
primarily due to an increase in long-term debt and credit facilities, primarily as a result of $100.0 million net drawdown on the revolving
credit facility, as well as increases in deferred tax liabilities and the recognition of lease liabilities upon the Company’s adoption of IFRS
16 “Leases”.
As of February 9, 2021, there were 1,258.4 million common shares of the Company issued and outstanding. In addition, at the same
date, the Company had 5.6 million share purchase options outstanding under its share option plan.
On February 10, 2021, the Board of Directors declared a dividend of $0.03 per common share payable on March 18, 2021 to
shareholders of record on March 3, 2021.
28
29 MDA
29
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Financings and Credit Facilities
Senior notes
The Company’s $1,750.0 million of senior notes consist of $500.0 million principal amount of 5.125% notes due in September 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.
The senior notes (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 45 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.
Revolving credit facility
As at December 31, 2020, the Company had utilized $7.5 million (December 31, 2019 - $119.1 million) of its $1,500.0 million revolving
credit facility, entirely for letters of credit.
In February 2020, the Company repaid the previously outstanding $100.0 million balance on the revolving credit facility. The Company
drew down $750.0 million on March 20, 2020 as a precautionary measure to protect against economic and business uncertainties
caused by the COVID-19 pandemic. The Company repaid $250.0 million of this drawn amount on July 24, 2020 and repaid the
remaining $500.0 million balance on September 18, 2020.
On July 25, 2019, the Company amended its $1,500.0 million revolving credit facility to extend the maturity date by one year from
August 10, 2023 to August 10, 2024.
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, 2020, interest charges and fees are as follows:
Type of credit
Revolving credit facility
Letters of credit
Standby fee applicable to unused availability
LIBOR plus 1.625%
1.0833-1.625%
0.325%
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, 2020.
The Company is monitoring the announced future LIBOR reference rate phase out and replacement, and will engage in discussions
with applicable financial institutions to ensure a comparable replacement pricing mechanism is agreed to where LIBOR is required as
a reference rate.
Tasiast loan
On December 16, 2019, the Company completed a definitive loan agreement for up to $300.0 million for Tasiast, with the first
drawdown of $200.0 million received on April 9, 2020, and the remaining $100.0 million is available to be drawn up to March 2022.
The asset recourse loan has a term of eight years, maturing in December 2027, a floating interest rate of LIBOR plus a weighted average
margin of 4.38% and a standby fee applicable to unused availability of 1.60%, with semi-annual interest payments to be made in June
and December for the term of the loan, and first principal repayments due in June 2022.
As at December 31, 2020, the Company held $25.0 million in a separate bank account as required under the Tasiast loan agreement.
This cash, which is subject to fluctuations over time depending on the next scheduled principal and interest payments, is required to
remain in the bank account for the duration of the loan and is therefore recorded as restricted cash in other long-term assets.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Other
The maturity date for the Company’s $300.0 million Letter of Credit guarantee facility with EDC was extended to June 30, 2022,
effective July 1, 2020. As part of the EDC renewal, the facility was expanded to allow for use for other obligations beyond reclamation
liabilities. Total fees related to letters of credit under this facility were 0.75% of the utilized amount. As at December 31, 2020, $228.9
million (December 31, 2019 - $227.8 million) was utilized under this facility.
In addition, at December 31, 2020, the Company had $175.6 million (December 31, 2019 - $184.7 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 and incur average fees of 0.74%.
As at December 31, 2020, $290.1 million (December 31, 2019 - $276.5 million) of surety bonds were outstanding with respect to
Kinross’ assets in the United States. These surety bonds were issued pursuant to arrangements with international insurance companies
and incur fees of 0.50%.
The following table outlines the credit facilities’ utilization and availability:
As at December 31,
2020
2019
$
(7.5)
$
(119.1)
(228.9)
(227.8)
$
(236.4)
$
(346.9)
$
1,492.5
$
1,380.9
71.1
72.2
$
1,563.6
$
1,453.1
(in millions)
Utilization of revolving credit facility
Utilization of EDC facility
Borrowings
Available under revolving credit facility
Available under EDC credit facility
Available credit
5.125% senior notes due in September 2021.
Liquidity Outlook
Total debt of $1,923.9 million as at December 31, 2020 consists of $1,739.8 million related to the senior notes, and $184.1 million
related to the Tasiast loan. The current portion of this debt as at December 31, 2020 is $499.7 million and relates to the Company’s
As at December 31, 2020, the Company has $500.0 million in scheduled debt repayments due in September 2021.
We believe that the Company’s existing cash and cash equivalents balance of $1,210.9 million, available credit of $1,563.6 million, and
expected operating cash flows based on current assumptions (noted in Section 3 - Outlook) will be sufficient to fund operations, our
forecasted exploration and capital expenditures (noted in Section 3 - Outlook), debt repayments noted above, reclamation and
remediation obligations, and lease liabilities, currently estimated for the next 12 months. All of Kinross’ mines continued production
during 2020, as the Company’s ongoing response to the COVID-19 pandemic continued to maintain the safety of its global workforce
and host communities while mitigating operational impacts. However, COVID-19 did partially affect overall performance, productivity
rates and costs, mainly as a result of global travel constraints and the implementation of rigorous safety protocols and measures at all
mines and projects. 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 additional lenders that include 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.
30
MDA 30
31
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Financings and Credit Facilities
Senior notes
The Company’s $1,750.0 million of senior notes consist of $500.0 million principal amount of 5.125% notes due in September 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.
The senior notes (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 45 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.
Revolving credit facility
As at December 31, 2020, the Company had utilized $7.5 million (December 31, 2019 - $119.1 million) of its $1,500.0 million revolving
credit facility, entirely for letters of credit.
In February 2020, the Company repaid the previously outstanding $100.0 million balance on the revolving credit facility. The Company
drew down $750.0 million on March 20, 2020 as a precautionary measure to protect against economic and business uncertainties
caused by the COVID-19 pandemic. The Company repaid $250.0 million of this drawn amount on July 24, 2020 and repaid the
remaining $500.0 million balance on September 18, 2020.
On July 25, 2019, the Company amended its $1,500.0 million revolving credit facility to extend the maturity date by one year from
August 10, 2023 to August 10, 2024.
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, 2020, interest charges and fees are as follows:
Type of credit
Revolving credit facility
Letters of credit
Standby fee applicable to unused availability
LIBOR plus 1.625%
1.0833-1.625%
0.325%
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, 2020.
The Company is monitoring the announced future LIBOR reference rate phase out and replacement, and will engage in discussions
with applicable financial institutions to ensure a comparable replacement pricing mechanism is agreed to where LIBOR is required as
a reference rate.
Tasiast loan
On December 16, 2019, the Company completed a definitive loan agreement for up to $300.0 million for Tasiast, with the first
drawdown of $200.0 million received on April 9, 2020, and the remaining $100.0 million is available to be drawn up to March 2022.
The asset recourse loan has a term of eight years, maturing in December 2027, a floating interest rate of LIBOR plus a weighted average
margin of 4.38% and a standby fee applicable to unused availability of 1.60%, with semi-annual interest payments to be made in June
and December for the term of the loan, and first principal repayments due in June 2022.
As at December 31, 2020, the Company held $25.0 million in a separate bank account as required under the Tasiast loan agreement.
This cash, which is subject to fluctuations over time depending on the next scheduled principal and interest payments, is required to
remain in the bank account for the duration of the loan and is therefore recorded as restricted cash in other long-term assets.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Other
The maturity date for the Company’s $300.0 million Letter of Credit guarantee facility with EDC was extended to June 30, 2022,
effective July 1, 2020. As part of the EDC renewal, the facility was expanded to allow for use for other obligations beyond reclamation
liabilities. Total fees related to letters of credit under this facility were 0.75% of the utilized amount. As at December 31, 2020, $228.9
million (December 31, 2019 - $227.8 million) was utilized under this facility.
In addition, at December 31, 2020, the Company had $175.6 million (December 31, 2019 - $184.7 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 and incur average fees of 0.74%.
As at December 31, 2020, $290.1 million (December 31, 2019 - $276.5 million) of surety bonds were outstanding with respect to
Kinross’ assets in the United States. These surety bonds were issued pursuant to arrangements with international insurance companies
and incur fees of 0.50%.
The following table outlines the credit facilities’ utilization and availability:
(in millions)
Utilization of revolving credit facility
Utilization of EDC facility
Borrowings
Available under revolving credit facility
Available under EDC credit facility
Available credit
As at December 31,
2020
2019
$
(7.5)
$
(119.1)
(228.9)
(227.8)
$
(236.4)
$
(346.9)
$
1,492.5
$
1,380.9
71.1
72.2
$
1,563.6
$
1,453.1
Total debt of $1,923.9 million as at December 31, 2020 consists of $1,739.8 million related to the senior notes, and $184.1 million
related to the Tasiast loan. The current portion of this debt as at December 31, 2020 is $499.7 million and relates to the Company’s
5.125% senior notes due in September 2021.
Liquidity Outlook
As at December 31, 2020, the Company has $500.0 million in scheduled debt repayments due in September 2021.
We believe that the Company’s existing cash and cash equivalents balance of $1,210.9 million, available credit of $1,563.6 million, and
expected operating cash flows based on current assumptions (noted in Section 3 - Outlook) will be sufficient to fund operations, our
forecasted exploration and capital expenditures (noted in Section 3 - Outlook), debt repayments noted above, reclamation and
remediation obligations, and lease liabilities, currently estimated for the next 12 months. All of Kinross’ mines continued production
during 2020, as the Company’s ongoing response to the COVID-19 pandemic continued to maintain the safety of its global workforce
and host communities while mitigating operational impacts. However, COVID-19 did partially affect overall performance, productivity
rates and costs, mainly as a result of global travel constraints and the implementation of rigorous safety protocols and measures at all
mines and projects. 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 additional lenders that include 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.
30
31 MDA
31
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Contractual Obligations and Commitments
The following table summarizes our long-term financial liabilities and off-balance sheet contractual obligations as at December 31,
2020:
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,
(in millions)
Long-term debt and credit facilities (a)
Lease liability obligations
Operating lease obligations
Purchase obligations (b)
Reclamation and remediation obligations
Interest and other fees
Total
Total
2021
2022-2025
2026 & thereafter
$
1,950.0
$
500.0
$
612.0
$
838.0
88.7
46.7
992.6
1,071.4
726.9
28.6
5.4
719.2
59.4
115.5
45.8
19.5
261.8
298.8
283.1
14.3
21.8
11.6
713.2
328.3
$
4,876.3
$
1,428.1
$
1,521.0
$
1,927.2
(a) Debt repayments are based on amounts due pursuant to the terms of existing indebtedness.
(b)
Includes both capital and operating commitments, of which $153.1 million relates to commitments for capital expenditures.
The Company manages its exposure to fluctuations in input commodity prices, currency exchange rates and interest rates, by entering
into derivative financial instruments from time to time, in accordance with the Company's risk management policy.
The following table provides a summary of derivative contracts outstanding at December 31, 2020 and their respective maturities:
Foreign currency
Brazilian real zero cost collars (in millions of U.S. dollars)
Average put strike (Brazilian real)
Average call strike (Brazilian real)
Canadian dollar forward buy contracts (in millions of U.S. dollars)
Average rate (Canadian dollar)
Russian rouble zero cost collars (in millions of U.S. dollars)
Average put strike (Russian rouble)
Average call strike (Russian rouble)
Energy
WTI oil swap contracts (barrels)
Average price
2021
$
2022
2023
$
$
$
$
$
103.6
4.35
5.39
25.2
1.37
51.6
70.3
87.8
64.8
4.62
6.56
12.0
1.40
36.0
75.0
100.6
$
43.2
5.00
7.26
-
$
-
20.4
77.0
97.8
$
1,054,400
47.52
$
822,600
42.14
$
565,200
39.58
$
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, 2020, 5,695,000 TRS units were outstanding.
In order to manage short-term metal price risk, the Company may enter into derivative contracts in relation to metal sales that it
believes are highly likely to occur within a given quarter. No such contracts were outstanding at December 31, 2020 or December 31,
2019.
Fair values of derivative instruments
The fair values of derivative instruments are noted in the table below:
(in millions)
Asset (liability)
Foreign currency forward and collar contracts
Energy swap contracts
Total return swap contracts
As at December 31,
2020
2019
$
$
(4.3)
7.6
(11.0)
(7.7)
3.9
4.0
(1.3)
6.6
$
$
32
MDA 32
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Other legal matters
results of operations or cash flows.
Maricunga regulatory proceedings
In May 2015, the Chile environmental enforcement authority (the “SMA”) commenced an administrative proceeding against Compania
Minera Maricunga (“CMM”) alleging that pumping of groundwater to support the Maricunga operation had impacted area wetlands
and, on March 18, 2016, issued a resolution alleging that CMM’s pumping was impacting the “Valle Ancho” wetland. Beginning in May
2016, the SMA issued a series of resolutions ordering CMM to temporarily curtail pumping from its wells.
In response, CMM suspended mining and crushing activities and reduced water consumption to minimal levels. CMM contested these
resolutions, but its efforts were unsuccessful and, except for a short period of time in July 2016, CMM’s operations have remained
suspended. On June 24, 2016, the SMA amended its initial sanction (the “Amended Sanction”) and effectively required CMM to cease
operations and close the mine, with water use from its wells curtailed to minimal levels. On July 9, 2016, CMM appealed the sanctions
and, on August 30, 2016, 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. On September 16, 2016, the Environmental Tribunal
rejected CMM’s injunction request and on August 7, 2017, upheld the SMA’s Amended Sanction and curtailment orders on procedural
grounds. On October 9, 2018, the Supreme Court affirmed the Environmental Tribunal’s ruling on procedural grounds and dismissed
CMM’s appeal.
On June 2, 2016, CMM was served with two separate lawsuits filed by the Chilean State Defense Counsel (“CDE”). Both lawsuits, filed
with the Environmental Tribunal, alleged that pumping from the Maricunga groundwater wells caused environmental damage to area
wetlands. One action relates to the “Pantanillo” wetland and the other action relates to the Valle Ancho wetland (described above).
Hearings on the CDE lawsuits took place in 2016 and 2017, and on November 23, 2018, the Tribunal ruled in favor of CMM in the
Pantanillo case and against CMM in the Valle Ancho case. In the Valle Ancho case, the Tribunal is requiring CMM to, among other
things, submit a restoration plan to the SMA for approval. CMM has appealed the Valle Ancho ruling to the Supreme Court. The CDE
has appealed to the Supreme Court in both cases and is asserting in the Valle Ancho matter that the Environmental Tribunal erred by
not ordering a complete shutdown of Maricunga’s groundwater wells. The timing of any rulings by the Supreme Court on the parties’
respective appeals remains 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. On August 5, 2015, while
working in another mine in the District known as the Gold King, the Environmental Protection Agency (the “EPA”) caused a release of
approximately three million gallons of contaminated water into a tributary of the Animas River. In the third quarter of 2016, 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 challenged portions of the CERCLA listing
in the United States Court of Appeals for District of Columbia Circuit, but SGC’s petition for review was denied, as was its subsequent
petition for rehearing. 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, as the EPA contends that Kinross has liability in the District under CERCLA and other statutes. In the second
quarter of 2018, the EPA issued to SGC a modified Unilateral Administrative Order for Remedial Investigation (“the Order”). In the
second quarter of 2019, pursuant to the original Order, the EPA issued to SGC a Modified Statement of Work, Work Plan and Field
Sampling Plan (together with the Order, the “Modified Order”). The Modified Order significantly altered and expanded upon the work
set out under the original Order. In the third quarter of 2019, after consulting with external legal counsel, SGC provided notice to the
EPA that the Modified Order is legally indefensible, does not address any imminent hazard and SGC does not intend to comply with
the Modified Order. On July 26, 2019, the EPA acknowledged receipt of SGC’s notice of its intention not to comply with the Modified
Order. The EPA indicated that it would undertake to complete the work ordered under the Modified Order, and has subsequently
completed some of that work. While SGC believes that it has good cause not to comply with the Modified Order, failure to comply
with the Modified Order may subject SGC to significant penalties, damages and/or potential reimbursement of the cost of remediation
work undertaken by the EPA.
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
33
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Contractual Obligations and Commitments
2020:
(in millions)
Long-term debt and credit facilities (a)
Lease liability obligations
Operating lease obligations
Purchase obligations (b)
Reclamation and remediation obligations
Interest and other fees
Total
Total
88.7
46.7
992.6
1,071.4
726.9
28.6
5.4
719.2
59.4
115.5
45.8
19.5
261.8
298.8
283.1
14.3
21.8
11.6
713.2
328.3
5.00
7.26
-
77.0
97.8
$
4,876.3
$
1,428.1
$
1,521.0
$
1,927.2
(a) Debt repayments are based on amounts due pursuant to the terms of existing indebtedness.
(b)
Includes both capital and operating commitments, of which $153.1 million relates to commitments for capital expenditures.
The Company manages its exposure to fluctuations in input commodity prices, currency exchange rates and interest rates, by entering
into derivative financial instruments from time to time, in accordance with the Company's risk management policy.
The following table provides a summary of derivative contracts outstanding at December 31, 2020 and their respective maturities:
Foreign currency
2021
2022
2023
Brazilian real zero cost collars (in millions of U.S. dollars)
$
103.6
$
64.8
$
43.2
Canadian dollar forward buy contracts (in millions of U.S. dollars)
$
25.2
$
12.0
$
-
Russian rouble zero cost collars (in millions of U.S. dollars)
$
51.6
$
36.0
$
20.4
4.35
5.39
1.37
70.3
87.8
4.62
6.56
1.40
75.0
100.6
1,054,400
822,600
565,200
$
47.52
$
42.14
$
39.58
Average put strike (Brazilian real)
Average call strike (Brazilian real)
Average rate (Canadian dollar)
Average put strike (Russian rouble)
Average call strike (Russian rouble)
Energy
WTI oil swap contracts (barrels)
Average price
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, 2020, 5,695,000 TRS units were outstanding.
In order to manage short-term metal price risk, the Company may enter into derivative contracts in relation to metal sales that it
believes are highly likely to occur within a given quarter. No such contracts were outstanding at December 31, 2020 or December 31,
2019.
Fair values of derivative instruments
The fair values of derivative instruments are noted in the table below:
(in millions)
Asset (liability)
Energy swap contracts
Total return swap contracts
Foreign currency forward and collar contracts
$
(4.3)
$
3.9
As at December 31,
2020
2019
7.6
(11.0)
4.0
(1.3)
$
(7.7)
$
6.6
The following table summarizes our long-term financial liabilities and off-balance sheet contractual obligations as at December 31,
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.
$
1,950.0
$
500.0
$
612.0
$
838.0
2021
2022-2025
2026 & thereafter
Maricunga regulatory proceedings
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Other legal matters
In May 2015, the Chile environmental enforcement authority (the “SMA”) commenced an administrative proceeding against Compania
Minera Maricunga (“CMM”) alleging that pumping of groundwater to support the Maricunga operation had impacted area wetlands
and, on March 18, 2016, issued a resolution alleging that CMM’s pumping was impacting the “Valle Ancho” wetland. Beginning in May
2016, the SMA issued a series of resolutions ordering CMM to temporarily curtail pumping from its wells.
In response, CMM suspended mining and crushing activities and reduced water consumption to minimal levels. CMM contested these
resolutions, but its efforts were unsuccessful and, except for a short period of time in July 2016, CMM’s operations have remained
suspended. On June 24, 2016, the SMA amended its initial sanction (the “Amended Sanction”) and effectively required CMM to cease
operations and close the mine, with water use from its wells curtailed to minimal levels. On July 9, 2016, CMM appealed the sanctions
and, on August 30, 2016, 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. On September 16, 2016, the Environmental Tribunal
rejected CMM’s injunction request and on August 7, 2017, upheld the SMA’s Amended Sanction and curtailment orders on procedural
grounds. On October 9, 2018, the Supreme Court affirmed the Environmental Tribunal’s ruling on procedural grounds and dismissed
CMM’s appeal.
On June 2, 2016, CMM was served with two separate lawsuits filed by the Chilean State Defense Counsel (“CDE”). Both lawsuits, filed
with the Environmental Tribunal, alleged that pumping from the Maricunga groundwater wells caused environmental damage to area
wetlands. One action relates to the “Pantanillo” wetland and the other action relates to the Valle Ancho wetland (described above).
Hearings on the CDE lawsuits took place in 2016 and 2017, and on November 23, 2018, the Tribunal ruled in favor of CMM in the
Pantanillo case and against CMM in the Valle Ancho case. In the Valle Ancho case, the Tribunal is requiring CMM to, among other
things, submit a restoration plan to the SMA for approval. CMM has appealed the Valle Ancho ruling to the Supreme Court. The CDE
has appealed to the Supreme Court in both cases and is asserting in the Valle Ancho matter that the Environmental Tribunal erred by
not ordering a complete shutdown of Maricunga’s groundwater wells. The timing of any rulings by the Supreme Court on the parties’
respective appeals remains 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. On August 5, 2015, while
working in another mine in the District known as the Gold King, the Environmental Protection Agency (the “EPA”) caused a release of
approximately three million gallons of contaminated water into a tributary of the Animas River. In the third quarter of 2016, 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 challenged portions of the CERCLA listing
in the United States Court of Appeals for District of Columbia Circuit, but SGC’s petition for review was denied, as was its subsequent
petition for rehearing. 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, as the EPA contends that Kinross has liability in the District under CERCLA and other statutes. In the second
quarter of 2018, the EPA issued to SGC a modified Unilateral Administrative Order for Remedial Investigation (“the Order”). In the
second quarter of 2019, pursuant to the original Order, the EPA issued to SGC a Modified Statement of Work, Work Plan and Field
Sampling Plan (together with the Order, the “Modified Order”). The Modified Order significantly altered and expanded upon the work
set out under the original Order. In the third quarter of 2019, after consulting with external legal counsel, SGC provided notice to the
EPA that the Modified Order is legally indefensible, does not address any imminent hazard and SGC does not intend to comply with
the Modified Order. On July 26, 2019, the EPA acknowledged receipt of SGC’s notice of its intention not to comply with the Modified
Order. The EPA indicated that it would undertake to complete the work ordered under the Modified Order, and has subsequently
completed some of that work. While SGC believes that it has good cause not to comply with the Modified Order, failure to comply
with the Modified Order may subject SGC to significant penalties, damages and/or potential reimbursement of the cost of remediation
work undertaken by the EPA.
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
32
33 MDA
33
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
negligence, public nuisance and trespass. New Mexico subsequently dropped the RCRA claim. The New Mexico 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. In the third quarter of 2017, the State of Utah filed a
complaint, which has been amended to name the EPA, 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 Utah 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. In the third quarter of 2018, numerous members of
the Navajo Nation initiated litigation against the EPA, SGC and Kinross, alleging negligence, gross negligence and injury, including great
spiritual and emotional distress. The complaint of the Navajo members seeks compensatory and consequential damages, interest,
punitive damages, attorneys’ fees and expenses. The New Mexico, Navajo Nation, Utah and Navajo member cases have been
centralized for coordinated or consolidated pretrial proceedings in the United States District Court for the District of New Mexico. In
the third quarter of 2019 (i) the EPA filed a cross claim against SGC and Kinross seeking contribution, including contribution under
CERCLA, for any damages awarded to New Mexico, the Navajo Nation, or Utah as well as cost-recovery for the EPA’s response costs
and remedial expenses incurred by the EPA in the District pursuant to CERCLA or other laws; (ii) Environmental Restoration, LLC, an
EPA contractor, filed a cross claim against SGC seeking contribution under CERCLA and attorneys’ fees and expenses; and (iii) SGC filed
a cross claim against the United States and certain contractors of the United States seeking contribution and equitable indemnity and
making a due process claim against the United States. In the first quarter of 2020, the Court granted the United States judgment on
SGC’s due process cross claim and dismissed it.
In the fourth quarter of 2020, SGC and Kinross reached settlements with the Navajo Nation and the State of New Mexico, which
settlements will result in a dismissal with prejudice of all claims by these parties against SGC and Kinross. Although these settlements
are not subject to entry of a Consent Decree approving the settlements, a Consent Decree approving the settlements will be lodged
with the United States District Court for the District of New Mexico for public notice and comment. Upon expiration of the comment
period, the parties will move the Court for entry of the Consent Decree.
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
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. On October 8,
2019, the Court of Appeals affirmed the Superior Court’s decision and the PCHB’s decision. On December 31, 2019, the Court of
Appeals denied Crown’s Motion for Reconsideration and to Supplement the Record. Crown did not petition the Washington Supreme
Court for review and, as a result, appeal of this matter has been exhausted.
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, which stay has been subsequently extended. On June 2, 2020,
the PCHB dismissed the appeal based on a Joint Stipulation of Voluntary Dismissal filed by the parties. The basis for the dismissal was
the exhaustion of appeals as to the Renewed Permit and Crown’s satisfaction of the AO.
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 third 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 timely filed.
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.
Each calendar quarter beginning April 2018, the WDOE has issued a NOV to Crown and, on one occasion, also to Kinross, asserting that
the companies had exceeded the discharge limits in the Permit and have failed to maintain the capture zone as required under the
Permit. The most recent NOV, dated January 29, 2021, asserted 144 alleged violations had occurred in the fourth quarter of 2020.
The NOVs order the companies to file a report with WDOE within 30 days identifying the steps which have been and are being taken
to “control such waste or pollution or otherwise comply with this determination,” which reports have been, or will be, timely filed.
Following its review of these reports, 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.
On April 10, 2020, the Okanogan Highlands Alliance (“OHA”) filed a citizen’s suit against Crown and Kinross Gold U.S.A., Inc. (“KGUSA”)
under the Clean Water Act (“CWA”) for alleged failure adequately to capture and treat mine-impacted groundwater and surface water
at the site in violation of the Permit and renewed Permit. The suit seeks injunctive relief and civil penalties in the amount of up to
$55,800 per day per violation. On May 7, 2020, the Attorney General for the State of Washington filed suit against Crown and KGUSA
under the CWA and the state Water Pollution Control Act alleging the same alleged permit violations and seeking similar relief as OHA.
These lawsuits have been consolidated and remain pending.
7. SUMMARY OF QUARTERLY INFORMATION
Metal sales
Net earnings attributable to
common shareholders
Basic earnings per share
Diluted earnings per share
(in millions, except per share amounts)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
$
1,195.1
$
1,131.3
$
1,007.2
$
879.8
$
996.2
$
877.1
$
837.8
$
786.2
2020
2019
$
783.3
$
240.7
$
195.7
$
122.7
$
521.5
$
60.9
$
71.5
$
64.7
attributable to common shareholders
$
0.62
$
0.19
$
0.16
$
0.10
$
0.41
$
0.05
$
0.06
$
0.05
attributable to common shareholders
$
0.62
$
0.19
$
0.15
$
0.10
$
0.41
$
0.05
$
0.06
$
0.05
Net cash flow provided from operating
activities
$
681.1
$
544.1
$
432.8
$
299.6
$
408.6
$
231.7
$
333.0
$
251.6
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 and foreign exchange rates have also affected results.
During the fourth quarter of 2020, revenue increased to $1,195.1 million on total gold equivalent ounces sold of 637,169, compared
to $996.2 million on sales of 670,917 total gold equivalent ounces during the fourth quarter of 2019. The average gold price realized
in the fourth quarter of 2020 was $1,875 per ounce compared to $1,485 per ounce in 2019.
Production cost of sales in the fourth quarter of 2020 decreased by 13% compared to the same period in 2019. Lower costs at Paracatu
mainly due to favourable foreign exchange movements and at Round Mountain due to lower gold equivalent ounces sold. This
decrease was partially offset by higher costs at Tasiast due to an increase in gold equivalent ounces sold.
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 as well as reversals of impairment charges during some of
these periods affected depreciation, depletion and amortization for quarters in subsequent periods.
In the fourth quarter of 2020, the Company recorded net, after‐tax, impairment reversals of $564.5 million related to property, plant
and equipment at Tasiast, Chirano and Lobo-Marte, and net, after-tax, impairment charges of $32.5 million relating to certain supplies
inventories at Kupol and Tasiast. In the second quarter of 2020, the Company recorded an impairment reversal of $48.3 million related
to property, plant and equipment at Lobo-Marte. In the fourth quarter of 2019, the Company recorded net, after‐tax, impairment
reversals of $293.6 million related to impairment reversals of property, plant and equipment at Paracatu and Tasiast.
34
MDA 34
35
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
negligence, public nuisance and trespass. New Mexico subsequently dropped the RCRA claim. The New Mexico 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. In the third quarter of 2017, the State of Utah filed a
complaint, which has been amended to name the EPA, 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 Utah 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. In the third quarter of 2018, numerous members of
the Navajo Nation initiated litigation against the EPA, SGC and Kinross, alleging negligence, gross negligence and injury, including great
spiritual and emotional distress. The complaint of the Navajo members seeks compensatory and consequential damages, interest,
punitive damages, attorneys’ fees and expenses. The New Mexico, Navajo Nation, Utah and Navajo member cases have been
centralized for coordinated or consolidated pretrial proceedings in the United States District Court for the District of New Mexico. In
the third quarter of 2019 (i) the EPA filed a cross claim against SGC and Kinross seeking contribution, including contribution under
CERCLA, for any damages awarded to New Mexico, the Navajo Nation, or Utah as well as cost-recovery for the EPA’s response costs
and remedial expenses incurred by the EPA in the District pursuant to CERCLA or other laws; (ii) Environmental Restoration, LLC, an
EPA contractor, filed a cross claim against SGC seeking contribution under CERCLA and attorneys’ fees and expenses; and (iii) SGC filed
a cross claim against the United States and certain contractors of the United States seeking contribution and equitable indemnity and
making a due process claim against the United States. In the first quarter of 2020, the Court granted the United States judgment on
SGC’s due process cross claim and dismissed it.
In the fourth quarter of 2020, SGC and Kinross reached settlements with the Navajo Nation and the State of New Mexico, which
settlements will result in a dismissal with prejudice of all claims by these parties against SGC and Kinross. Although these settlements
are not subject to entry of a Consent Decree approving the settlements, a Consent Decree approving the settlements will be lodged
with the United States District Court for the District of New Mexico for public notice and comment. Upon expiration of the comment
period, the parties will move the Court for entry of the Consent Decree.
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
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. On October 8,
2019, the Court of Appeals affirmed the Superior Court’s decision and the PCHB’s decision. On December 31, 2019, the Court of
Appeals denied Crown’s Motion for Reconsideration and to Supplement the Record. Crown did not petition the Washington Supreme
Court for review and, as a result, appeal of this matter has been exhausted.
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, which stay has been subsequently extended. On June 2, 2020,
the PCHB dismissed the appeal based on a Joint Stipulation of Voluntary Dismissal filed by the parties. The basis for the dismissal was
the exhaustion of appeals as to the Renewed Permit and Crown’s satisfaction of the AO.
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 third 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 timely filed.
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.
Each calendar quarter beginning April 2018, the WDOE has issued a NOV to Crown and, on one occasion, also to Kinross, asserting that
the companies had exceeded the discharge limits in the Permit and have failed to maintain the capture zone as required under the
Permit. The most recent NOV, dated January 29, 2021, asserted 144 alleged violations had occurred in the fourth quarter of 2020.
The NOVs order the companies to file a report with WDOE within 30 days identifying the steps which have been and are being taken
to “control such waste or pollution or otherwise comply with this determination,” which reports have been, or will be, timely filed.
Following its review of these reports, 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.
On April 10, 2020, the Okanogan Highlands Alliance (“OHA”) filed a citizen’s suit against Crown and Kinross Gold U.S.A., Inc. (“KGUSA”)
under the Clean Water Act (“CWA”) for alleged failure adequately to capture and treat mine-impacted groundwater and surface water
at the site in violation of the Permit and renewed Permit. The suit seeks injunctive relief and civil penalties in the amount of up to
$55,800 per day per violation. On May 7, 2020, the Attorney General for the State of Washington filed suit against Crown and KGUSA
under the CWA and the state Water Pollution Control Act alleging the same alleged permit violations and seeking similar relief as OHA.
These lawsuits have been consolidated and remain pending.
7. SUMMARY OF QUARTERLY INFORMATION
(in millions, except per share amounts)
Metal sales
Q4
1,195.1
$
Q3
1,131.3
$
Q2
1,007.2
$
Q1
879.8
$
Q4
996.2
$
Q3
877.1
$
Q2
837.8
$
Q1
786.2
$
2020
2019
Net earnings attributable to
common shareholders
Basic earnings per share
attributable to common shareholders
Diluted earnings per share
attributable to common shareholders
Net cash flow provided from operating
activities
$
783.3
$
240.7
$
195.7
$
122.7
$
521.5
$
60.9
$
71.5
$
64.7
$
0.62
$
0.19
$
0.16
$
0.10
$
0.41
$
0.05
$
0.06
$
0.05
$
0.62
$
0.19
$
0.15
$
0.10
$
0.41
$
0.05
$
0.06
$
0.05
$
681.1
$
544.1
$
432.8
$
299.6
$
408.6
$
231.7
$
333.0
$
251.6
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 and foreign exchange rates have also affected results.
During the fourth quarter of 2020, revenue increased to $1,195.1 million on total gold equivalent ounces sold of 637,169, compared
to $996.2 million on sales of 670,917 total gold equivalent ounces during the fourth quarter of 2019. The average gold price realized
in the fourth quarter of 2020 was $1,875 per ounce compared to $1,485 per ounce in 2019.
Production cost of sales in the fourth quarter of 2020 decreased by 13% compared to the same period in 2019. Lower costs at Paracatu
mainly due to favourable foreign exchange movements and at Round Mountain due to lower gold equivalent ounces sold. This
decrease was partially offset by higher costs at Tasiast due to an increase in gold equivalent ounces sold.
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 as well as reversals of impairment charges during some of
these periods affected depreciation, depletion and amortization for quarters in subsequent periods.
In the fourth quarter of 2020, the Company recorded net, after‐tax, impairment reversals of $564.5 million related to property, plant
and equipment at Tasiast, Chirano and Lobo-Marte, and net, after-tax, impairment charges of $32.5 million relating to certain supplies
inventories at Kupol and Tasiast. In the second quarter of 2020, the Company recorded an impairment reversal of $48.3 million related
to property, plant and equipment at Lobo-Marte. In the fourth quarter of 2019, the Company recorded net, after‐tax, impairment
reversals of $293.6 million related to impairment reversals of property, plant and equipment at Paracatu and Tasiast.
34
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2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Net operating cash flows increased to $681.1 million in the fourth quarter of 2020, compared to $408.6 million in the same period in
2019, primarily due to an increase in margins.
10. RISK ANALYSIS
On December 2, 2019, the Company entered into an agreement with Maverix to sell a royalty portfolio of precious metals royalties.
On December 19, 2019, the Company completed the sale for total consideration of $73.9 million, including $25.0 million in cash and
approximately 11.2 million common shares, representing 9.4% of the issued and outstanding common shares, of Maverix.
On July 31, 2019, the Company announced an agreement to acquire the Chulbatkan license located in Khabarovsk Krai, Far East Russia,
from N‐Mining, for total fixed consideration of $283.0 million. On January 16, 2020, the Company closed the acquisition of this
Chulbatkan license area. In accordance with an amended acquisition agreement, the first installment of $141.5 million, representing
50% of the $283.0 million fixed purchase price, plus ordinary course net working capital adjustments of $3.1 million, were paid in cash.
On January 15, 2021, in accordance with a further amended acquisition agreement, the Company paid the final installment of $141.5
million in cash.
On September 30, 2020, the Company acquired a 70% interest in the Peak development project in Alaska from Royal Gold and CORE
Alaska for a total cash consideration of $93.7 million.
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 U.S. Sarbanes‐Oxley Act of 2002 (“SOX”)
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 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’ internal control over
financial reporting was effective as at December 31, 2020.
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 audited consolidated financial statements.
Accounting Changes
Effective January 1, 2020, the Company adopted amendments to IFRS 3 “Business Combinations”, which amended the definition of a
business. Details of this accounting change are disclosed in Note 4 of the audited consolidated financial statements.
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, 2019, 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, 2020, which will be filed on SEDAR on or about March 31, 2021.
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 2020, the Company’s average realized gold price increased to $1,774 per ounce from $1,392 per ounce in 2019. If the world market
price of gold and/or silver were to drop and the prices realized by Kinross on gold and/or silver sales were to decrease substantially
and remain at such a level for any substantial period, Kinross’ profitability and cash flow would be negatively affected. In such
circumstances, Kinross may determine that it is not economically feasible to continue commercial production at some or all of its
operations or the development of some or all of its current projects, which could have an adverse impact on Kinross’ financial
performance and results of operations, 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.
Nature of Mineral Exploration and Mining
The exploration and development of mineral deposits involves significant financial and other risks over an extended period of time
which may not be eliminated even with careful evaluation, experience and knowledge. While discovery of gold-bearing 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
activities of precious metals mining properties, 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 and risks, such as unusual or unexpected formations, faults
and other geologic structures, rock bursts, pressures, cave-ins, flooding, pit wall failures, tailings dam failures, ground and slope 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,
36
MDA 36
37
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Net operating cash flows increased to $681.1 million in the fourth quarter of 2020, compared to $408.6 million in the same period in
10. RISK ANALYSIS
2019, primarily due to an increase in margins.
On December 2, 2019, the Company entered into an agreement with Maverix to sell a royalty portfolio of precious metals royalties.
On December 19, 2019, the Company completed the sale for total consideration of $73.9 million, including $25.0 million in cash and
approximately 11.2 million common shares, representing 9.4% of the issued and outstanding common shares, of Maverix.
On July 31, 2019, the Company announced an agreement to acquire the Chulbatkan license located in Khabarovsk Krai, Far East Russia,
from N‐Mining, for total fixed consideration of $283.0 million. On January 16, 2020, the Company closed the acquisition of this
Chulbatkan license area. In accordance with an amended acquisition agreement, the first installment of $141.5 million, representing
50% of the $283.0 million fixed purchase price, plus ordinary course net working capital adjustments of $3.1 million, were paid in cash.
On January 15, 2021, in accordance with a further amended acquisition agreement, the Company paid the final installment of $141.5
million in cash.
On September 30, 2020, the Company acquired a 70% interest in the Peak development project in Alaska from Royal Gold and CORE
Alaska for a total cash consideration of $93.7 million.
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 U.S. Sarbanes‐Oxley Act of 2002 (“SOX”)
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 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’ internal control over
financial reporting was effective as at December 31, 2020.
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 audited consolidated financial statements.
Accounting Changes
Effective January 1, 2020, the Company adopted amendments to IFRS 3 “Business Combinations”, which amended the definition of a
business. Details of this accounting change are disclosed in Note 4 of the audited consolidated financial statements.
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, 2019, 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, 2020, which will be filed on SEDAR on or about March 31, 2021.
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 2020, the Company’s average realized gold price increased to $1,774 per ounce from $1,392 per ounce in 2019. If the world market
price of gold and/or silver were to drop and the prices realized by Kinross on gold and/or silver sales were to decrease substantially
and remain at such a level for any substantial period, Kinross’ profitability and cash flow would be negatively affected. In such
circumstances, Kinross may determine that it is not economically feasible to continue commercial production at some or all of its
operations or the development of some or all of its current projects, which could have an adverse impact on Kinross’ financial
performance and results of operations, 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.
Nature of Mineral Exploration and Mining
The exploration and development of mineral deposits involves significant financial and other risks over an extended period of time
which may not be eliminated even with careful evaluation, experience and knowledge. While discovery of gold-bearing 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
activities of precious metals mining properties, 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 and risks, such as unusual or unexpected formations, faults
and other geologic structures, rock bursts, pressures, cave-ins, flooding, pit wall failures, tailings dam failures, ground and slope 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,
36
37 MDA
37
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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, public health 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, interpretations by Governments, 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, interpretations or enforcement including
those pertaining to taxes, the rights of leaseholders or the 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.
In light of tailings dam incidents in Brazil in 2015 and 2019, federal lawmakers have proposed legislation aimed at addressing risks of
future tailings dam failures. While there are a variety of measures under consideration, recently approved legislation at the federal
and state level includes the potential increase of financial assurance requirements, increased fines and penalties for environmental
damages and/or require the Company to further address risks to residents downstream. While regulations are pending on these issues,
these laws and regulations may adversely affect Kinross’ operations in Brazil or increase the costs associated with those operations.
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.
Reclamation Costs and Financial Assurance
In certain jurisdictions, the Company is required, or may be required in the future, to provide financial assurances covering reclamation
costs, cleanup costs or other actual or potential liabilities arising out of its activities or ownership. These costs and liabilities may be
significant and may exceed the provisions the Company has made in respect of these costs and liabilities. In some jurisdictions bonds,
letters of credit or other forms of financial assurance are required, or may be required in the future, as security for these costs and
liabilities, such as the financial assurances contemplated in Brazil under proposed tailing dam legislation. The amount and nature of
financial assurance are dependent upon a number of factors, including the Company’s financial condition, cost estimates and
thresholds set by applicable governments or legislation. Kinross may be required to replace or supplement existing financial
assurances, or source new financial assurances with more expensive forms, which might include cash deposits, which would reduce
its cash available for operations and financing activities. There can be no guarantee that Kinross will be able to maintain or add to its
current level of financial assurance or meet the requirements set by regulatory authorities in the future. These new requirements may
include, but are not limited to, financial assurances intended to cover potential environmental cleanup costs or potential liabilities
associated with the Company’s mine sites, including its tailings facilities and other infrastructure. To the extent that Kinross is or
becomes unable to post and maintain sufficient financial assurance covering these requirements, 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.
38
MDA 38
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Outbreak of Infectious Disease or Pandemic
An outbreak of infectious disease, pandemic or a similar public health threat, such as the COVID-19 pandemic, and the response
thereto, could adversely impact the Company, both operationally and financially. The global response to the COVID-19 outbreak has
resulted in, among other things, border closures, severe travel restrictions and fluctuations in financial and commodity markets.
Additional measures may be implemented by one or more governments around the world in jurisdictions where the Company
operates. Labour shortages due to illness, Company or government imposed isolation programs, or restrictions on the movement of
personnel or possible supply chain disruptions could result in a reduction or interruption of the Company’s operations, including mine
shutdowns or suspensions. The inability to transport or refine and process the Company’s products could have a material adverse
effect on the Company’s future cash flows, earnings, results of operations and financial condition. While the Company’s operations
have not been materially impacted to date, there can be no assurance that Kinross will remain unaffected by the current COVID-19
crisis or potential future health crises. The extent to which COVID-19 and any other pandemic or public health crisis impacts our
business, affairs, operations, financial condition, liquidity, availability of credit and results of operations will depend on future
developments that are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning
the severity of and the actions required to contain the COVID-19 or remedy its impact, among others.
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 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
Although Kinross is committed to ensure ongoing compliance, Kinross cannot be certain that it will be successful in complying with
obligations.
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 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.
39
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Outbreak of Infectious Disease or Pandemic
An outbreak of infectious disease, pandemic or a similar public health threat, such as the COVID-19 pandemic, and the response
thereto, could adversely impact the Company, both operationally and financially. The global response to the COVID-19 outbreak has
resulted in, among other things, border closures, severe travel restrictions and fluctuations in financial and commodity markets.
Additional measures may be implemented by one or more governments around the world in jurisdictions where the Company
operates. Labour shortages due to illness, Company or government imposed isolation programs, or restrictions on the movement of
personnel or possible supply chain disruptions could result in a reduction or interruption of the Company’s operations, including mine
shutdowns or suspensions. The inability to transport or refine and process the Company’s products could have a material adverse
effect on the Company’s future cash flows, earnings, results of operations and financial condition. While the Company’s operations
have not been materially impacted to date, there can be no assurance that Kinross will remain unaffected by the current COVID-19
crisis or potential future health crises. The extent to which COVID-19 and any other pandemic or public health crisis impacts our
business, affairs, operations, financial condition, liquidity, availability of credit and results of operations will depend on future
developments that are highly uncertain and cannot be accurately predicted, including new information which may emerge concerning
the severity of and the actions required to contain the COVID-19 or remedy its impact, among others.
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 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 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.
38
39 MDA
39
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, public health 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, interpretations by Governments, 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, interpretations or enforcement including
those pertaining to taxes, the rights of leaseholders or the 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.
In light of tailings dam incidents in Brazil in 2015 and 2019, federal lawmakers have proposed legislation aimed at addressing risks of
future tailings dam failures. While there are a variety of measures under consideration, recently approved legislation at the federal
and state level includes the potential increase of financial assurance requirements, increased fines and penalties for environmental
damages and/or require the Company to further address risks to residents downstream. While regulations are pending on these issues,
these laws and regulations may adversely affect Kinross’ operations in Brazil or increase the costs associated with those operations.
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.
Reclamation Costs and Financial Assurance
In certain jurisdictions, the Company is required, or may be required in the future, to provide financial assurances covering reclamation
costs, cleanup costs or other actual or potential liabilities arising out of its activities or ownership. These costs and liabilities may be
significant and may exceed the provisions the Company has made in respect of these costs and liabilities. In some jurisdictions bonds,
letters of credit or other forms of financial assurance are required, or may be required in the future, as security for these costs and
liabilities, such as the financial assurances contemplated in Brazil under proposed tailing dam legislation. The amount and nature of
financial assurance are dependent upon a number of factors, including the Company’s financial condition, cost estimates and
thresholds set by applicable governments or legislation. Kinross may be required to replace or supplement existing financial
assurances, or source new financial assurances with more expensive forms, which might include cash deposits, which would reduce
its cash available for operations and financing activities. There can be no guarantee that Kinross will be able to maintain or add to its
current level of financial assurance or meet the requirements set by regulatory authorities in the future. These new requirements may
include, but are not limited to, financial assurances intended to cover potential environmental cleanup costs or potential liabilities
associated with the Company’s mine sites, including its tailings facilities and other infrastructure. To the extent that Kinross is or
becomes unable to post and maintain sufficient financial assurance covering these requirements, 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.
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Mineral Reserve and Mineral Resource Estimates
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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, 2020, based
upon an assumed gold price of $1,200 per ounce.
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. In addition, changes in
legislation, permitting or title over land or mineral interests may result in mineral reserves or mineral resources being reclassified or
ceasing to meet the definition of mineral reserve or mineral resource. 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.
Kinross’s mineral reserve and resource estimates have been prepared in accordance with the requirements of Canadian securities
laws, which differ from the requirements of United States’ securities laws and other jurisdictions.
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
Uncertainty in the Russian Federation
Kinross must continually replace and expand its mineral reserves in order to maintain or grow its total mineral reserve base as they
are depleted by production at its operations. Similarly, 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. Once a site with
mineralization is discovered, it may take several years from the initial phases of drilling until production is possible. Development
projects are subject to accurate feasibility studies, the acquisition of surface or land rights and the issuance of necessary governmental
permits and approval. 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, development projects 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 permits and approvals necessary for the operation of a project. The timeline to obtain
these government permits or approvals is often beyond the control of Kinross. It is not unusual in the mining industry for new mining
operations to experience unexpected problems during the start-up phase, resulting in delays and requiring more capital than
anticipated.
Production and Cost Estimates
The Company prepares estimates of future production, operating costs and capital costs for its operations. Despite the Company’s
best efforts to budget and estimate such costs, as a result of the substantial expenditures involved in the development of mineral
40
MDA 40
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 (such as in Chile), floods, earthquakes, and pandemics; 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 due to factors beyond the Company’s control
such as a pandemic or a similar public health threat, 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.
From time to time, Kinross transacts in energy hedging to reduce the risk associated with fuel price fluctuations.
The Company is subject to the considerations and risks of operating in 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,
allegations of cyberattacks, and allegations of interference with foreign 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. 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.
New laws or regulations, or amendments to current laws and regulations, including the renegotiation or removal of international tax
treaties could have a material adverse effect on the Company, increase costs and result in a substantially higher tax burden for the
Company’s operations 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.
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, revoke existing stability provisions in those conventions or breach those
conventions; (2) political instability ; (3) the security situation in the country may deteriorate; (4) a lack of transparency in the operation
41
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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, 2020, based
upon an assumed gold price of $1,200 per ounce.
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. In addition, changes in
legislation, permitting or title over land or mineral interests may result in mineral reserves or mineral resources being reclassified or
ceasing to meet the definition of mineral reserve or mineral resource. 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.
Kinross’s mineral reserve and resource estimates have been prepared in accordance with the requirements of Canadian securities
laws, which differ from the requirements of United States’ securities laws and other jurisdictions.
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.
Kinross must continually replace and expand its mineral reserves in order to maintain or grow its total mineral reserve base as they
are depleted by production at its operations. Similarly, 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. Once a site with
mineralization is discovered, it may take several years from the initial phases of drilling until production is possible. Development
projects are subject to accurate feasibility studies, the acquisition of surface or land rights and the issuance of necessary governmental
permits and approval. 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, development projects 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 permits and approvals necessary for the operation of a project. The timeline to obtain
these government permits or approvals is often beyond the control of Kinross. It is not unusual in the mining industry for new mining
operations to experience unexpected problems during the start-up phase, resulting in delays and requiring more capital than
anticipated.
Production and Cost Estimates
The Company prepares estimates of future production, operating costs and capital costs for its operations. Despite the Company’s
best efforts to budget and estimate such costs, as a result of the substantial expenditures involved in the development of mineral
40
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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 (such as in Chile), floods, earthquakes, and pandemics; 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 due to factors beyond the Company’s control
such as a pandemic or a similar public health threat, 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.
From time to time, Kinross transacts in energy hedging to reduce the risk associated with fuel price fluctuations.
Development Projects
Uncertainty in the Russian Federation
The Company is subject to the considerations and risks of operating in 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,
allegations of cyberattacks, and allegations of interference with foreign 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. 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.
New laws or regulations, or amendments to current laws and regulations, including the renegotiation or removal of international tax
treaties could have a material adverse effect on the Company, increase costs and result in a substantially higher tax burden for the
Company’s operations 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.
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, revoke existing stability provisions in those conventions or breach those
conventions; (2) political instability ; (3) the security situation in the country may deteriorate; (4) a lack of transparency in the operation
41 MDA
41
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
of the government and development of new laws; (5) the potential for laws and regulations to be inconsistently applied; (6) disputes
under the application of the mining convention; (7) potential legal and practical difficulties with enforcement of the mining convention;
and (8) inconsistent interpretation and application of tax laws including potential re-assessments of historical tax filings. These issues
include, but are not limited to, a process and timetable for payment or offset of VAT refunds owed by the government to the Company,
production royalties payable by the Company, the long-term stability in the Company’s relationship with the workers’ union, the
availability of duty exonerations for fuel, the application of a clear, comprehensive, legally certain and enforceable VAT exemption for
the mining industry, labour force management and flexible labour practices and the timely issuance of work permits for the non-
national workforce.
The Company announced an Agreement in Principle with the Government of Mauritania in June 2020 which affords benefits and
stability to both the Company and the Government. The Agreement in Principle remains subject to finalizing and executing definitive
agreements. There can be no assurance that the Company will be able to conclude final and binding agreements with the Government
of Mauritania or that further disputes will not arise between the parties including disputes with respect to the matters addressed by
Agreement in Principle, any resulting definitive agreement, or the Company’s mining convention.
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 U.S. and state laws, are currently exempt from certain U.S. Environmental Protection Agency 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 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 and state law equivalents. Air emissions in the U.S. are subject to the Clean Air Act and its state equivalents
as well. The Company has received notices of violation related to alleged breaches of the waste discharge permit at its Kettle River-
Buckhorn site. There can be no assurance that the Company will not receive further notices, fines or penalties in the future related to
its waste discharge permit at Kettle River-Buckhorn. 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, health and safety 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, armed robberies and illegal
incursions on property (as may occur at Paracatu and Tasiast from time to time) which illegal incursions could result in serious security
and operational issues, including the endangerment of life and property; criminal or regulatory investigations, extreme fluctuations in
currency exchange rates; high rates of inflation; labour unrest; the risks of civil unrest; unstable governments or political systems;
expropriation and nationalization; renegotiation or nullification of existing concessions, conventions, licenses, permits and contracts
(including work permits for non-nationals at Tasiast); illegal mining (including at Tasiast and Chirano) 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; political regime change or instability; changes to policies and regulations impacting the mining
sector; restrictions on foreign exchange and repatriation of funds; restrictions on the movement of personnel or importation of goods
and equipment, global health crises or pandemics; 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.
Changes in political leadership or other future political and economic conditions in these countries may result in these governments
adopting different policies with respect to foreign investment, taxation 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 have a material adverse affect on
42
MDA 42
the financial performance of the Company. Such changes may also 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 from those currently in effect, which might extend to, as an
example, expropriation of assets.
The tax regimes in these countries may be subject to differing interpretations or levels of enforcement 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. In addition, in certain jurisdictions (such as Brazil and
Mauritania) Kinross may be required to pay refundable VAT on certain purchases. There can be no assurance that the Company will
be able to collect all, or part, of the amount of VAT refunds which are owed to the Company.
Governmental efforts to increase revenue from taxes and royalties have escalated in recent years. Brazil increased production royalties
in 2018 and the State of Nevada is currently contemplating an increase in state mining taxes. The government of Ghana recently
undertook an industry-wide audit of mining operations. There can be no assurance that current government royalty and mining tax
rates will remain static in future periods. The increasing intensity of government efforts to increase revenues may result in future
audits, tax reassessment and claims for increased payments of royalties, income tax, withholding taxes or additional forms of revenue.
The results of such audits or reassessments may result in claims, fines or penalties that are material to the Company.
Anti-bribery Legislation
The Foreign Corrupt Practices Act (United States) and the Corruption of Foreign Public Officials Act (Canada), anti-bribery provisions of
the Dutch Criminal Code and similar anti-bribery legislation prohibit companies and their intermediaries from making improper
payments for the purpose of obtaining or retaining business or other commercial advantage. Company policies mandate strict
compliance with applicable anti-bribery legislation. Kinross operates in jurisdictions that have experienced governmental and private
sector corruption to some degree. There can be no assurance that Kinross’ internal control policies and procedures will always protect
it from reckless or other inappropriate acts committed by the Company’s affiliates, employees or agents. Allegations of any violations
of anti-bribery legislation may result in costly and time consuming investigations. Violations of such legislation could result in fines or
penalties and have a material adverse effect on Kinross’ reputation and social license to operate.
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 or comply with 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.
Certain of Kinross’ United States mineral rights consist of unpatented mining claims. Unpatented mining claims present unique title
risks due to the rules for validity and the opportunities for third-party challenge. These claims are also subject to legal uncertainty as
reflected in the action titled Earthworks, et al. vs. Department of the Interior, et al., which is pending in the Court of Appeals for the
D.C. Circuit, and in which a Kinross subsidiary has intervened. In that case, appellants contend that the Bureau of Land Management
(“BLM”) issued rules that unlawfully allow mining companies to permit too much acreage for millsites and further contend that the
BLM must perform formal mining claim validity determinations and require payment of “fair market value” for the claims rather than
annual claims maintenance payments.
43
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
of the government and development of new laws; (5) the potential for laws and regulations to be inconsistently applied; (6) disputes
under the application of the mining convention; (7) potential legal and practical difficulties with enforcement of the mining convention;
and (8) inconsistent interpretation and application of tax laws including potential re-assessments of historical tax filings. These issues
include, but are not limited to, a process and timetable for payment or offset of VAT refunds owed by the government to the Company,
production royalties payable by the Company, the long-term stability in the Company’s relationship with the workers’ union, the
availability of duty exonerations for fuel, the application of a clear, comprehensive, legally certain and enforceable VAT exemption for
the mining industry, labour force management and flexible labour practices and the timely issuance of work permits for the non-
national workforce.
The Company announced an Agreement in Principle with the Government of Mauritania in June 2020 which affords benefits and
stability to both the Company and the Government. The Agreement in Principle remains subject to finalizing and executing definitive
agreements. There can be no assurance that the Company will be able to conclude final and binding agreements with the Government
of Mauritania or that further disputes will not arise between the parties including disputes with respect to the matters addressed by
Agreement in Principle, any resulting definitive agreement, or the Company’s mining convention.
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 U.S. and state laws, are currently exempt from certain U.S. Environmental Protection Agency 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 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 and state law equivalents. Air emissions in the U.S. are subject to the Clean Air Act and its state equivalents
as well. The Company has received notices of violation related to alleged breaches of the waste discharge permit at its Kettle River-
Buckhorn site. There can be no assurance that the Company will not receive further notices, fines or penalties in the future related to
its waste discharge permit at Kettle River-Buckhorn. 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, health and safety 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, armed robberies and illegal
incursions on property (as may occur at Paracatu and Tasiast from time to time) which illegal incursions could result in serious security
and operational issues, including the endangerment of life and property; criminal or regulatory investigations, extreme fluctuations in
currency exchange rates; high rates of inflation; labour unrest; the risks of civil unrest; unstable governments or political systems;
expropriation and nationalization; renegotiation or nullification of existing concessions, conventions, licenses, permits and contracts
(including work permits for non-nationals at Tasiast); illegal mining (including at Tasiast and Chirano) 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; political regime change or instability; changes to policies and regulations impacting the mining
sector; restrictions on foreign exchange and repatriation of funds; restrictions on the movement of personnel or importation of goods
and equipment, global health crises or pandemics; 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.
Changes in political leadership or other future political and economic conditions in these countries may result in these governments
adopting different policies with respect to foreign investment, taxation 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 have a material adverse affect on
42
the financial performance of the Company. Such changes may also 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 from those currently in effect, which might extend to, as an
example, expropriation of assets.
The tax regimes in these countries may be subject to differing interpretations or levels of enforcement 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. In addition, in certain jurisdictions (such as Brazil and
Mauritania) Kinross may be required to pay refundable VAT on certain purchases. There can be no assurance that the Company will
be able to collect all, or part, of the amount of VAT refunds which are owed to the Company.
Governmental efforts to increase revenue from taxes and royalties have escalated in recent years. Brazil increased production royalties
in 2018 and the State of Nevada is currently contemplating an increase in state mining taxes. The government of Ghana recently
undertook an industry-wide audit of mining operations. There can be no assurance that current government royalty and mining tax
rates will remain static in future periods. The increasing intensity of government efforts to increase revenues may result in future
audits, tax reassessment and claims for increased payments of royalties, income tax, withholding taxes or additional forms of revenue.
The results of such audits or reassessments may result in claims, fines or penalties that are material to the Company.
Anti-bribery Legislation
The Foreign Corrupt Practices Act (United States) and the Corruption of Foreign Public Officials Act (Canada), anti-bribery provisions of
the Dutch Criminal Code and similar anti-bribery legislation prohibit companies and their intermediaries from making improper
payments for the purpose of obtaining or retaining business or other commercial advantage. Company policies mandate strict
compliance with applicable anti-bribery legislation. Kinross operates in jurisdictions that have experienced governmental and private
sector corruption to some degree. There can be no assurance that Kinross’ internal control policies and procedures will always protect
it from reckless or other inappropriate acts committed by the Company’s affiliates, employees or agents. Allegations of any violations
of anti-bribery legislation may result in costly and time consuming investigations. Violations of such legislation could result in fines or
penalties and have a material adverse effect on Kinross’ reputation and social license to operate.
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 or comply with 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.
Certain of Kinross’ United States mineral rights consist of unpatented mining claims. Unpatented mining claims present unique title
risks due to the rules for validity and the opportunities for third-party challenge. These claims are also subject to legal uncertainty as
reflected in the action titled Earthworks, et al. vs. Department of the Interior, et al., which is pending in the Court of Appeals for the
D.C. Circuit, and in which a Kinross subsidiary has intervened. In that case, appellants contend that the Bureau of Land Management
(“BLM”) issued rules that unlawfully allow mining companies to permit too much acreage for millsites and further contend that the
BLM must perform formal mining claim validity determinations and require payment of “fair market value” for the claims rather than
annual claims maintenance payments.
43 MDA
43
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Competition
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Litigation Risk
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.
condition.
Counterparty and Liquidity Risk
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
2021, sensitivity to a 10% change in the gold price is estimated to have an approximate $340 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 2021, sensitivity to a 10% change in the silver price is estimated to have an approximate $15 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 cash and cash equivalents,
as well as some of its long-term debt and credit 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
long-term metal sales’ exposures. However, the Company may assume or enter into forward sales contracts or similar instruments if
hedges are acquired in a business acquisition, if hedges are required under project financing requirements, or when deemed
advantageous by management. As at December 31, 2020, 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 ouguiyas 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, 2020.
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. The Company may become
party to disputes governed by the rules of international arbitration. Kinross may also be the subject of legal claims in Canada in respect
of its activities in a foreign jurisdiction. 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
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, 2020, the Company’s gross credit exposure, including cash and cash equivalents, was $1,401.5 million and at
December 31, 2019, the gross credit exposure, including cash and cash equivalents, was $831.8 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 and Debt Markets
The mining, processing, development, and exploration of Kinross’ properties may require substantial additional financing. Failure to
obtain sufficient financing may result in the delay or indefinite postponement of exploration, development or production on any or all
of Kinross’ properties, or even a loss of property interest. Additional capital or other types of financing may not be available if needed
or, if available, the terms of such financing may be unfavourable to Kinross. The Company’s ability to access debt markets and the
related cost of debt financing is dependent upon its credit ratings. The Company has investment grade credit ratings from Fitch Ratings,
Moody’s and Standard Poor’s. There is no assurance that these credit ratings will remain in effect for any given period of time or that
such ratings will not be revised or withdrawn entirely by the rating agencies. 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. If the Company is unable to maintain its indebtedness and financial ratios at levels acceptable to its credit rating agencies,
or should the Company’s business prospects deteriorate, the ratings currently assigned to the Company by the rating agencies could
be downgraded, which could adversely affect the value of the Company’s outstanding securities and existing debt, its ability to obtain
new financing on favourable terms, and increase the Company’s borrowing costs.
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.
44
MDA 44
45
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Competition
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Litigation Risk
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
properties.
Disclosures about Market Risks
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
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
2021, sensitivity to a 10% change in the gold price is estimated to have an approximate $340 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 2021, sensitivity to a 10% change in the silver price is estimated to have an approximate $15 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.
Fluctuations in interest rates can affect the Company’s results of operations and cash flow. The Company’s cash and cash equivalents,
as well as some of its long-term debt and credit facilities are subject to variable interest rates.
Interest Rate Fluctuations
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
long-term metal sales’ exposures. However, the Company may assume or enter into forward sales contracts or similar instruments if
hedges are acquired in a business acquisition, if hedges are required under project financing requirements, or when deemed
advantageous by management. As at December 31, 2020, 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 ouguiyas 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, 2020.
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. The Company may become
party to disputes governed by the rules of international arbitration. Kinross may also be the subject of legal claims in Canada in respect
of its activities in a foreign jurisdiction. 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, 2020, the Company’s gross credit exposure, including cash and cash equivalents, was $1,401.5 million and at
December 31, 2019, the gross credit exposure, including cash and cash equivalents, was $831.8 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 and Debt Markets
The mining, processing, development, and exploration of Kinross’ properties may require substantial additional financing. Failure to
obtain sufficient financing may result in the delay or indefinite postponement of exploration, development or production on any or all
of Kinross’ properties, or even a loss of property interest. Additional capital or other types of financing may not be available if needed
or, if available, the terms of such financing may be unfavourable to Kinross. The Company’s ability to access debt markets and the
related cost of debt financing is dependent upon its credit ratings. The Company has investment grade credit ratings from Fitch Ratings,
Moody’s and Standard Poor’s. There is no assurance that these credit ratings will remain in effect for any given period of time or that
such ratings will not be revised or withdrawn entirely by the rating agencies. 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. If the Company is unable to maintain its indebtedness and financial ratios at levels acceptable to its credit rating agencies,
or should the Company’s business prospects deteriorate, the ratings currently assigned to the Company by the rating agencies could
be downgraded, which could adversely affect the value of the Company’s outstanding securities and existing debt, its ability to obtain
new financing on favourable terms, and increase the Company’s borrowing costs.
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.
44
45 MDA
45
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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 tighter credit markets could restrict the ability of certain companies to access capital, to date this has not affected the
Company’s liquidity.
As at December 31, 2020, the Company had $1,563.6 million available under its credit facility arrangements. However, 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 or actions by governments 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.
Impairment
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 containing goodwill has been reduced below its carrying amount. The carrying value
of property, plant and equipment is reviewed at each reporting period end to determine whether there is any indication of impairment
or reversal of impairment. If any such indication exists, then the CGU or asset’s recoverable amount is estimated. 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 to
reduce the CGU or asset’s carrying value to its recoverable amount. For property, plant and equipment and other long-lived assets, a
previously recognized impairment loss may be reversed if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognized. The recoverable amounts, or fair values, of the Company’s CGUs
are based, in part, on certain factors that may be partially or totally outside of Kinross’ control. Kinross’ fair value estimates are based
46
MDA 46
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
than those estimates.
Climate Risks
on numerous assumptions, some of which may be subjective, and it is possible that actual fair value could be significantly different
A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to the
potential impacts of climate change. Where legislation already exists, regulation relating to emission levels and energy efficiency is
becoming more stringent. The changes in legislation and regulation will likely increase the Company’s compliance costs.
In addition, the physical risks of climate change may also have an adverse effect at some of Kinross’ operations. These may include
extreme weather events, changes in rainfall patterns, water shortages, and changing temperatures. These physical impacts could
require the Company to curtail or close mining production and could prevent the Company from pursuing expansion opportunities.
These effects may adversely impact the cost, production and financial performance of the Company’s operations.
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 the Company’s operations. 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.
Excessive rainfall or flooding may also adversely affect operations. Excess rainfall can result in operational difficulties including
geotechnical instability, increased dewatering demands, and additional water management requirements. Extended periods of above
average rainfall at a site may result in increased costs or production disruptions that could have a material effect on Kinross’ financial
performance, liquidity and results of operations.
We can provide no assurance that efforts to mitigate the risks of climate changes will be effective and that the physical risks of climate
change will not have an adverse effect on the Company’s operations and profitability.
Human Resources
Production at Kinross’ mines is dependent upon the efforts of, and maintaining good relationships with, employees of Kinross.
Relations between Kinross and its employees may be impacted by changes in labour relations which may be introduced by, among
others, employee groups, unions, and the relevant governmental authorities in whose jurisdictions Kinross carries on business.
Adverse changes in such legislation or in the relationship between Kinross and its employees may have a material adverse effect on
Kinross’ business, results of operations, and financial condition.
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 aging 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-person life
insurance with respect to its executives.
Cybersecurity and Data Privacy 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,
47
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Global Financial Condition
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
on numerous assumptions, some of which may be subjective, and it is possible that actual fair value could be significantly different
than those estimates.
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
Climate Risks
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 tighter credit markets could restrict the ability of certain companies to access capital, to date this has not affected the
As at December 31, 2020, the Company had $1,563.6 million available under its credit facility arrangements. However, 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
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.
Company’s liquidity.
Company.
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 or actions by governments 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.
Impairment
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 containing goodwill has been reduced below its carrying amount. The carrying value
of property, plant and equipment is reviewed at each reporting period end to determine whether there is any indication of impairment
or reversal of impairment. If any such indication exists, then the CGU or asset’s recoverable amount is estimated. 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 to
reduce the CGU or asset’s carrying value to its recoverable amount. For property, plant and equipment and other long-lived assets, a
previously recognized impairment loss may be reversed if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognized. The recoverable amounts, or fair values, of the Company’s CGUs
are based, in part, on certain factors that may be partially or totally outside of Kinross’ control. Kinross’ fair value estimates are based
46
A number of governments or governmental bodies have introduced or are contemplating regulatory changes in response to the
potential impacts of climate change. Where legislation already exists, regulation relating to emission levels and energy efficiency is
becoming more stringent. The changes in legislation and regulation will likely increase the Company’s compliance costs.
In addition, the physical risks of climate change may also have an adverse effect at some of Kinross’ operations. These may include
extreme weather events, changes in rainfall patterns, water shortages, and changing temperatures. These physical impacts could
require the Company to curtail or close mining production and could prevent the Company from pursuing expansion opportunities.
These effects may adversely impact the cost, production and financial performance of the Company’s operations.
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 the Company’s operations. 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.
Excessive rainfall or flooding may also adversely affect operations. Excess rainfall can result in operational difficulties including
geotechnical instability, increased dewatering demands, and additional water management requirements. Extended periods of above
average rainfall at a site may result in increased costs or production disruptions that could have a material effect on Kinross’ financial
performance, liquidity and results of operations.
We can provide no assurance that efforts to mitigate the risks of climate changes will be effective and that the physical risks of climate
change will not have an adverse effect on the Company’s operations and profitability.
Human Resources
Production at Kinross’ mines is dependent upon the efforts of, and maintaining good relationships with, employees of Kinross.
Relations between Kinross and its employees may be impacted by changes in labour relations which may be introduced by, among
others, employee groups, unions, and the relevant governmental authorities in whose jurisdictions Kinross carries on business.
Adverse changes in such legislation or in the relationship between Kinross and its employees may have a material adverse effect on
Kinross’ business, results of operations, and financial condition.
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 aging 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-person life
insurance with respect to its executives.
Cybersecurity and Data Privacy 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,
47 MDA
47
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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.
The Company is subject to privacy and data security regulations in several of the jurisdictions that it operates in, such as Canada, Brazil,
the United States and the European Union (“EU”). Compliance with such laws, including General Data Protection Regulation in the EU,
will affect business conducted in the EU and may also be enforced against entities established outside the EU but processing data of
European data subjects. The Company could incur substantial costs in complying with these various national regulations as a result of
having to make changes to prior business practices in a manner adverse to our business. Such developments may also require the
Company to make system changes and develop new processes, further affecting our compliance costs. In addition, violations of
privacy-related regulations can result in significant penalties and reputational harm, which in turn could adversely impact the
Company’s business and results of operations.
Refining Capacity
The Company engages third-party refineries to refine doré into good delivery gold and silver bars, which are in turn sold into open
markets. The refineries are located in Canada, Switzerland, Russia, India, and the United States. The loss of any one refiner could have
a material adverse effect on the Company if alternative refineries are unavailable. There can be no guarantee that alternative refineries
would be available if the need for them were to arise or that it would not experience delays or disruptions in sales that would materially
and adversely affect results of operations. In addition, the Company has doré inventory at refineries and could incur a loss arising from
the refineries’ failure to fulfill their contractual obligations. The Company has legally binding agreements in place for such refining
services and also purchases bullion insurance, but there is a risk that a refinery will not satisfy its delivery obligations. In such a case,
the Company may pursue all remedies available, as appropriate, to enforce any outstanding delivery obligations. If such delivery
obligations are not fulfilled by the refinery, remedied by a court in a specific performance or damages judgment or insurance proceeds
are not received, the Company will incur a one-time non-cash charge related to the carrying value of the inventory.
Brazilian Power Plants
The ownership and operation of our Brazilian power plants carry an inherent risk of liability related to public safety, health, safety,
security and the environment, including the risk of government imposed orders to remedy unsafe conditions and/or to remediate or
otherwise address environmental contamination or damage. We may also be exposed to potential penalties for contravention of
health, safety, security and environmental laws and potential civil liability. We may become subject to government orders,
investigations, inquiries or other proceedings (including civil claims) relating to health, safety, security and environmental matters as
a result of which our operations may be limited or suspended. The occurrence of any of these events or any changes, additions to or
more rigorous enforcement of health, safety, security and environmental laws could impact the operation of the power plants and
result in additional expenditures. Additional environmental, health and safety issues relating to presently known or unknown matters
may require unanticipated expenditures, or result in fines, penalties or other consequences (including changes to operations) that
may be adverse to our business and results of operations.
Illegal Mining
Illegal mining activities occur near, and occasionally on some of the Company’s properties in Africa and Brazil. Illegal mining is
associated with a number of negative impacts, including environmental degradation, human rights abuse, child labour and funding of
conflict. In addition, substantial illegal mining activities on the Company’s properties or properties that the Company may seek to
acquire in the future may deplete mineral reserves or mineral resources and the economic benefits of those properties. It is difficult
for the Company to control illegal mining activities on and around its properties. The Company relies on government support and
enforcement to manage illegal mining activities near its operations; however, enforcement is often lacking or inconsistent.
48
MDA 48
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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 (gains)
Foreign exchange losses on translation of tax basis and foreign exchange
on deferred income taxes within income tax expense
Taxes in respect of prior periods
Reclamation and remediation expenses (recoveries)
Reversals of impairment charges - net(a)
COVID-19 and Tasiast strike costs (b)
U.S. CARES Act net benefit
Gain on disposition of royalty portfolio
Fort Knox pit wall slide related costs
Restructuring costs
U.S. Tax Reform impact
Tasiast Phase One commissioning costs
Other
Tax effects of the above adjustments
Years ended December 31,
2020
2019
2018
$
1,342.4
$
718.6
$
(23.6)
7.3
(0.6)
101.2
51.3
6.6
(650.9)
72.4
(25.4)
-
-
-
-
-
0.2
61.7
(375.6)
1.6
33.3
(11.9)
(361.8)
(72.7)
25.1
12.2
-
-
-
-
7.6
71.5
(295.7)
4.3
62.0
59.9
(3.5)
-
-
-
-
-
37.9
(8.7)
6.4
5.1
(11.7)
151.7
Adjusted net earnings attributable to common shareholders
Weighted average number of common shares outstanding - Basic
Adjusted net earnings per share
$
966.8
$
422.9
$
128.1
1,257.2
1,252.3
1,249.5
$
0.77
$
0.34
$
0.10
(a) During the year ended December 31, 2020, the Company recorded non-cash reversals of impairment charges of $689.0 million related to property,
plant and equipment at Tasiast, Chirano and Lobo-Marte. The tax impacts on the impairment reversals at Chirano and Lobo-Marte were expenses
of $71.6 million and $4.6 million, respectively. In addition, the Company recorded impairment charges of $38.1 million related to certain supplies
inventories. During the year ended December 31, 2019, the Company recorded non-cash reversals of impairment charges of $361.8 million related
to property, plant and equipment at Paracatu and Tasiast. The tax impact on the impairment reversal at Paracatu was an expense of $68.2 million.
There were no tax impacts on the impairment reversals at Tasiast in 2020 and 2019.
(b)
Includes $64.1 million of COVID-19 related labour, health and safety, donations and other support program costs, as well as $8.3 million of Tasiast
strike costs for the year ended December 31, 2020.
49
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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.
The Company is subject to privacy and data security regulations in several of the jurisdictions that it operates in, such as Canada, Brazil,
the United States and the European Union (“EU”). Compliance with such laws, including General Data Protection Regulation in the EU,
will affect business conducted in the EU and may also be enforced against entities established outside the EU but processing data of
European data subjects. The Company could incur substantial costs in complying with these various national regulations as a result of
having to make changes to prior business practices in a manner adverse to our business. Such developments may also require the
Company to make system changes and develop new processes, further affecting our compliance costs. In addition, violations of
privacy-related regulations can result in significant penalties and reputational harm, which in turn could adversely impact the
Company’s business and results of operations.
Refining Capacity
The Company engages third-party refineries to refine doré into good delivery gold and silver bars, which are in turn sold into open
markets. The refineries are located in Canada, Switzerland, Russia, India, and the United States. The loss of any one refiner could have
a material adverse effect on the Company if alternative refineries are unavailable. There can be no guarantee that alternative refineries
would be available if the need for them were to arise or that it would not experience delays or disruptions in sales that would materially
and adversely affect results of operations. In addition, the Company has doré inventory at refineries and could incur a loss arising from
the refineries’ failure to fulfill their contractual obligations. The Company has legally binding agreements in place for such refining
services and also purchases bullion insurance, but there is a risk that a refinery will not satisfy its delivery obligations. In such a case,
the Company may pursue all remedies available, as appropriate, to enforce any outstanding delivery obligations. If such delivery
obligations are not fulfilled by the refinery, remedied by a court in a specific performance or damages judgment or insurance proceeds
are not received, the Company will incur a one-time non-cash charge related to the carrying value of the inventory.
Brazilian Power Plants
The ownership and operation of our Brazilian power plants carry an inherent risk of liability related to public safety, health, safety,
security and the environment, including the risk of government imposed orders to remedy unsafe conditions and/or to remediate or
otherwise address environmental contamination or damage. We may also be exposed to potential penalties for contravention of
health, safety, security and environmental laws and potential civil liability. We may become subject to government orders,
investigations, inquiries or other proceedings (including civil claims) relating to health, safety, security and environmental matters as
a result of which our operations may be limited or suspended. The occurrence of any of these events or any changes, additions to or
more rigorous enforcement of health, safety, security and environmental laws could impact the operation of the power plants and
result in additional expenditures. Additional environmental, health and safety issues relating to presently known or unknown matters
may require unanticipated expenditures, or result in fines, penalties or other consequences (including changes to operations) that
may be adverse to our business and results of operations.
Illegal Mining
Illegal mining activities occur near, and occasionally on some of the Company’s properties in Africa and Brazil. Illegal mining is
associated with a number of negative impacts, including environmental degradation, human rights abuse, child labour and funding of
conflict. In addition, substantial illegal mining activities on the Company’s properties or properties that the Company may seek to
acquire in the future may deplete mineral reserves or mineral resources and the economic benefits of those properties. It is difficult
for the Company to control illegal mining activities on and around its properties. The Company relies on government support and
enforcement to manage illegal mining activities near its operations; however, enforcement is often lacking or inconsistent.
48
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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 (gains)
Foreign exchange losses on translation of tax basis and foreign exchange
on deferred income taxes within income tax expense
Taxes in respect of prior periods
Reclamation and remediation expenses (recoveries)
Reversals of impairment charges - net(a)
COVID-19 and Tasiast strike costs (b)
U.S. CARES Act net benefit
Gain on disposition of royalty portfolio
Fort Knox pit wall slide related costs
Restructuring costs
U.S. Tax Reform impact
Tasiast Phase One commissioning costs
Other
Tax effects of the above adjustments
Adjusted net earnings attributable to common shareholders
Weighted average number of common shares outstanding - Basic
Adjusted net earnings per share
Years ended December 31,
2020
$
1,342.4
2019
$
718.6
2018
$
(23.6)
7.3
(0.6)
101.2
51.3
6.6
(650.9)
72.4
(25.4)
1.6
33.3
(11.9)
(361.8)
-
-
4.3
62.0
59.9
(3.5)
-
-
-
-
-
-
-
-
0.2
61.7
(375.6)
966.8
1,257.2
0.77
(72.7)
25.1
12.2
-
-
7.6
71.5
(295.7)
422.9
1,252.3
0.34
$
$
$
$
$
$
-
37.9
-
(8.7)
6.4
5.1
(11.7)
151.7
128.1
1,249.5
0.10
(a) During the year ended December 31, 2020, the Company recorded non-cash reversals of impairment charges of $689.0 million related to property,
plant and equipment at Tasiast, Chirano and Lobo-Marte. The tax impacts on the impairment reversals at Chirano and Lobo-Marte were expenses
of $71.6 million and $4.6 million, respectively. In addition, the Company recorded impairment charges of $38.1 million related to certain supplies
inventories. During the year ended December 31, 2019, the Company recorded non-cash reversals of impairment charges of $361.8 million related
to property, plant and equipment at Paracatu and Tasiast. The tax impact on the impairment reversal at Paracatu was an expense of $68.2 million.
There were no tax impacts on the impairment reversals at Tasiast in 2020 and 2019.
Includes $64.1 million of COVID-19 related labour, health and safety, donations and other support program costs, as well as $8.3 million of Tasiast
strike costs for the year ended December 31, 2020.
(b)
49 MDA
49
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Free Cash Flow
Free cash flow is a non-GAAP measure and is defined as net cash flow provided from operating activities less capital expenditures. The
Company believes that that this measure, which is used internally to evaluate the Company’s underlying cash generation performance
and the ability to repay creditors and return cash to shareholders, provides investors with the ability to better evaluate the Company’s
underlying performance. However, the free cash flow measure is not necessarily indicative of operating earnings or net cash flow from
operations as determined under IFRS.
The following table provides a reconciliation of free cash flow for the periods presented:
production into gold equivalent ounces and credits it to total production.
(in millions)
Net cash flow provided from operating activities - as reported
Less: Additions to property, plant and equipment (a)
Free cash flow
Years ended December 31,
2019
2020
$
$
2018
$
788.7
(1,005.2)
(216.5)
1,224.9
(1,060.2)
164.7
$
$
$
1,957.6
(916.1)
1,041.5
(a) “Additions to property, plant and equipment” for the year ended December 31, 2018 is calculated as $1,043.4 million, as reported, less $38.2
million of capitalized interest paid, as reported.
Adjusted Operating Cash Flow
Adjusted operating cash flow is a non-GAAP measure and 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 operating cash flow for the periods presented:
(in millions)
Net cash flow provided from operating activities - as reported
Adjusting items:
Tax payments in respect of prior years
Working capital changes:
Accounts receivable and other assets
Inventories
Accounts payable and other liabilities, including income taxes paid
Adjusted operating cash flow
Years ended December 31,
2020
2019
$
1,957.6
$
1,224.9
2018
$
788.7
-
16.7
-
120.9
6.8
(172.6)
(44.9)
1,912.7
$
64.5
(53.8)
(50.8)
(23.4)
1,201.5
$
22.7
5.7
57.1
85.5
874.2
$
50
MDA 50
51
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
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
Management uses these measures to monitor and evaluate the performance of its operating properties.
The following table provides a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for
the periods presented:
(in millions, except ounces and production cost of sales per equivalent ounce)
Production cost of sales - as reported
Less: portion attributable to Chirano non-controlling interest (a)
Attributable(b) production cost of sales
Gold equivalent ounces sold
Less: portion attributable to Chirano non-controlling interest (j)
Attributable(b) gold equivalent ounces sold
Consolidated production cost of sales per equivalent ounce sold
Attributable(b) production cost of sales per equivalent ounce sold
See page 54 of this MD&A for details of the footnotes referenced within the table above.
Attributable Production Cost of Sales per Ounce Sold on a By-Product Basis
Years ended December 31,
2020
2019
2018
$
1,725.7
$
1,778.9
$
1,860.5
(19.6)
(19.0)
(17.3)
$
1,706.1
$
1,759.9
$
1,843.2
2,375,548
2,512,758
2,532,912
(16,621)
(20,186)
(22,493)
2,358,927
2,492,572
2,510,419
$
726
$
708
$
735
$
723
$
706
$
734
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
The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the
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 (a)
Less: attributable (b) silver revenue(c)
Attributable(b) production cost of sales net of silver by-product revenue
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest (j)
Attributable(b) gold ounces sold
Attributable(b) production cost of sales per ounce sold on a by-product basis
See page 54 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2020
2019
2018
$
1,725.7
$
1,778.9
$
1,860.5
(19.6)
(91.0)
(19.0)
(75.1)
(17.3)
(66.4)
$
1,615.1
$
1,684.8
$
1,776.8
2,324,324
2,458,839
2,480,529
(16,589)
(20,161)
(22,460)
2,307,735
2,438,678
2,458,069
$
700
$
691
$
723
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Free Cash Flow
Free cash flow is a non-GAAP measure and is defined as net cash flow provided from operating activities less capital expenditures. The
Company believes that that this measure, which is used internally to evaluate the Company’s underlying cash generation performance
and the ability to repay creditors and return cash to shareholders, provides investors with the ability to better evaluate the Company’s
underlying performance. However, the free cash flow measure is not necessarily indicative of operating earnings or net cash flow from
operations as determined under IFRS.
The following table provides a reconciliation of free cash flow for the periods presented:
(in millions)
Free cash flow
Net cash flow provided from operating activities - as reported
Less: Additions to property, plant and equipment (a)
Years ended December 31,
2020
2019
2018
$
1,957.6
$
1,224.9
$
788.7
(916.1)
(1,060.2)
(1,005.2)
$
1,041.5
$
164.7
$
(216.5)
(a) “Additions to property, plant and equipment” for the year ended December 31, 2018 is calculated as $1,043.4 million, as reported, less $38.2
million of capitalized interest paid, as reported.
Adjusted Operating Cash Flow
Adjusted operating cash flow is a non-GAAP measure and 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 operating cash flow for the periods presented:
Net cash flow provided from operating activities - as reported
(in millions)
Adjusting items:
Tax payments in respect of prior years
Working capital changes:
Accounts receivable and other assets
Inventories
Accounts payable and other liabilities, including income taxes paid
Years ended December 31,
2020
2019
2018
$
1,957.6
$
1,224.9
$
788.7
-
120.9
6.8
(172.6)
(44.9)
16.7
64.5
(53.8)
(50.8)
(23.4)
-
22.7
5.7
57.1
85.5
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Consolidated and Attributable Production Cost of Sales per Equivalent Ounce Sold
Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of sales
as reported on the consolidated statement of operations divided by the total number of gold equivalent ounces sold. This measure
converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as attributable production
cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company’s non-gold
production into gold equivalent ounces and credits it to total production.
Management uses these measures to monitor and evaluate the performance of its operating properties.
The following table provides a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for
the periods presented:
(in millions, except ounces and production cost of sales per equivalent ounce)
Production cost of sales - as reported
Less: portion attributable to Chirano non-controlling interest (a)
Attributable(b) production cost of sales
Gold equivalent ounces sold
Less: portion attributable to Chirano non-controlling interest (j)
Attributable(b) gold equivalent ounces sold
Consolidated production cost of sales per equivalent ounce sold
Attributable(b) production cost of sales per equivalent ounce sold
See page 54 of this MD&A for details of the footnotes referenced within the table above.
Attributable Production Cost of Sales per Ounce Sold on a By-Product Basis
Years ended December 31,
2020
2019
2018
$
1,725.7
$
1,778.9
$
1,860.5
(19.6)
(19.0)
(17.3)
$
1,706.1
$
1,759.9
$
1,843.2
2,375,548
2,512,758
2,532,912
(16,621)
(20,186)
(22,493)
2,358,927
2,492,572
2,510,419
$
726
$
708
$
735
$
723
$
706
$
734
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:
Adjusted operating cash flow
$
1,912.7
$
1,201.5
$
874.2
(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 (a)
Less: attributable (b) silver revenue(c)
Attributable(b) production cost of sales net of silver by-product revenue
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest (j)
Attributable(b) gold ounces sold
Attributable(b) production cost of sales per ounce sold on a by-product basis
See page 54 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2020
2019
2018
$
1,725.7
$
1,778.9
$
1,860.5
(19.6)
(91.0)
(19.0)
(75.1)
(17.3)
(66.4)
$
1,615.1
$
1,684.8
$
1,776.8
2,324,324
2,458,839
2,480,529
(16,589)
(20,161)
(22,460)
2,307,735
2,438,678
2,458,069
$
700
$
691
$
723
50
51 MDA
51
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Attributable All-In Sustaining Cost and All-In Cost per Ounce Sold on a By-Product Basis
Attributable All-In Sustaining Cost and All-In Cost per Equivalent Ounce Sold
In November 2018, the World Gold Council (“WGC”) published updates to its guidelines for reporting all-in sustaining costs and all-in
costs to address how the costs associated with leases, after a company’s adoption of IFRS 16, should be treated. 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 revenue(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)
Lease payments - sustaining(i)
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)
Lease payments - non-sustaining(i)
All-in Cost on a by-product basis - attributable (b)
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest (j)
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
See page 54 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2020
2019
2018
$
1,725.7
$
1,778.9
$
1,860.5
(19.6)
(91.0)
(19.0)
(75.1)
(17.3)
(66.4)
$
1,615.1
$
1,684.8
$
1,776.8
117.9
9.6
54.0
48.3
373.5
19.7
123.6
24.7
48.2
66.0
415.1
12.7
133.0
6.2
52.2
53.2
335.0
-
$
2,238.1
$
2,375.1
$
2,356.4
55.9
5.0
43.3
536.9
1.0
57.0
6.9
46.7
637.9
1.6
48.7
7.5
55.4
665.0
-
$
2,880.2
$
3,125.2
$
3,133.0
2,324,324
(16,589)
2,307,735
2,458,839
2,480,529
(20,161)
(22,460)
2,438,678
2,458,069
$
970
$
974
$
959
$
1,248
$
1,282
$
1,275
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)
Lease payments - sustaining(i)
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)
Lease payments - non-sustaining(i)
All-in Cost - attributable(b)
Gold equivalent ounces sold
Less: portion attributable to Chirano non-controlling interest (j)
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
See page 54 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2020
2019
2018
$
1,725.7
$
1,778.9
$
1,860.5
(19.6)
(19.0)
(17.3)
$
1,706.1
$
1,759.9
$
1,843.2
$
2,329.1
$
2,450.2
$
2,422.8
117.9
9.6
54.0
48.3
373.5
19.7
55.9
5.0
43.3
536.9
1.0
123.6
24.7
48.2
66.0
415.1
12.7
57.0
6.9
46.7
637.9
1.6
133.0
6.2
52.2
53.2
335.0
-
-
48.7
7.5
55.4
665.0
$
2,971.2
$
3,200.3
$
3,199.4
2,375,548
(16,621)
2,358,927
2,512,758
2,532,912
(20,186)
(22,493)
2,492,572
2,510,419
$
987
$
983
$
965
$
1,260
$
1,284
$
1,274
52
MDA 52
53
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
Attributable All-In Sustaining Cost and All-In Cost per Ounce Sold on a By-Product Basis
Attributable All-In Sustaining Cost and All-In Cost per Equivalent Ounce Sold
In November 2018, the World Gold Council (“WGC”) published updates to its guidelines for reporting all-in sustaining costs and all-in
costs to address how the costs associated with leases, after a company’s adoption of IFRS 16, should be treated. 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 revenue(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)
Lease payments - sustaining(i)
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)
Lease payments - non-sustaining(i)
All-in Cost on a by-product basis - attributable (b)
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest (j)
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
See page 54 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2020
2019
2018
$
1,725.7
$
1,778.9
$
1,860.5
(19.6)
(91.0)
(19.0)
(75.1)
(17.3)
(66.4)
$
1,615.1
$
1,684.8
$
1,776.8
$
2,238.1
$
2,375.1
$
2,356.4
117.9
9.6
54.0
48.3
373.5
19.7
55.9
5.0
43.3
536.9
1.0
123.6
24.7
48.2
66.0
415.1
12.7
57.0
6.9
46.7
637.9
1.6
133.0
6.2
52.2
53.2
335.0
-
-
48.7
7.5
55.4
665.0
$
2,880.2
$
3,125.2
$
3,133.0
2,324,324
(16,589)
2,307,735
2,458,839
2,480,529
(20,161)
(22,460)
2,438,678
2,458,069
$
970
$
974
$
959
$
1,248
$
1,282
$
1,275
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)
Lease payments - sustaining(i)
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)
Lease payments - non-sustaining(i)
All-in Cost - attributable(b)
Gold equivalent ounces sold
Less: portion attributable to Chirano non-controlling interest (j)
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
See page 54 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2020
2019
2018
$
1,725.7
$
1,778.9
$
1,860.5
(19.6)
(19.0)
(17.3)
$
1,706.1
$
1,759.9
$
1,843.2
117.9
9.6
54.0
48.3
373.5
19.7
123.6
24.7
48.2
66.0
415.1
12.7
133.0
6.2
52.2
53.2
335.0
-
$
2,329.1
$
2,450.2
$
2,422.8
55.9
5.0
43.3
536.9
1.0
57.0
6.9
46.7
637.9
1.6
48.7
7.5
55.4
665.0
-
$
2,971.2
$
3,200.3
$
3,199.4
2,375,548
(16,621)
2,358,927
2,512,758
2,532,912
(20,186)
(22,493)
2,492,572
2,510,419
$
987
$
983
$
965
$
1,260
$
1,284
$
1,274
52
53 MDA
53
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
(a) The portion attributable to Chirano non-controlling interest represents the non-controlling interest (10%) in the production cost of sales for the
Cautionary Statement on Forward-Looking Information
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
Chirano mine.
“Attributable” includes Kinross' share of Chirano (90%) production and costs, and Peak (70%) costs.
“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.
“General and administrative” expenses is as reported on the consolidated statement of operations, net of certain restructuring 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.
“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.
“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.
“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.
“Additions to property, plant and equipment – sustaining” represents the majority of capital expenditures at existing operations including
capitalized exploration costs, periodic 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 projects, including major capital stripping projects at existing operations that are expected to materially benefit the
operation, as well as enhancement capital for significant infrastructure improvements at existing operations. Non-sustaining capital expenditures
during the year ended December 31, 2020, primarily related to major projects at Tasiast, Fort Knox and Round Mountain. Non-sustaining capital
expenditures during the year ended December 31, 2019, primarily related to major projects at Tasiast, Round Mountain, Bald Mountain and Fort
Knox. Non-sustaining capital expenditures during the year ended December 31, 2018, primarily related to major projects at Tasiast, Round
Mountain, and Bald Mountain.
“Lease payments – sustaining” represents the majority of lease payments as reported on the consolidated statements of cash flows and is made
up of the principal and financing components of such cash payments, less non-sustaining lease payments. Lease payments for development
projects or closed mines are classified as non-sustaining.
“Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces sold from the Chirano mine.
“Average realized gold price per ounce” 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.
54
MDA 54
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) “Operational Outlook”, “Project Updates and New Development”, and “Liquidity
Outlook” and include, without limitation, statements with respect to our guidance for production, production costs of sales, all in sustaining cost, all in cost, cash
flow, free cash flow and capital expenditures; the declaration, payment and sustainability of the Company’s dividends; optimization of mine plans; identification
of additional resources and reserves; the schedules and budgets for the Company’s development projects; mine life and any potential extensions; the Company’s
capital reinvestment program and continuous improvement initiatives and project performance or outperformance, 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, operating costs; capital expenditures, costs and
timing of the development of projects and new deposits, estimates and the realization of such estimates (such as mineral or gold reserves and resources or mine
life), success of exploration, development and mining, currency fluctuations, capital requirements, project studies, government regulation permit applications and
conversions, restarting suspended or disrupted operations; environmental risks and proceedings; and resolution of pending litigation. The words “anticipate”,
“believe”, “estimate”, “expect”, “forecast”, “forward”, “growth projects”, “guidance” “on track”, “on schedule”, “opportunity”, “outlook”, “plan”, “potential”,
“prioritize”, “target”, or variations of or similar such words and phrases or statements that certain actions, events or results may, could, should or will be achieved,
received or taken, or will occur or result and similar such expressions identify forward-looking statements. Forward-looking statements are necessarily based upon
a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant
business, economic and competitive uncertainties and contingencies. The estimates, 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 Annual Information
Form dated March 30, 2020 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 the operational challenges at Fort Knox and Bald Mountain resulting from excessive rainfall, which can impact costs and/or production) and other or
related natural disasters, labour disruptions (including but not limited to strikes or workforce reductions), supply disruptions, power disruptions, damage to
equipment, pit wall slides (in particular that the effects of the pit wall slides at Fort Knox and Round Mountain are consistent with the Company’s expectations)
or otherwise; (2) permitting, development, operations and production from the Company’s operations and development projects 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 operation of Tasiast, and the development and operation of the 24k Project; operation of the SAG mill at Tasiast; land acquisitions and permitting
for the construction and operation of the new tailings facility, water and power supply and continued operation of the tailings reprocessing facility at Paracatu;
the Lobo-Marte project; commencement of production at the La Coipa project; approval of an enhanced mine plan at Fort Knox; in each case in a manner consistent
with the Company’s expectations; and the successful completion of exploration consistent with the Company’s expectations at the Company’s projects; (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 or any related sanctions and any other similar restrictions or penalties imposed, or actions
taken, by any government, including but not limited to amendments to the mining laws, and potential power rationing and tailings facility regulations in Brazil,
potential amendments to water laws and/or other water use restrictions and regulatory actions in Chile, new dam safety regulations, potential amendments to
minerals and mining laws and energy levies laws, the enforcement of labour laws in Ghana, new regulations relating to work permits, potential amendments to
customs and mining laws (including but not limited to amendments to the VAT) and the potential application of revisions to the tax code in Mauritania, the
European Union’s General Data Protection Regulation or similar legislation in other jurisdictions and potential amendments to and enforcement of tax laws in
Russia, Ghana and Mauritania (including, but not limited to, the interpretation, implementation, application and enforcement of any such laws and amendments
thereto), and the impact of any trade tariffs being consistent with Kinross’ current expectations; (4) the completion of studies, including optimization studies,
improvement studies; scoping studies and pre-feasibility and feasibility studies, on the timelines currently expected and the results of those studies being consistent
with Kinross’ current expectations, including the completion of the Lobo-Marte and Peak feasibility studies and the Udinsk pre-feasibility study; (5) 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; (6) certain price assumptions for gold and silver; (7) prices for diesel, natural gas, fuel oil, electricity and other key supplies being
approximately consistent with the Company’s expectations; (8) production and cost of sales forecasts for the Company meeting expectations; (9) the accuracy of:
the current mineral reserve and mineral resource estimates of the Company including the accuracy and reliability of the pre-acquisition mineral resource estimates
of the Peak project and Kinross’ analysis thereof being consistent with expectations (including but not limited to ore tonnage and ore grade estimates), future
mineral resource and mineral reserve estimates being consistent with preliminary work undertaken by the Company, mine plans for the Company’s current and
future mining operations, and the Company’s internal models; (10) labour and materials costs increasing on a basis consistent with Kinross’ current expectations;
(11) 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 and without material amendment or formal dispute (including without limitation the application of tax,
customs and duties exemptions and royalties); (12) goodwill and/or asset impairment potential; (13) 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; (14) access to capital
markets, including but not limited to maintaining our current credit ratings consistent with the Company’s current expectations; (15) that the Brazilian power
plants will operate in a manner consistent with our expectations; (16) that drawdown of remaining funds under the Tasiast project financing will proceed in a
manner consistent with our current expectations; (17) potential direct or indirect operational impacts resulting from infectious diseases or pandemics such as the
ongoing COVID-19 pandemic; (18) the effectiveness of preventative actions and contingency plans put in place by the Company to respond to the COVID-19
pandemic, including, but not limited to, social distancing, travel restrictions, business continuity plans, and efforts to mitigate supply chain disruptions; (19)
changes in national and local government legislation or other government actions, particularly in response to the COVID-19 outbreak; (20) litigation, regulatory
proceedings and audits, and the potential ramifications thereof, being concluded in a manner consistent with the Corporation’s expectations (including without
limitation the audit of mining companies in Ghana which includes the Corporation’s Ghanaian subsidiaries, litigation in Chile relating to the alleged damage of
wetlands and the scope of any remediation plan or other environmental obligations arising therefrom, the ongoing litigation with the Russian tax authorities
regarding dividend withholding tax and the ongoing Sunnyside litigation regarding potential liability under the U.S. Comprehensive Environmental Response,
Compensation, and Liability Act); (21) that the Company will enter into definitive documentation with the Government of Mauritania substantially in accordance
with the terms and conditions of the term sheet, on a basis consistent with our expectations and that the parties will perform their respective obligations
thereunder on the timelines agreed; (22) that the exploitation permit for Tasiast Sud will be issued under the terms and on timelines consistent with our
expectations; (23) that the benefits of the contemplated arrangements related to the agreement in principle will result in increased stability at the Company’s
operations in Mauritania; and (24) the Company’s financial results, cash flows and future prospects being consistent with Company expectations in amounts
sufficient to permit sustained dividend payments. Known and unknown factors could cause actual results to differ materially from those projected in the forward-
55
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
(a) The portion attributable to Chirano non-controlling interest represents the non-controlling interest (10%) in the production cost of sales for the
Cautionary Statement on Forward-Looking Information
Chirano mine.
(b)
(c)
gold production.
“Attributable” includes Kinross' share of Chirano (90%) production and costs, and Peak (70%) costs.
“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
(d)
“General and administrative” expenses is as reported on the consolidated statement of operations, net of certain restructuring 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, periodic 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 projects, including major capital stripping projects at existing operations that are expected to materially benefit the
operation, as well as enhancement capital for significant infrastructure improvements at existing operations. Non-sustaining capital expenditures
during the year ended December 31, 2020, primarily related to major projects at Tasiast, Fort Knox and Round Mountain. Non-sustaining capital
expenditures during the year ended December 31, 2019, primarily related to major projects at Tasiast, Round Mountain, Bald Mountain and Fort
Knox. Non-sustaining capital expenditures during the year ended December 31, 2018, primarily related to major projects at Tasiast, Round
Mountain, and Bald Mountain.
(i)
“Lease payments – sustaining” represents the majority of lease payments as reported on the consolidated statements of cash flows and is made
up of the principal and financing components of such cash payments, less non-sustaining lease payments. Lease payments for development
projects or closed mines are classified as non-sustaining.
(j)
(k)
“Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces sold from the Chirano mine.
“Average realized gold price per ounce” 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.
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) “Operational Outlook”, “Project Updates and New Development”, and “Liquidity
Outlook” and include, without limitation, statements with respect to our guidance for production, production costs of sales, all in sustaining cost, all in cost, cash
flow, free cash flow and capital expenditures; the declaration, payment and sustainability of the Company’s dividends; optimization of mine plans; identification
of additional resources and reserves; the schedules and budgets for the Company’s development projects; mine life and any potential extensions; the Company’s
capital reinvestment program and continuous improvement initiatives and project performance or outperformance, 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, operating costs; capital expenditures, costs and
timing of the development of projects and new deposits, estimates and the realization of such estimates (such as mineral or gold reserves and resources or mine
life), success of exploration, development and mining, currency fluctuations, capital requirements, project studies, government regulation permit applications and
conversions, restarting suspended or disrupted operations; environmental risks and proceedings; and resolution of pending litigation. The words “anticipate”,
“believe”, “estimate”, “expect”, “forecast”, “forward”, “growth projects”, “guidance” “on track”, “on schedule”, “opportunity”, “outlook”, “plan”, “potential”,
“prioritize”, “target”, or variations of or similar such words and phrases or statements that certain actions, events or results may, could, should or will be achieved,
received or taken, or will occur or result and similar such expressions identify forward-looking statements. Forward-looking statements are necessarily based upon
a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant
business, economic and competitive uncertainties and contingencies. The estimates, 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 Annual Information
Form dated March 30, 2020 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 the operational challenges at Fort Knox and Bald Mountain resulting from excessive rainfall, which can impact costs and/or production) and other or
related natural disasters, labour disruptions (including but not limited to strikes or workforce reductions), supply disruptions, power disruptions, damage to
equipment, pit wall slides (in particular that the effects of the pit wall slides at Fort Knox and Round Mountain are consistent with the Company’s expectations)
or otherwise; (2) permitting, development, operations and production from the Company’s operations and development projects 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 operation of Tasiast, and the development and operation of the 24k Project; operation of the SAG mill at Tasiast; land acquisitions and permitting
for the construction and operation of the new tailings facility, water and power supply and continued operation of the tailings reprocessing facility at Paracatu;
the Lobo-Marte project; commencement of production at the La Coipa project; approval of an enhanced mine plan at Fort Knox; in each case in a manner consistent
with the Company’s expectations; and the successful completion of exploration consistent with the Company’s expectations at the Company’s projects; (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 or any related sanctions and any other similar restrictions or penalties imposed, or actions
taken, by any government, including but not limited to amendments to the mining laws, and potential power rationing and tailings facility regulations in Brazil,
potential amendments to water laws and/or other water use restrictions and regulatory actions in Chile, new dam safety regulations, potential amendments to
minerals and mining laws and energy levies laws, the enforcement of labour laws in Ghana, new regulations relating to work permits, potential amendments to
customs and mining laws (including but not limited to amendments to the VAT) and the potential application of revisions to the tax code in Mauritania, the
European Union’s General Data Protection Regulation or similar legislation in other jurisdictions and potential amendments to and enforcement of tax laws in
Russia, Ghana and Mauritania (including, but not limited to, the interpretation, implementation, application and enforcement of any such laws and amendments
thereto), and the impact of any trade tariffs being consistent with Kinross’ current expectations; (4) the completion of studies, including optimization studies,
improvement studies; scoping studies and pre-feasibility and feasibility studies, on the timelines currently expected and the results of those studies being consistent
with Kinross’ current expectations, including the completion of the Lobo-Marte and Peak feasibility studies and the Udinsk pre-feasibility study; (5) 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; (6) certain price assumptions for gold and silver; (7) prices for diesel, natural gas, fuel oil, electricity and other key supplies being
approximately consistent with the Company’s expectations; (8) production and cost of sales forecasts for the Company meeting expectations; (9) the accuracy of:
the current mineral reserve and mineral resource estimates of the Company including the accuracy and reliability of the pre-acquisition mineral resource estimates
of the Peak project and Kinross’ analysis thereof being consistent with expectations (including but not limited to ore tonnage and ore grade estimates), future
mineral resource and mineral reserve estimates being consistent with preliminary work undertaken by the Company, mine plans for the Company’s current and
future mining operations, and the Company’s internal models; (10) labour and materials costs increasing on a basis consistent with Kinross’ current expectations;
(11) 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 and without material amendment or formal dispute (including without limitation the application of tax,
customs and duties exemptions and royalties); (12) goodwill and/or asset impairment potential; (13) 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; (14) access to capital
markets, including but not limited to maintaining our current credit ratings consistent with the Company’s current expectations; (15) that the Brazilian power
plants will operate in a manner consistent with our expectations; (16) that drawdown of remaining funds under the Tasiast project financing will proceed in a
manner consistent with our current expectations; (17) potential direct or indirect operational impacts resulting from infectious diseases or pandemics such as the
ongoing COVID-19 pandemic; (18) the effectiveness of preventative actions and contingency plans put in place by the Company to respond to the COVID-19
pandemic, including, but not limited to, social distancing, travel restrictions, business continuity plans, and efforts to mitigate supply chain disruptions; (19)
changes in national and local government legislation or other government actions, particularly in response to the COVID-19 outbreak; (20) litigation, regulatory
proceedings and audits, and the potential ramifications thereof, being concluded in a manner consistent with the Corporation’s expectations (including without
limitation the audit of mining companies in Ghana which includes the Corporation’s Ghanaian subsidiaries, litigation in Chile relating to the alleged damage of
wetlands and the scope of any remediation plan or other environmental obligations arising therefrom, the ongoing litigation with the Russian tax authorities
regarding dividend withholding tax and the ongoing Sunnyside litigation regarding potential liability under the U.S. Comprehensive Environmental Response,
Compensation, and Liability Act); (21) that the Company will enter into definitive documentation with the Government of Mauritania substantially in accordance
with the terms and conditions of the term sheet, on a basis consistent with our expectations and that the parties will perform their respective obligations
thereunder on the timelines agreed; (22) that the exploitation permit for Tasiast Sud will be issued under the terms and on timelines consistent with our
expectations; (23) that the benefits of the contemplated arrangements related to the agreement in principle will result in increased stability at the Company’s
operations in Mauritania; and (24) the Company’s financial results, cash flows and future prospects being consistent with Company expectations in amounts
sufficient to permit sustained dividend payments. Known and unknown factors could cause actual results to differ materially from those projected in the forward-
54
55 MDA
55
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2020
looking statements. Such factors include, but are not limited to: the inaccuracy of any of the foregoing assumption, 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; reductions in the ability of the Company to transport
and refine doré; 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, production royalties, 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, development or refining activities; employee relations; litigation or other
claims against, or regulatory investigations and/or any enforcement actions, administrative orders 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, environmental litigation or regulatory
proceedings 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
ratings; and contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards associated with the business of
gold exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding
and gold bullion losses (and the risk of inadequate insurance, or the inability to obtain insurance, to cover these risks). Many of these uncertainties and
contingencies can directly or indirectly affect, and could cause, Kinross’ actual results to differ materially from those expressed or implied in any forward-looking
statements made by, or on behalf of, Kinross, including but not limited to resulting in an impairment charge on goodwill and/or assets. There can be no assurance
that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
Forward-looking statements are provided for the purpose of providing information about management’s expectations and plans relating to the future. All of the
forward-looking statements made in this MD&A are qualified by this cautionary statement and those made in our other filings with the securities regulators of
Canada and the United States including, but not limited to, the cautionary statements made in the “Risk Factors” section of our most recently filed Annual
Information Form dated March 30, 2020. These factors are not intended to represent a complete list of the factors that could affect Kinross. Kinross disclaims any
intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such
forward-looking statements, except to the extent required by applicable law.
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 $14 impact on production cost of sales per equivalent ounce
sold2.
Specific to the Russian rouble, a 10% change in the exchange rate would be expected to result in an approximate $15 impact on Russian production cost of sales
per equivalent ounce sold.
Specific to the Brazilian real, a 10% change in the exchange rate would be expected to result in an approximate $25 impact on Brazilian production cost of sales
per equivalent ounce sold.
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 equivalent ounce sold.
A $100 change in the price of gold would be expected to result in an approximate $5 impact on production cost of sales per equivalent ounce sold 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 who is a
“qualified person” within the meaning of National Instrument 43-101. Mr. Sims was an officer of Kinross until December 31, 2020. Mr. Sims remains the
Company’s qualified person as an external consultant.
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.
56
MDA 56
2020 ANNUAL REPORT KINROSS GOLD
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 “Company”). 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, independent registered public accounting firm, in accordance with the standards
of the Public Company Accounting Oversight Board (United States).
/s/ J. Paul Rollinson
/s/ Andrea S. Freeborough
J. PAUL ROLLINSON
President and Chief Executive Officer
Toronto, Canada
February 10, 2021
ANDREA S. FREEBOROUGH
Senior Vice-President and Chief Financial Officer
Toronto, Canada
February 10, 2021
1 FS
1
2020 ANNUAL REPORT KINROSS GOLD
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, 2020, 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, 2020 has been audited by KPMG LLP, independent registered
public accounting firm, as stated in their report that appears herein.
/s/ J. Paul Rollinson
/s/ Andrea S. Freeborough
J. PAUL ROLLINSON
President and Chief Executive Officer
Toronto, Canada
February 10, 2021
ANDREA S. FREEBOROUGH
Senior Vice-President and Chief Financial Officer
Toronto, Canada
February 10, 2021
2
FS 2
2020 ANNUAL REPORT KINROSS GOLD
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 balance sheets of Kinross Gold Corporation (the Company) as of December 31, 2020 and 2019, the
related consolidated statements of operations, comprehensive income, cash flows and equity for each of the years then ended and the related notes
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2019, and its financial performance and its cash flows for each of the years then ended,
in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s
internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 10, 2021 expressed an unqualified opinion
on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. 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.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits
included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters
below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Recoverable amount of property, plant and equipment of the Tasiast, Chirano and Lobo-Marte cash generating units
As discussed in Note 7v to the consolidated financial statements, the carrying value of the Company’s property, plant and equipment was $7,653.5 million
as of December 31, 2020. As discussed in Note 8 to the consolidated financial statements, as a result of increases in the Company’s long-term gold
price estimate, the mine life extension at Chirano and the increase in mineral reserves at Lobo-Marte, during the year ended December 31, 2020 the
Company recorded reversals of previously recorded impairment charges of $689.0 million, related entirely to property, plant and equipment at Tasiast
($299.5 million), Chirano ($204.5 million) and Lobo-Marte ($185.0 million, which included $48.3 million for the impairment reversal recorded at June 30,
2020). The Company estimated the recoverable amounts of the Tasiast, Chirano and Lobo-Marte cash generating units using the Company’s life of mine
plans, future and long-term commodity prices, discount rates, NAV multiples, and foreign exchange rates relevant to these cash generating units.
We identified the assessment of the recoverable amount of property, plant and equipment of the Tasiast, Chirano and Lobo-Marte cash generating units
as a critical audit matter. A high degree of auditor judgment was required to evaluate the estimated future cash flows used to estimate the recoverable
amounts. Significant assumptions were the estimated future gold prices, discount rates, production levels, and costs used to determine the future cash
flows. Minor changes in any of these assumptions could have had a significant effect on the determination of the estimated recoverable amounts. In
addition, auditor judgment was required to assess the mineral reserves and resources which form the basis of the life of mine plans.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating
effectiveness of certain internal controls over the Company’s process to determine recoverable amounts of the cash generating units. This included
controls over the determination of future cash flows in the life-of-mine models used to estimate the recoverable amounts of the cash generating units and
the development of the significant assumptions. We assessed the estimates of production levels and cost assumptions used in the life of mine plans by
comparing them to historical results. We evaluated the Company’s estimate of mineral reserves and resources by comparing the Company’s historical
estimates to actual production results. We assessed the competence, capabilities and objectivity of the Company’s personnel who prepared the mineral
reserve and resource estimates, including the industry and regulatory standards they applied. We involved valuation professionals with specialized skills
and knowledge, who assisted in:
evaluating the future gold prices by comparing to third party estimates
evaluating the discount rate assumptions by comparing to estimates that were independently developed using publicly available third party
sources and data for comparable entities.
Uncertain income tax positions
As discussed in Notes 18 and 20 to the consolidated financial statements, the Company operates in multiple taxation jurisdictions. International income
tax matters involve significant judgment due to the complexity of varying income tax legislation in these jurisdictions and regulatory requirements. Income
tax legislation is subject to interpretation and it may be uncertain that an income tax filing position taken by the Company will be sustained upon review
by the taxation authorities.
We identified the evaluation of uncertain income tax positions as a critical audit matter. Complex auditor judgment was required to evaluate the Company’s
interpretation of, and compliance with, income tax law in the relevant jurisdictions and the estimate of the ultimate resolution of its income tax filing
positions.
3 FS
3
2020 ANNUAL REPORT KINROSS GOLD
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM –
(CONTINUED)
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating
effectiveness of certain internal controls related to the critical audit matter. This included controls over the Company’s review of uncertain income tax
positions and determination of the accounting for uncertain income tax positions. We involved taxation professionals with specialized skills and
knowledge, who assisted in:
evaluating the Company’s interpretation of tax laws
assessing the Company’s tax positions
obtaining and reading opinions provided by independent tax and legal experts related to the Company’s assessment of the income tax
positions recorded in certain jurisdictions.
/s/ KPMG LLP
Chartered Professional Accountants, Licensed Public Accountants
We have served as the Company’s auditor since 2005.
Toronto, Canada
February 10, 2021
4
FS 4
2020 ANNUAL REPORT KINROSS GOLD
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Kinross Gold Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited Kinross Gold Corporation’s internal control over financial reporting as of December 31, 2020, based on 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, 2020, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, cash
flows and equity for each of the years then ended, and the related notes (collectively, the consolidated financial statements), and our report dated
February 10, 2021 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.
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.
/s/ KPMG LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Canada
February 10, 2021
5 FS
5
2020 ANNUAL REPORT KINROSS GOLD
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
Non-current assets
Property, plant and equipment
Goodwill
Long-term investments
Investment in joint venture
Other long-term assets
Deferred tax assets
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Current income tax payable
Current portion of long-term debt and credit facilities
Current portion of provisions
Other current liabilities
Deferred payment obligation
Non-current liabilities
Long-term debt and credit facilities
Provisions
Long-term lease liabilities
Other long-term liabilities
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 interests
Total equity
Commitments and contingencies
Subsequent events
Total liabilities and equity
Common shares
Authorized
Issued and outstanding
As at
December 31,
2020
December 31,
2019
$
1,210.9
13.7
122.3
29.9
1,072.9
2,449.7
$
575.1
15.2
137.4
43.2
1,053.8
1,824.7
7,653.5
158.8
113.0
18.3
537.2
2.7
10,933.2
$
6,340.0
158.8
126.2
18.4
572.7
35.2
9,076.0
$
$
479.2
114.5
499.7
63.8
49.7
141.5
1,348.4
$
469.3
68.0
-
57.9
20.3
-
615.5
1,424.2
861.1
46.3
102.4
487.8
4,270.2
$
1,837.4
838.6
38.9
108.5
304.5
3,743.4
$
Note 7
Note 7
Note 7
Note 7
Note 7
Note 7
Note 7
Note 9
Note 7
Note 18
Note 7
Note 12
Note 14
Note 7
Note 6
Note 12
Note 14
Note 13
Note 18
Note 15
Note 7
$
$
4,473.7
10,709.0
(8,562.5)
(23.7)
6,596.5
66.5
6,663.0
14,926.2
242.1
(9,829.4)
(20.4)
5,318.5
14.1
5,332.6
$
$
Note 20
Note 6 and 15
$
10,933.2
$
9,076.0
Note 15
Unlimited
1,258,320,461
Unlimited
1,253,765,724
The accompanying notes are an integral part of these consolidated financial statements.
Signed on behalf of the Board:
/s/ Glenn A. Ives
Glenn A. Ives
Director
/s/ Kerry D. Dyte
Kerry D. Dyte
Director
6
FS 6
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
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
Reversals of impairment charges - net
Total cost of sales
Gross profit
Other operating expense
Exploration and business development
General and administrative
Operating earnings
Other income - net
Finance income
Finance expense
Earnings before tax
Income tax expense - net
Net earnings
Net earnings (loss) attributable to:
Non-controlling interests
Common shareholders
Earnings per share attributable to common shareholders
Basic
Diluted
Weighted average number of common shares outstanding
(millions)
Basic
Diluted
Years ended
December 31,
2020
December 31,
2019
$
4,213.4
$
3,497.3
1,725.7
842.3
(650.9)
1,917.1
2,296.3
186.5
92.5
117.9
1,899.4
7.4
4.3
(112.6)
1,798.5
(439.8)
1,778.9
731.3
(361.8)
2,148.4
1,348.9
108.5
113.5
135.8
991.1
72.7
7.9
(107.9)
963.8
(246.7)
$
1,358.7
$
717.1
$
16.3
$
(1.5)
$
1,342.4
$
718.6
$
$
1.07
1.06
$
$
0.57
0.57
1,257.2
1,268.0
1,252.3
1,262.3
Note 8
Note 7
Note 7
Note 7
Note 18
Note 17
The accompanying notes are an integral part of these consolidated financial statements.
7 FS
7
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(expressed in millions of United States dollars)
Years ended
December 31,
December 31,
2020
2019
Net earnings
$
1,358.7
$
717.1
Other comprehensive (loss) income, net of tax:
Items that will not be reclassified to profit or loss:
Equity investments at fair value through other comprehensive
income ("FVOCI") - net change in fair value(a)
Note 7
Items that are or may be reclassified to profit or loss in subsequent
periods:
Cash flow hedges - effective portion of changes in fair value(b)
Cash flow hedges - reclassified out of accumulated other
comprehensive income ("AOCI")(c)
0.3
49.0
(27.7)
24.1
(3.3)
23.6
5.5
78.1
Total comprehensive income
$
1,355.4
$
795.2
Attributable to non-controlling interest
Attributable to common shareholders
$
16.3
$
(1.5)
$
1,339.1
$
796.7
(a) Net of tax expense of $nil (2019 - $0.3 million).
(b) Net of tax (recovery) expense of $(12.5) million (2019 - $4.5 million).
(c) Net of tax expense of $10.4 million (2019 - $3.2 million).
The accompanying notes are an integral part of these consolidated financial statements.
8
FS 8
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
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
Adjustments to reconcile net earnings to net cash provided from
operating activities:
Depreciation, depletion and amortization
Reversals of impairment charges - net
Share-based compensation expense
Finance expense
Deferred tax expense
Foreign exchange losses (gains) and other
Reclamation expense (recovery)
Changes in operating assets and liabilities:
Accounts receivable and other assets
Inventories
Accounts payable and accrued liabilities
Cash flow provided from operating activities
Income taxes paid
Net cash flow provided from operating activities
Investing:
Additions to property, plant and equipment
Interest paid capitalized to property, plant and equipment
Acquisitions
Net (additions to) proceeds from the sale of long-term
investments and other assets
Net proceeds from the sale of property, plant and equipment
Increase in restricted cash - net
Interest received and other - net
Net cash flow used in investing activities
Financing:
Proceeds from drawdown of debt
Repayment of debt
Interest paid
Payment of lease liabilities
Dividends paid to common shareholders
Dividends paid to non-controlling interest
Other - net
Net cash flow (used in) provided from financing activities
Effect of exchange rate changes on cash and cash equivalents
Increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Years ended
December 31,
2020
December 31,
2019
$
1,358.7
$
717.1
Note 8
Note 12
Note 6
Note 12
Note 12
Note 12
Note 15
842.3
(650.9)
13.7
112.6
217.9
11.8
6.6
(120.9)
(6.8)
279.0
2,064.0
(106.4)
1,957.6
(916.1)
(47.9)
(267.0)
(5.9)
8.4
(23.5)
2.9
(1,249.1)
950.0
(850.0)
(63.1)
(20.7)
(75.5)
(6.0)
(2.4)
(67.7)
(5.0)
635.8
575.1
731.3
(361.8)
14.3
107.9
41.1
(53.2)
(11.9)
(64.5)
53.8
165.9
1,340.0
(115.1)
1,224.9
(1,060.2)
(45.0)
(30.0)
71.6
31.9
(2.5)
7.6
(1,026.6)
300.0
(200.0)
(55.6)
(14.3)
-
(5.0)
-
25.1
2.7
226.1
349.0
Cash and cash equivalents, end of period
$ 1,210.9
$ 575.1
The accompanying notes are an integral part of these consolidated financial statements.
9 FS
9
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
CONSOLIDATED STATEMENTS OF EQUITY
(expressed in millions of United States dollars)
Common share capital
Balance at the beginning of the period
Transfer to contributed surplus on reduction of stated capital
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
Transfer from common share capital on reduction of stated capital
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
Dividends paid
Net earnings 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 (loss) income, net of tax
Balance at the end of the period
Note 15
Note 15
Note 15
Years ended
December 31,
2020
December 31,
2019
$
$
$
$
$
$
14,926.2
(10,473.4)
7.8
13.1
4,473.7
242.1
10,473.4
13.7
(20.2)
10,709.0
14,913.4
-
5.3
7.5
14,926.2
239.8
-
14.3
(12.0)
242.1
$
$
$
$
(9,829.4)
(75.5)
1,342.4
(8,562.5)
$
(10,548.0)
-
718.6
(9,829.4)
$
$
$
$
$
(20.4)
(3.3)
(23.7)
14.1
16.3
41.0
1.1
(6.0)
66.5
(98.5)
78.1
(20.4)
20.6
(1.5)
-
-
(5.0)
14.1
Total accumulated deficit and accumulated other comprehensive income (loss)
$
(8,586.2)
$
(9,849.8)
Total common shareholders' equity
$
6,596.5
$
5,318.5
Non-controlling interests
Balance at the beginning of the period
Net earnings (loss) attributable to non-controlling interest
Non-controlling interest resulting from Peak acquisition
Funding from non-controlling interest
Dividends paid to non-controlling interest
Balance at the end of the period
Note 6
$
$
$
$
Total equity
$
6,663.0
$
5,332.6
The accompanying notes are an integral part of these consolidated financial statements.
10
FS 10
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
In anticipation of and in response to the global COVID-19 pandemic, Kinross’ protocols and contingency plans, which the
Company began implementing in late January 2020, have mitigated impacts of the pandemic to its global portfolio. All of
Kinross’ mines continued production during the year ended December 31, 2020, as the Company’s ongoing response to the
COVID-19 pandemic continued to maintain the safety of its global workforce and host communities while mitigating
operational impacts. However, COVID-19 did partially affect overall performance, productivity rates and costs, mainly as a
result of global travel constraints and the implementation of enhanced safety protocols and measures at all mines and
projects.
The consolidated financial statements of the Company for the year ended December 31, 2020 were authorized for issue in
accordance with a resolution of the Board of Directors on February 10, 2021.
2.
BASIS OF PRESENTATION
These consolidated financial statements for the year ended December 31, 2020 (“financial statements”) have been prepared
in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board.
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 Company’s significant accounting policies are presented
in Note 3 and have been consistently applied in each of the periods presented other than as noted in Note 4. Significant
accounting estimates, judgments and assumptions used or exercised by management in the preparation of these financial
statements are presented in Note 5.
11 FS
11
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
Property/ Segment
Location
2020
2019
As at
December 31,
December 31,
Entity
Subsidiaries:
(Consolidated)
Fairbanks Gold Mining, Inc.
Kinross Brasil Mineração S.A. ("KBM")
Fort Knox
Paracatu
Compania Minera Maricunga ("CMM")
Compania Minera Mantos de Oro ("MDO")
Echo Bay Minerals Company
Maricunga and Lobo-Marte /
Corporate and Other
La Coipa / Corporate and
Other
Kettle River - Buckhorn /
Corporate and Other
Chukotka Mining and Geological
Company
Kupol
Northern Gold LLC
Tasiast Mauritanie Ltd. S.A.
Chirano Gold Mines Ltd.(a)
KG Mining (Bald Mountain) Inc. ("KGBM")
Round Mountain Gold Corporation /
KG Mining (Round Mountain) Inc.
Udinsk Gold LLC(b)
Peak Gold, LLC(c) ("Peak")
Interest in joint venture:
(Equity accounted)
Sociedad Contractual Minera Puren
Dvoinoye/ Kupol
Tasiast
Chirano
Bald Mountain
Round Mountain
Chulbatkan / Corporate and
Other
Peak / Corporate and Other
Russian
Federation
USA
USA
Brazil
Chile
Chile
USA
Russian
Federation
Russian
Federation
Mauritania
Ghana
USA
USA
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
70%
100%
100%
100%
100%
100%
90%
100%
100%
-
-
Puren / Corporate and Other
Chile
65%
65%
(a)
The Company holds a 90% interest in Chirano Gold Mines Ltd. with the Government of Ghana having the right to the remaining 10%
interest.
(b) On January 16, 2020, the Company acquired the Chulbatkan license, containing the Udinsk development project, in Russia. See Note 6i.
(c) On September 30, 2020, the Company acquired a 70% interest in the Peak project in Alaska. See Note 6ii.
12
FS 12
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(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.
(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, 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 and measured at FVOCI,
is recognized in other comprehensive income (“OCI”), the related translation differences are also recognized in OCI.
13 FS
13
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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 or in escrow that is not available for general corporate use. Cash and cash
equivalents, and restricted cash are classified as and measured at amortized cost.
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. Short-
term investments are classified as and measured at amortized cost.
v. Long-term investments
Investments in entities that are not subsidiaries, joint operations, joint ventures or investments in associates are designated
as financial assets at FVOCI. These equity investments are measured at fair value on acquisition and at each reporting date,
with all realized and unrealized gains and losses recorded permanently in AOCI.
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 prevailing and long-term metal price estimates,
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.
14
FS 14
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
viii. Business combinations
A business combination is a transaction or other event in which control over one or more businesses is obtained.
For the year ended December 31, 2019, a business was defined as 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 consisted of inputs and processes applied to those inputs that have the ability to create
outputs that provided a return to the Company and its shareholders. A business did not need to include all of the inputs and
processes that were used by the acquiree to produce outputs if the business could be integrated with the inputs and
processes of the Company to continue to produce outputs.
Effective January 1, 2020, a business is defined as an integrated set of activities and assets that is capable of being conducted
and managed for the purpose of providing goods and services to customers, generating investment income (such as
dividends or interest) or generating other income from ordinary activities. In determining whether a particular set of
activities and assets is a business, the Company assesses whether the set of assets and activities acquired includes, at a
minimum, an input and substantive process and whether the acquired set has the ability to contribute to the creation of
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 to create
outputs or have the ability to contribute to the creation of outputs;
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.
The Company also has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired
set of activities and assets is not a business. If substantially all of the fair value of the gross assets acquired is concentrated
in a single identifiable asset or group of similar identifiable assets, the concentration test is met, and the transaction is
determined not to be a business combination.
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 any 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
15 FS
15
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
x. Exploration and evaluation (“E&E”) costs
E&E costs are those costs required to find a mineral property and determine its 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 E&E 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 the fair value of:
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 costs, 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 E&E 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.
16
FS 16
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
Mineral interests consist of:
Development and operating properties, which include capitalized development and stripping costs, cost of assets
under construction, E&E 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 E&E 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, net of residual value. 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 generally 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 E&E costs and assets under construction are not depreciated. These assets are depreciated when
they are ready for their intended use.
(c) Derecognition
The carrying amount of an item of property, plant and equipment is derecognized on disposal of the asset or when no future
economic benefits are expected to accrue to the Company from its continued use. Any gain or loss arising on derecognition
is included in the consolidated statement of operations in the period in which the asset is derecognized. The gain or loss is
determined as the difference between the carrying value and the net proceeds on the sale of the assets, if any, at the time
of disposal.
xii. 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 containing goodwill 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 E&E 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
17 FS
17
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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 CGU or asset’s 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
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 previously.
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.
xiii. Leases
Right-of-use assets and lease liabilities are recognized at the commencement date of a lease. Lease liabilities are initially
measured at the present value of lease payments to be paid after the lease’s commencement date, discounted using the
interest rate implicit in the lease, or if not readily determinable, the Company's incremental borrowing rate.
Right-of-use assets are initially measured at cost, which consists of the initial amount of the lease liability adjusted for any
lease payments made on or before the lease’s commencement date, plus any initial direct costs incurred and an estimate of
costs to dismantle or restore the leased asset, less any lease incentives received. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the useful life of the asset or the term of the lease. If a purchase option is expected to
be exercised, the asset is amortized over its useful life.
Lease liabilities are subsequently measured at amortized cost using the effective interest method and are re-measured if
and when there is a change in future lease payments arising from a change in an index or rate, or if and when there is a
change in the assessment of whether a purchase, extension or termination option is likely to be exercised.
Lease payments for short-term leases, which have a lease term of 12 months or less, leases of low-value assets, which have
an underlying asset value, when new, of $5,000 or less, as well as leases with variable lease payments are recognized as an
expense over the term of such leases.
xiv. Financial instruments and hedging activity
(a) Financial instrument classification and measurement
Financial assets are classified according to their contractual cash flow characteristics and the business models under which
they are held. On initial recognition, a financial asset is classified as: amortized cost, fair value through profit and loss (“FVPL”)
or FVOCI.
A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as FVPL:
it is held with the objective of collecting contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
18
FS 18
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to measure
the investment at FVOCI whereby changes in the investment’s fair value (realized and unrealized) will be recognized
permanently in OCI with no reclassification to profit or loss. The election is made on an investment-by-investment basis.
All financial assets not classified as amortized cost or FVOCI are classified as and measured at FVPL. This includes all derivative
assets. On initial recognition, a financial asset that otherwise meets the requirements to be measured at amortized cost or
FVOCI may be irrevocably designated as FVPL if doing so eliminates or significantly reduces an accounting mismatch that
would otherwise arise.
Financial instruments are measured on initial recognition at fair value, plus, in the case of financial instruments other than
those classified as FVPL, directly attributable transaction costs. Measurement of financial assets in subsequent periods
depends on whether the financial asset has been classified as amortized cost, FVPL or FVOCI. Measurement of financial
liabilities subsequent to initial recognition depends on whether they are classified as amortized cost or FVPL. Financial assets
and financial liabilities classified as amortized cost are measured subsequent to initial recognition using the effective interest
method.
Loss allowances for ‘expected credit losses’ are recognized on financial assets measured at amortized cost, contract assets
and investments in debt instruments measured at FVOCI, but not to equity investments. A loss event is not required to have
occurred before a credit loss is recognized.
The Company has classified and measured its financial instruments as described below:
Cash and cash equivalents, restricted cash and short-term investments are classified as and measured at amortized
cost.
Trade receivables and certain other assets are classified as and measured at amortized cost.
Long-term investments in equity securities, where the Company cannot exert significant influence, are classified
as and measured at FVOCI.
Accounts payable and accrued liabilities and long-term debt are classified as and measured at amortized cost.
Derivative assets and liabilities including derivative financial instruments that do not qualify as hedges, or are not
designated as hedges, and are classified as and measured at FVPL.
(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 included in earnings when the underlying hedged transaction, identified at the contract inception, is
completed, unless such hedged transaction results in the recognition of a non-financial asset. Any ineffective portion of a
hedge relationship is recognized immediately in earnings. 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. These amounts recorded in OCI are recognized in earnings 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 earnings in the period in which they occur.
For hedges that do not qualify for hedge accounting, gains or losses are recognized in earnings in the current period.
19 FS
19
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
xv. 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, either shares are issued from treasury, or the options are
cancelled and a cash payment equal to the ‘in-the-money’ value of the options is made.
Restricted Share Plan: Restricted share units (“RSUs”) and Restricted performance share units (“RPSUs”) are granted under
the Restricted Share Plan.
Restricted Share Unit Plan (Cash-Settled): Cash-settled RPSUs are granted under the Restricted Share Unit Plan (Cash-
Settled).
Both RSUs and RPSUs are awarded to certain employees as a percentage of long-term incentive awards.
(a) RSUs may be equity or cash-settled and 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. The estimated forfeiture rate is adjusted for actual forfeitures in each reporting period. On vesting
of equity-settled RSUs, shares are generally issued from treasury. Cash-settled RSUs are accounted for as a liability at
fair value and re-measured each period based on the current market value of the underlying stock at period end, with
changes in the liability recorded as compensation expense each period.
(b) RPSUs are equity-settled and 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. The estimated forfeiture rate is adjusted for actual forfeitures in each reporting 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.
xvi. 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. In order to manage
short-term metal price risk, the Company may enter into derivative contracts in relation to metal sales that it believes are
highly likely to occur within a given quarter. No such contracts were outstanding at December 31, 2020 or December 31,
2019.
Revenue from metal sales is recognized when control over the metal is transferred to the customer. Transfer of control
generally occurs when the refined gold, silver or doré has been accepted by the customer. Once the customer has accepted
the metals, the significant risks and rewards of ownership have typically been transferred and the customer is able to direct
the use of and obtain substantially all of the remaining benefits from the metals. On transfer of control, revenue and related
20
FS 20
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
costs can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the
Company as payment is received on the date of or within a few days of transfer of control.
The Company manages and reviews its operations by geographical location and managerial structure. For detailed
information about reportable segments and disaggregated revenue, see Note 19. All reportable segments principally
generate revenue from metal sales.
xvii. 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 activities 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 asset or 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 timing of cash flows. The
periodic unwinding of the discounted obligation is recognized in the consolidated statement of operations as a finance
expense.
xviii. 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
Company has the legal right and intent to offset.
xix. Earnings (loss) per share
Earnings (loss) per share calculations are based on the weighted average number of common shares and common share
equivalents issued and outstanding during the period. Basic earnings (loss) per share amounts are calculated by dividing net
earnings (loss) attributable to common shareholders for the period by the weighted average number of common shares
21 FS
21
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
CHANGES IN SIGNIFICANT ACCOUNTING POLICIES
Effective January 1, 2020, the Company adopted amendments to IFRS 3, which amended the definition of a business. This
amended definition requires a business to include an input and a substantive process that together significantly contribute
to the ability to create outputs. The definition of ‘outputs’ was amended to focus on goods and services provided to
customers, generating investment income and other income, and it excludes returns in the form of lower costs and economic
benefits. See Note 3viii for details of the accounting policy. These amendments were applied to the acquisitions of the
Chulbatkan license and 70% interest in the Peak project. See Note 6.
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.
(b) Depreciation, depletion and amortization
Significant judgment is involved in the determination of useful lives 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
22
FS 22
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
appropriately qualified persons. The estimation of future cash flows related to proven and probable mineral reserves is
based upon factors such as estimates of commodity prices, foreign exchange rates, 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 generally 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
The assessment of fair values, including those of the CGUs for purposes of testing goodwill for potential impairment and
long-lived assets for potential impairment or reversal of impairment, require the use of estimates and assumptions for
recoverable production, future capital requirements and operating performance, as contained in the Company’s LOM plans,
as well as future and long-term commodity prices, discount rates, NAV multiples, and foreign exchange rates. 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.
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 4 year to 17 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 Securities Administrators’ National Instrument 43-101 “Standards of
Disclosure for Mineral Projects”.
23 FS
23
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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 metals prices.
For the 2020 annual analysis, estimated 2021, 2022 and long-term gold prices of $1,700, $1,700, and $1,500 per ounce,
respectively, and short-term and long-term silver prices of $20 were used. For the 2019 annual analysis, estimated short-
term and long-term prices of gold and silver of $1,400 per ounce and $17.50 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 U.S. dollar are translated to U.S. 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 2020 annual analysis, estimated short-term and long-
term oil prices of $55 per barrel were used. For the 2019 annual analysis, estimated short-term and long-term oil prices of
$60 per barrel were 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 2020 annual analysis, real discount rates of between 3.61% and 6.82% were
used for the CGUs tested. For the CGUs tested in the 2019 annual analysis, real discount rates of between 3.33% and 6.97%
were used.
Since public gold companies typically trade at a market capitalization that is based on a multiple of their underlying NAV, a
market participant would generally apply a NAV multiple when estimating the fair value of a gold mining property.
Consequently, where applicable, the Company estimates the fair value of each CGU by applying a market NAV multiple to
the NAV of each CGU.
When selecting NAV multiples to arrive at fair value, the Company considered the trading prices and NAV estimates of
comparable gold mining companies as at December 31, 2020 in respect of the fair value determinations at that date, which
ranged from 0.4 to 1.5. NAV multiples observed at December 31, 2019 were in the range of 0.8 to 1.7. 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.
(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, and subsequent reversals thereof,
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 and
related reversals 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.
24
FS 24
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(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.
(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.
25 FS
25
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
6.
i.
ACQUISITIONS AND DISPOSITIONS
Acquisition of Chulbatkan license
On July 31, 2019, the Company announced an agreement to acquire the Chulbatkan license, containing the Udinsk
development project, located in Khabarovsk Krai, Far East Russia, from N-Mining Limited (“N-Mining”), for total fixed
consideration of $283.0 million. In addition, N-Mining is entitled to receive an economic participation equivalent to a 1.5%
Net Smelter Return (“NSR”) royalty on future production from this Chulbatkan license, as well as $50 per ounce of future
proven and probable reserves beyond the first 3.25 million of declared proven and probable ounces. Kinross will retain the
right to buy-back one-third of the 1.5% NSR royalty for $10 million, subject to certain gold price related adjustments, at any
time within 24 months of closing.
On January 16, 2020, the Company closed the acquisition. In accordance with an amended acquisition agreement, the first
installment of $141.5 million, representing 50% of the $283.0 million fixed purchase price, plus ordinary course net working
capital adjustments of $3.1 million, were paid in cash. The remaining 50% was recorded as a deferred payment obligation
on the consolidated balance sheet. On January 15, 2021, in accordance with a further amended acquisition agreement to
settle 100% of the final installment in cash instead of 60-100% in Kinross shares, the Company paid the remaining $141.5
million in cash.
The acquisition was accounted for as an asset acquisition, with the total purchase price of $290.5 million comprised of the
$283.0 million fixed purchase price, plus $3.1 million of net working capital adjustments and transaction costs of $4.4 million,
allocated as follows:
Purchase price allocation
Mineral interests - pre-development properties
Land, plant and equipment
Total property, plant and equipment
Net working capital
Total net assets acquired
$
$
278.9
8.0
286.9
3.6
290.5
ii.
Acquisition of 70% interest in the Peak development project
On September 30, 2020, the Company acquired a 70% interest in the Peak project in Alaska, which was 40% owned by Royal
Alaska, LLC (“Royal Alaska”), a subsidiary of Royal Gold, Inc. (“Royal Gold”) and 60% owned by CORE Alaska, LLC (“CORE
Alaska”), a subsidiary of Contango ORE, Inc. (“Contango”), for total cash consideration of $93.7 million. Kinross purchased
40% of Peak by acquiring Royal Alaska from Royal Gold for total cash consideration of $49.2 million, and purchased an
additional 30% of Peak from CORE Alaska for total consideration of $44.5 million. The cash consideration paid to Contango
includes a $1.2 million reimbursement prepayment for a new royalty on Peak silver revenues.
The acquisition was accounted for as an asset acquisition with the total purchase price of $96.9 million, comprised of cash
payments of $93.7 million and total transaction costs of $3.2 million, allocated as follows:
Purchase price allocation
Mineral interests - pre-development properties
Land, plant and equipment
Total property, plant and equipment
Other assets - net
Non-controlling interest(a)
Total net assets acquired
$
$
136.5
0.2
136.7
1.2
(41.0)
96.9
(a) Non-controlling interest has been recorded related to the 30% interest of Peak Gold, LLC that the Company did not acquire.
iii.
Disposition of royalty portfolio
On December 2, 2019, the Company entered into an agreement with Maverix Metals Inc. (“Maverix”) to sell a royalty
portfolio of precious metals royalties.
On December 19, 2019, the Company completed the sale for total consideration of $73.9 million, including $25.0 million in
cash and approximately 11.2 million common shares, representing 9.4% of the issued and outstanding common shares, of
Maverix. The Company recognized a gain on disposition of $72.7 million in other income in connection with the sale. See
Note 7xiii.
26
FS 26
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
7.
CONSOLIDATED FINANCIAL STATEMENT DETAILS
Consolidated Balance Sheets
i.
Cash and cash equivalents:
Cash on hand and balances with banks
Short-term deposits
ii.
Restricted cash:
Restricted cash(a)
December 31,
2020
December 31,
2019
$
$
562.0
648.9
1,210.9
305.6
269.5
575.1
$
$
December 31,
2020
December 31,
2019
$
13.7
$
15.2
(a) Restricted cash relates to loan escrow judicial deposits and environmental indemnity deposits.
iii.
Accounts receivable and other assets:
December 31,
2020
December 31,
2019
$
$
Trade receivables
Prepaid expenses
VAT receivable
Deposits
Unrealized fair value of derivative assets(a)
Other
(a) See Note 10 for details of the current portion of unrealized fair value of derivative assets.
iv.
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,
2020
December 31,
2019
$
$
8.1
21.6
46.6
28.9
6.5
10.6
122.3
277.4
498.8
108.0
50.3
448.2
1,382.7
(309.8)
1,072.9
6.9
25.2
69.6
10.5
7.2
18.0
137.4
300.3
384.7
99.2
52.3
520.6
1,357.1
(303.3)
1,053.8
$
$
(a) Ore in stockpiles relates to the Company’s operating mines. Low-grade material not scheduled for processing within the next 12 months
is included in other long-term assets. See Note 7viii.
(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 Bald Mountain in 2023, Round Mountain in 2026 and Fort Knox
in 2028. The last tonne of ore was placed on the Tasiast leach pads during 2020. Material not scheduled for processing within the next
12 months is included in other long-term assets. See Note 7viii.
27 FS
27
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
v.
Property, plant and equipment:
Cost
Balance at January 1, 2020
Additions
Acquisitions(c)
Capitalized interest
Disposals
Other
Balance at December 31, 2020
Mineral Interests
Land, plant and
equipment(a)
Development and
operating
properties(b)
Pre-development
properties
Total
$
9,715.0
535.5
8.2
22.8
(82.9)
(8.6)
10,190.0
$
9,540.6
539.9
15.4
25.5
-
14.8
10,136.2
$
13.4
15.5
441.8
0.8
(0.1)
(6.1)
465.3
$
19,269.0
1,090.9
465.4
49.1
(83.0)
0.1
20,791.5
Accumulated depreciation, depletion, amortization
and reversals of impairment charges
Balance at January 1, 2020
Depreciation, depletion and amortization
Reversals of impairment charges(d)
Disposals
Other
Balance at December 31, 2020
$
(6,114.1)
(589.9)
160.5
73.8
(1.6)
(6,471.3)
$
(6,814.9)
(380.3)
528.5
-
-
(6,666.7)
-
$
-
-
-
-
-
$
(12,929.0)
(970.2)
689.0
73.8
(1.6)
(13,138.0)
Net book value
$
3,718.7
$
3,469.5
$
465.3
$
7,653.5
Amount included above as at December 31, 2020:
Assets under construction
Assets not being depreciated(e)
$
$
540.8
769.9
$
$
189.1
607.0
$
$
19.1
465.3
$
$
749.0
1,842.2
(a) Additions includes $38.2 million of right-of-use assets for lease arrangements entered into during the year ended December 31, 2020.
Depreciation, depletion and amortization includes depreciation for leased right-of-use assets of $16.1 million during the year ended
December 31, 2020. The net book value of property, plant and equipment includes leased right-of use assets with an aggregate net
book value of $76.2 million as at December 31, 2020.
(b) At December 31, 2020, the significant development and operating properties are Fort Knox, Round Mountain, Bald Mountain, Paracatu,
Kupol, Tasiast, Chirano, La Coipa, and Lobo-Marte.
(c) During the year ended December 31, 2020, the Company acquired the Chulbatkan license area and a 70% interest in the Peak
development project, with both respective mineral interests classified in pre-development properties. See Note 6.
(d) At December 31, 2020, impairment reversals of property, plant and equipment were recorded at Tasiast, Chirano, and Lobo-Marte. At
June 30, 2020, an impairment reversal was recorded at Lobo-Marte, entirely related to property, plant and equipment. See Note 8.
(e) Assets not being depreciated relate to land, capitalized E&E costs, assets under construction, which relate to expansion projects, and
other assets that are in various stages of being readied for use.
28
FS 28
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Cost
Balance at January 1, 2019
Additions
Capitalized interest
Disposals
Other
Balance at December 31, 2019
Mineral Interests
Land, plant and
equipment(a)
Development and
operating
properties(b)
Pre-development
properties
$
9,184.2
607.5
14.7
(69.9)
(21.5)
9,715.0
$
8,816.6
666.5
32.7
-
24.8
9,540.6
$
13.4
-
-
-
-
13.4
Total
$
18,014.2
1,274.0
47.4
(69.9)
3.3
19,269.0
Accumulated depreciation, depletion, amortization
and reversal of impairment charges
Balance at January 1, 2019
Depreciation, depletion and amortization
Reversals of impairment charges(c)
Disposals
Other
Balance at December 31, 2019
$
(5,702.1)
(572.9)
102.4
60.5
(2.0)
(6,114.1)
$
(6,793.0)
(280.6)
259.4
-
(0.7)
(6,814.9)
-
$
-
-
-
-
-
$
(12,495.1)
(853.5)
361.8
60.5
(2.7)
(12,929.0)
Net book value
$
3,600.9
$
2,725.7
$
13.4
$
6,340.0
Amount included above as at December 31, 2019:
Assets under construction
Assets not being depreciated(d)
$
$
308.8
538.3
$
$
438.2
735.9
$
-
$
13.4
$
$
747.0
1,287.6
(a) Additions includes $42.9 million of transitional adjustments for the recognition of leased right-of-use assets upon the Company’s
adoption of IFRS 16 on January 1, 2019, as well as $22.7 million of right-of-use assets for lease arrangements entered into during the
year ended December 31, 2019. Depreciation, depletion and amortization includes depreciation for leased right-of-use assets of $11.5
million during the year ended December 31, 2019. The net book value of property, plant and equipment includes leased right-of-use
assets with an aggregate net book value of $54.1 million as at December 31, 2019.
(b) At December 31, 2019, the significant development and operating properties were Fort Knox, Round Mountain, Bald Mountain,
Paracatu, Kupol, Tasiast, Chirano, La Coipa and Lobo-Marte.
(c) At December 31, 2019, impairment reversals were recorded at Paracatu and Tasiast, entirely related to property, plant and equipment.
See Note 8.
(d) Assets not being depreciated relate to land, capitalized E&E 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 Tasiast, Round Mountain, Fort Knox, Bald Mountain
and Paracatu and had a weighted average borrowing rate of 5.20% and 5.49% during the years ended December 31, 2020
and 2019, respectively.
At December 31, 2020, $526.1 million of E&E assets were included in mineral interests (December 31, 2019 - $251.4 million).
During the year ended December 31, 2020, the Company had additions of $457.3 million, primarily related to the purchases
of the Chulbatkan license area and a 70% interest in the Peak project, recognized $90.9 million of impairment reversals
related to Chirano E&E assets, and transferred $311.9 million of E&E assets to capitalized development, primarily related to
La Coipa and Chirano. During the year ended December 31, 2019, the Company did not have any acquisitions, dispositions
or reversals of impairments of E&E assets, or transfers of E&E assets to capitalized development.
During the year ended December 31, 2020, the Company capitalized $38.4 million and expensed $19.1 million of E&E costs
(year ended December 31, 2019 - $20.7 million and $17.4 million, respectively). Capitalized E&E costs are included as
investing cash flows while expensed E&E costs are included as operating cash flows.
vi.
Goodwill:
As at December 31, 2020 and 2019, goodwill of $158.8 million related entirely to Kupol.
29 FS
29
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
vii.
Long-term investments:
Gains and losses on equity investments at FVOCI are recorded in AOCI as follows:
December 31, 2020
December 31, 2019
Investments in an accumulated gain position
Investments in an accumulated loss position
Net realized gains (losses)
$
Fair value
80.9
32.1
-
$
113.0
$
Gains (losses) in
AOCI(a)
18.2
(47.0)
2.9
(25.9)
$
Gains (losses) in
AOCI(a)
Fair value
$ 10.3
$ 79.8
(36.5)
46.4
- -
(26.2)
$
$
126.2
(a)
See the consolidated statements of comprehensive income and Note 7xi for details of changes in fair value recognized in OCI during
the years ended December 31, 2020 and 2019.
December 31,
2020
December 31,
2019
$
$
viii.
Other long-term assets:
Long-term portion of ore in stockpiles and ore on leach pads(a)
Deferred charges, net of amortization
Long-term receivables
Advances for the purchase of capital equipment
Restricted cash(b)
Unrealized fair value of derivative assets(c)
Other
309.8
6.0
124.1
9.1
25.0
10.5
52.7
537.2
89.1
242.8
147.3
479.2
28.4
21.3
49.7
303.3
32.5
171.0
15.1
-
4.5
46.3
572.7
89.3
246.7
133.3
469.3
16.0
4.3
20.3
$
$
(a)
Long-term portion of ore in stockpiles and ore on leach pads represents low-grade material not scheduled for processing within the
next 12 months. As at December 31, 2020, long-term ore in stockpiles was at the Company’s Fort Knox, Kupol, Tasiast and Paracatu
mines, and long-term ore on leach pads was at the Company’s Fort Knox and Round Mountain mines.
(b) See Note 12iii for details of the Tasiast loan and cash restricted for future loan payments as at December 31, 2020.
(c)
See Note 10 for details of the non-current portion of unrealized fair value of derivative assets.
ix.
Accounts payable and accrued liabilities:
December 31,
2020
December 31,
2019
Trade payables
Accrued liabilities
Employee related accrued liabilities
x.
Other current liabilities:
Current portion of lease liabilities(a)
Current portion of unrealized fair value of derivative liabilities(b)
$
$
$
$
December 31,
2020
December 31,
2019
$
$
$
$
(a) See Note 13 for details of the current portion of lease liabilities.
(b) See Note 10 for details of the current portion of unrealized fair value of derivative liabilities.
xi.
Accumulated other comprehensive income (loss):
Balance at December 31, 2018
Other comprehensive income before tax
Tax
Balance at December 31, 2019
Other comprehensive income (loss) before tax
Tax
Balance at December 31, 2020
$
$
$
Long-term
Investments
(75.2)
49.3
(0.3)
(26.2)
0.3
-
(25.9)
Derivative
Contracts
(23.3)
36.8
(7.7)
5.8
(5.7)
2.1
2.2
$
$
$
$
$
$
Total
(98.5)
86.1
(8.0)
(20.4)
(5.4)
2.1
(23.7)
30
FS 30
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Consolidated Statements of Operations
xii.
Other operating expense:
Other operating expense
Years ended December 31,
2019
2020
$
$
186.5
186.5
$
$
108.5
108.5
In 2020, other operating expense of $186.5 million for the year ended December 31, 2020 includes $64.1 million of labour,
health and safety, donations and other support program costs associated with the COVID-19 pandemic, $8.3 million of costs
relating to the temporary suspension of site activities as a result of the Tasiast strike in the second quarter of 2020, and
environmental and other operating expenses for non-operating mining sites of $46.0 million.
Other operating expense of $108.5 million for the year ended December 31, 2019 includes $25.1 million of costs as a result
of production issues associated with the pit wall slide at Fort Knox, and environmental and other operating expenses for
closed mining sites of $35.6 million, and was reduced by $17.5 million as a result of additional federal VAT credits at Paracatu
due to changes in Brazil’s tax regulations.
xiii.
Other income – net:
Net gains on dispositions of assets(a)
Foreign exchange (losses) gains - net
Net non-hedge derivative gains
Equity in (losses) earnings of joint venture(b)
Other - net(c)
Years ended December 31,
2019
2020
$
$
1.2
(7.3)
1.0
(0.1)
12.6
7.4
70.4
0.6
1.4
0.1
0.2
72.7
$
$
(a) During the year ended December 31, 2019, the Company recognized a gain of $72.7 million on disposition of a portfolio of precious
metals royalties. See Note 6iii.
(b) Represents Kinross’ equity in net (losses) earnings, and other comprehensive income (losses) of which there was $nil for the years
ended December 31, 2020 and 2019, of its Puren joint venture investment.
(c) During the year ended December 31, 2020, the Company recognized $10.8 million of insurance recoveries.
xiv.
Finance expense:
Accretion of reclamation and remediation obligations
Interest expense, including accretion of debt and lease liabilities(a), (b)
Years ended December 31,
2019
2020
$
$
(23.0)
(89.6)
(112.6)
(31.0)
(76.9)
(107.9)
$
$
(a) During the years ended December 31, 2020 and 2019, $49.1 million and $47.4 million, respectively, of interest was capitalized to
property, plant and equipment. See Note 7v.
(b) During the years ended December 31, 2020 and 2019, accretion of lease liabilities was $3.0 million and $2.9 million, respectively.
Total interest paid, including interest capitalized, during the year ended December 31, 2020 was $111.0 million (year ended
December 31, 2019 - $100.6 million). See Note 12v.
xv.
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,
2019
2020
Salaries, short-term incentives, and other benefits
Share-based payments
Other
31 FS
31
$
$
707.9
30.7
16.3
754.9
680.8
27.0
26.4
734.2
$
$
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
8.
REVERSALS OF IMPAIRMENT CHARGES - NET
Property, plant and equipment (i)
Inventories (ii)
i.
Property, plant and equipment
Years ended December 31,
2019
2020
$
$
(689.0)
38.1
(650.9)
(361.8)
-
(361.8)
$
$
During the year ended December 31, 2020, the Company recorded reversals of previous impairment charges of $689.0
million, related entirely to property, plant and equipment at Tasiast ($299.5 million), Chirano ($204.5 million) and Lobo-
Marte ($185.0 million, which included $48.3 million for the impairment reversal recorded at June 30, 2020). These
impairment reversals were mainly a result of increases in the Company’s long-term gold price estimate, the mine life
extension at Chirano and the increase in mineral reserves at Lobo-Marte. For Tasiast and Chirano, the reversals were limited
to a full reversal of the remaining impairment charges previously recorded. For Lobo-Marte, the reversal represents a partial
reversal of the total impairment charges previously recorded. The tax impacts of the impairment reversals at Chirano and
Lobo-Marte were income tax expenses of $71.6 million and $4.6 million, respectively. There was no tax impact on the
impairment reversal at Tasiast. After giving effect to the impairment reversals, the carrying values of Tasiast, Chirano and
Lobo-Marte were $2,455.7 million, $240.3 million and $319.2 million, respectively, as at December 31, 2020.
At December 31, 2019, the Company recorded reversals of previous impairment charges of $361.8 million, related entirely
to property, plant and equipment at Paracatu ($200.7 million) and Tasiast ($161.1 million), and were mainly due to an
increase in the Company’s long-term gold price estimate. For Paracatu, the reversal was limited to a full reversal of the
remaining impairment charge recorded in 2017. For Tasiast, the reversal represents a partial reversal of the total impairment
charges previously recorded. The tax impact on the impairment reversal at Paracatu was an expense of $68.2 million and
was recorded within income tax expense. There was no tax impact on the impairment reversal at Tasiast. After giving effect
to the impairment reversals, the carrying values of Paracatu and Tasiast were $1,461.0 million and $2,123.6 million,
respectively, as at December 31, 2019.
The significant estimates and assumptions used in the Company’s impairment assessments are disclosed in Note 5 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 with recorded goodwill
to exceed its recoverable amount.
ii.
Inventories
During 2020, the Company recognized impairment charges of $38.1 million related to inventories. The inventory impairment
charges were recorded to reduce the carrying value of certain materials and supplies inventories to net realizable value.
9.
INVESTMENT IN JOINT VENTURE
The Company’s Puren joint venture investment is accounted for under the equity method and had the following carrying
values:
Investment in joint venture - Puren
There are no publicly quoted market prices for Puren.
December 31,
2020
December 31,
2019
$
$
18.3
18.3
$
$
18.4
18.4
32
FS 32
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
10.
(a)
FAIR VALUE MEASUREMENT
Recurring fair value measurement:
Carrying values for financial instruments carried at amortized cost, including cash and cash equivalents, restricted cash,
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, 2020 include:
Equity investments at FVOCI
Derivative contracts:
Foreign currency forward and collar contracts
Energy swap contracts
Total return swap contracts
$
Level 1
113.0
Level 2
$
-
Level 3
$
-
Aggregate
Fair Value
113.0
$
-
-
-
$ 113.0
(4.3)
7.6
(11.0)
$ (7.7)
-
-
-
$
-
(4.3)
7.6
(11.0)
$ 105.3
During the year ended December 31, 2020, 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:
Equity investments at FVOCI:
Equity investments at FVOCI include shares in publicly traded companies listed on a stock exchange. The fair value of equity
investments at FVOCI 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 equity investments at FVOCI 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.
33 FS
33
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
The following table summarizes information about derivative contracts outstanding at December 31, 2020 and 2019:
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, 2020
December 31, 2019
Asset / (Liability)
Fair Value
Asset / (Liability)
Fair Value
AOCI
AOCI
$ (4.3) $ (2.5) $ 3.9
$ 2.6
7.6
4.7
4.0
(11.0)
- (1.3)
3.2
-
Total all contracts
$ (7.7) $ 2.2
$ 6.6
$ 5.8
Unrealized fair value of derivative assets
Current
Non-current
Unrealized fair value of derivative liabilities
Current
Non-current
Total net fair value
$ 6.5
10.5
$ 17.0
$
(21.3)
(3.4)
$
(24.7)
$ (7.7)
$ 7.2
4.5
$ 11.7
$ (4.3)
(0.8)
$ (5.1)
$ 6.6
(a) Of the total amount recorded in AOCI at December 31, 2020, $(4.1) million will be reclassified out of AOCI within the next 12 months
as a result of settling the contracts.
(b) Of the total amount recorded in AOCI at December 31, 2020, $(0.5) million will be reclassified out of AOCI within the next 12 months
as a result of settling the contracts.
(i)
Foreign currency forward and collar contracts
The following table provides a summary of foreign currency forward and collar contracts outstanding at December 31, 2020
and their respective maturities:
Foreign currency
Brazilian real zero cost collars (in millions of U.S. dollars)
Average put strike (Brazilian real)
Average call strike (Brazilian real)
Canadian dollar forward buy contracts (in millions of U.S. dollars)
Average rate (Canadian dollar)
Russian rouble zero cost collars (in millions of U.S. dollars)
Average put strike (Russian rouble)
Average call strike (Russian rouble)
2021
$
2022
2023
$
$
$
$
$
103.6
4.35
5.39
25.2
1.37
51.6
70.3
87.8
64.8
4.62
6.56
12.0
1.40
36.0
75.0
100.6
$
43.2
5.00
7.26
-
$
-
20.4
77.0
97.8
$
34
FS 34
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
The following new foreign currency forward and collar contracts were entered into during the year ended December 31,
2020:
$134.4 million of Brazilian real zero cost collars, maturing from 2021 to 2023, with average put and call strikes of 4.81
and 6.94, respectively;
$25.2 million of Canadian dollar forward buy contracts, maturing from 2021 to 2022, at an average rate of 1.40; and
$82.8 million of Russian rouble zero cost collars, maturing from 2021 to 2023, with average put and call strikes of 75.35
and 96.93, respectively.
At December 31, 2020, the unrealized gain or loss on foreign currency forward and collar contracts recorded in AOCI is as
follows:
Brazilian real zero cost collar contracts – unrealized loss of $5.8 million (December 31, 2019 - $0.1 million loss);
Canadian dollar forward buy contracts – unrealized gain of $2.2 million (December 31, 2019 - $0.5 million gain); and
Russian rouble zero cost collar contracts – unrealized gain of $1.1 million (December 31, 2019 - $2.2 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 enters 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, 2020 and their respective
maturities:
Energy
WTI oil swap contracts (barrels)
Average price
2021
2022
2023
1,054,400
47.52
$
$
822,600
42.14
$
565,200
39.58
During 2020, the following new energy swap contracts were entered into:
1,759,100 barrels of WTI oil swap contracts at an average rate of $40.52 per barrel maturing from 2021 to 2023.
At December 31, 2020, the unrealized gain on energy swap contracts recorded in AOCI is as follows:
WTI oil swap contracts – unrealized gain of $4.7 million (December 31, 2019 - $3.2 million gain).
(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, 2020, 5,695,000 TRS units were outstanding. Hedge accounting is not applied for the DSU/RSU
hedging program.
(b)
Fair value measurements related to non-financial assets:
The Company recorded reversals of previous impairment charges related to the property, plant and equipment at Tasiast,
Chirano and Lobo-Marte during the year ended December 31, 2020 and at Tasiast and Paracatu during the year ended
December 31, 2019, due to changes in the estimates used to determine the recoverable amount of these CGUs since their
last impairment losses were recognized. Certain assumptions used in the calculation of the recoverable amounts, calculated
on a fair value less cost of disposal basis, are categorized as Level 3 in the fair value hierarchy. See Notes 5ii(d) and 8.
(c)
Fair value of financial assets and liabilities not measured and recognized at fair value:
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.
35 FS
35
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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 prices 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 and credit facilities
Current portion of long-term debt and credit facilities
Total debt
Common shareholders' equity
Total debt / total debt and common shareholders' equity ratio
Company target
ii.
Gold and silver price risk management
December 31,
2020
$ 1,424.2
499.7
$ 1,923.9
$ 6,596.5
22.6%
0 – 30%
December 31,
2019
$ 1,837.4
-
$ 1,837.4
$ 5,318.5
25.7%
0 – 30%
In order to manage short-term metal price risk, the Company may enter into derivative contracts in relation to metal sales
that it believes are highly likely to occur within a given quarter. No such contracts were outstanding at December 31, 2020
or December 31, 2019.
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.
36
FS 36
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
At December 31, 2020, 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 foreign currencies.
Canadian dollar
Brazilian real
Chilean peso
Russian rouble
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)
$
$
$
$
$
$
$
(43.7)
(158.9)
(13.4)
33.5
3.0
9.2
(1.7)
$
$
$
$
$
$
$
4.0
14.4
1.2
(3.0)
(0.3)
(0.8)
0.2
10% weakening in
U.S. dollar
Effect on earnings before
taxes, gain (loss)(a)
$
$
$
$
$
$
$
(4.9)
(17.7)
(1.5)
3.7
0.3
1.0
(0.2)
(a) As described in Note 3ii, 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 Euro, British pound, Australian dollar and South African rand.
(b)
At December 31, 2020, 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 dollar
Brazilian real
Russian rouble
10% strengthening in
U.S. dollar
Effect on OCI before
taxes, (loss)(a)
$
$
$
(3.6)
(10.1)
(4.8)
10% weakening in
U.S. dollar
Effect on OCI before
taxes, gain(a)
$
$
$
4.5
11.8
6.4
(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.
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, 2020, 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(a)
10% decrease in
price
Effect on OCI before
taxes, (loss)(a)
$
11.4
$
(11.3)
(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.
37 FS
37
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
v.
Liquidity risk
The Company manages liquidity risk by maintaining adequate cash and cash equivalent balances (December 31, 2020 -
$1,210.9 million in aggregate), by utilizing its lines of credit and by monitoring developments in the capital markets. The
Company continuously monitors and reviews both actual and forecasted cash flows. The contractual cash flow requirements
for financial liabilities at December 31, 2020 are as follows:
Long-term debt(a)
Total
$
2,640.0
2021
Within 1 year(b)
$
604.5
2022-2025
2 to 5 years
$
870.9
2026+
More than 5 years
$
1,164.6
Includes the full face value of the senior notes, drawdowns on the revolving credit facility, Tasiast loan, and estimated interest.
(a)
(b) Represents interest on the senior notes, revolving credit facility and Tasiast loan, due within the next 12 months.
vi.
Credit risk management
Credit risk relates to cash and cash equivalents, accounts receivable and derivative contracts and arises from the possibility
that any counterparty to an instrument fails to perform. The Company 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,
2020, the Company’s maximum exposure to credit risk was the carrying value of cash and cash equivalents, restricted cash,
accounts receivable, and derivative assets.
12.
LONG-TERM DEBT AND CREDIT FACILITIES
Interest Rates
4.50%-6.875%
LIBOR plus 1.625%
LIBOR plus 4.380%
Senior notes
Revolving credit facility
Tasiast loan
Total long-term and current debt
Less: current portion
Long-term debt and credit facility
(i)
(ii)
(iii)
December 31, 2020
Deferred
Financing
Costs
Carrying
Amount(a)
Nominal
Amount
December 31, 2019
Fair
Value(b)
Carrying
Amount(a)
Fair
Value(b)
$
$
$
$
$
1,747.7
-
200.0
1,947.7
(500.0)
1,447.7
$
$
$
$
(7.9)
-
(15.9)
(23.8)
0.3
(23.5)
1,739.8
-
184.1
1,923.9
(499.7)
1,424.2
$
$
1,999.5
-
200.0
2,199.5
(509.3)
1,690.2
$
$
1,737.4
100.0
-
1,837.4
-
1,837.4
$
1,881.9
100.0
-
$
1,981.9
-
$
1,981.9
$
$
Includes transaction costs on senior notes financings.
(a)
(b) The fair value of senior notes is primarily determined using quoted market determined variables. See Note 10(c).
Scheduled debt repayments
Senior notes
Tasiast loan
Total debt payable
(i)
Senior notes
2021
$
500.0
$
-
$
500.0
2022
$
-
$
40.0
$
40.0
2023
$
-
$
36.0
$
36.0
2024
$
$
$
500.0
32.0
532.0
2025
$
-
$
4.0
$
4.0
2026 and
thereafter
$
$
$
750.0
88.0
838.0
Total
1,750.0
200.0
1,950.0
$
$
$
The Company’s $1,750.0 million of senior notes consist of $500.0 million principal amount of 5.125% notes due in September
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.
38
FS 38
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
The senior notes (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 45 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.
(ii)
Revolving credit facility
As at December 31, 2020, the Company had utilized $7.5 million (December 31, 2019 - $119.1 million) of its $1,500.0 million
revolving credit facility, entirely for letters of credit.
In February 2020, the Company repaid the previously outstanding $100.0 million balance on the revolving credit facility. The
Company drew down $750.0 million on March 20, 2020 as a precautionary measure to protect against economic and
business uncertainties caused by the COVID-19 pandemic. The Company repaid $250.0 million of this drawn amount on July
24, 2020 and repaid the remaining $500.0 million balance on September 18, 2020.
On July 25, 2019, the Company amended its $1,500.0 million revolving credit facility to extend the maturity date by one year
from August 10, 2023 to August 10, 2024.
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, 2020, interest charges and fees are
as follows:
Type of credit
Revolving credit facility
Letters of credit
Standby fee applicable to unused availability
LIBOR plus 1.625%
1.0833-1.625%
0.325%
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, 2020.
(iii)
Tasiast Loan
On December 16, 2019, the Company completed a definitive loan agreement for up to $300.0 million for Tasiast, with the
first drawdown of $200.0 million received on April 9, 2020, and the remaining $100.0 million is available to be drawn up to
March 2022.
The asset recourse loan has a term of eight years, maturing in December 2027, a floating interest rate of LIBOR plus a
weighted average margin of 4.38% and a standby fee applicable to unused availability of 1.60%, with semi-annual interest
payments to be made in June and December for the term of the loan, and first principal repayments due in June 2022.
As at December 31, 2020, the Company held $25.0 million in a separate bank account as required under the Tasiast loan
agreement. This cash, which is subject to fluctuations over time depending on the next scheduled principal and interest
payments, is required to remain in the bank account for the duration of the loan and is therefore recorded as restricted cash
in other long-term assets. See Note 7viii.
(iv)
Other
The maturity date for the Company’s $300.0 million Letter of Credit guarantee facility with Export Development Canada
(“EDC”) was extended to June 30, 2022, effective July 1, 2020. As part of the EDC renewal, the facility was expanded to allow
for use for other obligations beyond reclamation liabilities. Total fees related to letters of credit under this facility were
0.75% of the utilized amount. As at December 31, 2020, $228.9 million (December 31, 2019 - $227.8 million) was utilized
under this facility.
39 FS
39
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
In addition, at December 31, 2020, the Company had $175.6 million (December 31, 2019 - $184.7 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 and incur average fees of 0.74%.
As at December 31, 2020, $290.1 million (December 31, 2019 - $276.5 million) of surety bonds were outstanding with respect
to Kinross’ properties in the United States. These surety bonds were issued pursuant to arrangements with international
insurance companies and incur fees of 0.50%.
(v)
Changes in liabilities arising from financing activities
Balance as at January 1, 2020
Changes from financing cash flows
Debt issued
Debt repayments
Interest paid
Payment of lease liabilities
Other changes
Interest expense and accretion
Capitalized interest
Capitalized interest paid
Additions of lease liabilities
Accretion of lease liabilities
Other cash changes
Other non-cash changes
Balance as at December 31, 2020
(a)
Included in Accounts payable and accrued liabilities.
Balance as at January 1, 2019(a)
Changes from financing cash flows
Debt issued
Debt repayments
Interest paid
Payment of lease liabilities
Other changes
Interest expense and accretion
Capitalized interest
Capitalized interest paid
Additions of lease liabilities
Accretion of lease liabilities
Other cash changes
Other non-cash changes
Balance as at December 31, 2019
Long-term debt
and credit facilities
$
1,837.4
Lease
liabilities
$
54.9
Accrued interest
payable(a)
$
33.3
Total
$
1,925.6
950.0
(850.0)
-
-
1,937.4
-
-
-
(20.7)
34.2
-
-
(63.1)
-
(29.8)
950.0
(850.0)
(63.1)
(20.7)
1,941.8
$
$
-
$
-
-
-
-
(12.8)
(0.7)
(13.5)
1,923.9
$
-
$
-
-
38.2
3.0
-
(0.7)
40.5
74.7
$
$
$
Long-term debt
and credit facilities
$
1,735.0
Lease
liabilities(a)
$
42.9
Accrued interest
payable(b)
$
33.3
Total
$
1,811.2
300.0
(200.0)
-
-
1,835.0
-
-
-
(14.3)
28.6
-
-
(55.6)
-
(22.3)
300.0
(200.0)
(55.6)
(14.3)
1,841.3
$
$
-
$
-
-
-
-
-
2.4
2.4
1,837.4
$
-
$
-
-
22.9
2.9
-
0.5
26.3
54.9
$
86.6
49.1
(47.9)
38.2
3.0
(26.6)
(11.9)
90.5
2,032.3
74.0
47.4
(45.0)
22.9
2.9
(10.0)
(7.9)
84.3
1,925.6
86.6
49.1
(47.9)
-
-
(13.8)
(10.5)
63.5
33.7
74.0
47.4
(45.0)
-
-
(10.0)
(10.8)
55.6
33.3
$
$
(a) Total lease liabilities of $42.9 million was recognized upon the initial application of IFRS 16 as of January 1, 2019.
(b)
Included in Accounts payable and accrued liabilities.
40
FS 40
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
13.
LEASES
Current portion of lease liabilities
Long-term lease liabilities
December 31,
2020
December 31,
2019
$
$
28.4
46.3
74.7
16.0
38.9
54.9
$
$
The Company has a number of lease agreements involving office space, buildings, vehicles and equipment. Many of the
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. 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.
The following table summarizes total undiscounted lease liability maturities as at December 31, 2020:
Lease liabilities
$
88.7
$
28.6
Total
2021
Within 1 year
2021-2025
1 to 5 years
$
45.8
2026+
More than 5 years
$
14.3
The following table summarizes such lease payments that have been expensed for the years ended December 31, 2020 and
2019:
December 31,
2020
December 31,
2019
$
$
4.8
0.1
31.2
36.1
23.7
0.4
23.3
47.4
$
$
Leases with a term of 12 months or less
Leases of assets with underlying value, when new, of $5,000 or less
Leases with variable lease payments
41 FS
41
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
14.
PROVISIONS
Balance at January 1, 2020
Additions
Reductions
Reclamation spending
Accretion
Reclamation expense
Balance at December 31, 2020
Current portion
Non-current portion
$
$
$
Reclamation and
remediation
obligations (i)
866.1
45.0
(5.0)
(39.6)
23.0
6.6
896.1
Other
30.4
8.6
(10.2)
-
-
-
28.8
Total
896.5
53.6
(15.2)
(39.6)
23.0
6.6
924.9
$
$
$
58.7
837.4
$ 896.1 $ 28.8
63.8
5.1
23.7 861.1
$ 924.9
(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, 2020 is a $6.6 million expense (year ended December
31, 2019 - $11.9 million recovery) reflecting revised estimated fair values of costs that support the reclamation and
remediation obligations for properties that have been closed or are nearing the end of their operating life. The majority of
the expenditures are expected to occur between 2021 and 2044. The discount rates used in estimating the site restoration
cost obligation were between 0.4% and 13.3% for the year ended December 31, 2020 (year ended December 31, 2019 –
1.7% and 14.7%), and the inflation rates used were between 2.1% and 4.0% for the year ended December 31, 2020 (year
ended December 31, 2019 - 2.2% and 4.0%).
Regulatory authorities in certain jurisdictions require that security be provided to cover the estimated reclamation and
remediation obligations. As at December 31, 2020, letters of credit totaling $379.9 million (December 31, 2019 - $391.9
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 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, 2020, $289.3 million (December 31, 2019 - $275.7 million) of surety
bonds were outstanding as security over reclamation and remediation obligations with respect to Kinross’ assets in the
United States. The surety bonds were issued pursuant to arrangements with international insurance companies.
42
FS 42
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
15.
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, 2020 and 2019 is as follows:
Year ended
Year ended
December 31, 2020
December 31, 2019
Number of shares
(000's)
Amount
Number of shares
(000's)
Amount
Common shares
Balance at January 1,
Transfer to contributed surplus on reduction of stated capital(a)
Issued under share option and restricted share plans
Balance at end of period
Total common share capital
1,253,766
-
4,554
1,258,320
$
14,926.2
(10,473.4)
20.9
4,473.7
$
1,250,229
-
3,537
1,253,766
$
$
14,913.4
-
12.8
14,926.2
$
4,473.7
$
14,926.2
(a) Effective as of May 6, 2020, the shareholders of the Company approved a resolution to reduce the stated capital account of the common
shares, with a resulting addition to contributed surplus.
i. Dividends on common shares
The following summarizes dividends declared and paid during the year ended December 31, 2020:
Dividends declared during the periods:
Three months ended March 31, 2020
Three months ended June 30, 2020
Three months ended September 30, 2020
Three months ended December 31, 2020
Total
Dividends paid during the periods:
Three months ended March 31, 2020
Three months ended June 30, 2020
Three months ended September 30, 2020
Three months ended December 31, 2020
Total
Per share
$
-
-
0.03
0.03
-
$
-
-
0.06
Total
amount
$
-
-
37.7
37.8
75.5
$
-
$
-
-
75.5
75.5
$
On February 10, 2021 the Board of Directors declared a dividend of $0.03 per common share payable on March 18, 2021 to
shareholders of record on March 3, 2021.
There were no dividends declared but unpaid at December 31, 2020, and no dividends were declared or paid during the year
ended December 31, 2019.
43 FS
43
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
16.
SHARE-BASED PAYMENTS
Share-based compensation expense recorded during the years ended December 31, 2020 and 2019 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 expense
(i)
Share option plan
Years ended December 31,
2019
2020
$
$ 1.0
29.7
1.3
2.4
$ 34.4
$
2.4
24.6
1.1
2.1
30.2
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 share options outstanding at December 31, 2020 expire at various dates through
2026. The number of common shares available for the granting of options as at December 31, 2020 was 14.6 million.
The following table summarizes the status of the share option plan and changes during the years ended December 31, 2020
and 2019:
2020
2019
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
10,170
-
(2,566)
(808)
(1,195)
5,601
3,813
$
$
5.16
-
4.90
5.02
8.03
4.68
4.68
12,344
2,042
(1,577)
(741)
(1,898)
10,170
6,459
$
$
$
$
5.77
4.59
4.41
4.42
9.42
5.16
5.38
For the year ended December 31, 2020, the weighted average share price at the date of exercise was CDN$8.63 (December
31, 2019 - CDN$6.20).
The following table summarizes information about the stock options outstanding and exercisable at December 31, 2020:
Exercise price range in CDN$:
3.73 4.50
4.51 5.00
5.01 5.82
Options outstanding
Options exercisable
Weighted
average exercise
price
(CDN$)
Weighted
average
remaining
contractual life
(years)
Weighted
average exercise
price
(CDN$)
Weighted
average
remaining
contractual life
(years)
Number of
options
(000’s)
Number of
options
(000’s)
1,438
2,794
1,369
5,601
3.89
4.74
5.39
4.68
$
1.48
3.90
1.74
2.75
1,438
1,006
1,369
3,813
3.89
4.82
5.40
4.68
$
1.48
3.76
1.74
2.17
44
FS 44
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
No options were granted during the year ended December 31, 2020. 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 year ended
December 31, 2019:
Weighted average share price (CDN$)
Expected dividend yield
Expected volatility
Risk-free interest rate
Expected option life (in years)
Weighted average fair value per stock option granted (CDN$)
2019
$ 4.59
0.0%
44.8%
1.8%
4.5
$ 1.79
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 unit plans
The Company has a Restricted Share Plan and a Restricted Share Unit Plan (Cash-Settled) whereby RSUs and RPSUs may be
granted to employees, officers and contractors of the Company. Under the Restricted Share Plan, the aggregate number of
shares reserved for issuance may not exceed 50 million common shares. The number of common shares available for the
granting of restricted shares under this plan as at December 31, 2020 was 21.9 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 all RSUs and related changes during the years ended December 31, 2020
and 2019:
2020
2019
Number of units
(000's)
Weighted average
fair value
(CDN$/unit)
$
Balance at January 1
Granted
Redeemed
Forfeited
Outstanding at end of period
8,512
3,106
(4,199)
(944)
6,475
4.68
7.42
4.78
5.17
5.86
$
Number of units
(000's)
7,626
5,740
(3,888)
(966)
8,512
$
Weighted average
fair value
(CDN$/unit)
4.88
4.56
4.86
4.81
4.68
$
As at December 31, 2020, the Company had recognized a liability of $17.6 million (December 31, 2019 - $13.9 million) within
employee related accrued liabilities (see Note 7ix) in respect of its cash-settled RSUs.
(b) Restricted performance share units
The RPSUs are subject to certain vesting requirements and vest at the end of three years. The vesting requirements are
based on certain performance criteria over the vesting period established by the Company.
45 FS
45
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
The following table summarizes information about the RPSUs and related changes during the years ended December 31,
2020 and 2019:
2020
Number of units
(000's)
Weighted average
fair value
(CDN$/unit)
$
Balance at January 1
Granted
Redeemed
Forfeited
Outstanding at end of period
(iii)
Deferred share unit plan
4,937
1,436
(1,575)
(339)
4,459
5.16
7.76
5.32
5.02
5.95
$
2019
Number of units
(000's)
4,990
2,263
(1,702)
(614)
4,937
$
Weighted average
fair value
(CDN$/unit)
5.14
4.54
4.45
4.71
5.16
$
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, 2020 and 2019 are as follows:
DSUs granted (000's)
Weighted average grant-date fair value (CDN$/ unit)
Years ended December 31,
2019
2020
269
$ 5.39
203
$ 8.66
There were 1,422,650 DSUs outstanding, for which the Company had recognized a liability of $10.4 million, as at December
31, 2020 (December 31, 2019 - $7.8 million), within employee related accrued liabilities (see Note 7ix).
(iv)
Employee share purchase plan
The Company has an employee SPP whereby certain employees of the Company have the opportunity to contribute up to a
maximum of 10% of their annual base salary to purchase common shares. Since 2004, the Company has made contributions
equal to 50% of the employees' contributions.
The compensation expense related to the employee SPP for the year ended December 31, 2020 was $2.4 million (year ended
December 31, 2019 - $2.1 million).
46
FS 46
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
17.
EARNINGS PER SHARE
Basic and diluted net earnings attributable to common shareholders of Kinross for the year ended December 31, 2020 was
$1,342.4 million (year ended December 31, 2019 - $718.6 million).
Earnings 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 share units
Restricted performance share units
Diluted weighted average shares outstanding
Weighted average shares dilution adjustments - exclusions:(a)
Stock options(b)
Restricted share units
Restricted performance share units
Years ended December 31,
2019
2020
1,257,163
1,252,316
3,218
2,929
4,660
1,267,970
165
-
-
1,679
3,181
5,168
1,262,344
3,870
-
-
(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,
2020 and 2019, the average share price used was $7.00 and $3.97, respectively.
18.
INCOME TAX EXPENSE
The following table shows the components of the current and deferred tax expense:
Current tax expense
Current period
Adjustment for prior periods
Deferred tax expense
Origination and reversal of temporary differences
Impact of changes in tax rate
Change in unrecognized deductible temporary differences
Recognition of previously unrecognized tax losses
Total tax expense
Years ended December 31,
2020
2019
$
297.7
(75.8)
$
206.6
(1.0)
335.5
(0.8)
(73.4)
(43.4)
$
439.8
223.0
(1.6)
(156.3)
(24.0)
246.7
$
On March 27, 2020 the U.S. CARES Act was signed into law. Kinross benefited primarily from two significant changes in tax
law included in the U.S. CARES Act. First, $33.1 million of federal Alternative Minimum Tax (“AMT”) credits that were
previously expected to be received after 2020, were received in 2020. Second, the tax law amendments provided for new
tax loss carry-back opportunities that created additional federal AMT credits of $73.7 million, which were also refunded in
2020. The carry-back of U.S. net operating losses also resulted in a $25.4 million net tax benefit to tax expense, the result of
the 35% U.S. federal corporate income tax rates prior to 2018, compared to 21% post 2017.
47 FS
47
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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
Percentage of depletion
Difference in foreign tax rates and foreign exchange on deferred income taxes within income tax
expense
Change in unrecognized deferred tax assets
Over provided in prior periods
Income not subject to tax
Effect of non-taxable impairment reversals
Accounting expenses disallowed for tax
Taxes on repatriation of foreign earnings
Impact of CARES Act
AMT credit receivable due to U.S. Tax Reform
Other
Effective tax rate
i.
Deferred income tax
The following table summarizes the components of deferred income tax:
Deferred tax assets
Accrued expenses and other
Property, plant and equipment
Reclamation and remediation obligations
Inventory capitalization
Non-capital loss
Deferred tax liabilities
Accrued expenses and other
Reclamation and remediation obligations
Property, plant and equipment
Inventory capitalization
Deferred tax liabilities - net
2020
2019
26.5%
26.5%
1.7%
(0.9%)
5.5%
(0.4%)
-
(0.7%)
(6.9%)
1.7%
0.1%
(1.4%)
-
(0.7%)
24.5%
1.2%
(1.4%)
4.5%
(4.1%)
(0.4%)
(0.7%)
(4.2%)
2.3%
0.5%
-
(0.5%)
1.9%
25.6%
December 31,
2020
December 31,
2019
$
51.1
5.2
123.3
20.8
54.4
254.8
$
29.0
-
109.6
16.8
34.7
190.1
2.4
-
677.5
60.0
485.1
$
2.7
2.8
423.4
30.5
269.3
$
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:
Balance at the beginning of the period
Recognized in the statement of operations
Recognized in OCI
Balance at the end of the period
December 31,
2020
$
December 31,
2019
$
269.3
217.9
(2.1)
485.1
220.2
41.1
8.0
269.3
$
$
48
FS 48
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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, 2020 is $8.9 billion (December 31, 2019 - $7.3 billion).
Deferred tax assets have not been recognized in respect of the following items:
Deductible temporary differences
Tax losses
December 31,
2020
$
$
535.2
394.1
December 31,
2019
$
$
656.5
441.3
The tax losses not recognized expire as per the amount and years noted below. The deductible temporary differences do
not expire under current tax legislation. Deferred tax assets have not been recognized in respect of these items because it
is not probable that future taxable profit will be available against which the Company can utilize the benefits therefrom.
iii.
Non-capital losses (not recognized)
The following table summarizes the Company’s non-capital losses that can be applied against future taxable profit:
Country
Canada
United States(a)
Chile
Brazil
Russia
Mauritania
Barbados
Luxembourg
Other
Type
Net operating losses
Net operating losses
Net operating losses
Net operating losses
Net operating losses
Net operating losses
Net operating losses
Net operating losses
Net operating losses
Amount
$ 1,011.9
33.6
243.8
2.1
2.5
88.6
144.9
75.1
57.5
Expiry Date
2027 - 2040
2021 - 2033
No expiry
No expiry
No expiry
2021 - 2025
2020 - 2026
Various
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.
19.
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, shutdown and other non-operating assets (including Chulbatkan,
Kettle River-Buckhorn, La Coipa, Lobo-Marte, Maricunga, and Peak) and non-mining and other operations. These have been
aggregated into one reportable segment.
Finance income, finance expense, and other income - net are managed on a consolidated basis and are not allocated to
operating segments.
49 FS
49
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
i.
Operating segments
The following tables set forth operating results by reportable segment for the following years:
Year ended December 31, 2020:
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
(Reversals of) impairment charges - net
Total cost of sales
Gross profit
Other operating expense (income)
Exploration and business development
General and administrative
Operating earnings (loss)
Other income - net
Finance income
Finance expense
Earnings before tax
Year ended December 31, 2019:
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Reversal of impairment charges
Total cost of sales
Gross profit (loss)
Other operating expense (income)
Exploration and business development
General and administrative
Operating earnings (loss)
Other income - net
Finance income
Finance expense
Earnings before tax
Property, plant and equipment at:
December 31, 2020
Total assets at:
December 31, 2020
Fort Knox
Round
Mountain
Bald
Mountain
Paracatu
Kupol
Tasiast
Chirano
Operating segments
Non-operating
segments(a)
Corporate and
other(b),(c)
Total
$
422.9
565.5
330.5
960.7
904.6
718.0
295.1
16.1
$
4,213.4
251.3
97.2
-
348.5
74.4
2.6
4.8
-
67.0
$
$
219.6
49.6
-
269.2
296.3
3.9
5.6
-
286.8
155.9
128.3
-
284.2
46.3
5.2
6.5
-
34.6
358.9
183.5
-
542.4
418.3
11.3
-
-
407.0
304.5
123.5
27.8
455.8
448.8
32.5
5.8
-
410.5
235.7
191.8
(289.2)
138.3
579.7
73.4
2.0
-
504.3
196.1
58.2
(204.5)
49.8
245.3
(2.2)
9.4
-
238.1
3.7
10.2
(185.0)
(171.1)
187.2
59.8
58.4
117.9
(48.9)
1,725.7
842.3
(650.9)
1,917.1
2,296.3
186.5
92.5
117.9
1,899.4
7.4
4.3
(112.6)
1,798.5
$
$
$
Fort Knox
Round
Mountain
Bald
Mountain
Paracatu
Kupol
Tasiast
Chirano
Operating segments
Non-operating
segments(a)
Corporate and
other(b),(c)
Total
$
279.6
502.2
249.2
856.3
734.4
532.8
281.6
61.2
$
3,497.3
213.7
90.3
-
304.0
(24.4)
25.1
3.4
-
(52.9)
$
$
250.6
39.8
-
290.4
211.8
(0.3)
4.8
-
207.3
136.6
79.5
-
216.1
33.1
7.8
12.6
-
12.7
412.3
163.4
(200.7)
375.0
481.3
(10.9)
-
-
492.2
314.1
125.1
-
439.2
295.2
(8.9)
23.0
-
281.1
230.4
130.2
(161.1)
199.5
333.3
46.4
1.8
-
285.1
189.7
92.6
-
282.3
(0.7)
(0.9)
8.0
-
(7.8)
31.5
10.4
-
41.9
19.3
50.2
59.9
135.8
(226.6)
1,778.9
731.3
(361.8)
2,148.4
1,348.9
108.5
113.5
135.8
991.1
72.7
7.9
(107.9)
963.8
$
$
$
Operating segments
Fort Knox
Round
Mountain
Bald
Mountain
Paracatu
Kupol
Tasiast
Chirano
Non-operating
segments(a)
Corporate and
other(b),(c)
Total
$
488.7
774.6
635.7
1,718.8
271.2
2,277.3
332.7
1,154.5
$
7,653.5
$
719.7
1,028.0
857.1
2,226.3
896.9
2,699.8
429.8
2,075.6
$
10,933.2
Capital expenditures for year ended December 31, 2020(d)
$
150.1
180.6
129.1
161.3
32.9
302.2
23.4
82.3
$
1,061.9
Property, plant and equipment at:
December 31, 2019
Total assets at:
December 31, 2019
Operating segments
Fort Knox
Round
Mountain
Bald
Mountain
Paracatu
Kupol
Tasiast
Chirano
Non-operating
segments(a)
Corporate and
other(b),(c)
Total
$
421.1
653.7
685.1
1,748.1
332.8
1,924.8
152.9
421.5
$
6,340.0
$
633.2
846.8
862.5
2,024.0
1,053.4
2,312.5
255.0
1,088.6
$
9,076.0
Capital expenditures for year ended December 31, 2019(d)
$
149.3
241.5
249.3
113.5
39.7
370.5
16.4
27.1
$
1,207.3
(a) Non-operating segments include development and pre-development properties.
(b) Corporate and other includes corporate, shutdown and other non-operating assets (including Chulbatkan, Kettle River-Buckhorn, La
Coipa, Lobo-Marte, Maricunga, and Peak).
(c) The Company suspended mining and crushing activities at Maricunga in the third quarter of 2016, however there was continued
production through 2019 as ounces continued to be recovered from heap leach pads until the fourth quarter of 2019 when all processing
activities transitioned to care and maintenance. As such the Maricunga segment was reclassified as non-operating within the Corporate
and other segment in 2020. Accordingly, Corporate and other includes metal sales and operating (losses) earnings of Maricunga of
$16.1 million and $(12.5) million, respectively, for the year ended December 31, 2020 ($61.2 million and $10.9 million, respectively, for
the year ended December 31, 2019) as Maricunga continues to sell its remaining finished metals inventories.
(d) Segment capital expenditures are presented on an accrual basis. Additions to property, plant and equipment in the consolidated
statements of cash flows are presented on a cash basis.
50
FS 50
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
ii.
Geographic segments
The following table shows metal sales and property, plant and equipment by geographic region:
Metal sales
Years ended December 31,
2019
2020
Property, plant and equipment
As at December 31,
2020
2019
Geographic information(a)
United States
Russian Federation
Brazil
Chile
Mauritania
Ghana
Total
$
$
$
$
$
1,031.0
734.4
856.3
61.2
532.8
281.6
3,497.3
2,043.7
604.0
1,721.5
653.5
2,289.2
341.6
7,653.5
1,765.0
337.4
1,749.3
394.1
1,932.4
161.8
6,340.0
$
$
$
$
1,318.9
904.6
960.7
16.1
718.0
295.1
4,213.4
(a) Geographic location is determined based on location of the mining assets.
iii.
Significant customers
The following table represents sales to individual customers exceeding 10% of annual metal sales for the following periods:
Year ended December
31, 2020:
Fort Knox
Round
Mountain
Bald
Mountain Paracatu
Kupol
Tasiast
Chirano
Corporate
and other(a)
Total
Customer
1
2
3
% of total metal sales
$ 36.1
17.6
73.1
83.7
22.9
81.6
48.3
14.9
43.7
109.4
54.3
121.5
100.6
233.1
109.3
225.5
- 45.0
36.8
54.0
61.9
0.6
-
1.7
(a) The Corporate and other segment includes metal sales for Maricunga for the year ended December 31, 2020.
Year ended December 31,
2019:
Fort Knox
Round
Mountain
Bald
Mountain Paracatu
Kupol
Tasiast
Chirano
Corporate
and other(a)
Customer
1
2
3
% of total metal sales
$ 11.3 56.3 17.0 59.4
175.5 51.7 0.7
31.5 49.0 40.4 76.8 55.8 78.5 57.8 8.0
- 66.6 47.8 4.1
24.2 14.5 16.7
181.1
145.4
648.6
498.5
428.5
1,575.6
37.4%
Total
517.3
397.8
355.0
1,270.1
36.3%
$
$
(a) The Corporate and other segment includes metal sales for Maricunga for the year ended December 31, 2019.
The Company is not economically dependent on a limited number of customers for the sale of its product as gold can be
sold through numerous commodity market traders worldwide.
51 FS
51
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
20.
COMMITMENTS AND CONTINGENCIES
i.
Commitments
Purchase commitments
At December 31, 2020, the Company had future purchase commitments of approximately $992.6 million (December 31,
2019 - $1,104.3 million), of which $153.1 million relates to commitments for capital expenditures (December 31, 2019 -
$186.6 million).
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.
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 May 2015, the Chile environmental enforcement authority (the “SMA”) commenced an administrative proceeding against
Compania Minera Maricunga (“CMM”) alleging that pumping of groundwater to support the Maricunga operation had
impacted area wetlands and, on March 18, 2016, issued a resolution alleging that CMM’s pumping was impacting the “Valle
Ancho” wetland. Beginning in May 2016, the SMA issued a series of resolutions ordering CMM to temporarily curtail pumping
from its wells. In response, CMM suspended mining and crushing activities and reduced water consumption to minimal
levels. CMM contested these resolutions, but its efforts were unsuccessful and, except for a short period of time in July 2016,
CMM’s operations have remained suspended. On June 24, 2016, the SMA amended its initial sanction (the “Amended
Sanction”) and effectively required CMM to cease operations and close the mine, with water use from its wells curtailed to
minimal levels. On July 9, 2016, CMM appealed the sanctions and, on August 30, 2016, 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. On September 16, 2016, the Environmental Tribunal rejected CMM’s injunction
request and on August 7, 2017, upheld the SMA’s Amended Sanction and curtailment orders on procedural grounds. On
October 9, 2018, the Supreme Court affirmed the Environmental Tribunal’s ruling on procedural grounds and dismissed
CMM’s appeal.
On June 2, 2016, CMM was served with two separate lawsuits filed by the Chilean State Defense Counsel (“CDE”). Both
lawsuits, filed with the Environmental Tribunal, alleged that pumping from the Maricunga groundwater wells caused
environmental damage to area wetlands. One action relates to the “Pantanillo” wetland and the other action relates to the
Valle Ancho wetland (described above). Hearings on the CDE lawsuits took place in 2016 and 2017, and on November 23,
2018, the Tribunal ruled in favor of CMM in the Pantanillo case and against CMM in the Valle Ancho case. In the Valle Ancho
case, the Tribunal is requiring CMM to, among other things, submit a restoration plan to the SMA for approval. CMM has
appealed the Valle Ancho ruling to the Supreme Court. The CDE has appealed to the Supreme Court in both cases and is
asserting in the Valle Ancho matter that the Environmental Tribunal erred by not ordering a complete shutdown of
Maricunga’s groundwater wells. The Supreme Court has the discretion to decide whether it will hear any of the appeals and
has determined that it will hear the CDE’s appeal in the Pantanillo case. The Supreme Court has not yet determined whether
it will hear the appeals in the Valle Ancho case. The timing of any rulings by the Supreme Court on the parties’ respective
appeals remains uncertain.
52
FS 52
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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. On August 5, 2015, while working in another mine in the District known as the Gold King, the Environmental Protection
Agency (the “EPA”) caused a release of approximately three million gallons of contaminated water into a tributary of the
Animas River. In the third quarter of 2016, 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 challenged portions of the CERCLA listing in the United States Court of Appeals for District
of Columbia Circuit, but SGC’s petition for review was denied, as was its subsequent petition for rehearing. 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, as the EPA contends that Kinross has liability in the District under CERCLA and other statutes. In the second quarter
of 2018, the EPA issued to SGC a modified Unilateral Administrative Order for Remedial Investigation (“the Order”). In the
second quarter of 2019, pursuant to the original Order, the EPA issued to SGC a Modified Statement of Work, Work Plan and
Field Sampling Plan (together with the Order, the “Modified Order”). The Modified Order significantly altered and expanded
upon the work set out under the original Order. In the third quarter of 2019, after consulting with external legal counsel,
SGC provided notice to the EPA that the Modified Order is legally indefensible, does not address any imminent hazard and
SGC does not intend to comply with the Modified Order. On July 26, 2019, the EPA acknowledged receipt of SGC’s notice of
its intention not to comply with the Modified Order. The EPA indicated that it would undertake to complete the work ordered
under the Modified Order, and has subsequently completed some of that work. While SGC believes that it has good cause
not to comply with the Modified Order, failure to comply with the Modified Order may subject SGC to significant penalties,
damages and/or potential reimbursement of the cost of remediation work undertaken by the EPA.
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. New Mexico subsequently dropped the RCRA claim. The New
Mexico 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. In the third quarter of 2017, the State of Utah filed a complaint, which has been amended to name the EPA, 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 Utah 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. In the third quarter of 2018,
numerous members of the Navajo Nation initiated litigation against the EPA, SGC and Kinross, alleging negligence, gross
negligence and injury, including great spiritual and emotional distress. The complaint of the Navajo members seeks
compensatory and consequential damages, interest, punitive damages, attorneys’ fees and expenses. The New Mexico,
Navajo Nation, Utah and Navajo member cases have been centralized for coordinated or consolidated pretrial proceedings
in the United States District Court for the District of New Mexico. In the third quarter of 2019 (i) the EPA filed a cross claim
against SGC and Kinross seeking contribution, including contribution under CERCLA, for any damages awarded to New
Mexico, the Navajo Nation, or Utah as well as cost-recovery for the EPA’s response costs and remedial expenses incurred by
the EPA in the District pursuant to CERCLA or other laws; (ii) Environmental Restoration, LLC, an EPA contractor, filed a cross
claim against SGC seeking contribution under CERCLA and attorneys’ fees and expenses; and (iii) SGC filed a cross claim
against the United States and certain contractors of the United States seeking contribution and equitable indemnity and
making a due process claim against the United States. In the first quarter of 2020, the Court granted the United States
judgment on SGC’s due process cross claim and dismissed it.
In the fourth quarter of 2020, SGC and Kinross reached settlements with the Navajo Nation and the State of New Mexico,
which settlements will result in a dismissal with prejudice of all claims by these parties against SGC and Kinross. Although
these settlements are not subject to entry of a Consent Decree approving the settlements, a Consent Decree approving the
settlements will be lodged with the United States District Court for the District of New Mexico for public notice and comment.
Upon expiration of the comment period, the parties will move the Court for entry of the Consent Decree.
53 FS
53
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Income taxes
The Company operates in numerous countries around the world and accordingly is subject to, and pays taxes under the
various regimes in countries in which it operates. These tax regimes are determined under general corporate tax laws of the
country. The Company has historically filed, and continues to file, all required 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.
Kinross’ tax records, transactions and filing positions may be subject to examination by the tax authorities in the countries
in which the Company has operations. The tax authorities may review the Company’s transactions in respect of the year, or
multiple years, which they have chosen for examination. The tax authorities may interpret the tax implications of a
transaction in form or in fact, differently from the interpretation reached by the Company. In circumstances where the
Company and the tax authority cannot reach a consensus on the tax impact, there are processes and procedures which both
parties may undertake in order to reach a resolution, which may span many years in the future. Uncertainty in the
interpretation and application of applicable tax laws, regulations or the relevant sections of Mining Conventions by the tax
authorities, or the failure of relevant Governments or tax authorities to honour tax laws, regulations or the relevant sections
of Mining Conventions could adversely affect Kinross.
21.
RELATED PARTY TRANSACTIONS
There were no material related party transactions in 2020 and 2019 other than compensation of key management personnel.
Key management personnel
Compensation of key management personnel of the Company is as follows:
Years ended December 31,
2019
2020
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
$
$
7.4
8.8
1.1
17.3
7.3
8.5
10.2
26.0
$
$
Key management personnel are defined as the Senior Leadership Team and members of the Board of Directors.
22.
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
(Ghana) Limited, White Ice Ventures Limited and 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.
During the year ended December 31, 2020, a change was made to the guarantor subsidiaries such that Red Back Mining B.V.
is no longer a guarantor.
The following tables contain separate financial information related to the guarantor subsidiaries as set out in the
consolidating balance sheets as at December 31, 2020 and 2019 and the consolidating statements of operations, statements
of comprehensive income (loss) and statements of cash flows for the years ended December 31, 2020 and 2019. 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. As a result of the change in the guarantor subsidiaries
noted above, the consolidating balance sheet, consolidating statement of operations, comprehensive income (loss) and cash
flows for the comparative periods have been recast.
54
FS 54
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Consolidating balance sheet as at December 31, 2020
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable and other assets
Intercompany receivables
Current income tax recoverable
Inventories
Non-current assets
Property, plant and equipment
Goodwill
Long-term investments
Investment in joint venture
Intercompany investments
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 long-term debt and credit facilities
Current portion of provisions
Other current liabilities
Deferred payment obligation
Non-current liabilities
Long-term debt and credit facilities
Provisions
Long-term lease liabilities
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 interests
Total equity
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Guarantors
Non-
guarantors
Eliminations
Consolidated
$
115.5
$
366.8
$
-
$
482.3
$
728.6
$
-
$
1,210.9
5.7
45.3
1,553.5
0.7
584.1
2,556.1
3,619.0
158.8
-
-
-
13.7
610.1
-
3.9
743.2
76.1
-
103.0
-
5,779.7
18.9
3,024.9
-
-
-
5.7
59.0
8.0
63.3
-
-
(300.1)
1,863.5
4,293.7
(6,157.2)
-
-
0.7
588.0
29.2
484.9
-
-
13.7
122.3
-
29.9
1,072.9
(300.1)
2,999.2
5,607.7
(6,157.2)
$
2,449.7
-
-
-
-
3,695.1
3,958.4
158.8
103.0
-
1,538.6
228.6
3,089.6
-
-
10.0
18.3
-
-
-
-
18,247.8
(19,786.4)
308.6
5,242.1
2.7
-
(8,331.7)
-
7,653.5
158.8
113.0
18.3
-
537.2
-
2.7
3,241.6
(7,482.7)
209.7
66.2
-
-
(1.5)
-
$
9,745.8
$
9,851.4
$
(7,784.3)
$
11,812.9
$
33,395.6
$
(34,275.3)
$
10,933.2
$
96.2
$
202.0
$
-
$
298.2
$
181.0
$
-
$
479.2
102.4
-
499.7
-
13.9
-
712.2
1,240.2
13.3
17.3
0.5
1,165.8
-
3,149.3
871.8
112.6
-
30.6
27.8
-
(300.1)
-
-
-
-
-
674.1
112.6
499.7
30.6
41.7
-
1,244.8
(300.1)
1,656.9
-
461.1
25.9
37.4
276.8
322.7
-
-
-
-
(1.5)
-
2,368.7
(301.6)
1,240.2
474.4
43.2
37.9
1,441.1
322.7
5,216.4
5,483.1
(6,157.2)
1.9
-
33.2
8.0
141.5
5,848.7
184.0
386.7
3.1
64.5
6,890.6
165.1
-
-
-
-
-
(6,157.2)
-
-
-
-
(8,331.7)
-
13,542.7
(14,488.9)
-
114.5
499.7
63.8
49.7
141.5
1,348.4
1,424.2
861.1
46.3
102.4
-
487.8
4,270.2
$
4,473.7
$
1,786.7
$
(1,786.7)
$
4,473.7
$
19,619.5
$
(19,619.5)
$
4,473.7
10,709.0
(8,562.5)
(23.7)
6,596.5
-
6,596.5
2,187.6
3,527.4
(19.0)
(2,187.6)
(3,527.4)
19.0
10,709.0
(8,562.5)
(23.7)
7,943.3
(7,727.4)
(49.0)
7,727.4
49.0
(7,943.3)
10,709.0
7,482.7
(7,482.7)
6,596.5
19,786.4
(19,786.4)
-
-
-
66.5
-
7,482.7
(7,482.7)
6,596.5
19,852.9
(19,786.4)
(8,562.5)
(23.7)
6,596.5
66.5
6,663.0
Total liabilities and equity
$
9,745.8
$
9,851.4
$
(7,784.3)
$
11,812.9
$
33,395.6
$
(34,275.3)
$
10,933.2
55 FS
55
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Consolidating balance sheet as at December 31, 2019
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable and other assets
Intercompany receivables
Current income tax recoverable
Inventories
Non-current assets
Property, plant and equipment
Goodwill
Long-term investments
Investment in joint venture
Intercompany investments
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 long-term debt and credit facilities
Current portion of provisions
Other current liabilities
Deferred payment obligation
Non-current liabilities
Long-term debt and credit facilities
Provisions
Long-term lease liabilities
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 interests
Total equity
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Guarantors
Non-
guarantors
Eliminations
Consolidated
$
124.9
$
118.1
$
-
$
243.0
$
332.1
$
-
$
575.1
6.6
57.6
1,217.6
0.7
507.1
1,907.7
3,497.3
158.8
-
-
-
10.6
601.5
-
3.4
740.4
77.8
-
116.5
-
4,354.0
17.2
3,215.1
-
-
-
6.6
68.2
8.6
69.2
-
-
(280.7)
1,538.4
4,420.0
(5,958.4)
-
-
0.7
510.5
42.5
543.3
-
-
15.2
137.4
-
43.2
1,053.8
(280.7)
2,367.4
5,415.7
(5,958.4)
$
1,824.7
-
-
-
-
3,575.1
2,764.9
158.8
116.5
-
566.3
183.7
3,448.8
-
-
9.7
18.4
-
-
-
-
17,765.7
(18,332.0)
389.0
5,230.2
35.2
-
(8,679.0)
-
6,340.0
158.8
126.2
18.4
-
572.7
-
35.2
2,206.8
(5,994.5)
166.5
234.8
-
-
(1.1)
-
$
8,521.0
$
8,171.9
$
(6,276.3)
$
10,416.6
$
31,628.8
$
(32,969.4)
$
9,076.0
$
89.1
$
208.6
$
-
$
297.7
$
171.6
$
-
$
469.3
123.0
-
-
-
2.6
-
214.7
1,837.4
11.4
18.4
0.3
1,120.3
-
3,202.5
821.1
65.4
-
25.7
10.8
-
(280.7)
-
-
-
-
-
663.4
65.4
-
25.7
13.4
-
5,295.0
(5,958.4)
2.6
-
32.2
6.9
-
-
-
-
-
-
-
68.0
-
57.9
20.3
-
1,131.6
(280.7)
1,065.6
5,508.3
(5,958.4)
615.5
-
448.4
11.5
45.0
276.3
264.6
-
-
-
-
(1.1)
-
2,177.4
(281.8)
1,837.4
459.8
29.9
45.3
1,395.5
264.6
5,098.1
-
378.8
9.0
63.2
7,283.5
39.9
-
-
-
-
(8,679.0)
-
13,282.7
(14,637.4)
1,837.4
838.6
38.9
108.5
-
304.5
3,743.4
$
14,926.2
$
1,786.6
$
(1,786.6)
$
14,926.2
$
19,285.5
$
(19,285.5)
$
14,926.2
242.1
(9,829.4)
(20.4)
5,318.5
-
5,318.5
2,187.6
2,039.8
(19.5)
(2,187.6)
(2,039.8)
19.5
242.1
(9,829.4)
(20.4)
7,844.4
(8,744.0)
(53.9)
(7,844.4)
8,744.0
53.9
5,994.5
(5,994.5)
5,318.5
18,332.0
(18,332.0)
-
-
-
14.1
-
5,994.5
(5,994.5)
5,318.5
18,346.1
(18,332.0)
242.1
(9,829.4)
(20.4)
5,318.5
14.1
5,332.6
Total liabilities and equity
$
8,521.0
$
8,171.9
$
(6,276.3)
$
10,416.6
$
31,628.8
$
(32,969.4)
$
9,076.0
56
FS 56
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Consolidating statement of operations for the year ended December 31, 2020
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Reversals of impairment charges - net
Total cost of sales
Gross profit
Other operating expense
Exploration and business development
General and administrative
Operating earnings (loss)
Other income (expense) - net
Finance income
Finance expense
Earnings (loss) before tax
Income tax expense - net
Net earnings (loss)
Net earnings (loss) attributable to:
Non-controlling interests
Common shareholders
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Non-guarantors
Eliminations
Consolidated
$
2,225.4
$
2,229.0
$
(2,165.8)
$
2,288.6
$
1,924.8
$
-
$
4,213.4
2,181.9
5.0
-
2,186.9
38.5
8.3
25.6
80.4
(75.8)
22.8
980.8
458.9
-
1,439.7
789.3
23.1
17.4
2.7
746.1
7.7
(2,165.8)
-
-
996.9
463.9
-
(2,165.8)
1,460.8
-
-
-
-
-
-
827.8
31.4
43.0
83.1
670.3
30.5
882.7
82.9
(107.5)
728.8
378.4
(650.9)
456.3
1,468.5
155.1
49.5
34.8
1,229.1
188.2
-
143.5
(227.2)
-
-
-
-
-
-
-
-
-
(211.3)
(882.7)
(222.1)
222.1
2.7
(32.3)
(0.4)
0.4
80.6
(75.6)
1,341.2
1.2
1,740.4
(1,522.7)
1,558.9
1,333.6
(1,094.0)
(217.7)
-
(216.5)
(223.3)
-
$
1,342.4
$
1,522.7
$
(1,522.7)
$
1,342.4
$
1,110.3
$
(1,094.0)
$
1,358.7
$
-
$
-
$
-
$
-
$
16.3
$
-
$
16.3
$
1,342.4
$
1,522.7
$
(1,522.7)
$
1,342.4
$
1,094.0
$
(1,094.0)
$
1,342.4
1,725.7
842.3
(650.9)
1,917.1
2,296.3
186.5
92.5
117.9
1,899.4
7.4
-
4.3
(112.6)
1,798.5
(439.8)
Equity in earnings (losses) of intercompany investments
1,389.2
1,016.2
(1,522.7)
57 FS
57
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Consolidating statement of operations for the year ended December 31, 2019
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Reversals of impairment charges - net
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 intercompany investments
Finance income
Finance expense
Earnings (loss) before tax
Income tax expense - net
Net earnings (loss)
Net earnings (loss) attributable to:
Non-controlling interests
Common shareholders
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Non-guarantors
Eliminations
Consolidated
$
1,892.0
$
1,848.0
$
(1,794.7)
$
1,945.3
$
1,552.0
$
-
$
3,497.3
1,857.5
1,009.8
(1,794.5)
1,072.8
3.3
-
1,860.8
31.2
18.0
29.6
86.1
(102.5)
33.0
767.1
83.5
(63.7)
717.4
1.2
373.7
(200.7)
1,182.8
665.2
21.6
20.8
4.0
618.8
1.9
399.2
12.3
(44.7)
987.5
(163.1)
(0.2)
-
376.8
(200.7)
(1,794.7)
1,248.9
-
-
-
-
-
-
(824.4)
(0.4)
0.4
(824.4)
-
696.4
39.6
50.4
90.1
516.3
34.9
341.9
95.4
(108.0)
880.5
(161.9)
706.1
354.5
(161.1)
899.5
652.5
68.9
63.1
45.7
474.8
249.5
-
134.5
(221.9)
636.9
(84.8)
-
-
-
-
-
-
-
-
-
(211.7)
(341.9)
(222.0)
222.0
(553.6)
-
1,778.9
731.3
(361.8)
2,148.4
1,348.9
108.5
113.5
135.8
991.1
72.7
-
7.9
(107.9)
963.8
(246.7)
$
718.6
$
824.4
$
(824.4)
$
718.6
$
552.1
$
(553.6)
$
717.1
$
-
$
-
$
-
$
-
$
(1.5)
$
-
$
(1.5)
$
718.6
$
824.4
$
(824.4)
$
718.6
$
553.6
$
(553.6)
$
718.6
58
FS 58
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Consolidating statement of comprehensive income (loss) for the year ended December 31, 2020
Net earnings (loss)
$
1,342.4
$
1,522.7
$
(1,522.7)
$
1,342.4
$
1,110.3
$
(1,094.0)
$
1,358.7
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Guarantors
Non-
guarantors
Eliminations
Consolidated
Other comprehensive income (loss), net of tax:
Items that will not be reclassified to profit or loss:
Equity investments at fair value through other
comprehensive income - net change in fair value (a)
Items that are or may be reclassified to profit or loss in
subsequent periods:
Cash flow hedges - effective portion of changes in fair
value (b)
Cash flow hedges - reclassified out of accumulated other
comprehensive income (c)
Equity in other comprehensive income (loss) of
intercompany investments
Total comprehensive income (loss)
Attributable to non-controlling interests
Attributable to common shareholders
(a) Net of tax of
(b) Net of tax of
(c) Net of tax of
$
$
$
$
$
$
(5.9)
-
(1.9)
5.2
(2.6)
(0.7)
(25.8)
18.9
(6.9)
-
-
-
-
-
6.9
(5.9)
6.2
(27.7)
24.1
(9.5)
6.2
-
-
6.2
-
-
-
-
-
(6.2)
0.3
(27.7)
24.1
(3.3)
-
1,339.1
$
1,515.8
$
(1,515.8)
$
1,339.1
$
1,116.5
$
(1,100.2)
$
1,355.4
-
1,339.1
-
(0.7)
1.9
$
$
$
$
$
-
1,515.8
-
(11.8)
8.5
$
$
$
$
$
-
(1,515.8)
-
-
-
$
$
$
$
$
-
1,339.1
-
(12.5)
10.4
$
$
$
$
$
16.3
1,100.2
-
-
-
$
$
$
$
$
-
(1,100.2)
-
-
-
$
$
$
$
$
16.3
1,339.1
-
(12.5)
10.4
59 FS
59
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Consolidating statement of comprehensive income (loss) for the year ended December 31, 2019
Net earnings (loss)
$
718.6
$
824.4
$
(824.4)
$
718.6
$
552.1
$
(553.6)
$
717.1
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Guarantors
Non-
guarantors
Eliminations
Consolidated
Other comprehensive income (loss), net of tax:
Items that will not be reclassified to profit or loss:
Equity investments at fair value through other
comprehensive income - net change in fair value (a)
Items that are or may be reclassified to profit or loss in
subsequent periods:
Cash flow hedges - effective portion of changes in fair
value (b)
Cash flow hedges - reclassified out of accumulated other
comprehensive income (c)
Equity in other comprehensive income (loss) of
intercompany investments
Total comprehensive income (loss)
Attributable to non-controlling interests
Attributable to common shareholders
(a) Net of tax of
(b) Net of tax of
(c) Net of tax of
$
$
$
$
$
$
49.6
-
14.2
(0.3)
63.5
14.6
9.4
5.8
15.2
-
-
-
-
-
(15.2)
49.6
(0.6)
23.6
5.5
78.7
(0.6)
-
-
(0.6)
-
-
-
-
-
0.6
796.7
$
839.6
$
(839.6)
$
796.7
$
551.5
$
(553.0)
$
-
796.7
-
1.3
(0.1)
$
$
$
$
$
-
839.6
-
3.2
3.3
$
$
$
$
$
-
(839.6)
-
-
-
$
$
$
$
$
-
796.7
-
4.5
3.2
$
$
$
$
$
(1.5)
553.0
0.3
-
-
$
$
$
$
$
-
(553.0)
-
-
-
$
$
$
$
$
49.0
23.6
5.5
78.1
-
795.2
(1.5)
796.7
0.3
4.5
3.2
60
FS 60
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Consolidating statement of cash flows for the year ended December 31, 2020
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
Reversals of impairment charges - net
Equity in (earnings) losses of intercompany investments
Share-based compensation expense
Finance expense
Deferred tax expense (recovery)
Foreign exchange (gains) losses and other
Reclamation expense (recovery)
Changes in operating assets and liabilities:
Accounts receivable and other assets
Inventories
Accounts payable and accrued liabilities
Cash flow provided from (used in) operating activities
Income taxes paid
Net cash flow provided from (used in) operating activities
Investing:
Additions to property, plant and equipment
Interest paid capitalized to property, plant and equipment
Acquisitions
Net proceeds from the sale of (additions to) long-term
investments and other assets
Net proceeds from the sale of property, plant and equipment
(Increase) decrease in restricted cash - net
Interest received and other - net
Net cash flow provided from (used in) investing activities
Financing:
Proceeds from drawdown of debt
Repayment of debt
Interest paid
Payment of lease liabilities
Dividends received from (paid to) common shareholders and
subsidiaries
Dividend paid to non-controlling interest
Intercompany advances
Other - net
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
$
1,342.4
$
1,522.7
$
(1,522.7)
$
1,342.4
$
1,110.3
$
(1,094.0)
$
1,358.7
5.0
-
458.9
-
-
-
(1,389.2)
(1,016.2)
1,522.7
13.7
75.6
(1.2)
15.0
-
(2.4)
(0.5)
(5.5)
52.9
-
52.9
(3.2)
(0.1)
1.3
7.5
-
-
0.7
6.2
750.0
(850.0)
(63.1)
(1.8)
(72.0)
-
159.2
9.2
(68.5)
-
(9.4)
124.9
-
32.3
61.1
0.5
-
3.7
(61.9)
124.5
1,125.6
(88.4)
1,037.2
(554.0)
(26.8)
-
(21.9)
1.8
1.0
0.5
(599.4)
-
-
-
(10.8)
(48.4)
-
(129.9)
-
(189.1)
-
248.7
118.1
-
(0.4)
-
-
-
-
-
-
(0.4)
-
(0.4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.4
-
0.4
-
-
-
463.9
-
(882.7)
13.7
107.5
59.9
15.5
-
1.3
(62.4)
119.0
1,178.1
(88.4)
1,089.7
(557.2)
(26.9)
1.3
(14.4)
1.8
1.0
1.2
(593.2)
750.0
(850.0)
(63.1)
(12.6)
(120.4)
-
29.7
9.2
(257.2)
-
239.3
243.0
378.4
(650.9)
-
-
227.2
158.0
(3.7)
6.6
(122.2)
55.6
160.0
1,319.3
(18.0)
1,301.3
(358.9)
(21.0)
(268.3)
8.5
6.6
(24.5)
1.7
(655.9)
200.0
-
-
(8.1)
(166.4)
(6.0)
(251.8)
(11.6)
(243.9)
(5.0)
396.5
332.1
-
-
882.7
-
(222.1)
-
-
-
-
-
-
(433.4)
-
(433.4)
-
-
-
-
-
-
-
-
-
-
-
-
211.3
-
222.1
-
433.4
-
-
-
842.3
(650.9)
-
13.7
112.6
217.9
11.8
6.6
(120.9)
(6.8)
279.0
2,064.0
(106.4)
1,957.6
(916.1)
(47.9)
(267.0)
(5.9)
8.4
(23.5)
2.9
(1,249.1)
950.0
(850.0)
(63.1)
(20.7)
(75.5)
(6.0)
-
(2.4)
(67.7)
(5.0)
635.8
575.1
$
115.5
$
366.8
$
-
$
482.3
$
728.6
$
-
$
1,210.9
61 FS
61
2020 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2020 and 2019
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Consolidating statement of cash flows for the year ended December 31, 2019
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
Reversals of impairment charges - net
Equity in (earnings) losses of intercompany investments
Share-based compensation expense
Finance expense
Deferred tax expense (recovery)
Foreign exchange (gains) losses and other
Reclamation expense (recovery)
Changes in operating assets and liabilities:
Accounts receivable and other assets
Inventories
Accounts payable and accrued liabilities
Cash flow provided from (used in) operating activities
Income taxes paid
Net cash flow provided from (used in) operating activities
Investing:
Additions to property, plant and equipment
Interest paid capitalized to property, plant and equipment
Acquisitions
Net proceeds from the sale of (additions to) long-term
investments and other assets
Net proceeds from the sale of property, plant and
equipment
(Increase) decrease in restricted cash - net
Interest received and other - net
Financing:
Proceeds from drawdown of debt
Repayment of debt
Interest paid
Payment of lease liabilities
Dividends received from (paid to) common shareholders and
subsidiaries
Dividend paid to non-controlling interest
Intercompany advances
Other - net
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
Net cash flow provided from (used in) investing activities
108.6
(717.5)
Guarantors
Kinross Gold
Corp.
Guarantor
Subsidiaries
Guarantor
Adjustments
Total
Guarantors
Non-
guarantors
Eliminations
Consolidated
$
718.6
$
824.4
$
(824.4)
$
718.6
$
552.1
$
(553.6)
$
717.1
3.3
-
(767.1)
14.3
63.7
(1.2)
(9.8)
-
(1.2)
(0.8)
4.1
23.9
-
23.9
(30.4)
(0.3)
-
373.7
(200.7)
(399.2)
-
44.7
65.8
(10.4)
-
(14.4)
12.6
75.0
771.5
(51.7)
719.8
(663.8)
(32.6)
-
126.8
(22.6)
12.0
-
0.5
0.3
(0.4)
1.6
300.0
(200.0)
(55.6)
(2.0)
-
-
(83.6)
3.9
(37.3)
-
95.2
29.7
-
-
-
(8.6)
(22.3)
-
57.5
-
26.6
-
28.9
89.2
(0.2)
-
824.4
-
(0.4)
-
-
-
-
0.2
-
(0.4)
-
(0.4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.4
-
0.4
-
-
-
376.8
(200.7)
(341.9)
14.3
108.0
64.6
(20.2)
-
(15.6)
12.0
79.1
795.0
(51.7)
743.3
(694.2)
(32.9)
-
354.5
(161.1)
-
-
221.9
(23.5)
(33.0)
(11.9)
(48.9)
41.8
86.8
978.7
(63.4)
915.3
(366.0)
(12.1)
(30.0)
104.2
(32.6)
12.3
(0.4)
2.1
19.6
(2.1)
5.5
(608.9)
(417.7)
300.0
(200.0)
(55.6)
(10.6)
(22.3)
-
(25.7)
3.9
(10.3)
-
124.1
118.9
-
-
-
(3.7)
(189.4)
(5.0)
(196.3)
(3.9)
(398.3)
2.7
102.0
230.1
-
-
341.9
-
(222.0)
-
-
-
-
-
-
(433.7)
-
(433.7)
-
-
-
-
-
-
-
-
-
-
-
-
211.7
-
222.0
-
433.7
-
-
-
731.3
(361.8)
-
14.3
107.9
41.1
(53.2)
(11.9)
(64.5)
53.8
165.9
1,340.0
(115.1)
1,224.9
(1,060.2)
(45.0)
(30.0)
71.6
31.9
(2.5)
7.6
(1,026.6)
300.0
(200.0)
(55.6)
(14.3)
-
(5.0)
-
-
25.1
2.7
226.1
349.0
$
124.9
$
118.1
$
-
$
243.0
$
332.1
$
-
$
575.1
62
FS 62
2020 ANNUAL REPORT KINROSS GOLD
MINERAL RESERVE AND MINERAL RESOURCE STATEMENT
PROVEN AND PROBABLE MINERAL RESERVES
Gold
Proven and Probable Mineral Reserves (1, 2, 3, 4, 5, 6)
Kinross Gold Corporation’s Share at December 31, 2020
Property
Location
Kinross
Interest
(%)
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)
NORTH AMERICA
Bald Mountain
Fort Knox
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Lobo-Marte
Paracatu
Subtotal
AFRICA
Chirano
Tasiast
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Gold
USA
USA
USA
100.0%
100.0%
100.0%
Chile
Chile
Brazil
100.0%
100.0%
100.0%
Ghana
Mauritania
90.0%
100.0%
Russia
Russia
100.0%
100.0%
–
36,440
4,979
41,419
370
–
519,250
519,620
5,775
44,810
50,585
1,275
794
2,069
613,693
–
0.4
0.5
0.4
0.5
–
0.4
0.4
1.7
1.2
1.3
–
425
81
58,647
193,575
84,189
506
336,411
5
–
7,221
16,969
146,771
72,309
7,226
236,049
314
1,797
9,926
66,664
2,111
76,590
0.6
0.3
0.8
0.5
1.6
1.4
0.3
1.1
2.1
2.1
2.1
1,143
2,046
2,164
58,647
230,015
89,168
5,353
377,830
866
6,394
802
17,339
146,771
591,559
8,062
755,669
660
4,533
15,701
111,474
5,193
127,175
4.1
10.1
6.4
0.5
167
257
424
149
4,938
5,087
10,267
654,137
11.7
6.7
6.8
0.9
56
1,057
1,113
1,424
5,732
7,156
19,721
1,267,830
0.6
0.3
0.8
0.5
1.6
1.4
0.4
0.6
1.9
1.8
1.8
4.9
7.1
6.7
0.7
1,143
2,471
2,245
5,859
871
6,394
8,023
15,288
974
6,330
7,304
223
1,314
1,537
29,988
Silver
Proven and Probable Mineral Reserves (1, 2, 3, 4, 5, 6)
Kinross Gold Corporation’s Share at December 31, 2020
Property
Location
Kinross
Interest
(%)
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)
NORTH AMERICA
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
USA
100.0%
Chile
100.0%
Russia
Russia
100.0%
100.0%
–
–
370
370
1,275
794
2,069
2,439
–
–
56.7
56.7
8.1
101.5
43.9
45.9
–
–
675
675
332
2,590
2,922
6,945
6,945
6.3
6.3
1,414
1,414
6,945
6,945
6.3
6.3
1,414
1,414
16,969
73.7
40,196
17,339
73.3
40,871
16,969
73.7
40,196
17,339
73.3
40,871
149
4,938
5,087
33.4
87.1
160
13,835
85.6
13,995
1,424
5,732
7,156
10.8
89.1
492
16,425
73.5
16,917
3,597
29,001
59.6
55,605
31,440
58.6
59,202
63
2020 ANNUAL REPORT KINROSS GOLD
MEASURED AND INDICATED MINERAL RESOURCES
Gold
Measured and Indicated Mineral Resources (Excludes Proven and Probable Mineral Reserves) (2, 3, 4, 5, 6, 9, 10, 11)
Kinross Gold Corporation’s Share at December 31, 2020
Property
Location
Kinross
Interest
(%)
100.0%
100.0%
100.0%
70.0%
100.0%
USA
USA
USA
USA
USA
Chile
Chile
Chile
Brazil
100.0%
100.0%
100.0%
100.0%
Ghana
Mauritania
90.0%
100.0%
Russia
Russia
Russia
100.0%
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)
9,150
13,496
–
331
–
22,977
4,030
–
35,555
138,606
178,191
4,667
4,826
9,493
–
3
279
282
0.8
0.2
–
6.4
–
0.5
1.8
–
0.8
0.3
0.4
1.8
0.7
1.2
–
5.9
11.4
11.4
233
103
–
68
–
197,315
253,524
1,133
6,110
173,376
404
631,458
235
–
905
1,225
18,205
98,925
312,171
170,464
2,365
599,765
269
109
378
–
1
102
7,171
70,445
77,616
105,708
57
1,575
103
107,340
210,943
0.5
3,250
1,416,179
0.5
0.3
6.5
4.0
0.7
0.5
1.6
0.7
0.6
0.3
0.6
1.6
1.2
1.2
3,359
2,486
236
778
3,734
206,465
267,020
1,133
6,441
173,376
10,593
654,435
926
2,167
6,166
1,749
22,235
98,925
347,726
309,070
11,008
777,956
359
2,644
11,838
75,271
3,003
87,109
1.2
10.4
7.9
1.3
0.6
4,167
19
398
105,708
60
1,854
4,584
107,622
29,188
1,627,122
0.5
0.3
6.5
4.1
0.7
0.5
1.6
0.7
0.6
0.3
0.5
1.7
1.1
1.2
1.2
10.1
8.4
1.4
0.6
3,592
2,589
236
846
3,734
10,997
1,161
2,167
7,071
2,974
13,373
628
2,753
3,381
4,167
20
500
4,687
32,438
NORTH AMERICA
Bald Mountain
Fort Knox
Kettle River
Manh Choh (formerly
Peak Gold) 12
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Lobo-Marte
Maricunga
Paracatu
Subtotal
AFRICA
Chirano
Tasiast
Subtotal
RUSSIA
Chulbatkan 13
Dvoinoye
Kupol
Subtotal
Total Gold
Silver
Measured and Indicated Mineral Resources (Excludes Proven and Probable Mineral Reserves) (2, 3, 4, 5, 6, 9, 10, 11)
Kinross Gold Corporation’s Share at December 31, 2020
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)
USA
USA
70.0%
100.0%
Chile
100.0%
Russia
Russia
100.0%
100.0%
331
–
331
4,030
4,030
3
279
282
16.7
–
16.7
29.9
29.9
178
–
178
6,110
4,707
10,817
14.1
8.3
11.5
2,762
1,254
6,441
4,707
4,016
11,148
14.2
8.3
11.7
2,940
1,254
4,194
3,880
18,205
42.4
24,824
22,235
40.2
28,704
3,880
18,205
42.4
24,824
22,235
40.2
28,704
6.1
139.9
1
1,255
138.3
1,256
57
1,575
1,632
21.2
97.9
95.2
39
4,959
4,998
60
1,854
20.3
104.2
40
6,214
1,914
101.6
6,254
4,643
35.6
5,314
30,654
34.3
33,838
35,297
34.5
39,152
NORTH AMERICA
Manh Choh (formerly
Peak Gold) 12
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
64
2020 ANNUAL REPORT KINROSS GOLD INFERRED MINERAL RESOURCES
Gold
Inferred Mineral Resources (2, 3, 4, 5, 6, 9, 10, 11)
Kinross Gold Corporation’s Share at December 31, 2020
Property
NORTH AMERICA
Bald Mountain
Fort Knox
Kettle River
Manh Choh (formerly Peak Gold) 12
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Lobo-Marte
Maricunga
Paracatu
Subtotal
AFRICA
Chirano
Tasiast
Subtotal
RUSSIA
Chulbatkan 13
Dvoinoye
Kupol
Subtotal
Total Gold
Silver
Inferred Mineral Resources (2, 3, 4, 5, 6, 9, 10, 11)
Kinross Gold Corporation’s Share at December 31, 2020
Property
NORTH AMERICA
Manh Choh (formerly Peak Gold) 12
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
Kinross
Interest
(%)
100.0%
100.0%
100.0%
70.0%
100.0%
Location
USA
USA
USA
USA
USA
Chile
Chile
Chile
Brazil
100.0%
100.0%
100.0%
100.0%
Ghana
Mauritania
90.0%
100.0%
Russia
Russia
Russia
100.0%
100.0%
100.0%
Inferred
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
47,776
128,115
1,816
941
96,437
275,085
2,668
13,974
153,276
91,262
261,180
5,695
4,392
10,087
6,022
58
1,052
7,132
553,484
0.5
0.3
6.5
2.7
0.5
0.4
1.3
0.6
0.6
0.3
0.5
2.1
1.9
2.0
0.9
24.1
8.0
2.1
0.5
695
1,057
378
81
1,563
3,774
108
269
2,782
914
4,073
376
267
643
173
45
272
490
8,980
Kinross
Interest
(%)
Location
Inferred
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
USA
USA
70.0%
100.0%
941
490
1,431
Chile
100.0%
2,668
2,668
16.1
3.6
11.8
35.4
35.4
486
57
543
3,036
3,036
Russia
Russia
100.0%
100.0%
58
1,052
22.7
148.4
43
5,020
1,110
141.8
5,063
5,209
51.6
8,642
65
2020 ANNUAL REPORT KINROSS GOLD
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 $1,200 per ounce and a
silver price of $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 based on Kinross’ interest and are
estimated based on the following foreign exchange rates:
Russian Rouble to United States Dollars: 60.00
Chilean Peso to United States Dollars: 725.00
Brazilian Real to United States Dollars: 3.75
Ghanaian Cedi to United States Dollars: 5.50
Mauritanian Ouguiya to United States Dollars: 35.00
(2) The Company’s mineral reserve and mineral resource estimates as at December 31, 2020 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.
(3) 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”,
“probable mineral reserve”, “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are Canadian mining
terms as defined in accordance with NI 43-101 and the CIM Definition Standards. These definitions differ materially from the definitions in the United States Securities
and Exchange Commission (“SEC”) SEC Industry Guide 7 under the United States Securities Act of 1933, as amended. Under SEC Industry 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 Industry Guide 7. U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories
will ever be upgraded to SEC Industry Guide 7 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.
The SEC has adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with
the SEC under the Securities Exchange Act of 1934 (“Exchange Act”). These amendments became effective February 25, 2019 (the “SEC Modernization Rules”) and,
commencing for registrants with their first fiscal year beginning on or after January 1, 2021, the SEC Modernization Rules replace the historical property disclosure
requirements included in SEC Industry Guide 7. As a foreign private issuer that files its annual report on Form 40-F with the SEC pursuant to the multi-jurisdictional
disclosure system, the Company is not required to provide disclosure on its mineral properties under the SEC Modernization Rules and will continue to provide
disclosure under NI 43-101 and the CIM Definition Standards. If the Company ceases to be a foreign private issuer or loses its eligibility to file its annual report on
Form 40-F pursuant to the multi-jurisdictional disclosure system, then the Company will be subject to the SEC Modernization Rules which differ from the requirements
of NI 43-101 and the CIM Definition Standards. The SEC Modernization Rules include the adoption of terms describing mineral reserves and mineral resources that
are “substantially similar” to the corresponding terms under the CIM Definition Standards. As a result of the adoption of the SEC Modernization Rules, the SEC
now recognizes estimates of “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources”. In addition, the SEC has amended
its definitions of “proven mineral reserves” and “probable mineral reserves” to be “substantially similar” to the corresponding CIM Definitions. U.S. investors are
cautioned that while the above terms are “substantially similar” to CIM Definitions, there are differences in the definitions under the SEC Modernization Rules and the
CIM Definition Standards. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report as “proven mineral reserves”,
“probable mineral reserves”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under NI 43-101 would be the same had
the Company prepared the mineral reserve or mineral resource estimates under the standards adopted under the SEC Modernization Rules. U.S. investors are also
cautioned that while the SEC recognizes “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under the Modernization
Rules, investors should not assume that any part or all of the mineralization in these categories will ever be converted into a higher category of mineral resources or
into mineral reserves. Mineralization described using these terms has a greater amount of uncertainty as to its existence and feasibility than mineralization that has
been characterized as reserves. Accordingly, investors are cautioned not to assume that any measured mineral resources, indicated mineral resources, or inferred
mineral resources that the Company reports are or will be economically or legally mineable. Further, “inferred mineral resources” have a greater amount of uncertainty
as to their existence and as to whether they can be mined legally or economically. Therefore, U.S. investors are also cautioned not to assume that all or any part of
the “inferred mineral resources” exist. Under Canadian securities laws, estimates of “inferred mineral resources” may not form the basis of feasibility or pre-feasibility
studies, except in rare cases.
For the above reasons, the mineral reserve and mineral resource estimates and related information in this Annual Report 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 securities laws and the rules and
regulations thereunder.
(4) The Company’s mineral resource and mineral reserve estimates were prepared under the supervision of and verified by Mr. John Sims, who is a qualified person as
defined by NI 43-101. Mr. Sims was an officer of Kinross until December 31, 2020. Mr. Sims remains the Company’s qualified person as an external consultant.
(5) 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.
(6) Rounding of values to the 000s may result in apparent discrepancies.
(7) Round Mountain refers to the Round Mountain project, which includes the Round Mountain deposit and the Gold Hill deposit. The Round Mountain deposit does not
contain silver and all silver resources at Round Mountain are contained exclusively within the Gold Hill deposit. Disclosure of gold mineral reserves and mineral resources
reflect both the Round Mountain deposit and the Gold Hill deposit. Disclosure of silver mineral reserves and mineral resources reflect only the Gold Hill deposit.
(8)
Includes mineral resources and mineral reserves from the Puren deposit in which the Company holds a 65% interest, as well as mineral resources from the Catalina
deposit, in which the Company holds a 75% interest.
(9) Mineral resources are exclusive of mineral reserves.
(10) Unless otherwise noted, the Company’s mineral resources are estimated using appropriate cut-off grades based on a gold price of $1,600 per ounce and a silver price
of $20.00 per ounce. Foreign exchange rates for estimating mineral resources were the same as for mineral reserves. The mineral resource estimates for the Gil deposit
at Fort Knox assume a $1,400 per ounce gold price. The mineral resource estimates for Manh Choh (formerly Peak Gold) assume a $1,400 per ounce gold price and are
based on the 2018 preliminary economic assessment.
(11) 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.
(12) Peak Gold, now referred to as Manh Choh, was acquired by Kinross effective September 30, 2020.
(13) Chulbatkan was acquired by Kinross effective January 16, 2020.
66
2020 ANNUAL REPORT KINROSS GOLD
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 levels 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.
‘Modifying Factors’ are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted
to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors.
67
2020 ANNUAL REPORT KINROSS GOLD Summarized Five-Year Review (1, 3, 6, 7, 8, 10, 11)
(in millions, except per share amounts)
Operating results from continuing operations
2020
2019
2018
2017
2016
Production (attributable) (Au eq. oz.)
2,366,648
2,507,659
2,452,398
2,673,533
2,789,150
Metal sales
Production cost of sales (attributable) (per Au eq. oz.)
Attributable all-in sustaining cost per equivalent ounce sold
Net earnings (loss) from continuing operations attributable to
common shareholders
Adjusted net earnings attributable to common shareholders
Net cash flow provided from operating activities
Adjusted operating cash flow
Capital expenditures
Free cash flow
Financial position
Cash and cash equivalents
Total assets
Long-term debt and credit facilities (including current portion)
Common shareholders’ equity
Per share data
Net earnings (loss) per share from continuing operations
attributable to common shareholders – basic
Adjusted net earnings (loss) per share attributable to
common shareholders
Market
Average realized gold price per ounce
2020 Kinross Share Trading Data
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
4,213.4
723
987
1,342.4
966.8
1,957.6
1,912.7
916.1
1,041.5
1,210.9
10,933.2
1,923.9
6,596.5
$
$
$
$
$
$
$
$
$
$
$
$
$
3,497.3 $
3,212.6 $
3,303.0 $
3,472.0
706 $
983 $
734 $
965 $
669 $
954 $
712
984
718.6 $
(23.6) $
445.4 $
(104.0)
422.9 $
128.1 $
178.7 $
93.0
1,224.9 $
788.7 $
951.6 $
1,099.2
1,201.5 $
874.2 $
1,166.7 $
1,060.2 $
1,005.2 $
879.6 $
164.7 $
(216.5) $
72.0 $
926.7
612.0
487.2
575.1 $
349.0 $
1,025.8 $
827.0
9,076.0 $
8,063.8 $
8,157.2 $
7,979.3
1, 837.4 $
1,735.0 $
1,732.6 $
1,733.2
5,318.5 $
4,506.7 $
4,583.6 $
4,145.5
1.07
$
0.57 $
(0.02) $
0.36 $
(0.08)
0.77
$
0.34 $
0.10 $
0.14 $
0.08
1,774
$
1,392 $
1,268 $
1,260 $
1,249
High
Low
$
$
$
$
$
$
$
$
8.30
10.64
13.59
12.38
6.27
7.67
10.32
9.42
$
$
$
$
$
$
$
$
4.00
5.67
9.47
8.75
2.72
4.00
7.00
6.85
TSX (Cdn dollars)
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
NYSE (U.S. dollars)
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
68
2020 ANNUAL REPORT KINROSS GOLD
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) “Letter to Shareholders”,
“2020 Achievements” as well as statements with respect to our guidance for production, production costs of sales, cash flow, free
cash flow, all-in sustaining cost of sales, and capital expenditures; the declaration, payment and sustainability of the Company’s
dividends; optimization of mine plans; identification of additional resources and reserves; the schedules and budgets for the
Company’s development projects; mine life and any potential extensions; the Company’s capital reinvestment program and
continuous improvement initiatives and project performance or outperformance, 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, operating costs; capital
expenditures, costs and timing of the development of projects and new deposits, estimates and the realization of such estimates
(such as mineral or gold reserves and resources or mine life), success of exploration, development and mining, currency fluctuations,
capital requirements, project studies, government regulation permit applications and conversions, restarting suspended or
disrupted operations; environmental risks and proceedings; and resolution of pending litigation. The words “anticipate”,
“continue”, “estimates”, “expects”, “forecast”, “guidance”, “intends”, “outlook”, “progress”, “potential”, “prioritize”, 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
Management’s Discussion and Analysis (“MD&A”) for the year ended December 31, 2020, and the most recently filed Annual
Information Form as well as: (1) there being no significant disruptions affecting the operations of the Company, whether due to
extreme weather events (including, without limitation, excessive or lack of rainfall; in particular, the potential for further production
curtailments at Paracatu resulting from insufficient rainfall and the operational challenges at Fort Knox and Bald Mountain resulting
from excessive rainfall, which can impact costs and/or production) and other or related natural disasters, labour disruptions
(including but not limited to strikes or workforce reductions), supply disruptions, power disruptions, damage to equipment, pit wall
slides (in particular that the effects of the pit wall slides at Fort Knox and Round Mountain are consistent with the Company’s
expectations) or otherwise; (2) permitting, development, operations and production from the Company’s operations and
development projects 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 operation of Tasiast, and the
development and operation of the 24k Project; operation of the SAG mill at Tasiast; land acquisitions and permitting for the
construction and operation of the new tailings facility, water and power supply and continued operation of the tailings reprocessing
facility at Paracatu; the Lobo-Marte project; commencement of production at the La Coipa project; approval of an enhanced mine
plan at Fort Knox; in each case in a manner consistent with the Company’s expectations; and the successful completion of
exploration consistent with the Company’s expectations at the Company’s projects including Kupol and Chirano; (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 or any related sanctions and any
other similar restrictions or penalties imposed, or actions taken, by any government, including but not limited to amendments to the
mining laws, and potential power rationing and tailings facility regulations in Brazil, potential amendments to water laws and/or
other water use restrictions and regulatory actions in Chile, new dam safety regulations, potential amendments to minerals and
mining laws and energy levies laws, the enforcement of labour laws in Ghana, new regulations relating to work permits, potential
amendments to customs and mining laws (including but not limited to amendments to the VAT) and the potential application of
revisions to the tax code in Mauritania, the European Union’s General Data Protection Regulation or similar legislation in other
jurisdictions and potential amendments to and enforcement of tax laws in Russia, Ghana and Mauritania (including, but not limited
to, the interpretation, implementation, application and enforcement of any such laws and amendments thereto), and the impact of
any trade tariffs being consistent with Kinross’ current expectations; (4) the completion of studies, including optimization studies,
improvement studies; scoping studies and pre-feasibility and feasibility studies, on the timelines currently expected and the results
of those studies being consistent with Kinross’ current expectations, including the completion of the Lobo-Marte and Manh Choh
feasibility studies and Udinsk pre-feasibility study; (5) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso,
69
2020 ANNUAL REPORT KINROSS GOLD Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately consistent with current levels; (6)
certain price assumptions for gold and silver; (7) prices for diesel, natural gas, fuel oil, electricity and other key supplies being
approximately consistent with the Company’s expectations; (8) production and cost of sales forecasts for the Company meeting
expectations; (9) the accuracy of: the current mineral reserve and mineral resource estimates of the Company including the
accuracy and reliability of the pre-acquisition mineral resource estimates of the Manh Choh project, formerly Peak Gold, and
Kinross’ analysis thereof being consistent with expectations (including but not limited to ore tonnage and ore grade estimates),
future mineral resource and mineral reserve estimates being consistent with preliminary work undertaken by the Company, mine
plans for the Company’s current and future mining operations, and the Company’s internal models; (10) labour and materials costs
increasing on a basis consistent with Kinross’ current expectations; (11) 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 and without material amendment or formal dispute (including without limitation the application of tax,
customs and duties exemptions and royalties); (12) goodwill and/or asset impairment potential; (13) 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; (14) access to capital markets, including but not limited to maintaining our current credit ratings
consistent with the Company’s current expectations; (15) that the Brazilian power plants will operate in a manner consistent with our
expectations; (16) that drawdown of remaining funds under the Tasiast project financing will proceed in a manner consistent with
our current expectations; (17) potential direct or indirect operational impacts resulting from infectious diseases or pandemics such
as the ongoing COVID-19 pandemic; (18) the effectiveness of preventative actions and contingency plans put in place by the
Company to respond to the COVID-19 pandemic, including, but not limited to, social distancing, travel restrictions, business
continuity plans, and efforts to mitigate supply chain disruptions; (19) changes in national and local government legislation or other
government actions, particularly in response to the COVID-19 outbreak; (20) litigation, regulatory proceedings and audits, and the
potential ramifications thereof, being concluded in a manner consistent with the Corporation’s expectations (including without
limitation the audit of mining companies in Ghana which includes the Corporation’s Ghanaian subsidiaries, litigation in Chile
relating to the alleged damage of wetlands and the scope of any remediation plan or other environmental obligations arising
therefrom, the ongoing litigation with the Russian tax authorities regarding dividend withholding tax and the ongoing Sunnyside
litigation regarding potential liability under the U.S. Comprehensive Environmental Response, Compensation, and Liability Act);
(21) that the Company will enter into definitive documentation with the Government of Mauritania substantially in accordance with
the terms and conditions of the term sheet, on a basis consistent with our expectations and that the parties will perform their
respective obligations thereunder on the timelines agreed; (22) that the exploitation permit for Tasiast Sud will be issued under the
terms and on timelines consistent with our expectations; (23) that the benefits of the contemplated arrangements related to the
agreement in principle will result in increased stability at the Company’s operations in Mauritania; and (24) the Company’s financial
results, cash flows and future prospects being consistent with Company expectations in amounts sufficient to permit sustained
dividend payments. 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: the inaccuracy of any of the foregoing assumptions,
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; reductions in the ability of the Company to
transport and refine doré; 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,
production royalties, 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
70
2020 ANNUAL REPORT KINROSS GOLD divestitures; operating or technical difficulties in connection with mining, development or refining activities; employee relations;
litigation or other claims against, or regulatory investigations and/or any enforcement actions, administrative orders 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, environmental litigation or regulatory proceedings 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 ratings; 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 this cautionary statement and those made in our other filings with the
securities regulators of Canada and the United States including, but not limited to, the cautionary statements made in the “Risk
Analysis” section of our MD&A for the year ended December 31, 2020 and the 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.
71
2020 ANNUAL REPORT KINROSS GOLD 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 $14 impact on production cost of
sales per equivalent ounce sold.9
• Specific to the Russian rouble, a 10% change in the exchange rate would be expected to result in an approximate $15 impact on
Russian production cost of sales per equivalent ounce sold.
• Specific to the Brazilian real, a 10% change in the exchange rate would be expected to result in an approximate $25 impact on
Brazilian production cost of sales per equivalent ounce sold.
• 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
equivalent ounce sold.
• A $100 change in the price of gold would be expected to result in an approximate $5 impact on production cost of sales per
equivalent ounce sold 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 as at
December 31, 2020 under the supervision and verified by an officer of the Company, Mr. John Sims, who is a “qualified person”
within the meaning of National Instrument 43-101. Mr. Sims was an officer of Kinross until December 31, 2020. Mr. Sims remains the
Company’s qualified person as an external consultant.
72
2020 ANNUAL REPORT KINROSS GOLD Endnotes
1 Unless otherwise stated, production, production cost of sales per Au eq. oz., and all-in sustaining costs per Au eq. oz., in this
annual report are based on Kinross’ 90% share of Chirano production and costs, and 70% share of Manh Choh costs.
2 Kinross guidance and outlook 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%.
3 These figures are non-GAAP financial measures and are defined and reconciled in Section 11, Supplemental Information of
the Management’s Discussion and Analysis.
4
In 2019 we reported $3.2 billion for total spending in host countries and expect 2020 to be a similar amount. The final figure
for 2020 will be published in our 2020 Sustainability Supplement.
5 Attributable margin per equivalent ounce sold is a non-GAAP financial measure defined as “average realized gold price per
ounce” less “attributable production cost of sales per gold equivalent ounce sold.”
6 Net earnings figures in this report represent “net earnings (loss) from continuing operations attributable to common
shareholders.”
7 Reported net earnings (loss) include non-cash impairment (reversals) charges-net: (2020: ($650.9 million); 2019: ($361.8 million);
2018: nil; 2017: $21.5 million; 2016: $139.6 million).
8 Average realized price of gold is a non-GAAP financial measure and is defined as metal sales divided by the total number
of ounces sold. This measure is intended to enable management to better understand the price realized in each reporting
period. The average realized price of gold does not have any standardized definition under IFRS and should not be
considered a substitute for measures of performance prepared in accordance with IFRS.
9 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 weighting of each
currency without our consolidated cost structure.
10 “Capital expenditures” for the years ended December 31, 2020 and 2019 are as reported as “Additions to property, plant
and equipment” on the consolidated statements of cash flows and exclude “Interest paid capitalized to property, plant and
equipment”. “Capital expenditures” for the year ended December 31, 2018 is calculated as $1,043.4 million of “Additions to
property, plant and equipment”, as reported on the consolidated statements of cash flows, less $38.2 million of capitalized
interest paid, as reported. “Capital expenditures” for the year ended December 31, 2017 is calculated as $897.6 million of
“Additions to property, plant and equipment”, as reported on the consolidated statements of cash flows, less $18.0 million of
capitalized interest paid, as reported. “Capital expenditures” for the year ended December 31, 2016 is calculated as $633.8
million of “Additions to property, plant and equipment”, as reported on the consolidated statements of cash flows, less $21.8
million of capitalized interest paid, as reported.
11 Free cash flow is a non-GAAP financial measure and is defined and reconciled, for the years ended December 31, 2020, 2019
and 2018, in Section 11, Supplemental Information of the Management’s Discussion and Analysis. Free cash flow for the year
ended December 31, 2017 is calculated as $951.6 million of “Net cash flow provided from operating activities”, as reported
on the consolidated statements of cash flows, less $879.6 million of capital expenditures. Free cash flow for the year ended
December 31, 2016 is calculated as $1,099.2 million of “Net cash flow provided from operating activities”, as reported on the
consolidated statements of cash flows, less $612.0 million of capital expenditures.
73
2020 ANNUAL REPORT KINROSS GOLD CORPORATE INFORMATION
Corporate Information
Contact Information
Publications
To obtain copies of Kinross’
publications, please visit our
corporate website at Kinross.com,
contact us by email at
info@kinross.com
or call 1-866-561-3636.
Sustainability Report
Kinross provides a transparent
account of its corporate responsibility
performance annually. Every two years,
we publish a comprehensive Global
Reporting Initiative Report, which
is also mapped against the
Sustainability Accounting Board
Metal and Mining Standards. We
publish a supplemental report in
the intervening period.
In 2021, we will be publishing our
2020 Sustainability Supplement at
kinross.com.
Transfer Agent and Registrar
Computershare Investor Services Inc.
Toronto, Ontario, Canada
Toll-free: 1-800-564-6253
Proxy Solicitation Agent
Kingsdale Proxy Advisors
Toronto, Ontario, Canada
Annual Meeting of Shareholders
Date: Wednesday, May 12th, 2021
Time: 10:00 a.m. EDT
Virtual via live webcast at
Webcast link:
web.lumiagm.com/406172480
Meeting ID: 406-172-480
Password: kinross2021
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
General
Kinross Gold Corporation
25 York Street, 17th Floor
Toronto, Ontario, Canada M5J 2V5
Website: Kinross.com
Telephone: 416-365-5123
Toll-free: 1-866-561-3636
Email: info@kinross.com
Investor Relations
Tom Elliott, Senior Vice-President,
Investor Relations
Telephone: 416-365-3390
Email: tom.elliott@kinross.com
Media Relations
Louie Diaz, Vice-President,
Corporate Communications
Telephone: 416-369-6469
Email: louie.diaz@kinross.com
Safety and Sustainability
Ed Opitz, Senior Vice-President,
Safety and Sustainability
Telephone: 1-866-561-3636
Email: sustainability@kinross.com
Shareholder Inquiries
Computershare Investor Services Inc.
8th Floor, 100 University Avenue
Toronto, Ontario, Canada M5J 2Y1
Toll-free: 1-800-564-6253
Toll-free facsimile: 1-888-453-0330
74
2020 ANNUAL REPORT KINROSS GOLD KINROSS GOLD CORPORATION
25 York Street, 17th Floor
Toronto, Ontario M5J 2V5
Canada
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