Kinross Gold
2021 ANNUAL REPORT
Strength
Value
Growth
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Kinross is a senior gold mining company with strong
and consistent operating results driven by a high
performance culture. With a balanced global portfolio
of mines and projects, our focus is on delivering value
based on the core principles of operational excellence,
financial discipline and responsible mining.
OUR CORE VALUES
Putting people first.
Outstanding corporate citizenship.
High performance culture.
Rigorous financial discipline.
TSX: K
Toronto Stock Exchange
NYSE: KGC
New York Stock Exchange
Table of Contents:
Letter to Shareholders
2021 ESG Highlights
Directors and Senior Leadership
Financial Summary
Financial Review
Cautionary Statement on
Forward-Looking Information
1
4
8
9
9
61
All figures in the report are in U.S. dollars unless otherwise stated. Endnotes
can be found on page 65 of this report. “Attributable” includes Kinross’ share
of Chirano (90%) production and costs, and Manh Choh (70%) costs.
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Letter to Shareholders
While this letter focuses on Kinross’ performance over
2021, I’d like to begin by acknowledging the tragic
situation in Ukraine, which began in late February
2022. As a company, we are deeply saddened by the
resulting loss of life and destruction and extend our
deepest sympathies to those affected.
In response to this evolving conflict, Kinross made a
number of decisions in March 2022, including providing
support to those most in need through a $1 million
donation to the Canadian Red Cross Ukraine Humanitarian
Crisis Appeal.
The Company is also evaluating a transition process for
its Kupol mine, which accounts for 13% of our production
outlook in 2022, and its Udinsk project in Russia. In line
with our First Priorities, we will prioritize the safety and
well-being of our more than 2,000 Russian employees and
meet our environmental responsibilities as we finalize our
transition plans and evaluate our next steps in the country.
While the situation continues to quickly evolve at the time
of this writing, I know we are all hopeful for a peaceful and
diplomatic solution in Ukraine.
Performance highlights
J. Paul Rollinson
President and
Chief Executive Officer
2021 Review
In 2021, despite some challenges, Kinross made progress
on a number of fronts by advancing our long-term growth
strategy, generating shareholder value and strengthening
our ESG governance. Our business and financial position
remain strong, anchored by a diversified global portfolio of
mines, a pipeline of high-quality development projects and
a large mineral reserve base.
Our commitment to responsible mining is the foundation of
our Company, and over the year, we delivered strong ESG
performance and advanced our sustainability governance
to further improve our strategy in this important area.
Kinross did face headwinds in 2021, but we remain well-
positioned to continue delivering value to our shareholders
and other stakeholders as we advance our growth strategy,
while remaining aligned with our First Priorities and values.
Continued to mitigate the impact of COVID-19 through
rigorous safety protocols, and supported employee and
local vaccination efforts.
Closed the acquisition of Great Bear Resources and
its Dixie project, one of the most exciting recent gold
discoveries globally, in February 2022.
Met revised annual production, cost of sales and
attributable all-in sustaining cost guidance.
Maintained quarterly dividend of $0.03 per share,
returning approximately $150 million to shareholders.
Generated a total shareholder return of 80% over the last
five years and outperformed the S&P TSX Global Gold
Index.
Initiated share buyback program and repurchased and
cancelled 17.6 million shares for approximately $100 million.
Commenced commissioning and the first gold bar was
poured at the La Coipa project in February 2022, on
schedule and under budget. Increased life-of-mine
production estimate to 1 million Au eq. oz. to extend
mine life to 2026.
Tasiast 24k project on schedule to reach sustained
throughput of 21,000 tonnes per day by the end of Q1
2022 and 24,000 tonnes per day by mid-2023.
Advanced studies at Lobo-Marte and Manh Choh projects,
and achieved first production from the Gil satellite pits at
Fort Knox in Alaska.
Increased mineral reserves by 34% since 2019 to 32.6
million ounces at year-end 2021.1
Completed a definitive agreement with the Government
of Mauritania to enhance our partnership.
Continued to rank well among our peers in major
environmental, social and governance (ESG) rankings
and ratings.
Committed to a 30% intensity reduction in Scope 1 and
Scope 2 greenhouse gas (GHG) emissions by 2030.
Contributed more than $3 billion in economic benefits
through taxes, wages, procurement and community
investments to host countries.
Carried out over 96,000 stakeholder interactions and
supported programs with approximately 1 million
beneficiaries in host communities.
Added 938k gold ounces in proven and probable reserves
at Round Mountain Phase S.1
Highest ranked Canadian gold mining company surveyed
in the Globe and Mail’s annual governance review.
1
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2021 ANNUAL REPORT KINROSS GOLD We delivered strong ESG
performance and advanced our
sustainability governance
LA COIPA
Started production
Large production profile to drive robust cash flow
Our global portfolio produced approximately 2.07 million
attributable Au eq. oz.2,3 in 2021, at a consolidated
production cost of sales†4 of $832 per Au eq. oz.3 and
attributable all-in sustaining cost*2,5 of $1,138 per Au eq.oz.3,
in line with revised guidance for the year.
While our workforce effectively mitigated the impacts of
COVID-19 for a second year, we were also challenged with a
business interruption in June 2021, when milling operations
were temporarily suspended at Tasiast as a result of a mill
fire. All of our people were safe and accounted for, which
was our primary concern, however, the incident prompted
us to revise our Company guidance for the year.
The Tasiast mill was fully operational by year-end 2021
and we expect strong performance at the mine to continue
into 2022.
As we look ahead, Kinross expects to maintain its large
production profile to drive substantial and growing free
cash flow over the coming years.
Returning capital to shareholders
As part of our commitment to returning capital to
shareholders, we initiated a share buyback program in
August 2021. We continue to believe that Kinross shares are
undervalued, and took this opportunity to reinvest in our
own shares and enhance shareholder value.
As of December 31, 2021, Kinross had repurchased and
cancelled 17.6 million common shares as part of the
Kinross expects to maintain its large
production profile to drive substantial
and growing free cash flow over the
coming years
RETURNING CAPITAL
$250 million
Returned more than $250 million in capital to
shareholders through share buyback and quarterly
dividend programs in 2021.
*These figures are non-GAAP financial measures or ratios, as applicable.
Figures with “†” are supplementary measures. Refer to Endnotes on page 65
for further details.
2
TASIAST 24K
On schedule
program. Additionally, we continued to pay a quarterly
dividend of $0.03 per common share throughout the year.
In total, Kinross returned more than $250 million in capital
to shareholders in 2021.
Operating cash flow6 was $1,135 million, and our margins†7
were robust at $965 per ounce sold during 2021. In
addition, Kinross’ adjusted net earnings*5 were $541
million, and reported net earnings8 were $221 million.
We ended the year with total liquidity†9 of $1.9 billion and
remain well-funded to advance our development projects.
High-quality development portfolio
Our growth strategy is underpinned by our pipeline of
high-quality development projects, which advanced well
over 2021.
The Tasiast 24k project, which is expected to increase
production, reduce costs, and generate significant cash
flow, is proceeding on schedule. We expect to reach
sustained throughput of 21,000 tonnes per day shortly, and
24,000 tonnes per day by mid-2023.
At La Coipa, commissioning commenced and the first gold
bar was poured in February 2022, on schedule and under
budget. The plant is expected to ramp up over the next
few months to reach full operating capacity by mid-year.
Through mine plan optimizations, we were also successful
in increasing estimated life-of-mine production by 45% to
1 million Au eq. oz.3 and mine life to early 2026 at La Coipa.
We continue to study other opportunities to further expand
La Coipa’s mine plan.
At the Lobo-Marte project, permitting activities continued
after the completion of the project feasibility study in Q4
2021, and at our Manh Choh project, the feasibility study is
on schedule to be completed by the end of 2022.
Great Bear Resources acquisition
Our development pipeline was further bolstered by the
acquisition of Great Bear Resources, which closed in
February 2022, and the addition of its Dixie project in Red
Lake, Canada to Kinross’ portfolio.
The Dixie project has the characteristics of a top-tier deposit,
which could support a large, long-life mine complex. We
envision a high-grade open pit mine, and longer term, a
sizeable underground operation to significantly add to our
future production. Located in our home jurisdiction, near
established infrastructure and in a province with a low-
carbon energy grid, the project is a great fit for Kinross.
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2021 ANNUAL REPORT KINROSS GOLD GREAT BEAR RESOURCES ACQUISITION
Top-tier Deposit
On December 8, 2021, Kinross announced that it had
entered into a definitive agreement to acquire Great Bear
Resources Ltd., and its flagship project located in the
prolific Red Lake mining district in Ontario, Canada.
The transaction closed on February 24, 2022.
The project has excellent potential to become a
top-tier deposit that could support a large, long-
life mine complex and bolster Kinross’ long-term
production outlook.
Significant Exploration Upside
Top Mining Jurisdiction
Exceptional Outlook
Ideal Portfolio Fit
We are now rapidly advancing our exploration plans at
the project, working with local First Nations and local
communities, and plan to complete 200,000 metres of
drilling in 2022. We look forward to unlocking the asset’s
vast potential as we move forward.
Adding reserves and advancing exploration
Growing our reserve base through exploration efforts,
along with mine plan optimization, is an important part
of our strategic plan. Through this approach, our mineral
reserve base has increased by 34% over the two years
ended December 31, 2021.
The success of our exploration program in 2021 will provide
the foundation for an exciting program in 2022, as we expect
to follow up on key targets identified with the goal of adding
to Kinross’ mineral reserve and resource estimates.
Strong ESG strategy and governance
Our commitment to mining responsibly has always been
fundamental to our business strategy. By implementing
a values-based approach to sustainability, we ensure
that we maintain a clear focus on delivering on our ESG
commitments across our global portfolio.
Kinross continued to rank well among its peers in major ESG
rankings and ratings, including being recognized as one of
the industry’s top 10 for ESG performance in the S&P Global
2022 Sustainability Yearbook and retaining our “A” level
rating by MSCI. Our leading corporate governance practices
were also recognized as Kinross was again the highest
ranking Canadian gold mining company in the Globe and
Mail’s annual corporate governance ranking.
The safety of our global workforce is, and has always been,
Kinross’ first priority. While our overall safety performance
remained in line with three-year averages, a tragic fatality
at our Chirano mine and the mill fire incident at Tasiast
overshadowed our efforts in this regard. These serious
incidents prompted discussions on how to improve our
safety systems through Safety Stand-Downs, and company-
wide, cross-functional discussions.
Kinross also committed to being a net-zero GHG
emissions company by 2050, as we recognize that we all
have a role to play in reducing GHG emissions to address
the impacts of climate change. In February 2022, we
outlined our Climate Change Strategy, with the objective
of a 30% intensity reduction in Scope 1 and Scope 2 GHG
emissions by 2030.
While pandemic restrictions continued to hinder social
engagement initiatives, we were able to conduct over
We have an exciting future ahead of us,
with an impressive value proposition
96,000 stakeholder interactions in 2021, with approximately
1 million beneficiaries from our community investments
over the year. We also spent more than $3 billion in host
countries through taxes, support of local suppliers and
employment. Kinross also donated $1 million to support
response and rebuilding efforts after a tragic explosion in
Appiatse, Ghana in January 2022.
To strengthen our ESG governance, in November 2021,
Kinross established an ESG Executive Committee that will
report to the CEO and Senior Leadership Team and to the
Board of Directors on a quarterly basis.
Generating future value
Over the five-year period ended December 31, 2021,
Kinross has generated a notable 80% total shareholder
return and outperformed the S&P TSX Global Gold Index
by 30 percentage points.
By keeping our focus on our core strategic principles –
operational excellence, financial discipline, and responsible
mining – Kinross remains on track to continue generating
value for our shareholders.
We have an exciting future ahead of us, with an impressive
value proposition that includes:
• Robust annual production with a diversified portfolio of
mines and projects;
• Additional upside through a pipeline of high-quality
development projects and exploration opportunities;
• A large reserve base of 32.6 million gold ounces1;
• A strong balance sheet and a commitment to return
capital to our shareholders; and
• Recognized ESG performance in the mining sector.
In conclusion, I would like to again acknowledge the hard
work of our employees, whose dedication to our shared
goals continues to build and benefit our Company.
And to our shareholders, on behalf of our entire team,
thank you for your continued support.
J. Paul Rollinson
President and Chief Executive Officer
3
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2021 ANNUAL REPORT KINROSS GOLD
2021 ESG Highlights
ESG is a core part
of our culture,
business strategy,
and future growth
4
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2021 ANNUAL REPORT KINROSS GOLD In alignment with our values and our culture, Kinross made significant
progress in advancing environmental, social and governance
priorities in 2021. We met our ESG commitments, worked to further
strengthen our sustainability strategy and governance, and delivered
strong performance.
SET CLIMATE TARGETS
BENEFIT FOOTPRINT
X 30% reduction
X +$3 billion
Targeting a 30% reduction in intensity of Scope 1
and Scope 2 GHG emissions by 2030, and to
have net-zero GHG emissions by 2050.
Provided more than $3 billion in
economic benefits to host countries
from our global operations.
LOCAL EMPLOYMENT
ROBUST GOVERNANCE
X 99%
X Top tier
Approximately 99% of Kinross’ total workforce and
92% of management roles are from within host
countries, both being record highs for the Company.
Recognized as the highest ranking Canadian gold
mining company in the Globe and Mail’s annual
corporate governance survey.
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2021 ANNUAL REPORT KINROSS GOLD Strong ESG Performance
Kinross continued to achieve strong ESG performance over the year, and
consistently ranks well among peers in major ESG rankings and ratings.
Kinross was recognized as one of the industry’s top 10 for ESG performance
in the S&P Global 2022 Sustainability Yearbook and retained its “A”
level rating by MSCI. The Company is on track to complete external
assurance to conform with the World Gold Council’s Responsible Gold
Mining Principles.
KINROSS RELATIVE PERFORMANCE ON ESG RATINGS
100
90
80
70
60
50
40
30
20
10
0
S&P Global (1)
(Nov 2021)
Sustainalytics (2)
(Oct 2021)
MSCI (3)
(Dec 2021)
ISS ESG (4)
(Feb 2022)
CDP Climate (5)
(2021)
VigeoEiris (6)
(April 2020)
Refinitiv (7)
(Nov 2021)
Percentile ranking based on: (1) Score 71; 94th percentile. (2) 39th out of 123 peers (ESG risk score 34.2). (3) Achieved an ‘A’ rating. 23% of peers rated AA or higher, 16% as A;
assume KGC at midpoint. (4) Achieved a C rating; of 173 peers, approximately 2% scored B, 5% B-, 7% C+, and 22% C; assume KGC at midpoint of C. (5) Achieved a C rating.
6% of peers scored A, 28% at B and 26% at C (awareness level); assume KGC at midpoint of C band. (6) Score 51; 6th out of 56 in sector, equivalent to 89th percentile. (7) Score
B+; 69.99 out of 100.
ADVANCED CLIMATE CHANGE STRATEGY
Our Climate Change Strategy
is in line with Kinross’ values,
the goals of the 2015 Paris
Agreement, and builds on our
strong record in this area.
Our objective is to reduce the
intensity of our Scope 1 and
Scope 2 GHG emissions by
30% by 2030, and have net-
zero GHG emissions by 2050.
Incorporate energy efficient & renewable projects into operations
Foster partnerships with equipment manufacturers and energy
suppliers to reduce GHG emissions and energy use
Embed climate change considerations into business strategy
Maintain robust governance & transparent reporting
Enhance business resiliency
6
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2021 ANNUAL REPORT KINROSS GOLD SAFETY REMAINS FIRST PRIORITY
MAINTAINED BOARD DIVERSITY
• Maintained 2021 safety performance in line
with three-year averages, among the lowest
total reportable injury rates in the industry,
although tragically overshadowed by a mine
site fatality at Chirano.
MAINTAINED BEST PRACTICES
TAILINGS MANAGEMENT
Zero tailings breaches in Kinross’
29-year history
Independent geotechnical reviews
Significant executive and Board
level oversight
INVESTING IN RENEWABLE ENERGY
X 34 MW
Started development of 34 MW solar power plant
at Tasiast that is expected to reduce GHG emissions
by ~530 Kt over the life of mine.
X 33%
Continued to achieve board gender diversity target
of 33%, and focused on further advancing diversity
through board succession planning.
MAINTAINED WATER EFFICIENCY
X 75% water
recycled
Achieved a five-year average water recycle rate of 75%.
PARTNERING FOR THE ENVIRONMENT
X $500,000
Partnered with Trout Unlimited and state and
federal agencies to support the Alaska Abandoned
Mine Restoration Initiative, committing over
$500,000 to restore a historic mining district in which
Kinross has not operated.
2021 Benefit Footprint
We generate value for our host communities through local job creation, procurement, tax payments and donations. The benefit
footprint metrics reported below are estimates and the final 2021 figures will be provided in our 2021 Sustainability Report.
+$3 billion
total spend in our host countries
~$500 million
payments to governments
~$800 million
employee wages and benefits
~$2 billion
payments to suppliers in
host countries
~1 million
beneficiaries of community
investments
7
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2021 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
Senior Leadership Team
A
Audit and Risk Committee
CGN Corporate Governance and
Nominating Committee
CR
H
Corporate Responsibility and
Technical Committee
Human Resources and
Compensation Committee
(left to right)
J. Paul Rollinson
President and
Chief Executive Officer
Andrea S. Freeborough
Executive Vice-President
and Chief Financial Officer
Geoffrey P. Gold
Executive Vice-President,
Corporate Development,
External Relations and
Chief Legal Officer
Paul B. Tomory
Executive Vice-President
and Chief Technical Officer
Claude Schimper
Executive Vice-President,
Russia and West Africa
Operations
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.
Yves Breau
Vice-President, Metallurgy
and Engineering Processing
Laurence Davies
Vice-President, Finance,
Operations and Projects
Graeme Davis
Senior Vice-President,
Exploration
Kathleen Grandy
Senior Vice-President,
Human Resources
8
Ned Jalil
Senior Vice-President,
Technical Services,
Geology and Mining
Stephen Kerrigan
Vice-President,
Information Technology
Chris Lichtenheldt
Vice-President,
Investor Relations
Nathan Longenecker
Senior Vice-President,
Legal, and General Counsel
David Maude
Vice-President
and Treasurer
Ed Opitz
Senior Vice-President,
Safety and Sustainability
David Shaver
Senior Vice-President,
Corporate Development
Mike Sylvestre
Senior Vice-President,
Americas Operations
Hélène Timpano
Senior Vice-President,
Operations
Mike van Akkooi
Senior Vice-President,
Government Relations
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2021 ANNUAL REPORT KINROSS GOLD Net earnings attributable to common shareholders
$ 221.2
$ 1,342.4
Net earnings per share attributable to common shareholders
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*5
Impairment charges (reversals) and asset derecognition – net
Basic
Diluted
Adjusted net earnings attributable to common shareholders*5
Adjusted net earnings per share*5
Consolidated production cost of sales per equivalent ounce sold†3,4
Attributable production cost of sales per equivalent ounce sold*2,3,5
Attributable all-in sustaining cost per equivalent ounce sold*2,3,5
Capital expenditures10
Free cash flow*11
Average realized gold price per ounce†12
Attributable gold equivalent ounces produced 2,3
2021
2020
2019
$ 3,729.4
$ 4,213.4
$ 3,497.3
$ 1,135.2
$ 1,309.9
$ 144.5
$
$
$
(650.9)
1,957.6
$ 1,224.9
1,912.7
$ 1,201.5
$
$
$
$
$
$
$
$
$
(361.8)
718.6
0.57
0.57
422.9
0.34
708
706
983
$
$
0.18
0.17
$ 541.3
$
$
$
0.43
832
828
$ 1,138
$ 938.6
$
$
$
$
$
$
$
$
1.07
1.06
966.8
0.77
726
723
987
916.1
$ 1,060.2
$ 196.6
$ 1,041.5
$ 1,797
$
1,774
2,067,549
2,366,648
$
$
164.7
1,392
2,507,659
Financial Review
Management’s Discussion and Analysis
Management’s Responsibility for Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements and Notes
Mineral Reserve and Mineral Resource Statement
Summarized Five-Year Review
Kinross Share Trading Data
MDA 1
FS 1
FS 3
FS 5
55
60
60
*These figures are non-GAAP financial measures or ratios, as applicable.
Figures with “†” are supplementary measures. Refer to Endnotes on page 65
for further details.
2021 ANNUAL REPORT KINROSS GOLD
9
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KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
This management's discussion and analysis ("MD&A"), prepared as of February 16, 2022, relates to the financial condition and results
of operations of Kinross Gold Corporation together with its wholly owned subsidiaries, as at December 31, 2021 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, 2021 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 2021 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, 2021, 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 57 – 58 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, 2020, 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.
Ownership percentage at December 31,
Operating Segments
Fort Knox
Round Mountain
Bald Mountain
Paracatu
Kupol(a)
Tasiast
Operator
Kinross
Kinross
Kinross
Kinross
Kinross
Kinross
Chirano
(a) The Kupol segment includes the Kupol and Dvoinoye mines.
Kinross
Location
USA
USA
USA
Brazil
Russian Federation
Mauritania
Ghana
1
2021
100%
100%
100%
100%
100%
100%
90%
2020
100%
100%
100%
100%
100%
100%
90%
1 MDA
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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
Years ended December 31,
2021 vs. 2020
2021
2020
2019
Change
% Change
2020 vs. 2019
Change % Change(g)
2,083,016
2,383,307
2,527,788
(300,291)
2,075,738
2,375,548
2,512,758
(299,810)
(13%)
(13%)
(144,481)
(137,210)
2,067,549
2,366,648
2,507,659
(299,099)
(13%)
(141,011)
2,060,909
2,358,927
2,492,572
(298,018)
(13%)
(133,645)
$
3,729.4
$
4,213.4
$
3,497.3
$
(484.0)
(11%)
$
716.1
$
1,726.1
$
1,725.7
$
1,778.9
$
0.4
0%
$
(53.2)
$
840.9
$
842.3
$
731.3
$
(1.4)
(0%)
$
111.0
(6%)
(5%)
(6%)
(5%)
20%
(3%)
15%
Impairment charges (reversals) and asset derecognition ‐ net
$
144.5
$
(650.9)
$
(361.8)
$
795.4
122%
$
(289.1)
(80%)
Operating earnings
$
463.6
$
1,899.4
$
991.1
$
(1,435.8)
(76%)
$
908.3
Net earnings attributable to common shareholders
$
221.2
$
1,342.4
$
718.6
$
(1,121.2)
(84%)
$
623.8
Basic earnings per share attributable to common shareholders
$
0.18
$
1.07
$
0.57
$
(0.89)
(83%)
$
0.50
Diluted earnings 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 (e)
Consolidated production cost of sales per equivalent ounce (c) sold(f)
Attributable(a) production cost of sales per equivalent ounce (c) sold(b)
Attributable(a) production cost of sales per ounce sold on a by‐product basis (b)
Attributable(a) all‐in sustaining cost per ounce sold on a by‐product basis (b)
Attributable(a) all‐in sustaining cost per equivalent ounce (c) sold(b)
Attributable(a) all‐in cost per ounce sold on a by‐product basis (b)
Attributable(a) all‐in cost per equivalent ounce (c) sold(b)
$
0.17
$
1.06
$
0.57
$
(0.89)
(84%)
$
0.49
$
541.3
$
966.8
$
422.9
$
(425.5)
(44%)
$
543.9
$
0.43
$
0.77
$
0.34
$
(0.34)
(44%)
$
0.43
$
1,135.2
$
1,957.6
$
1,224.9
$
(822.4)
(42%)
$
732.7
$
1,309.9
$
1,912.7
$
1,201.5
$
(602.8)
(32%)
$
711.2
$
938.6
$
916.1
$
1,060.2
$
22.5
2%
$
(144.1)
$
196.6
$
1,041.5
$
164.7
$
(844.9)
(81%)
$
876.8
$
1,797
$
1,774
$
1,392
$
23
$
832
$
726
$
708
$
106
$
828
$
723
$
706
$
105
$
799
$
700
$
691
$
99
$
1,118
$
970
$
974
$
148
$
1,138
$
987
$
983
$
151
$
$
1,458
1,467
$
$
1,248
1,260
$
$
1,282
1,284
$
$
210
207
1%
$
382
15%
$
18
15%
$
17
14%
$
9
15%
$
(4)
15%
$
4
17%
16%
$
$
(34)
(24)
92%
87%
88%
86%
129%
126%
60%
59%
(14%)
nm
27%
3%
2%
1%
(0%)
0%
(3%)
(2%)
(a)
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production and costs, and Manh Choh (70%)
costs.
(b) The definition and reconciliation of these non-GAAP financial measures and ratios is included in Section 11. Non-GAAP financial measures and
ratios have no standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other issuers.
"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 2021 was 71.51:1 (2020 - 86.32:1 and 2019 - 85.99:1).
“Capital expenditures” is as reported as “Additions to property, plant and equipment” on the consolidated statements of cash flows.
“Average realized gold price per ounce” is defined as gold metal sales divided by the total number of gold ounces sold.
“Consolidated production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces
sold.
"nm" means not meaningful.
(c)
(d)
(e)
(f)
(g)
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Consolidated Financial Performance
This Consolidated Financial Performance section references attributable production cost of sales per equivalent ounce sold and per
ounce sold on a by-product basis, adjusted net earnings attributable to common shareholders and adjusted net earnings per share;
adjusted operating cash flow, free cash flow, attributable all-in sustaining cost per equivalent ounce sold and per ounce sold on a by-
product basis, and attributable all-in cost per equivalent ounce sold and per ounce sold on a by-product basis, all of which are non-
GAAP financial measures or ratios. The definitions and reconciliations of these non-GAAP financial measures and ratios are included in
Section 11 of this MD&A.
2021 vs. 2020
Kinross’ attributable production in 2021 decreased by 13% compared to 2020, and was in line with expectations after taking into
account the Tasiast mill fire. Lower production levels were seen at Tasiast due to the temporary suspension of milling operations as a
result of the mill fire in June 2021, with lower mill grades prior to the incident also contributing to the reduction, at Round Mountain
due to the change in mine plan as a result of the instability in the north wall of the pit detected in the first quarter of 2021, and at
Kupol due to lower grades. These reductions were partially offset by an increase in ounces recovered from the heap leach pads at Fort
Knox and at Bald Mountain.
Metal sales decreased by 11% in 2021, compared to 2020, due to a decrease in gold equivalent ounces sold, partially offset by an
increase in the average metal prices realized. Total gold equivalent ounces sold in 2021 decreased to 2,075,738 ounces from 2,375,548
ounces in 2020, primarily due to the decrease in production as described above. The average realized gold price increased to $1,797
per ounce in 2021 from $1,774 per ounce in 2020.
Production cost of sales in 2021 was comparable to 2020. Production cost of sales increased at Paracatu and Bald Mountain due to
increases in gold equivalent ounces sold and higher operating waste mined, at Round Mountain due to higher operating waste mined,
and at Fort Knox due to an increase in gold equivalent ounces sold. These increases were offset by a decrease in production cost of
sales at Tasiast due to a decrease in gold equivalent ounces sold as a result of the temporary suspension of milling operations.
In 2021, attributable production cost of sales per equivalent ounce sold and per ounce sold on a by-product basis increased by 15%
and 14%, respectively, compared to 2020, due to the decrease in ounces sold, as described above, as well as inflationary pressures on
consumables. Consolidated production cost of sales per equivalent ounce sold was comparable to both attributable production cost
of sales per equivalent ounce sold and per ounce sold on a by-product basis.
Depreciation, depletion and amortization in 2021 was comparable to 2020, mainly due to increases in the depreciable asset bases at
Bald Mountain, Round Mountain, and Chirano, with the increase at Chirano largely related to the reversal of property, plant and
equipment impairment at the end of 2020. These increases were largely offset by decreases at Kupol due to a decrease in the
depreciable asset base related to the completion of mining activities at Dvoinoye and at Tasiast due to the decrease in gold equivalent
ounces sold.
During the year ended December 31, 2021, the Company recorded after-tax impairment and asset derecognition charges of $106.1
million (pre-tax $144.5 million) related to metal inventory and property, plant and equipment at Bald Mountain. The inventory
impairment charge of $69.9 million (pre-tax $95.2 million) resulted from a reduction in the estimate of recoverable ounces on the
Vantage heap leach pad at December 31, 2021 due to the presence of carbonaceous ore. Property, plant and equipment related to
the Vantage heap leach pad was also derecognized, resulting in an after-tax charge of $36.2 million (pre-tax $49.3 million). During the
year ended December 31, 2020, the Company recorded after‐tax impairment reversals of $612.8 million (pre-tax $650.9 million),
related entirely to property, plant and equipment at Tasiast ($299.5 million), Chirano ($132.9 million, pre-tax $204.5 million) and Lobo-
Marte ($180.4 million, pre-tax $185.0 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.
Operating earnings were $463.6 million in 2021 compared to $1,899.4 million in 2020. The decrease was largely related to the
temporary suspension of milling operations at Tasiast and the deferred mining activity at Round Mountain due to instability in the
north wall of the pit. Additionally, inventory impairment and asset derecognition charges at Bald Mountain were recorded as
compared to the impairment reversals recorded in 2020.
In 2021, the Company recorded income tax expense of $250.7 million, compared to $439.8 million in 2020. The $250.7 million of
income tax expense in 2021 included $24.1 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, and additional tax expenses of $49.9 million
2
3
MDA 2
30836 Q30 - KINROSS AR-Proof.pdf - p13 (March 31, 2022 01:56:27)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Consolidated Financial and Operating Highlights
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Consolidated Financial Performance
(in millions, except ounces, per share amounts and per ounce amounts)
2021
2020
2019
Change
% Change
Change % Change(g)
Years ended December 31,
2021 vs. 2020
2020 vs. 2019
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
2,083,016
2,383,307
2,527,788
(300,291)
2,075,738
2,375,548
2,512,758
(299,810)
(13%)
(13%)
(144,481)
(137,210)
2,067,549
2,366,648
2,507,659
(299,099)
(13%)
(141,011)
2,060,909
2,358,927
2,492,572
(298,018)
(13%)
(133,645)
$
3,729.4
$
4,213.4
$
3,497.3
$
(484.0)
(11%)
$
716.1
$
1,726.1
$
1,725.7
$
1,778.9
$
0.4
0%
$
(53.2)
$
840.9
$
842.3
$
731.3
$
(1.4)
(0%)
$
111.0
Impairment charges (reversals) and asset derecognition ‐ net
$
144.5
$
(650.9)
$
(361.8)
$
795.4
122%
$
(289.1)
(80%)
Operating earnings
$
463.6
$
1,899.4
$
991.1
$
(1,435.8)
(76%)
$
908.3
Net earnings attributable to common shareholders
$
221.2
$
1,342.4
$
718.6
$
(1,121.2)
(84%)
$
623.8
Basic earnings per share attributable to common shareholders
$
0.18
$
1.07
$
0.57
$
(0.89)
(83%)
$
0.50
Diluted earnings per share attributable to common shareholders
$
0.17
$
1.06
$
0.57
$
(0.89)
(84%)
$
0.49
Adjusted net earnings attributable to common shareholders (b)
$
541.3
$
966.8
$
422.9
$
(425.5)
(44%)
$
543.9
Adjusted net earnings per share (b)
$
0.43
$
0.77
$
0.34
$
(0.34)
(44%)
$
0.43
Net cash flow provided from operating activities
$
1,135.2
$
1,957.6
$
1,224.9
$
(822.4)
(42%)
$
732.7
Adjusted operating cash flow(b)
Capital expenditures (d)
Free cash flow(b)
Average realized gold price per ounce (e)
$
1,309.9
$
1,912.7
$
1,201.5
$
(602.8)
(32%)
$
711.2
$
938.6
$
916.1
$
1,060.2
$
22.5
2%
$
(144.1)
$
196.6
$
1,041.5
$
164.7
$
(844.9)
(81%)
$
876.8
Consolidated production cost of sales per equivalent ounce (c) sold(f)
Attributable(a) production cost of sales per equivalent ounce (c) sold(b)
$
1,797
$
1,774
$
1,392
$
23
$
832
$
726
$
708
$
106
$
828
$
723
$
706
$
105
Attributable(a) production cost of sales per ounce sold on a by‐product basis (b)
$
799
$
700
$
691
$
99
Attributable(a) all‐in sustaining cost per ounce sold on a by‐product basis (b)
$
1,118
$
970
$
974
$
148
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)
$
1,138
$
987
$
983
$
151
$
1,458
$
1,248
$
1,282
$
210
$
1,467
$
1,260
$
1,284
$
207
1%
$
382
15%
$
18
15%
$
17
14%
$
9
15%
$
(4)
15%
$
4
17%
16%
$
(34)
$
(24)
(a)
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production and costs, and Manh Choh (70%)
costs.
(b) The definition and reconciliation of these non-GAAP financial measures and ratios is included in Section 11. Non-GAAP financial measures and
ratios have no standardized meaning under IFRS and therefore, may not be comparable to similar measures presented by other issuers.
"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 2021 was 71.51:1 (2020 - 86.32:1 and 2019 - 85.99:1).
“Capital expenditures” is as reported as “Additions to property, plant and equipment” on the consolidated statements of cash flows.
“Average realized gold price per ounce” is defined as gold metal sales divided by the total number of gold ounces sold.
“Consolidated production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces
(c)
(d)
(e)
(f)
sold.
(g)
"nm" means not meaningful.
(6%)
(5%)
(6%)
(5%)
20%
(3%)
15%
92%
87%
88%
86%
129%
126%
60%
59%
(14%)
nm
27%
3%
2%
1%
(0%)
0%
(3%)
(2%)
This Consolidated Financial Performance section references attributable production cost of sales per equivalent ounce sold and per
ounce sold on a by-product basis, adjusted net earnings attributable to common shareholders and adjusted net earnings per share;
adjusted operating cash flow, free cash flow, attributable all-in sustaining cost per equivalent ounce sold and per ounce sold on a by-
product basis, and attributable all-in cost per equivalent ounce sold and per ounce sold on a by-product basis, all of which are non-
GAAP financial measures or ratios. The definitions and reconciliations of these non-GAAP financial measures and ratios are included in
Section 11 of this MD&A.
2021 vs. 2020
Kinross’ attributable production in 2021 decreased by 13% compared to 2020, and was in line with expectations after taking into
account the Tasiast mill fire. Lower production levels were seen at Tasiast due to the temporary suspension of milling operations as a
result of the mill fire in June 2021, with lower mill grades prior to the incident also contributing to the reduction, at Round Mountain
due to the change in mine plan as a result of the instability in the north wall of the pit detected in the first quarter of 2021, and at
Kupol due to lower grades. These reductions were partially offset by an increase in ounces recovered from the heap leach pads at Fort
Knox and at Bald Mountain.
Metal sales decreased by 11% in 2021, compared to 2020, due to a decrease in gold equivalent ounces sold, partially offset by an
increase in the average metal prices realized. Total gold equivalent ounces sold in 2021 decreased to 2,075,738 ounces from 2,375,548
ounces in 2020, primarily due to the decrease in production as described above. The average realized gold price increased to $1,797
per ounce in 2021 from $1,774 per ounce in 2020.
Production cost of sales in 2021 was comparable to 2020. Production cost of sales increased at Paracatu and Bald Mountain due to
increases in gold equivalent ounces sold and higher operating waste mined, at Round Mountain due to higher operating waste mined,
and at Fort Knox due to an increase in gold equivalent ounces sold. These increases were offset by a decrease in production cost of
sales at Tasiast due to a decrease in gold equivalent ounces sold as a result of the temporary suspension of milling operations.
In 2021, attributable production cost of sales per equivalent ounce sold and per ounce sold on a by-product basis increased by 15%
and 14%, respectively, compared to 2020, due to the decrease in ounces sold, as described above, as well as inflationary pressures on
consumables. Consolidated production cost of sales per equivalent ounce sold was comparable to both attributable production cost
of sales per equivalent ounce sold and per ounce sold on a by-product basis.
Depreciation, depletion and amortization in 2021 was comparable to 2020, mainly due to increases in the depreciable asset bases at
Bald Mountain, Round Mountain, and Chirano, with the increase at Chirano largely related to the reversal of property, plant and
equipment impairment at the end of 2020. These increases were largely offset by decreases at Kupol due to a decrease in the
depreciable asset base related to the completion of mining activities at Dvoinoye and at Tasiast due to the decrease in gold equivalent
ounces sold.
During the year ended December 31, 2021, the Company recorded after-tax impairment and asset derecognition charges of $106.1
million (pre-tax $144.5 million) related to metal inventory and property, plant and equipment at Bald Mountain. The inventory
impairment charge of $69.9 million (pre-tax $95.2 million) resulted from a reduction in the estimate of recoverable ounces on the
Vantage heap leach pad at December 31, 2021 due to the presence of carbonaceous ore. Property, plant and equipment related to
the Vantage heap leach pad was also derecognized, resulting in an after-tax charge of $36.2 million (pre-tax $49.3 million). During the
year ended December 31, 2020, the Company recorded after‐tax impairment reversals of $612.8 million (pre-tax $650.9 million),
related entirely to property, plant and equipment at Tasiast ($299.5 million), Chirano ($132.9 million, pre-tax $204.5 million) and Lobo-
Marte ($180.4 million, pre-tax $185.0 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.
Operating earnings were $463.6 million in 2021 compared to $1,899.4 million in 2020. The decrease was largely related to the
temporary suspension of milling operations at Tasiast and the deferred mining activity at Round Mountain due to instability in the
north wall of the pit. Additionally, inventory impairment and asset derecognition charges at Bald Mountain were recorded as
compared to the impairment reversals recorded in 2020.
In 2021, the Company recorded income tax expense of $250.7 million, compared to $439.8 million in 2020. The $250.7 million of
income tax expense in 2021 included $24.1 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, and additional tax expenses of $49.9 million
2
3
3 MDA
30836 Q30 - KINROSS AR-Proof.pdf - p14 (March 31, 2022 01:56:27)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
in respect of the settlement of tax amounts relating to prior years. Income tax expense decreased in 2021 compared to 2020 largely
due to lower operating mine profitability compared to 2020. In 2020, the $439.8 million income tax expense included $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, an additional deferred tax expense of $76.2 million related to the reversal of impairment charges
at Chirano and Lobo‐Marte, as well as $25.4 million net tax benefit from U.S. tax law changes legislated through the U.S. Cares Act.
Kinross' combined federal and provincial statutory tax rate for both 2021 and 2020 was 26.5%.
Net earnings attributable to common shareholders in 2021 were $221.2 million, or $0.18 per share, compared to $1,342.4 million, or
$1.07 per share, in 2020. The decrease is a result of the decrease in operating earnings as described above, partially offset by the
decrease in income tax expense.
Adjusted net earnings attributable to common shareholders in 2021 were $541.3 million, or $0.43 per share, compared to $966.8
million, or $0.77 per share, in 2020. The decrease in adjusted net earnings was primarily due to the decrease in metal sales, as
described above, and an increase in exploration expenses.
In 2021, net cash flow provided from operating activities decreased to $1,135.2 million, from $1,957.6 million in 2020, mainly due to
the decrease in operating earnings as described above, higher net taxes paid and unfavourable working capital movements.
Adjusted operating cash flow in 2021 decreased to $1,309.9 million, from $1,912.7 million in 2020, primarily due to the decrease in
net cash flow provided from operating activities as described above.
Capital expenditures increased to $938.6 million in 2021, compared with $916.1 million in 2020, primarily due to increased
expenditures for development activities at La Coipa, the feasibility study at Lobo‐Marte and the pre‐feasibility and feasibility studies
at Udinsk, and an increase in capital stripping at Tasiast. These increases were partially offset by reduced capital stripping at Bald
Mountain, Round Mountain and Fort Knox.
Free cash flow decreased to $196.6 million in 2021, compared with $1,041.5 million in 2020, largely due to the decrease in net cash
flow provided from operating activities, as described above.
Attributable all‐in sustaining cost per equivalent ounce sold and per ounce sold on a by‐product basis in 2021 both increased by 15%,
compared to 2020, primarily due to the decrease in gold ounces sold. Attributable all‐in cost per equivalent ounce sold and per ounce
sold on a by‐product basis increased by 16% and 17%, respectively, compared to 2020, due to the decrease in ounces sold and
increases in capital expenditures and non‐sustaining exploration expenses.
2020 vs. 2019
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 per ounce, partially offset
by a decrease in gold equivalent ounces sold. The average realized gold price per ounce 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 planned 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, compared to 2019, consolidated production cost of sales per equivalent ounce sold increased by 3%, and attributable
production cost of sales per equivalent ounce sold and per ounce sold on a by‐product basis both increased slightly. The increases
were 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.
4
MDA 4
During the year ended December 31, 2020 the Company recorded after‐tax impairment reversals of $612.8 million (pre-tax $650.9
million), related entirely to property, plant and equipment at Tasiast ($299.5 million), Chirano ($132.9 million, pre-tax $204.5 million)
and Lobo-Marte ($180.4 million, pre-tax $185.0 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. At December 31, 2019, the Company recorded after‐tax
impairment reversals of $293.6 million (pre-tax $361.8 million), related entirely to property, plant and equipment at Tasiast ($161.1
million) and Paracatu ($132.5 million, pre-tax $200.7 million), and were mainly due to an increase in the Company’s long‐term gold
price estimate.
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.
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.
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.
Mineral Reserves1
Kinross’ total estimated proven and probable gold reserves at December 31, 2021 were approximately 32.6 million ounces. The
increase of 2.7 million ounces in estimated gold reserves compared to December 31, 2020 was mainly a result of the conversion of 3.0
million ounces of resources to probable reserves at Chulbatkan. Amongst the operating sites, 1.7 million ounces were also added to
proven and probable reserves to partially offset production depletion.
Proven and probable silver reserves at year-end 2021 were estimated at approximately 57.8 million ounces, a decrease of 1.4 million
ounces compared with year-end 2020, primarily due to production depletion at Kupol, Dvoinoye and Round Mountain.
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 16, 2022.
5
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
in respect of the settlement of tax amounts relating to prior years. Income tax expense decreased in 2021 compared to 2020 largely
due to lower operating mine profitability compared to 2020. In 2020, the $439.8 million income tax expense included $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, an additional deferred tax expense of $76.2 million related to the reversal of impairment charges
at Chirano and Lobo‐Marte, as well as $25.4 million net tax benefit from U.S. tax law changes legislated through the U.S. Cares Act.
Kinross' combined federal and provincial statutory tax rate for both 2021 and 2020 was 26.5%.
Net earnings attributable to common shareholders in 2021 were $221.2 million, or $0.18 per share, compared to $1,342.4 million, or
$1.07 per share, in 2020. The decrease is a result of the decrease in operating earnings as described above, partially offset by the
decrease in income tax expense.
Adjusted net earnings attributable to common shareholders in 2021 were $541.3 million, or $0.43 per share, compared to $966.8
million, or $0.77 per share, in 2020. The decrease in adjusted net earnings was primarily due to the decrease in metal sales, as
described above, and an increase in exploration expenses.
In 2021, net cash flow provided from operating activities decreased to $1,135.2 million, from $1,957.6 million in 2020, mainly due to
the decrease in operating earnings as described above, higher net taxes paid and unfavourable working capital movements.
Adjusted operating cash flow in 2021 decreased to $1,309.9 million, from $1,912.7 million in 2020, primarily due to the decrease in
net cash flow provided from operating activities as described above.
Capital expenditures increased to $938.6 million in 2021, compared with $916.1 million in 2020, primarily due to increased
expenditures for development activities at La Coipa, the feasibility study at Lobo‐Marte and the pre‐feasibility and feasibility studies
at Udinsk, and an increase in capital stripping at Tasiast. These increases were partially offset by reduced capital stripping at Bald
Mountain, Round Mountain and Fort Knox.
Free cash flow decreased to $196.6 million in 2021, compared with $1,041.5 million in 2020, largely due to the decrease in net cash
flow provided from operating activities, as described above.
Attributable all‐in sustaining cost per equivalent ounce sold and per ounce sold on a by‐product basis in 2021 both increased by 15%,
compared to 2020, primarily due to the decrease in gold ounces sold. Attributable all‐in cost per equivalent ounce sold and per ounce
sold on a by‐product basis increased by 16% and 17%, respectively, compared to 2020, due to the decrease in ounces sold and
increases in capital expenditures and non‐sustaining exploration expenses.
2020 vs. 2019
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 per ounce, partially offset
by a decrease in gold equivalent ounces sold. The average realized gold price per ounce 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 planned 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, compared to 2019, consolidated production cost of sales per equivalent ounce sold increased by 3%, and attributable
production cost of sales per equivalent ounce sold and per ounce sold on a by‐product basis both increased slightly. The increases
were 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.
4
During the year ended December 31, 2020 the Company recorded after‐tax impairment reversals of $612.8 million (pre-tax $650.9
million), related entirely to property, plant and equipment at Tasiast ($299.5 million), Chirano ($132.9 million, pre-tax $204.5 million)
and Lobo-Marte ($180.4 million, pre-tax $185.0 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. At December 31, 2019, the Company recorded after‐tax
impairment reversals of $293.6 million (pre-tax $361.8 million), related entirely to property, plant and equipment at Tasiast ($161.1
million) and Paracatu ($132.5 million, pre-tax $200.7 million), and were mainly due to an increase in the Company’s long‐term gold
price estimate.
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.
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.
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.
Mineral Reserves1
Kinross’ total estimated proven and probable gold reserves at December 31, 2021 were approximately 32.6 million ounces. The
increase of 2.7 million ounces in estimated gold reserves compared to December 31, 2020 was mainly a result of the conversion of 3.0
million ounces of resources to probable reserves at Chulbatkan. Amongst the operating sites, 1.7 million ounces were also added to
proven and probable reserves to partially offset production depletion.
Proven and probable silver reserves at year-end 2021 were estimated at approximately 57.8 million ounces, a decrease of 1.4 million
ounces compared with year-end 2020, primarily due to production depletion at Kupol, Dvoinoye and Round Mountain.
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 16, 2022.
5
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30836 Q30 - KINROSS AR-Proof.pdf - p16 (March 31, 2022 01:56:27)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
2.
IMPACT OF KEY ECONOMIC TRENDS AND THE COVID-19 PANDEMIC
COVID-19 Pandemic
Kinross’ protocols and contingency plans in response to the Global COVID-19 pandemic have mitigated impacts of the pandemic to its
global portfolio. 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.
Price of Gold
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 2021, the price of gold fluctuated between a low of $1,684 per ounce in March to a high of $1,950 per
ounce in January, based on daily closing prices. The average price for the year based on the London Bullion Market Association PM Fix
was $1,799 per ounce, a $29 per ounce increase over the 2020 average price of $1,770 per ounce. Major influences on the gold price
during 2021 included rising U.S. yields, a stronger U.S. dollar and reduced safe haven demand.
Source: London Bullion Marketing Association London PM Fix
1 “Average realized gold price per ounce” is defined as gold metal sales divided by the total number of gold ounces sold.
In 2021, the Company realized an average gold price of $1,797 per ounce compared to the average PM Fix of $1,799 per ounce.
6
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
2.
IMPACT OF KEY ECONOMIC TRENDS AND THE COVID-19 PANDEMIC
Kinross’ protocols and contingency plans in response to the Global COVID-19 pandemic have mitigated impacts of the pandemic to its
global portfolio. 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
COVID-19 Pandemic
rates and costs.
Price of Gold
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 2021, the price of gold fluctuated between a low of $1,684 per ounce in March to a high of $1,950 per
ounce in January, based on daily closing prices. The average price for the year based on the London Bullion Market Association PM Fix
was $1,799 per ounce, a $29 per ounce increase over the 2020 average price of $1,770 per ounce. Major influences on the gold price
during 2021 included rising U.S. yields, a stronger U.S. dollar and reduced safe haven demand.
Source: London Bullion Marketing Association London PM Fix
1 “Average realized gold price per ounce” is defined as gold metal sales divided by the total number of gold ounces sold.
In 2021, the Company realized an average gold price of $1,797 per ounce compared to the average PM Fix of $1,799 per ounce.
6
7
7 MDA
30836 Q30 - KINROSS AR-Proof.pdf - p18 (March 31, 2022 01:56:28)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Gold Supply and Demand Fundamentals
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Source: World Gold Council 2021 Gold Demand Trends report
According to the World Gold Council, total gold supply in 2021 decreased marginally, by approximately 1%, compared to 2020. Mine
production recovered 2% in 2021 but growth was counteracted by a 11% drop in recycling. Mine production and recycled gold remain
the dominant sources of gold supply, and in 2021 they represented approximately 75% and 25% of total supply, respectively.
Source: World Gold Council 2021 Gold Demand Trends report
According to the World Gold Council, total demand for gold in 2021 increased by approximately 10% compared to 2020. Annual
demand recovered across most sectors except ETF and similar products which saw net annual outflows. Central bank buying outpaced
that of 2020 and increased approximately 82% compared to 2020. Demand for gold in the consumer-driven jewelry sector recovered
throughout the year in line with economic growth and sentiment, and increased approximately 67% compared to 2020.
8
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Gold Supply and Demand Fundamentals
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Source: World Gold Council 2021 Gold Demand Trends report
According to the World Gold Council, total gold supply in 2021 decreased marginally, by approximately 1%, compared to 2020. Mine
production recovered 2% in 2021 but growth was counteracted by a 11% drop in recycling. Mine production and recycled gold remain
the dominant sources of gold supply, and in 2021 they represented approximately 75% and 25% of total supply, respectively.
Source: World Gold Council 2021 Gold Demand Trends report
According to the World Gold Council, total demand for gold in 2021 increased by approximately 10% compared to 2020. Annual
demand recovered across most sectors except ETF and similar products which saw net annual outflows. Central bank buying outpaced
that of 2020 and increased approximately 82% compared to 2020. Demand for gold in the consumer-driven jewelry sector recovered
throughout the year in line with economic growth and sentiment, and increased approximately 67% compared to 2020.
8
9
9 MDA
30836 Q30 - KINROSS AR-Proof.pdf - p20 (March 31, 2022 01:56:28)
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Cost Sensitivity
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 increases in 2021, primarily due to the strengthening fuel demand
and global energy supply concerns. 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 71% of the
Company’s expected attributable production in 2022 is forecast to come from operations outside the U.S. and costs will continue to
be exposed to foreign exchange rate movements. In order to manage this risk, the Company uses currency hedges for certain foreign
currency exposures – refer to Section 6 - Liquidity and Capital Resources for details.
Source: Bloomberg
In order to mitigate the impact of higher consumable prices, the Company continues to focus on continuous improvement, both by
promoting more efficient use of materials and supplies, and by pursuing more advantageous pricing, whilst increasing performance
and without compromising operational integrity.
10
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Cost Sensitivity
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 increases in 2021, primarily due to the strengthening fuel demand
and global energy supply concerns. 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 71% of the
Company’s expected attributable production in 2022 is forecast to come from operations outside the U.S. and costs will continue to
be exposed to foreign exchange rate movements. In order to manage this risk, the Company uses currency hedges for certain foreign
currency exposures – refer to Section 6 - Liquidity and Capital Resources for details.
Source: Bloomberg
In order to mitigate the impact of higher consumable prices, the Company continues to focus on continuous improvement, both by
promoting more efficient use of materials and supplies, and by pursuing more advantageous pricing, whilst increasing performance
and without compromising operational integrity.
10
11
11 MDA
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
3. OUTLOOK
The forward‐looking information contained in this section is subject to the risk factors and assumptions contained in the Cautionary
Statement on Forward‐Looking Information included with this MD&A and the risk factors set out in Section 10 ‐ Risk Analysis.
This Outlook section references attributable production cost of sales per equivalent ounce sold and attributable all-in sustaining cost
per equivalent ounce sold and per ounce sold on a by-product basis, all of which are non-GAAP financial ratios. The definitions of these
non-GAAP financial ratios and comparable reconciliations are included in Section 11 of this MD&A.
Attributable Production Guidance
Capital Expenditures Guidance
In 2022, the Company expects to produce 2.65 million attributable gold equivalent ounces (+/- 5%) from its operations, which is a 28%
increase from the Company’s 2021 production. Annual production is expected to further increase to 2.8 million attributable gold
equivalent ounces (+/- 5%) in 2023. The Company expects to produce 2.6 million attributable gold equivalent ounces in 2024 and has
maintained its strong production profile of estimated average production of at least 2.5 million attributable gold equivalent ounces
per year over the remainder of the decade.
In 2022, attributable production is expected to be higher in the second half of the year, which is largely driven by production from La
Coipa, as it is scheduled to reach full operating capacity at mid-year, as well as higher production expected at Paracatu and Tasiast.
Kinross made modest adjustments to its 2022 and 2023 production mid-point guidance estimates, with 2022 expected to be impacted
by the COVID-19 Omicron variant’s effect on productivity and supply chain logistics at Tasiast, and fewer ounces expected from the
Vantage heap leach pad at Bald Mountain. In 2023, the Company’s production outlook is expected to be impacted by the deferral of
some production at several sites, including La Coipa, Bald Mountain, Kupol and Chirano. These deferrals are expected to extend mine
life and increase total life of mine production. The Phase W deferral at Round Mountain also impacted the Company’s 2023 production
outlook, while the 2024 production outlook excludes the Manh Choh project.
The expected attributable production growth in 2022 and 2023, and Kinross’ strong long-term production profile, represents
additional ounces enabled by planned life of mine extensions and projects resulting from the Company’s previous capital investments,
continuous improvement programs, and an exploration strategy focused on promising prospects around existing operations.
Inflation Impact
The ongoing global impacts of the COVID-19 pandemic and inflation have been factored into the Company’s 2022 attributable cost of
sales and capital expenditures guidance. Potential additional inflationary impacts have been excluded from the Company’s directional
forecasts on 2023 attributable cost of sales and 2023-2024 capital costs.
Attributable Cost of Sales Guidance
Attributable production cost of sales per equivalent ounce sold
Consolidated production cost of sales per equivalent ounce sold
Attributable all-in sustaining cost per equivalent ounce sold
Attributable all-in sustaining cost per ounce sold on a by-product basis
2022 Guidance
(+/-5%)
$
$
$
$
830
835
1,130
1,100
2021 Full-Year
Results
$
$
$
$
828
832
1,138
1,118
Attributable production cost of sales per equivalent ounce sold is expected to be $830 (+/- 5%) for 2022. Attributable production cost
of sales per equivalent ounce sold is expected to be higher in the first half of the year and decrease during the second half of the year
largely due to the anticipated increase in production.
Kinross’ attributable production cost of sales per equivalent ounce sold outlook for 2023 is expected to be lower compared with 2022,
excluding impacts of inflation, mainly due to the planned growth in production.
The Company expects its attributable all-in sustaining cost to be $1,130 (+/- 5%) per equivalent ounce sold for 2022, which is largely
in line with 2021 results.
Material assumptions used to forecast 2022 production costs are: a gold price of $1,500 per ounce, a silver price of $20 per ounce, an
oil price of $70 per barrel, and foreign exchange rates of 5.00 Brazilian reais to the U.S. dollar, 1.25 Canadian dollars to the U.S. dollar,
70 Russian roubles to the U.S. dollar, 750 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 0.85 U.S. dollars to the Euro.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Taking into account existing currency and oil hedges, a 10% change in foreign currency exchange rates would be expected to result in
an approximate $20 impact on attributable 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 $25 and $30 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 fuel consumption costs on attributable 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 attributable production
cost of sales per equivalent ounce sold as a result of a change in royalties.
Total capital expenditures for 2022 are forecast to be approximately $1,050 million (+/- 5%). Of this amount, sustaining capital
expenditures are expected to be approximately $505 million, with non-sustaining capital expenditures of approximately $545 million
for the La Coipa Restart (including Puren), Udinsk, Tasiast’s West Branch stripping and 24k project, ESG projects, and other
development and growth projects and studies. The capital expenditures guidance is higher than previous estimates mainly due to
inflationary pressures, a pull forward of planned spending at Udinsk to de-risk the project schedule, additional stripping at La Coipa
with the inclusion of Puren into the project plan, and the inclusion of approximately $50 million for ESG initiatives such as the Tasiast
solar power project.
Kinross’ capital expenditures outlook for 2023 and 2024 is expected to be largely in line with 2022 at approximately $1 billion per year.
The outlook is based on Kinross’ current baseline production guidance and includes projects such as Udinsk, La Coipa’s Puren deposit
and scope changes in the portfolio, which were not included in the Company’s previous multi-year capital expenditure outlook. As
Kinross continues to develop and optimize its portfolio, other projects may be incorporated into its capital expenditures, as well as
inflation impacts, over the 2023-2024 timeframe. These projects include Manh Choh, which is not included in the 2023 and 2024
capital expenditures outlook.
Other Guidance
The 2022 forecast for exploration is approximately $130 million, all of which is expected to be expensed, and is a $10 million increase
from last year’s forecast. The exploration program (greenfields and brownfields) will follow up on 2021’s exploration success, including
focusing on the Kupol Synergy Zone of Influence (“KSP”), the 130 kilometre radius around Kupol based on an economic trucking
distance to the mill, and starting an underground exploration drift at Round Mountain. The exploration forecast does not include
activities planned at the Dixie project in Red Lake, Ontario, pending the expected closing of the Great Bear acquisition.
The 2022 forecast for overhead (general and administrative and business development expenses) is approximately $160 million, which
is largely in line with last year’s guidance. The Company has made cost improvements over recent years, with 2022 annual overhead
guidance down $45 million over the past five years.
Other operating costs expected to be incurred in 2022 are approximately $125 million (+/- 5%), which are principally due to care and
maintenance, reclamation, and 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 $50 million and
taxes paid is expected to be $170 million. Adjusting the Brazilian real and Russian rouble to the respective exchange rates of 5.58 and
74.3 to the U.S. dollar in effect at December 31, 2021, tax expense would be expected to be $105 million. Tax expense is expected to
increase by 24% of any profit resulting from higher gold prices. Taxes paid is expected to increase by approximately $20 million for
every $100 increase in the realized gold price.
Depreciation, depletion and amortization is forecast to be approximately $400 per Au eq. oz. (+/- 5%).
Interest paid is forecast to be approximately $85 million, which includes $35 million of capitalized interest. The interest paid forecast
does not include any interest payment related to the expected financing of the Great Bear acquisition.
12
13
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
3. OUTLOOK
The forward‐looking information contained in this section is subject to the risk factors and assumptions contained in the Cautionary
Statement on Forward‐Looking Information included with this MD&A and the risk factors set out in Section 10 ‐ Risk Analysis.
This Outlook section references attributable production cost of sales per equivalent ounce sold and attributable all-in sustaining cost
per equivalent ounce sold and per ounce sold on a by-product basis, all of which are non-GAAP financial ratios. The definitions of these
non-GAAP financial ratios and comparable reconciliations are included in Section 11 of this MD&A.
In 2022, the Company expects to produce 2.65 million attributable gold equivalent ounces (+/- 5%) from its operations, which is a 28%
increase from the Company’s 2021 production. Annual production is expected to further increase to 2.8 million attributable gold
equivalent ounces (+/- 5%) in 2023. The Company expects to produce 2.6 million attributable gold equivalent ounces in 2024 and has
maintained its strong production profile of estimated average production of at least 2.5 million attributable gold equivalent ounces
per year over the remainder of the decade.
In 2022, attributable production is expected to be higher in the second half of the year, which is largely driven by production from La
Coipa, as it is scheduled to reach full operating capacity at mid-year, as well as higher production expected at Paracatu and Tasiast.
Kinross made modest adjustments to its 2022 and 2023 production mid-point guidance estimates, with 2022 expected to be impacted
by the COVID-19 Omicron variant’s effect on productivity and supply chain logistics at Tasiast, and fewer ounces expected from the
Vantage heap leach pad at Bald Mountain. In 2023, the Company’s production outlook is expected to be impacted by the deferral of
some production at several sites, including La Coipa, Bald Mountain, Kupol and Chirano. These deferrals are expected to extend mine
life and increase total life of mine production. The Phase W deferral at Round Mountain also impacted the Company’s 2023 production
outlook, while the 2024 production outlook excludes the Manh Choh project.
The expected attributable production growth in 2022 and 2023, and Kinross’ strong long-term production profile, represents
additional ounces enabled by planned life of mine extensions and projects resulting from the Company’s previous capital investments,
continuous improvement programs, and an exploration strategy focused on promising prospects around existing operations.
The ongoing global impacts of the COVID-19 pandemic and inflation have been factored into the Company’s 2022 attributable cost of
sales and capital expenditures guidance. Potential additional inflationary impacts have been excluded from the Company’s directional
forecasts on 2023 attributable cost of sales and 2023-2024 capital costs.
Inflation Impact
Attributable Cost of Sales Guidance
Attributable production cost of sales per equivalent ounce sold
Consolidated production cost of sales per equivalent ounce sold
Attributable all-in sustaining cost per equivalent ounce sold
Attributable all-in sustaining cost per ounce sold on a by-product basis
2022 Guidance
2021 Full-Year
(+/-5%)
Results
$
830
$
828
$
835
$
832
$
1,130
$
1,138
$
1,100
$
1,118
Attributable production cost of sales per equivalent ounce sold is expected to be $830 (+/- 5%) for 2022. Attributable production cost
of sales per equivalent ounce sold is expected to be higher in the first half of the year and decrease during the second half of the year
largely due to the anticipated increase in production.
Kinross’ attributable production cost of sales per equivalent ounce sold outlook for 2023 is expected to be lower compared with 2022,
excluding impacts of inflation, mainly due to the planned growth in production.
The Company expects its attributable all-in sustaining cost to be $1,130 (+/- 5%) per equivalent ounce sold for 2022, which is largely
in line with 2021 results.
Material assumptions used to forecast 2022 production costs are: a gold price of $1,500 per ounce, a silver price of $20 per ounce, an
oil price of $70 per barrel, and foreign exchange rates of 5.00 Brazilian reais to the U.S. dollar, 1.25 Canadian dollars to the U.S. dollar,
70 Russian roubles to the U.S. dollar, 750 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 0.85 U.S. dollars to the Euro.
12
Attributable Production Guidance
Capital Expenditures Guidance
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Taking into account existing currency and oil hedges, a 10% change in foreign currency exchange rates would be expected to result in
an approximate $20 impact on attributable 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 $25 and $30 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 fuel consumption costs on attributable 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 attributable production
cost of sales per equivalent ounce sold as a result of a change in royalties.
Total capital expenditures for 2022 are forecast to be approximately $1,050 million (+/- 5%). Of this amount, sustaining capital
expenditures are expected to be approximately $505 million, with non-sustaining capital expenditures of approximately $545 million
for the La Coipa Restart (including Puren), Udinsk, Tasiast’s West Branch stripping and 24k project, ESG projects, and other
development and growth projects and studies. The capital expenditures guidance is higher than previous estimates mainly due to
inflationary pressures, a pull forward of planned spending at Udinsk to de-risk the project schedule, additional stripping at La Coipa
with the inclusion of Puren into the project plan, and the inclusion of approximately $50 million for ESG initiatives such as the Tasiast
solar power project.
Kinross’ capital expenditures outlook for 2023 and 2024 is expected to be largely in line with 2022 at approximately $1 billion per year.
The outlook is based on Kinross’ current baseline production guidance and includes projects such as Udinsk, La Coipa’s Puren deposit
and scope changes in the portfolio, which were not included in the Company’s previous multi-year capital expenditure outlook. As
Kinross continues to develop and optimize its portfolio, other projects may be incorporated into its capital expenditures, as well as
inflation impacts, over the 2023-2024 timeframe. These projects include Manh Choh, which is not included in the 2023 and 2024
capital expenditures outlook.
Other Guidance
The 2022 forecast for exploration is approximately $130 million, all of which is expected to be expensed, and is a $10 million increase
from last year’s forecast. The exploration program (greenfields and brownfields) will follow up on 2021’s exploration success, including
focusing on the Kupol Synergy Zone of Influence (“KSP”), the 130 kilometre radius around Kupol based on an economic trucking
distance to the mill, and starting an underground exploration drift at Round Mountain. The exploration forecast does not include
activities planned at the Dixie project in Red Lake, Ontario, pending the expected closing of the Great Bear acquisition.
The 2022 forecast for overhead (general and administrative and business development expenses) is approximately $160 million, which
is largely in line with last year’s guidance. The Company has made cost improvements over recent years, with 2022 annual overhead
guidance down $45 million over the past five years.
Other operating costs expected to be incurred in 2022 are approximately $125 million (+/- 5%), which are principally due to care and
maintenance, reclamation, and 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 $50 million and
taxes paid is expected to be $170 million. Adjusting the Brazilian real and Russian rouble to the respective exchange rates of 5.58 and
74.3 to the U.S. dollar in effect at December 31, 2021, tax expense would be expected to be $105 million. Tax expense is expected to
increase by 24% of any profit resulting from higher gold prices. Taxes paid is expected to increase by approximately $20 million for
every $100 increase in the realized gold price.
Depreciation, depletion and amortization is forecast to be approximately $400 per Au eq. oz. (+/- 5%).
Interest paid is forecast to be approximately $85 million, which includes $35 million of capitalized interest. The interest paid forecast
does not include any interest payment related to the expected financing of the Great Bear acquisition.
13 MDA
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30836 Q30 - KINROSS AR-Proof.pdf - p24 (March 31, 2022 01:56:28)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
4. PROJECT UPDATES AND NEW DEVELOPMENTS
Tasiast 24k
The Tasiast 24k project continues to advance well, with the first phase of the project on schedule to reach sustained throughput of
21,000 tonnes per day by the end of the first quarter of 2022. The power plant started operations in the fourth quarter of 2021 and
commissioning is ongoing at a number of facilities that are part of the project’s first phase. The second phase of the project is also
progressing well and is on schedule to reach throughput of 24,000 tonnes per day by mid-2023. Engineering for the second phase of
the project is 60% complete, with all major equipment purchased and construction of the site’s third leach tank 50% complete.
Tasiast solar project
As part of Kinross’ efforts to reduce its greenhouse gas (“GHG”) emissions, the Company is proceeding with the development of a
photovoltaic solar power plant at Tasiast with power generation capacity of 34 MW and a battery system of 18 MW.
The plant is expected to generate positive returns and reduce GHG emissions by up to 50 Kt per year, or approximately 530 Kt over
the life of mine, which could save approximately 180 million litres of fuel over the same period. The plant is expected to be integrated
with Tasiast’s power generation suite, and provide approximately 20% of the site’s power. Site activities, such as geotechnical drilling
for solar panel foundations, is expected to commence in the second quarter of 2022, with the plant scheduled to be completed in the
third quarter of 2023. The project is expected to cost approximately $55 million and contribute to the Government of Mauritania’s
GHG reduction targets in the country.
La Coipa Restart
The La Coipa Restart project in Chile continued to make excellent progress, with commissioning of the plant commencing in February
2022, on schedule and on budget. The project is currently using lower grade stockpile ore for commissioning, with the plant expected
to ramp up over the first half of the year to reach full operating capacity mid-year. Plant refurbishments of critical components are
essentially complete, with other ongoing refurbishments planned during the ramp up period. The construction of the mine road has
been completed.
Kinross has increased La Coipa’s expected life of mine production by 45% to approximately 1 million gold equivalent ounces, compared
with the previous estimate of 690,000 gold equivalent ounces by incorporating the nearby Puren pit into the project and optimizing
the Phase 7 mine plan. The increase in production has extended La Coipa’s estimated mine life to early 2026 from 2024. With the
positive changes to the mine plan, some ounces expected in 2023 are planned to be deferred into later years due to blending of lower
grade Puren ore with Phase 7 ore. Pre-stripping at the main Phase 7 pit continues on schedule, with pre-stripping at Puren expected
to start early in the second quarter of 2022.
The Company continues to study other opportunities to further expand La Coipa’s mine plan, including an additional Puren pushback
and incorporating other adjacent pits into the project. Kinross has also recently signed a power purchase agreement to supply La Coipa
with 100% renewable power to meet its power needs, in line with the Company’s GHG reduction strategy.
As a result of mine plan optimizations, the Company added to La Coipa’s gold and silver mineral reserve estimates. Kinross also added
to the project’s gold and silver mineral resource estimates, mainly due to the change in the Company’s silver price assumption for
mineral resources from $20 per ounce to $22 per ounce:
27,000 gold ounces2 added to proven and probable reserves and 251,000 gold ounces2 added to measured and indicated
•
resources;
857,000 silver ounces2 added to proven and probable mineral reserves and 6,588,000 silver ounces2 added to measured and
•
indicated resources.
Lobo-Marte
After completion of the Lobo-Marte feasibility study last quarter, the Company continues to work on activities related to permitting,
and the Environmental Impact Assessment. The timing for Lobo-Marte is dependent on permitting and the conclusion of mining at La
Coipa. Should further La Coipa mine life extension opportunities be successful, such as the additional Puren pushback and
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
incorporating other adjacent pits, Lobo-Marte’s timing is expected to be affected accordingly.
Lobo-Marte provides optionality for Kinross’ long-term portfolio and the Company sees potential to develop the project into a large,
low-cost mine. The go-forward decision will depend on a range of factors, including the gold price environment and projections,
expected economic returns, and permitting.
Udinsk
The Udinsk feasibility study continues to advance engineering with a focus on design optimization, capital cost updates and trend
analysis. The Company has now incorporated the construction of a power line to connect Udinsk to the regional grid as part of the
base case feasibility study. In addition to reducing GHG emissions, the power line can potentially improve life of mine costs, project
economics, and local power availability in local communities.
The feasibility study is also contemplating mine plan optimizations to enhance value and project economics that may bring incremental
capital requirements. These include higher benches to potentially expand the pit and increase mine life, and optimizing plans for roads
Capital cost and operating cost input pricing updates, including incorporating potential inflation impacts, will commence late in the
first quarter of 2022 and will be completed as engineering designs are finalized and execution planning is completed. Permitting work
is also advancing, as well as community engagement activities. The feasibility study is on schedule to be completed in the third quarter
Project construction is expected to commence with early work activities in late 2022, and first production is planned for the fourth
quarter of 2025, pending a positive development decision.
Exploration work during 2021 has identified several targets that are expected to be tested during 2022.
and the camp.
of 2022.
Manh Choh
At the 70%-owned Manh Choh project, normal course permit applications were submitted at the end of 2021, including an application
to the United States Army Corps of Engineers for a permit to disturb wetlands under Section 404 of the Clean Water Act. The public
comment period on the wetlands permit ended on February 13, 2022. Feasibility study work is advancing and the Company continues
to refine the project plan, including implementing strategies to address potential impacts of inflation and contractor and labour market
constraints in Alaska. The feasibility study is on schedule to be completed by the end of 2022 and, subject to permitting, initial
production is expected to commence in late 2024.
Kinross is continuing to prioritize transparent engagement with local communities and the Village of Tetlin as it develops the project,
building on its long and successful history of safe, responsible mining in Alaska. Manh Choh is expected to generate significant
economic benefits for state and local communities, and the project plan minimizes Manh Choh’s environmental footprint by avoiding
the construction of a mill and tailings facilities by transporting ore to Fort Knox for processing.
Other developments
Share buyback and dividend
million in dividends.
Tasiast mill re-start update
In 2021, Kinross enhanced shareholder returns through its share buyback and quarterly dividend programs, which are underpinned
by the Company’s investment grade balance sheet, free cash flow profile and expected production growth. During the past year,
Kinross returned a total of $251.3 million in capital to shareholders.
In 2021, the Company repurchased and cancelled 17.6 million of its common shares for $100.2 million and returned a total of $151.1
Tasiast made excellent progress re-starting the mill in the second half of the year and completed a successful recommissioning with
no material mechanical issues encountered. In the fourth quarter of 2021, the site achieved its production target of 15,000 gold
equivalent ounces after re-starting the plant processing lower grade stockpile ore. Throughput gradually ramped up during the
quarter, with the mill reaching throughput of 19,000-20,000 tonnes per day in January 2022 on a sustained basis.
2 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 16, 2022.
14
15
MDA 14
30836 Q30 - KINROSS AR-Proof.pdf - p25 (March 31, 2022 01:56:28)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
4. PROJECT UPDATES AND NEW DEVELOPMENTS
Tasiast 24k
The Tasiast 24k project continues to advance well, with the first phase of the project on schedule to reach sustained throughput of
21,000 tonnes per day by the end of the first quarter of 2022. The power plant started operations in the fourth quarter of 2021 and
commissioning is ongoing at a number of facilities that are part of the project’s first phase. The second phase of the project is also
progressing well and is on schedule to reach throughput of 24,000 tonnes per day by mid-2023. Engineering for the second phase of
the project is 60% complete, with all major equipment purchased and construction of the site’s third leach tank 50% complete.
Tasiast solar project
As part of Kinross’ efforts to reduce its greenhouse gas (“GHG”) emissions, the Company is proceeding with the development of a
photovoltaic solar power plant at Tasiast with power generation capacity of 34 MW and a battery system of 18 MW.
The plant is expected to generate positive returns and reduce GHG emissions by up to 50 Kt per year, or approximately 530 Kt over
the life of mine, which could save approximately 180 million litres of fuel over the same period. The plant is expected to be integrated
with Tasiast’s power generation suite, and provide approximately 20% of the site’s power. Site activities, such as geotechnical drilling
for solar panel foundations, is expected to commence in the second quarter of 2022, with the plant scheduled to be completed in the
third quarter of 2023. The project is expected to cost approximately $55 million and contribute to the Government of Mauritania’s
GHG reduction targets in the country.
La Coipa Restart
The La Coipa Restart project in Chile continued to make excellent progress, with commissioning of the plant commencing in February
2022, on schedule and on budget. The project is currently using lower grade stockpile ore for commissioning, with the plant expected
to ramp up over the first half of the year to reach full operating capacity mid-year. Plant refurbishments of critical components are
essentially complete, with other ongoing refurbishments planned during the ramp up period. The construction of the mine road has
been completed.
Kinross has increased La Coipa’s expected life of mine production by 45% to approximately 1 million gold equivalent ounces, compared
with the previous estimate of 690,000 gold equivalent ounces by incorporating the nearby Puren pit into the project and optimizing
the Phase 7 mine plan. The increase in production has extended La Coipa’s estimated mine life to early 2026 from 2024. With the
positive changes to the mine plan, some ounces expected in 2023 are planned to be deferred into later years due to blending of lower
grade Puren ore with Phase 7 ore. Pre-stripping at the main Phase 7 pit continues on schedule, with pre-stripping at Puren expected
to start early in the second quarter of 2022.
The Company continues to study other opportunities to further expand La Coipa’s mine plan, including an additional Puren pushback
and incorporating other adjacent pits into the project. Kinross has also recently signed a power purchase agreement to supply La Coipa
with 100% renewable power to meet its power needs, in line with the Company’s GHG reduction strategy.
As a result of mine plan optimizations, the Company added to La Coipa’s gold and silver mineral reserve estimates. Kinross also added
to the project’s gold and silver mineral resource estimates, mainly due to the change in the Company’s silver price assumption for
mineral resources from $20 per ounce to $22 per ounce:
•
27,000 gold ounces2 added to proven and probable reserves and 251,000 gold ounces2 added to measured and indicated
•
857,000 silver ounces2 added to proven and probable mineral reserves and 6,588,000 silver ounces2 added to measured and
resources;
indicated resources.
Lobo-Marte
After completion of the Lobo-Marte feasibility study last quarter, the Company continues to work on activities related to permitting,
and the Environmental Impact Assessment. The timing for Lobo-Marte is dependent on permitting and the conclusion of mining at La
Coipa. Should further La Coipa mine life extension opportunities be successful, such as the additional Puren pushback and
2 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 16, 2022.
14
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
incorporating other adjacent pits, Lobo-Marte’s timing is expected to be affected accordingly.
Lobo-Marte provides optionality for Kinross’ long-term portfolio and the Company sees potential to develop the project into a large,
low-cost mine. The go-forward decision will depend on a range of factors, including the gold price environment and projections,
expected economic returns, and permitting.
Udinsk
The Udinsk feasibility study continues to advance engineering with a focus on design optimization, capital cost updates and trend
analysis. The Company has now incorporated the construction of a power line to connect Udinsk to the regional grid as part of the
base case feasibility study. In addition to reducing GHG emissions, the power line can potentially improve life of mine costs, project
economics, and local power availability in local communities.
The feasibility study is also contemplating mine plan optimizations to enhance value and project economics that may bring incremental
capital requirements. These include higher benches to potentially expand the pit and increase mine life, and optimizing plans for roads
and the camp.
Capital cost and operating cost input pricing updates, including incorporating potential inflation impacts, will commence late in the
first quarter of 2022 and will be completed as engineering designs are finalized and execution planning is completed. Permitting work
is also advancing, as well as community engagement activities. The feasibility study is on schedule to be completed in the third quarter
of 2022.
Project construction is expected to commence with early work activities in late 2022, and first production is planned for the fourth
quarter of 2025, pending a positive development decision.
Exploration work during 2021 has identified several targets that are expected to be tested during 2022.
Manh Choh
At the 70%-owned Manh Choh project, normal course permit applications were submitted at the end of 2021, including an application
to the United States Army Corps of Engineers for a permit to disturb wetlands under Section 404 of the Clean Water Act. The public
comment period on the wetlands permit ended on February 13, 2022. Feasibility study work is advancing and the Company continues
to refine the project plan, including implementing strategies to address potential impacts of inflation and contractor and labour market
constraints in Alaska. The feasibility study is on schedule to be completed by the end of 2022 and, subject to permitting, initial
production is expected to commence in late 2024.
Kinross is continuing to prioritize transparent engagement with local communities and the Village of Tetlin as it develops the project,
building on its long and successful history of safe, responsible mining in Alaska. Manh Choh is expected to generate significant
economic benefits for state and local communities, and the project plan minimizes Manh Choh’s environmental footprint by avoiding
the construction of a mill and tailings facilities by transporting ore to Fort Knox for processing.
Other developments
Share buyback and dividend
In 2021, Kinross enhanced shareholder returns through its share buyback and quarterly dividend programs, which are underpinned
by the Company’s investment grade balance sheet, free cash flow profile and expected production growth. During the past year,
Kinross returned a total of $251.3 million in capital to shareholders.
In 2021, the Company repurchased and cancelled 17.6 million of its common shares for $100.2 million and returned a total of $151.1
million in dividends.
Tasiast mill re-start update
Tasiast made excellent progress re-starting the mill in the second half of the year and completed a successful recommissioning with
no material mechanical issues encountered. In the fourth quarter of 2021, the site achieved its production target of 15,000 gold
equivalent ounces after re-starting the plant processing lower grade stockpile ore. Throughput gradually ramped up during the
quarter, with the mill reaching throughput of 19,000-20,000 tonnes per day in January 2022 on a sustained basis.
15 MDA
15
30836 Q30 - KINROSS AR-Proof.pdf - p26 (March 31, 2022 01:56:28)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Agreement with Government of Mauritania
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
5. CONSOLIDATED RESULTS OF OPERATIONS
In January 2022, the Company reached an agreement with the Government of Mauritania (“Government”) regarding two licenses
located west, east and north of the main Tasiast operation. Kinross has agreed to renew exploration activities at these licenses and
has committed to spend $10 million in exploration over the next three years. As part of its commitment, the Company is budgeting $5
million for exploration in 2022 at these licenses.
Round Mountain mine optimization
The Company implemented initiatives to stabilize the wall in 2021, including dewatering and moving waste material from the pit rim.
As a result of the mine optimization program, which was initiated in the first quarter of 2021, 938,000 gold ounces at Phase S were
converted to proven and probable mineral reserves at year-end 2021 and additional challenges were identified in the west wall of the
Phase W area which may affect Round Mountain’s annual production plans post 2024. The program is evaluating further initiatives to
enhance wall stability, including shallower pit wall slope angles over a more extensive area, and alternative mine plan opportunities,
such as incorporating the Phase S pushback.
The alternative mine plan opportunities also include modified open pit sequencing for Phase W and Phase S and the potential for
underground mining for portions of Phase W and Phase X. The Company is planning to construct a drift for underground exploration
at Phase X in 2022 after positive exploration results in 2021. Given the mine optimization program’s expanded parameters, results of
the analysis are now expected in the second half of 2022.
Great Bear Resources acquisition update
On December 8, 2021, Kinross announced that it had entered into a definitive agreement (“Agreement”) to acquire Great Bear
Resources Ltd. (“Great Bear”), which includes the flagship Dixie project located in the prolific Red Lake mining district in Ontario,
Canada. The Dixie project has excellent potential to become a top tier deposit that could support a large, long-life mine complex and
bolster Kinross’ long-term production outlook.
Under the terms of the Agreement, Kinross has agreed to an upfront payment of approximately $1.4 billion (C$1.8 billion),
representing C$29.003 per Great Bear common share on a fully-diluted basis. The upfront payment will be payable at the election of
Great Bear shareholders in cash and Kinross common shares subject to pro-ration to a maximum cash consideration of approximately
$1.1 billion (C$1.4 billion) and a maximum of approximately 80.7 million Kinross common shares. The Agreement also includes a
payment of contingent consideration in the form of contingent value rights that may be exchanged for 0.1330 of a Kinross common
share per Great Bear common share. The contingent consideration will be payable in connection with Kinross’ public announcement
of commercial production at the Dixie project, provided that a cumulative total of at least 8.5 million gold ounces of mineral reserves
and measured and indicated mineral resources are disclosed.
Upon completion of the transaction, Kinross expects to rapidly advance exploration activities at the LP Fault zone, the most significant
discovery to date at Dixie. These activities include 200,000 metres of planned drilling in 2022, which is expected to largely focus on
infill drilling and multiple other targets. Kinross plans to undertake a comprehensive exploration and development program at the
Dixie project which aims to support Kinross’ vision of a quality, high-grade, open-pit mine and a longer-term, sizeable underground
mine.
Great Bear security holders approved the Agreement on February 14, 2022, with approximately 98% of the votes cast in favour of the
acquisition. The Company received final court approval on February 16, 2022, and the transaction is expected to close during the first
quarter of 2022.
(in millions, except ounces and per ounce amounts)
2021
2020
2019
Change
% Change
Change
% Change
Years ended December 31,
2021 vs. 2020
2020 vs. 2019
Operating Highlights
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
2,083,016
2,383,307
2,527,788
(300,291)
(13%)
(144,481)
2,075,738
2,375,548
2,512,758
(299,810)
(13%)
(137,210)
2,067,549
2,366,648
2,507,659
(299,099)
(13%)
(141,011)
2,060,909
2,358,927
2,492,572
(298,018)
(13%)
(133,645)
2,015,068
2,324,324
2,458,839
(309,256)
(13%)
(134,515)
4,344
4,429
4,636
(85)
$
1,797
$
1,774
$
1,392
$
23
(2%)
(207)
1%
$
382
$
3,729.4
$
4,213.4
$
3,497.3
$
(484.0)
(11%)
$
716.1
$
1,726.1
$
1,725.7
$
1,778.9
$
0.4
0%
$
(53.2)
$
840.9
$
842.3
$
731.3
$
(1.4)
(0%)
$
111.0
Impairment charges (reversals) and asset derecognition - net
$
144.5
$
(650.9)
$
(361.8)
$
795.4
122%
$
(289.1)
Operating earnings
Net earnings attributable to common shareholders
$
463.6
$
221.2
$
1,899.4
$
991.1
$
(1,435.8)
$
1,342.4
$
718.6
$
(1,121.2)
(76%)
(84%)
$
908.3
$
623.8
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production and costs, and Manh Choh (70%)
"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 2021 was 71.51:1 (2020 - 86.32:1 and 2019 - 85.99:1).
“Average realized gold price per ounce” is defined as gold metal sales divided by the total number of gold ounces sold.
costs.
(a)
(b)
(c)
Operating Earnings (Loss) by Segment
Years ended December 31,
2021 vs. 2020
2020 vs. 2019
2021
2020
2019
Change
% Change(c)
Change % Change(c)
(in millions)
Operating segments
Fort Knox
Round Mountain
Bald Mountain
Paracatu
Kupol(a)
Tasiast
Chirano
Non-operating segment
Corporate and other(b)
Total
$
91.9
$
67.0
$
(52.9)
$
24.9
108.6
(174.7)
384.4
442.7
(67.0)
(20.4)
286.8
34.6
407.0
410.5
504.3
238.1
207.3
12.7
492.2
281.1
285.1
(7.8)
(178.2)
(209.3)
(22.6)
32.2
(571.3)
(258.5)
37%
(62%)
nm
(6%)
8%
(113%)
(109%)
119.9
79.5
21.9
(85.2)
129.4
219.2
245.9
(301.9)
(48.9)
(226.6)
(253.0)
$
463.6
$
1,899.4
$
991.1
$
(1,435.8)
nm
177.7
(76%)
$
908.3
(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, Manh Choh and Maricunga).
(c)
"nm" means not meaningful.
(6%)
(5%)
(6%)
(5%)
(5%)
(4%)
27%
20%
(3%)
15%
(80%)
92%
87%
nm
38%
172%
(17%)
46%
77%
nm
78%
92%
3 Based upon the closing price of a Kinross share on the Toronto Stock Exchange as at December 7, 2021.
16
MDA 16
17
30836 Q30 - KINROSS AR-Proof.pdf - p27 (March 31, 2022 01:56:29)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Agreement with Government of Mauritania
In January 2022, the Company reached an agreement with the Government of Mauritania (“Government”) regarding two licenses
located west, east and north of the main Tasiast operation. Kinross has agreed to renew exploration activities at these licenses and
has committed to spend $10 million in exploration over the next three years. As part of its commitment, the Company is budgeting $5
million for exploration in 2022 at these licenses.
Round Mountain mine optimization
The Company implemented initiatives to stabilize the wall in 2021, including dewatering and moving waste material from the pit rim.
As a result of the mine optimization program, which was initiated in the first quarter of 2021, 938,000 gold ounces at Phase S were
converted to proven and probable mineral reserves at year-end 2021 and additional challenges were identified in the west wall of the
Phase W area which may affect Round Mountain’s annual production plans post 2024. The program is evaluating further initiatives to
enhance wall stability, including shallower pit wall slope angles over a more extensive area, and alternative mine plan opportunities,
such as incorporating the Phase S pushback.
The alternative mine plan opportunities also include modified open pit sequencing for Phase W and Phase S and the potential for
underground mining for portions of Phase W and Phase X. The Company is planning to construct a drift for underground exploration
at Phase X in 2022 after positive exploration results in 2021. Given the mine optimization program’s expanded parameters, results of
the analysis are now expected in the second half of 2022.
Great Bear Resources acquisition update
On December 8, 2021, Kinross announced that it had entered into a definitive agreement (“Agreement”) to acquire Great Bear
Resources Ltd. (“Great Bear”), which includes the flagship Dixie project located in the prolific Red Lake mining district in Ontario,
Canada. The Dixie project has excellent potential to become a top tier deposit that could support a large, long-life mine complex and
bolster Kinross’ long-term production outlook.
Under the terms of the Agreement, Kinross has agreed to an upfront payment of approximately $1.4 billion (C$1.8 billion),
representing C$29.003 per Great Bear common share on a fully-diluted basis. The upfront payment will be payable at the election of
Great Bear shareholders in cash and Kinross common shares subject to pro-ration to a maximum cash consideration of approximately
$1.1 billion (C$1.4 billion) and a maximum of approximately 80.7 million Kinross common shares. The Agreement also includes a
payment of contingent consideration in the form of contingent value rights that may be exchanged for 0.1330 of a Kinross common
share per Great Bear common share. The contingent consideration will be payable in connection with Kinross’ public announcement
of commercial production at the Dixie project, provided that a cumulative total of at least 8.5 million gold ounces of mineral reserves
and measured and indicated mineral resources are disclosed.
Upon completion of the transaction, Kinross expects to rapidly advance exploration activities at the LP Fault zone, the most significant
discovery to date at Dixie. These activities include 200,000 metres of planned drilling in 2022, which is expected to largely focus on
infill drilling and multiple other targets. Kinross plans to undertake a comprehensive exploration and development program at the
Dixie project which aims to support Kinross’ vision of a quality, high-grade, open-pit mine and a longer-term, sizeable underground
Great Bear security holders approved the Agreement on February 14, 2022, with approximately 98% of the votes cast in favour of the
acquisition. The Company received final court approval on February 16, 2022, and the transaction is expected to close during the first
mine.
quarter of 2022.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
5. CONSOLIDATED RESULTS OF OPERATIONS
Operating Highlights
(in millions, except ounces and per ounce amounts)
2021
2020
2019
Change
% Change
Change
% Change
Years ended December 31,
2021 vs. 2020
2020 vs. 2019
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
Impairment charges (reversals) and asset derecognition - net
Operating earnings
Net earnings attributable to common shareholders
2,083,016
2,383,307
2,527,788
(300,291)
(13%)
(144,481)
2,075,738
2,375,548
2,512,758
(299,810)
(13%)
(137,210)
2,067,549
2,366,648
2,507,659
(299,099)
(13%)
(141,011)
2,060,909
2,358,927
2,492,572
(298,018)
(13%)
(133,645)
2,015,068
4,344
1,797
$
2,324,324
4,429
1,774
$
2,458,839
4,636
1,392
$
(309,256)
(85)
23
$
(13%)
(2%)
1%
(134,515)
(207)
382
$
$
$
$
$
$
$
3,729.4
1,726.1
840.9
144.5
463.6
221.2
$
$
$
$
$
$
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
$
$
$
$
$
$
(484.0)
0.4
(1.4)
795.4
(1,435.8)
(1,121.2)
(11%)
0%
(0%)
122%
(76%)
(84%)
$
$
$
$
$
$
716.1
(53.2)
111.0
(289.1)
908.3
623.8
(6%)
(5%)
(6%)
(5%)
(5%)
(4%)
27%
20%
(3%)
15%
(80%)
92%
87%
(a)
(b)
(c)
"Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production and costs, and Manh Choh (70%)
costs.
"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 2021 was 71.51:1 (2020 - 86.32:1 and 2019 - 85.99:1).
“Average realized gold price per ounce” is defined as gold metal sales divided by the total number of gold ounces sold.
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)
Total
Years ended December 31,
2021 vs. 2020
2021
2020
2019
Change
% Change(c)
2020 vs. 2019
Change % Change(c)
$
91.9
108.6
(174.7)
384.4
442.7
(67.0)
(20.4)
$
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)
$
24.9
(178.2)
(209.3)
(22.6)
32.2
(571.3)
(258.5)
37%
(62%)
nm
(6%)
8%
(113%)
(109%)
119.9
79.5
21.9
(85.2)
129.4
219.2
245.9
(301.9)
463.6
$
(48.9)
1,899.4
$
(226.6)
$
991.1
(253.0)
(1,435.8)
$
nm
(76%)
177.7
908.3
$
nm
38%
172%
(17%)
46%
77%
nm
78%
92%
3 Based upon the closing price of a Kinross share on the Toronto Stock Exchange as at December 7, 2021.
16
(c)
17 MDA
17
(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, Manh Choh and Maricunga).
"nm" means not meaningful.
30836 Q30 - KINROSS AR-Proof.pdf - p28 (March 31, 2022 01:56:29)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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
Years ended December 31,
2021
2020
Change
% Change
34,961
37,899
0.70
81.2%
28,568
32,150
0.65
81.4%
6,393
5,749
0.05
(0.2%)
264,283
263,590
237,925
238,349
26,358
25,241
$
$
$
473.3
267.2
109.8
96.3
0.7
3.7
91.9
422.9
251.3
97.2
74.4
2.6
4.8
67.0
50.4
15.9
12.6
21.9
(1.9)
(1.1)
24.9
$
$
$
22%
18%
8%
(0%)
11%
11%
12%
6%
13%
29%
(73%)
(23%)
37%
Includes 29,840,000 tonnes placed on the heap leach pads during 2021 (2020 - 22,994,000 tonnes).
(a)
(b) Amount represents mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.20 grams per tonne during 2021
(2020 - 0.21 grams per tonne). Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
The Company has been operating the Fort Knox mine, located near Fairbanks, Alaska, since it was acquired in 1998.
2021 vs. 2020
In 2021, tonnes of ore mined increased by 22%, compared to 2020, largely due to planned mine sequencing. During the year, mining
activities were focused on mining a higher proportion of leachable ore from Phase 8 East and Phase 9. Tonnes of ore processed in
2021 increased by 18%, compared to 2020, primarily due to the increase in tonnes of ore mined and placed on the heap leach pads,
partially offset by lower mill throughput. Mill grades increased by 8% due to mine sequencing. Gold equivalent ounces produced and
sold in 2021 each increased by 11%, compared to 2020, due to an increase in ounces recovered from the heap leach pads.
Metal sales increased in 2021 by 12%, compared to 2020, due to the increase in gold equivalent ounces sold and the increase in
average metal prices realized. Production cost of sales increased by 6% in 2021, compared to 2020, largely due to an increase in gold
equivalent ounces sold, partially offset by the higher proportion of less costly ounces produced from the Barnes Creek heap leach pad.
Depreciation, depletion, and amortization increased by 13% in 2021, compared to 2020, due to an increase in gold equivalent ounces
sold and an increase in the depreciable asset base largely related to the Gilmore project.
18
19
MDA 18
30836 Q30 - KINROSS AR-Proof.pdf - p29 (March 31, 2022 01:56:29)
DT
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Round Mountain (100% ownership and operator) – USA
Operating Statistics
Tonnes ore mined (000's)
Tonnes processed (000's)(a)
Grade (grams/tonne)(b)
Recovery(b)
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Other operating expense
Exploration and business development
Segment operating earnings
Years ended December 31,
2021
2020
Change
% Change(c)
9,680
16,623
0.62
77.2%
20,758
23,975
0.83
83.3%
(11,078)
(7,352)
(0.21)
(6.1%)
257,005
259,941
324,277
319,228
(67,272)
(59,287)
$
466.6
$
565.5
$
(98.9)
235.9
65.2
165.5
51.3
5.6
219.6
49.6
296.3
3.9
5.6
(130.8)
16.3
15.6
47.4
-
$
108.6
$
286.8
$
(178.2)
(53%)
(31%)
(25%)
(7%)
(21%)
(19%)
(17%)
7%
31%
(44%)
nm
0%
(62%)
(a)
Includes 12,542,000 tonnes placed on the heap leach pads during 2021 (2020 - 20,151,000 tonnes).
(b) Amounts represent mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.37 grams per tonne during 2021
(2020 - 0.42 grams per tonne). Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
(c)
"nm" means not meaningful.
The Company acquired its 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.
2021 vs. 2020
Tonnes of ore mined in 2021 decreased by 53%, compared to 2020. Mining activities were impacted by precautionary measures taken
after wall instability in the north wall of the pit was detected by the site’s comprehensive monitoring system late in the first quarter
of 2021. The site deferred mining in the area, which delayed access to Phase W ore and affected production in 2021. Tonnes of ore
processed in 2021 decreased by 31%, compared to 2020, due to a decrease in tonnes placed on the heap leach pads. In 2021, mill
grades decreased by 25% compared to 2020, due to mine sequencing. Gold equivalent ounces produced and sold decreased by 21%
and 19% in 2021, respectively, compared to 2020, primarily due to lower mill grades and the timing of ounces recovered from the
heap leach pads. Gold equivalent ounces sold in 2021 were higher than production due to timing of sales.
In 2021, metal sales decreased by 17%, compared to 2020, due to the decrease in gold equivalent ounces sold, partially offset by the
increase in average metal prices realized. Production cost of sales in 2021 increased by 7% compared to 2020, largely due to higher
operating waste mined, and increases in royalties and production taxes, partially offset by the decrease in gold equivalent ounces sold.
Depreciation, depletion and amortization increased by 31% mainly due to an increase in the depreciable asset base, largely related to
the completion of Phase W construction, partially offset by the decrease in gold equivalent ounces sold. Other operating expense in
2021 included $50.1 million of costs associated with stabilizing the north wall.
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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
Years ended December 31,
2021
2020
Change
% Change
34,961
37,899
0.70
81.2%
28,568
32,150
0.65
81.4%
6,393
5,749
0.05
(0.2%)
264,283
263,590
237,925
238,349
26,358
25,241
$
473.3
$
422.9
$
50.4
267.2
109.8
96.3
0.7
3.7
251.3
97.2
74.4
2.6
4.8
15.9
12.6
21.9
(1.9)
(1.1)
$
91.9
$
67.0
$
24.9
22%
18%
8%
(0%)
11%
11%
12%
6%
13%
29%
(73%)
(23%)
37%
(a)
Includes 29,840,000 tonnes placed on the heap leach pads during 2021 (2020 - 22,994,000 tonnes).
(b) Amount represents mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.20 grams per tonne during 2021
(2020 - 0.21 grams per tonne). Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
The Company has been operating the Fort Knox mine, located near Fairbanks, Alaska, since it was acquired in 1998.
2021 vs. 2020
In 2021, tonnes of ore mined increased by 22%, compared to 2020, largely due to planned mine sequencing. During the year, mining
activities were focused on mining a higher proportion of leachable ore from Phase 8 East and Phase 9. Tonnes of ore processed in
2021 increased by 18%, compared to 2020, primarily due to the increase in tonnes of ore mined and placed on the heap leach pads,
partially offset by lower mill throughput. Mill grades increased by 8% due to mine sequencing. Gold equivalent ounces produced and
sold in 2021 each increased by 11%, compared to 2020, due to an increase in ounces recovered from the heap leach pads.
Metal sales increased in 2021 by 12%, compared to 2020, due to the increase in gold equivalent ounces sold and the increase in
average metal prices realized. Production cost of sales increased by 6% in 2021, compared to 2020, largely due to an increase in gold
equivalent ounces sold, partially offset by the higher proportion of less costly ounces produced from the Barnes Creek heap leach pad.
Depreciation, depletion, and amortization increased by 13% in 2021, compared to 2020, due to an increase in gold equivalent ounces
sold and an increase in the depreciable asset base largely related to the Gilmore project.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Round Mountain (100% ownership and operator) – USA
Years ended December 31,
2021
2020
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
Exploration and business development
Segment operating earnings
9,680
16,623
0.62
77.2%
20,758
23,975
0.83
83.3%
(11,078)
(7,352)
(0.21)
(6.1%)
257,005
259,941
324,277
319,228
(67,272)
(59,287)
$
$
466.6
235.9
65.2
165.5
51.3
5.6
108.6
565.5
219.6
49.6
296.3
3.9
5.6
286.8
$
(98.9)
16.3
15.6
(130.8)
47.4
-
$
(178.2)
$
$
(53%)
(31%)
(25%)
(7%)
(21%)
(19%)
(17%)
7%
31%
(44%)
nm
0%
(62%)
Includes 12,542,000 tonnes placed on the heap leach pads during 2021 (2020 - 20,151,000 tonnes).
(a)
(b) Amounts represent mill grade and recovery only. Ore placed on the heap leach pads had an average grade of 0.37 grams per tonne during 2021
(2020 - 0.42 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 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.
2021 vs. 2020
Tonnes of ore mined in 2021 decreased by 53%, compared to 2020. Mining activities were impacted by precautionary measures taken
after wall instability in the north wall of the pit was detected by the site’s comprehensive monitoring system late in the first quarter
of 2021. The site deferred mining in the area, which delayed access to Phase W ore and affected production in 2021. Tonnes of ore
processed in 2021 decreased by 31%, compared to 2020, due to a decrease in tonnes placed on the heap leach pads. In 2021, mill
grades decreased by 25% compared to 2020, due to mine sequencing. Gold equivalent ounces produced and sold decreased by 21%
and 19% in 2021, respectively, compared to 2020, primarily due to lower mill grades and the timing of ounces recovered from the
heap leach pads. Gold equivalent ounces sold in 2021 were higher than production due to timing of sales.
In 2021, metal sales decreased by 17%, compared to 2020, due to the decrease in gold equivalent ounces sold, partially offset by the
increase in average metal prices realized. Production cost of sales in 2021 increased by 7% compared to 2020, largely due to higher
operating waste mined, and increases in royalties and production taxes, partially offset by the decrease in gold equivalent ounces sold.
Depreciation, depletion and amortization increased by 31% mainly due to an increase in the depreciable asset base, largely related to
the completion of Phase W construction, partially offset by the decrease in gold equivalent ounces sold. Other operating expense in
2021 included $50.1 million of costs associated with stabilizing the north wall.
18
19
19 MDA
30836 Q30 - KINROSS AR-Proof.pdf - p30 (March 31, 2022 01:56:29)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Bald Mountain (100% ownership and operator) – USA
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Paracatu (100% ownership and operator) – Brazil
Years ended December 31,
2021
2020
Change
% Change(b)
Operating Statistics(a)
Tonnes ore mined (000's)
Tonnes processed (000's)
Grade (grams/tonne)
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charge and asset derecognition
Other operating expense
Exploration and business development
Segment operating (loss) earnings
19,063
19,063
0.51
18,303
18,303
0.51
760
760
-
204,890
196,066
191,282
186,549
13,608
9,517
$
$
$
352.1
177.5
195.9
144.5
(165.8)
1.7
7.2
(174.7)
330.5
155.9
128.3
-
46.3
5.2
6.5
34.6
21.6
21.6
67.6
144.5
(212.1)
(3.5)
0.7
(209.3)
$
$
$
4%
4%
-
7%
5%
7%
14%
53%
nm
nm
(67%)
11%
nm
(a) Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
(b)
“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.
Rio Tinto Plc.
2021 vs. 2020
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
2021 vs. 2020
Tonnes of ore mined and processed each increased by 4% in 2021, compared to 2020, due to planned mine sequencing. Mining
activities shifted to the North Area in the second half of 2021 with the completion of mining in the Vantage pit in August 2021. Grades
in 2021 were comparable to 2020. In 2021, gold equivalent ounces produced and sold increased by 7% and 5%, respectively, compared
to 2020, due to the timing of ounces recovered from the heap leach pads and timing of sales.
Metal sales in 2021 increased by 7% compared to 2020, due to the increase in gold equivalent ounces sold and the increase in average
metal prices realized. Production cost of sales in 2021 increased by 14% compared to 2020, due to the increase in gold equivalent
ounces sold, higher operating waste mined and production taxes. Depreciation, depletion and amortization increased by 53%
compared to 2020, due to the increases in the depreciable asset base and gold equivalent ounces sold.
During the year ended December 31, 2021, the Company recorded impairment and asset derecognition charges of $144.5 million
related to metal inventory and property, plant and equipment at Bald Mountain. The inventory impairment charge of $95.2 million
resulted from a reduction in the estimate of recoverable ounces on the Vantage heap leach pad at December 31, 2021 due to the
presence of carbonaceous ore. The derecognized property, plant and equipment of $49.3 million was also related to the Vantage heap
leach pad. The tax impacts of the impairment and derecognition charges were income tax recoveries of $25.3 million and $13.1 million,
respectively. No such charges were recognized in 2020.
20
21
MDA 20
30836 Q30 - KINROSS AR-Proof.pdf - p31 (March 31, 2022 01:56:29)
DT
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
Other operating expense
Exploration and business development
Segment operating earnings
(a)
"nm" means not meaningful.
Years ended December 31,
2021
2020
Change
% Change(a)
52,379
60,046
0.37
76.0%
52,653
54,255
0.42
75.1%
550,560
549,900
542,435
541,506
412.1
180.6
395.2
9.9
0.9
358.9
183.5
418.3
11.3
-
(274)
5,791
(0.05)
0.9%
8,125
8,394
53.2
(2.9)
(23.1)
(1.4)
0.9
$
987.9
$
960.7
$
27.2
$
384.4
$
407.0
$
(22.6)
(1%)
11%
(12%)
1%
1%
2%
3%
15%
(2%)
(6%)
(12%)
nm
(6%)
Tonnes of ore mined decreased slightly in 2021, compared to 2020, largely due to planned mine sequencing. Tonnes of ore processed
increased by 11% in 2021, compared to 2020, mainly due to an increase in mill availability. Grades decreased by 12% in 2021, compared
to 2020, largely due to planned mine sequencing. Gold equivalent ounces produced and sold increased by 1% and 2% in 2021,
respectively, compared to 2020, largely due to higher mill throughput and the timing of ounces processed through the mill, largely
offset by the decrease in grades.
Metal sales in 2021 increased by 3%, compared to 2020, due to increases in gold equivalent ounces sold and average metal prices
realized. Production cost of sales increased by 15% in 2021, compared to 2020, largely due to increases in gold equivalent ounces sold,
operating waste mined, contractor and energy costs, as well as inflationary pressures on consumables, partially offset by favourable
foreign exchange movements. Depreciation, depletion and amortization decreased by 2% in 2021, compared to 2020, due to an
increase in mineral reserves at the end of 2020.
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Bald Mountain (100% ownership and operator) – USA
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Paracatu (100% ownership and operator) – Brazil
Operating Statistics(a)
Tonnes ore mined (000's)
Tonnes processed (000's)
Grade (grams/tonne)
Gold equivalent ounces:
Produced
Sold
Financial Data (in millions)
Metal sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charge and asset derecognition
Other operating expense
Exploration and business development
Segment operating (loss) earnings
Years ended December 31,
2021
2020
Change
% Change(b)
19,063
19,063
0.51
18,303
18,303
0.51
760
760
-
204,890
196,066
191,282
186,549
13,608
9,517
$
352.1
$
330.5
$
21.6
177.5
195.9
144.5
(165.8)
1.7
7.2
155.9
128.3
-
46.3
5.2
6.5
21.6
67.6
144.5
(212.1)
(3.5)
0.7
$
(174.7)
$
34.6
$
(209.3)
4%
4%
-
7%
5%
7%
14%
53%
nm
nm
(67%)
11%
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
Other operating expense
Exploration and business development
Segment operating earnings
(a)
"nm" means not meaningful.
Years ended December 31,
2021
2020
Change
% Change(a)
52,379
60,046
0.37
76.0%
52,653
54,255
0.42
75.1%
550,560
549,900
542,435
541,506
(274)
5,791
(0.05)
0.9%
8,125
8,394
$
$
$
987.9
412.1
180.6
395.2
9.9
0.9
384.4
960.7
358.9
183.5
418.3
11.3
-
407.0
27.2
53.2
(2.9)
(23.1)
(1.4)
0.9
(22.6)
$
$
$
(1%)
11%
(12%)
1%
1%
2%
3%
15%
(2%)
(6%)
(12%)
nm
(6%)
(a) Due to the nature of heap leach operations, point-in-time recovery rates are not meaningful.
(b)
“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.
2021 vs. 2020
Tonnes of ore mined and processed each increased by 4% in 2021, compared to 2020, due to planned mine sequencing. Mining
activities shifted to the North Area in the second half of 2021 with the completion of mining in the Vantage pit in August 2021. Grades
in 2021 were comparable to 2020. In 2021, gold equivalent ounces produced and sold increased by 7% and 5%, respectively, compared
to 2020, due to the timing of ounces recovered from the heap leach pads and timing of sales.
Metal sales in 2021 increased by 7% compared to 2020, due to the increase in gold equivalent ounces sold and the increase in average
metal prices realized. Production cost of sales in 2021 increased by 14% compared to 2020, due to the increase in gold equivalent
ounces sold, higher operating waste mined and production taxes. Depreciation, depletion and amortization increased by 53%
compared to 2020, due to the increases in the depreciable asset base and gold equivalent ounces sold.
During the year ended December 31, 2021, the Company recorded impairment and asset derecognition charges of $144.5 million
related to metal inventory and property, plant and equipment at Bald Mountain. The inventory impairment charge of $95.2 million
resulted from a reduction in the estimate of recoverable ounces on the Vantage heap leach pad at December 31, 2021 due to the
presence of carbonaceous ore. The derecognized property, plant and equipment of $49.3 million was also related to the Vantage heap
leach pad. The tax impacts of the impairment and derecognition charges were income tax recoveries of $25.3 million and $13.1 million,
respectively. No such charges were recognized in 2020.
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.
2021 vs. 2020
Tonnes of ore mined decreased slightly in 2021, compared to 2020, largely due to planned mine sequencing. Tonnes of ore processed
increased by 11% in 2021, compared to 2020, mainly due to an increase in mill availability. Grades decreased by 12% in 2021, compared
to 2020, largely due to planned mine sequencing. Gold equivalent ounces produced and sold increased by 1% and 2% in 2021,
respectively, compared to 2020, largely due to higher mill throughput and the timing of ounces processed through the mill, largely
offset by the decrease in grades.
Metal sales in 2021 increased by 3%, compared to 2020, due to increases in gold equivalent ounces sold and average metal prices
realized. Production cost of sales increased by 15% in 2021, compared to 2020, largely due to increases in gold equivalent ounces sold,
operating waste mined, contractor and energy costs, as well as inflationary pressures on consumables, partially offset by favourable
foreign exchange movements. Depreciation, depletion and amortization decreased by 2% in 2021, compared to 2020, due to an
increase in mineral reserves at the end of 2020.
20
21
21 MDA
30836 Q30 - KINROSS AR-Proof.pdf - p32 (March 31, 2022 01:56:29)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Kupol (100% ownership and operator) – Russian Federation(a)
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Tasiast (100% ownership and operator) – Mauritania
Years ended December 31,
2021
2020
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
Exploration and business development
Segment operating earnings
1,280
1,697
8.29
71.73
95.0%
84.9%
1,544
1,704
9.17
68.07
94.8%
85.7%
(264)
(7)
(0.88)
3.66
0.2%
(0.8%)
481,108
480,968
510,743
510,973
(29,635)
(30,005)
3,329
3,322
3,169
3,177
160
145
$
$
$
862.8
306.2
70.5
-
486.1
26.7
16.7
442.7
904.6
304.5
123.5
27.8
448.8
32.5
5.8
410.5
(41.8)
1.7
(53.0)
(27.8)
37.3
(5.8)
10.9
32.2
$
$
$
(a) The Kupol segment includes the Kupol and Dvoinoye mines. Mining activities were completed at Dvoinoye in the fourth quarter of 2020.
(b) Tonnes of ore mined relates entirely to the Kupol mine during 2021 (2020 included 326,000 tonnes of ore mined from Dvoinoye).
(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 2021 was 71.51:1 (2020 - 86.32:1).
“nm" means not meaningful.
(d)
(17%)
(0%)
(10%)
5%
0%
(1%)
(6%)
(6%)
5%
5%
(5%)
1%
(43%)
nm
8%
(18%)
188%
8%
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 (loss) earnings
(a) Amount represents mill grade and recovery only.
(b)
"nm" means not meaningful.
of the capital, Nouakchott.
2021 vs. 2020
Years ended December 31,
2021
2020
Change
% Change(b)
3,544
3,733
1.69
94.1%
4,838
5,349
2.49
94.4%
(1,294)
(1,616)
(0.80)
(0.3%)
170,502
174,193
406,509
403,789
(236,007)
(229,596)
$
314.7
$
718.0
$
(403.3)
123.6
136.9
-
54.2
116.9
4.3
235.7
191.8
(289.2)
579.7
73.4
2.0
(112.1)
(54.9)
289.2
(525.5)
43.5
2.3
$
(67.0)
$
504.3
$
(571.3)
(113%)
(27%)
(30%)
(32%)
(0%)
(58%)
(57%)
(56%)
(48%)
(29%)
nm
(91%)
59%
115%
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
Tonnes of ore mined in 2021 decreased by 27% compared to 2020, primarily due to mine sequencing involving increases in stripping
activities in West Branch 4, following the completion of mining in West Branch 3 in the first quarter of 2021. Overall mining rates in
the second half of 2021 were impacted as a result of challenges with drilling and blasting. Tonnes of ore processed in 2021 decreased
by 30% compared to 2020, due to the temporary suspension of milling operations as a result of the mill fire on June 15, 2021. Milling
activities restarted in the fourth quarter of 2021. Mill grades in 2021 decreased by 32%, compared to 2020, mainly due to mine
sequencing involving a higher portion of ore milled from stockpile ore. Gold equivalent ounces produced and sold decreased by 58%
and 57%, respectively, compared to 2020, primarily due to the temporary suspension of milling operations and lower mill grades. Gold
equivalent ounces sold in 2021 were higher than production due to timing of sales.
Metal sales in 2021 decreased by 56%, compared to 2020, due to the decrease in gold equivalent ounces sold. In 2021, production
cost of sales decreased by 48%, compared to 2020, primarily due to the decrease in gold equivalent ounces sold as a result of the
temporary suspension of milling operations, partially offset by increases in operating waste mined, and contractor and maintenance
costs. Depreciation, depletion and amortization decreased by 29%, compared to 2020, primarily due to the decrease in gold equivalent
ounces sold, partially offset by an increase in the depreciable asset base, primarily related to the reversal of property, plant and
equipment impairment at the end of 2020. In 2021, other operating expense included $59.2 million of costs associated with the
temporary suspension of milling operations and mill repair.
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.
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.
2021 vs. 2020
Tonnes of ore mined in 2021 decreased by 17%, compared to 2020, largely due to the completion of mining activities at Dvoinoye in
November 2020. Mill grades decreased by 10% in 2021, compared to 2020, consistent with the mine plan. Gold equivalent ounces
produced and sold each decreased by 6%, mainly due to lower grades, partially offset by the timing of ounces processed through the
mill.
Metal sales in 2021 decreased by 5%, compared to 2020, due to the decrease in gold equivalent ounces sold, partially offset by the
increase in average metal prices realized. Production cost of sales increased slightly in 2021, compared to 2020, mainly due to higher
mining costs, largely offset by the decrease in gold equivalent ounces sold. Depreciation, depletion and amortization decreased by
43% compared to 2020, due to a decrease in the depreciable asset base related to the completion of mining activities at Dvoinoye and
the decrease in gold equivalent ounces sold.
22
23
MDA 22
30836 Q30 - KINROSS AR-Proof.pdf - p33 (March 31, 2022 01:56:29)
DT
2021 ANNUAL REPORT KINROSS GOLD
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
Exploration and business development
Segment operating earnings
Years ended December 31,
2021
2020
Change
% Change(d)
1,280
1,697
8.29
71.73
95.0%
84.9%
1,544
1,704
9.17
68.07
94.8%
85.7%
(264)
(7)
(0.88)
3.66
0.2%
(0.8%)
481,108
480,968
510,743
510,973
(29,635)
(30,005)
3,329
3,322
3,169
3,177
160
145
$
862.8
$
904.6
$
(41.8)
306.2
70.5
-
486.1
26.7
16.7
304.5
123.5
27.8
448.8
32.5
5.8
1.7
(53.0)
(27.8)
37.3
(5.8)
10.9
$
442.7
$
410.5
$
32.2
(17%)
(0%)
(10%)
5%
0%
(1%)
(6%)
(6%)
5%
5%
(5%)
1%
(43%)
nm
8%
(18%)
188%
8%
(a) The Kupol segment includes the Kupol and Dvoinoye mines. Mining activities were completed at Dvoinoye in the fourth quarter of 2020.
(b) Tonnes of ore mined relates entirely to the Kupol mine during 2021 (2020 included 326,000 tonnes of ore mined from Dvoinoye).
(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 2021 was 71.51:1 (2020 - 86.32:1).
(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.
2021 vs. 2020
mill.
Tonnes of ore mined in 2021 decreased by 17%, compared to 2020, largely due to the completion of mining activities at Dvoinoye in
November 2020. Mill grades decreased by 10% in 2021, compared to 2020, consistent with the mine plan. Gold equivalent ounces
produced and sold each decreased by 6%, mainly due to lower grades, partially offset by the timing of ounces processed through the
Metal sales in 2021 decreased by 5%, compared to 2020, due to the decrease in gold equivalent ounces sold, partially offset by the
increase in average metal prices realized. Production cost of sales increased slightly in 2021, compared to 2020, mainly due to higher
mining costs, largely offset by the decrease in gold equivalent ounces sold. Depreciation, depletion and amortization decreased by
43% compared to 2020, due to a decrease in the depreciable asset base related to the completion of mining activities at Dvoinoye and
the decrease in gold equivalent ounces sold.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Kupol (100% ownership and operator) – Russian Federation(a)
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Tasiast (100% ownership and operator) – Mauritania
Years ended December 31,
2021
2020
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 (loss) earnings
(a) Amount represents mill grade and recovery only.
(b)
"nm" means not meaningful.
3,544
3,733
1.69
94.1%
4,838
5,349
2.49
94.4%
(1,294)
(1,616)
(0.80)
(0.3%)
170,502
174,193
406,509
403,789
(236,007)
(229,596)
$
$
$
314.7
123.6
136.9
-
54.2
116.9
4.3
(67.0)
718.0
235.7
191.8
(289.2)
579.7
73.4
2.0
504.3
(403.3)
(112.1)
(54.9)
289.2
(525.5)
43.5
2.3
(571.3)
$
$
$
(27%)
(30%)
(32%)
(0%)
(58%)
(57%)
(56%)
(48%)
(29%)
nm
(91%)
59%
115%
(113%)
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.
2021 vs. 2020
Tonnes of ore mined in 2021 decreased by 27% compared to 2020, primarily due to mine sequencing involving increases in stripping
activities in West Branch 4, following the completion of mining in West Branch 3 in the first quarter of 2021. Overall mining rates in
the second half of 2021 were impacted as a result of challenges with drilling and blasting. Tonnes of ore processed in 2021 decreased
by 30% compared to 2020, due to the temporary suspension of milling operations as a result of the mill fire on June 15, 2021. Milling
activities restarted in the fourth quarter of 2021. Mill grades in 2021 decreased by 32%, compared to 2020, mainly due to mine
sequencing involving a higher portion of ore milled from stockpile ore. Gold equivalent ounces produced and sold decreased by 58%
and 57%, respectively, compared to 2020, primarily due to the temporary suspension of milling operations and lower mill grades. Gold
equivalent ounces sold in 2021 were higher than production due to timing of sales.
Metal sales in 2021 decreased by 56%, compared to 2020, due to the decrease in gold equivalent ounces sold. In 2021, production
cost of sales decreased by 48%, compared to 2020, primarily due to the decrease in gold equivalent ounces sold as a result of the
temporary suspension of milling operations, partially offset by increases in operating waste mined, and contractor and maintenance
costs. Depreciation, depletion and amortization decreased by 29%, compared to 2020, primarily due to the decrease in gold equivalent
ounces sold, partially offset by an increase in the depreciable asset base, primarily related to the reversal of property, plant and
equipment impairment at the end of 2020. In 2021, other operating expense included $59.2 million of costs associated with the
temporary suspension of milling operations and mill repair.
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.
22
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30836 Q30 - KINROSS AR-Proof.pdf - p34 (March 31, 2022 01:56:30)
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Chirano (90% ownership and operator) – Ghana(a)
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Maricunga (100% ownership and operator) – Chile
Years ended December 31,
2021
2020
Change
% Change(b)
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 expense
Exploration and business development
Segment operating (loss) earnings
3,095
3,433
1.59
86.9%
3,053
3,275
1.80
87.9%
42
158
(0.21)
(1.0%)
154,668
148,293
166,590
166,207
(11,922)
(17,914)
$
$
$
267.0
201.6
73.0
-
(7.6)
0.9
11.9
(20.4)
295.1
196.1
58.2
(204.5)
245.3
(2.2)
9.4
238.1
(28.1)
5.5
14.8
204.5
(252.9)
3.1
2.5
(258.5)
$
$
$
1%
5%
(12%)
(1%)
(7%)
(11%)
(10%)
3%
25%
nm
(103%)
141%
27%
(109%)
(a) Operating statistics and financial data are at 100% for all periods.
(b)
"nm" means not meaningful.
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.
2021 vs. 2020
Tonnes of ore mined in 2021 increased slightly, compared to 2020, primarily due to an increase in ore mined from the Akoti Main and
Mamnao open pits, partially offset by lower ore mined from the underground deposits. Tonnes of ore processed increased by 5%
compared to 2020, largely due to an increase in mill availability in 2021 compared to 2020. Mill grades decreased by 12% compared
to 2020, mainly due to lower grade ore mined at the underground deposits. Gold equivalent ounces produced and sold decreased by
7% and 11%, respectively, compared to 2020, primarily due to the decrease in grade, partially offset by the increase in mill throughput.
In 2021, metal sales decreased by 10%, compared to 2020, due to the decrease in gold equivalent ounces sold, partially offset by the
increase in average metal prices realized. Production cost of sales increased by 3% compared to 2020, mainly due to increases in
contractor and energy costs, partially offset by the decrease in gold equivalent ounces sold. Depreciation, depletion and amortization
increased by 25%, compared to 2020, primarily due to an increase in the depreciable asset base, largely related to the reversal of
property, plant and equipment impairment at the end of 2020, partially offset by the increase in mineral reserves 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.
As previously reported, Kinross’ operating subsidiary Chirano Gold Mines Ltd. (“CGML”), was 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 of Ghana appointed an ombudsman who provided an independent assessment of the issues addressed in the report.
The Government of Ghana established an inter-ministerial committee to review the audit and report issues of concern. CGML
continues to cooperate with the relevant agencies and the Government of Ghana in connection with this ongoing process. As part of
its cooperative efforts, CGML is exchanging information with the authorities.
24
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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 in the fourth quarter of 2019, there was no new ore mined
and processed in both 2021 and 2020.
In 2021, gold equivalent ounces sold of 2,787 decreased by 69% compared to gold equivalent ounces sold of 8,947 in 2020. No further
production is expected while Maricunga continues to sell its remaining finished metals inventories. Metal sales and operating losses
were $5.0 million and $17.8 million, respectively, in 2021, compared to metal sales and operating losses of $16.1 million and $12.5
Impairment charges (reversals) and asset derecognition – net
Years ended December 31,
2021
2020
Change
% Change
$
95.2
$
38.1
$
57.1
49.3
(689.0)
738.3
$
144.5
$
(650.9)
$
795.4
150%
107%
122%
million, respectively, in 2020.
(in millions)
Inventories (i)
Property, plant and equipment (ii)
i.
Inventories
During the year ended December 31, 2021, the Company recognized an impairment charge of $95.2 million related to metal inventory
as a result of a reduction in the estimate of recoverable ounces on the Bald Mountain Vantage heap leach pad due to the presence of
carbonaceous ore. The tax impact of the impairment was an income tax recovery of $25.3 million.
During the year ended December 31, 2020, the Company recognized impairment charges of $38.1 million to reduce the carrying value
of certain materials and supplies inventories to net realizable value.
ii.
Property, plant and equipment
During the year ended December 31, 2021, the Company derecognized property, plant and equipment related to the Vantage heap
leach pad at Bald Mountain, which resulted in a charge of $49.3 million. The tax impact of the derecognition was an income tax
recovery of $13.1 million.
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. No impairment charges or reversals were recorded in
2021.
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 cash-generating unit (“CGU”) which indicate that a previously recognized
impairment loss may no longer exist or may have decreased.
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 expense
Exploration and business development
Segment operating (loss) earnings
(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.
2021 vs. 2020
Years ended December 31,
2021
2020
Change
% Change(b)
3,095
3,433
1.59
86.9%
3,053
3,275
1.80
87.9%
42
158
(0.21)
(1.0%)
154,668
148,293
166,590
166,207
(11,922)
(17,914)
$
267.0
$
295.1
$
(28.1)
201.6
73.0
-
(7.6)
0.9
11.9
196.1
58.2
(204.5)
245.3
(2.2)
9.4
5.5
14.8
204.5
(252.9)
3.1
2.5
$
(20.4)
$
238.1
$
(258.5)
1%
5%
(12%)
(1%)
(7%)
(11%)
(10%)
3%
25%
nm
(103%)
141%
27%
(109%)
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
Tonnes of ore mined in 2021 increased slightly, compared to 2020, primarily due to an increase in ore mined from the Akoti Main and
Mamnao open pits, partially offset by lower ore mined from the underground deposits. Tonnes of ore processed increased by 5%
compared to 2020, largely due to an increase in mill availability in 2021 compared to 2020. Mill grades decreased by 12% compared
to 2020, mainly due to lower grade ore mined at the underground deposits. Gold equivalent ounces produced and sold decreased by
7% and 11%, respectively, compared to 2020, primarily due to the decrease in grade, partially offset by the increase in mill throughput.
In 2021, metal sales decreased by 10%, compared to 2020, due to the decrease in gold equivalent ounces sold, partially offset by the
increase in average metal prices realized. Production cost of sales increased by 3% compared to 2020, mainly due to increases in
contractor and energy costs, partially offset by the decrease in gold equivalent ounces sold. Depreciation, depletion and amortization
increased by 25%, compared to 2020, primarily due to an increase in the depreciable asset base, largely related to the reversal of
property, plant and equipment impairment at the end of 2020, partially offset by the increase in mineral reserves 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.
As previously reported, Kinross’ operating subsidiary Chirano Gold Mines Ltd. (“CGML”), was 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 of Ghana appointed an ombudsman who provided an independent assessment of the issues addressed in the report.
The Government of Ghana established an inter-ministerial committee to review the audit and report issues of concern. CGML
continues to cooperate with the relevant agencies and the Government of Ghana in connection with this ongoing process. As part of
its cooperative efforts, CGML is exchanging information with the authorities.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 in the fourth quarter of 2019, there was no new ore mined
and processed in both 2021 and 2020.
In 2021, gold equivalent ounces sold of 2,787 decreased by 69% compared to gold equivalent ounces sold of 8,947 in 2020. No further
production is expected while Maricunga continues to sell its remaining finished metals inventories. Metal sales and operating losses
were $5.0 million and $17.8 million, respectively, in 2021, compared to metal sales and operating losses of $16.1 million and $12.5
million, respectively, in 2020.
Impairment charges (reversals) and asset derecognition – net
Years ended December 31,
(in millions)
Inventories (i)
Property, plant and equipment (ii)
i.
Inventories
2021
$
95.2
49.3
144.5
2020
$
38.1
(689.0)
(650.9)
Change
$
57.1
738.3
795.4
$
% Change
150%
107%
122%
$
$
During the year ended December 31, 2021, the Company recognized an impairment charge of $95.2 million related to metal inventory
as a result of a reduction in the estimate of recoverable ounces on the Bald Mountain Vantage heap leach pad due to the presence of
carbonaceous ore. The tax impact of the impairment was an income tax recovery of $25.3 million.
During the year ended December 31, 2020, the Company recognized impairment charges of $38.1 million to reduce the carrying value
of certain materials and supplies inventories to net realizable value.
ii.
Property, plant and equipment
During the year ended December 31, 2021, the Company derecognized property, plant and equipment related to the Vantage heap
leach pad at Bald Mountain, which resulted in a charge of $49.3 million. The tax impact of the derecognition was an income tax
recovery of $13.1 million.
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. No impairment charges or reversals were recorded in
2021.
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 cash-generating unit (“CGU”) which indicate that a previously recognized
impairment loss may no longer exist or may have decreased.
24
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Other Operating Expense
(in millions)
Other operating expense
Years ended December 31,
2021
2020
$
294.6
$
186.5
Change
$
108.1
% Change
58%
In 2021, other operating expense included environmental and other operating expenses for non-operating mining sites of $69.1
million, costs associated with the temporary suspension of milling operations and mill repair at Tasiast of $59.2 million, costs
associated with stabilizing the north wall at Round Mountain of $50.1 million, and labour, health and safety, donations and other
support program costs associated with the COVID-19 pandemic of $34.8 million.
In 2020, other operating expense included labour, health and safety, donations and other support program costs associated with the
COVID-19 pandemic of $64.1 million, costs relating to the temporary suspension of site activities as a result of the Tasiast strike in the
second quarter of 2020 of $8.3 million, and environmental and other operating expenses for non-operating mining sites of $46.0
million.
Exploration and Business Development
(in millions)
Exploration and business development
Years ended December 31,
2021
2020
$
133.1
$
92.5
Change
$
40.6
% Change
44%
Of the total Exploration and business development expense, expenditures on exploration totaled $107.4 million in 2021, an increase
compared to $64.5 million in 2020, primarily as a result of increased brownfields exploration activities in North America, Russia and
Chirano, and lower than 2021 expectation. Capitalized exploration expenses, including capitalized evaluation expenditures, totaled
$75.1 million in 2021, compared to $38.4 million in 2020.
Kinross was active on more than 18 mine sites, near-mine and greenfield initiatives in 2021, with a total of 237,136 metres drilled. In
2020, Kinross was active on more than 19 mine sites, near-mine and greenfield initiatives, with a total 170,963 metres drilled.
General and Administrative
(in millions)
General and administrative
Years ended December 31,
2021
2020
$
126.6
$
117.9
Change
$
8.7
% Change
7%
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.
Other Income – Net
(in millions)
Insurance recoveries
Net (losses) gains on dispositions of assets
Foreign exchange losses - net
Net non-hedge derivative (losses) gains
Other - net
Other income (expense) - net
(a)
"nm" means not meaningful.
Years ended December 31,
2021
2020
$
$
91.1
(9.5)
(4.7)
(1.0)
3.3
79.2
Change % Change(a)
nm
$
nm
36%
nm
94%
nm
80.3
(10.7)
2.6
(2.0)
1.6
71.8
$
10.8
1.2
(7.3)
1.0
1.7
7.4
$
$
Other income – net increased to $79.2 million in 2021 from $7.4 million in 2020 largely due to initial insurance recoveries of $90.0
million for the mill fire at Tasiast, of which $28.5 million was received in 2021.
with IFRS.
26
27
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DT
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Finance Expense
(in millions)
Accretion of reclamation and remediation obligations
Interest expense, including accretion of lease liabilities
Finance expense
Years ended December 31,
2021
2020
Change
% Change
$
14.2
$
23.0
$
(8.8)
71.5
89.6
(18.1)
$
85.7
$
112.6
$
(26.9)
(38%)
(20%)
(24%)
Interest expense in 2021 decreased to $71.5 million, compared to $89.6 million in 2020, due to the full repayment of the revolving
credit facility in September 2020, and reduced interest resulting from the repayment of senior notes on June 1, 2021. Interest expense
capitalized in 2021 was $48.3 million, compared to $49.1 million in 2020.
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 2021, the Company recorded income tax expense of $250.7 million, compared to income tax expense of $439.8 million in 2020. The
$250.7 million of income tax expense in 2021 included $24.1 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, and additional tax expenses of
$49.9 million in respect of the settlement of tax amounts relating to prior years. Income tax expense decreased in 2021 compared to
2020 largely due to lower operating mine profitability compared to 2020. In 2020, the $439.8 million income tax expense included
$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, an additional deferred tax expense of $76.2 million related to the reversal of
impairment charges at Chirano and Lobo‐Marte, as well as $25.4 million net tax benefit from U.S. tax law changes legislated through
the U.S. Cares Act. Kinross' combined federal and provincial statutory tax rate for both 2021 and 2020 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 in 2020. 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
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.
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Other Operating Expense
(in millions)
Other operating expense
Years ended December 31,
2021
2020
Change
% Change
$
294.6
$
186.5
$
108.1
58%
In 2021, other operating expense included environmental and other operating expenses for non-operating mining sites of $69.1
million, costs associated with the temporary suspension of milling operations and mill repair at Tasiast of $59.2 million, costs
associated with stabilizing the north wall at Round Mountain of $50.1 million, and labour, health and safety, donations and other
support program costs associated with the COVID-19 pandemic of $34.8 million.
In 2020, other operating expense included labour, health and safety, donations and other support program costs associated with the
COVID-19 pandemic of $64.1 million, costs relating to the temporary suspension of site activities as a result of the Tasiast strike in the
second quarter of 2020 of $8.3 million, and environmental and other operating expenses for non-operating mining sites of $46.0
million.
Exploration and Business Development
(in millions)
Exploration and business development
Years ended December 31,
2021
2020
Change
% Change
$
133.1
$
92.5
$
40.6
44%
Of the total Exploration and business development expense, expenditures on exploration totaled $107.4 million in 2021, an increase
compared to $64.5 million in 2020, primarily as a result of increased brownfields exploration activities in North America, Russia and
Chirano, and lower than 2021 expectation. Capitalized exploration expenses, including capitalized evaluation expenditures, totaled
$75.1 million in 2021, compared to $38.4 million in 2020.
Kinross was active on more than 18 mine sites, near-mine and greenfield initiatives in 2021, with a total of 237,136 metres drilled. In
2020, Kinross was active on more than 19 mine sites, near-mine and greenfield initiatives, with a total 170,963 metres drilled.
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.
Years ended December 31,
2021
2020
Change
% Change
$
126.6
$
117.9
$
8.7
7%
Years ended December 31,
2021
2020
Change % Change(a)
$
91.1
$
10.8
$
80.3
(9.5)
(4.7)
(1.0)
3.3
1.2
(7.3)
1.0
1.7
(10.7)
2.6
(2.0)
1.6
$
79.2
$
7.4
$
71.8
nm
nm
36%
nm
94%
nm
General and Administrative
(in millions)
General and administrative
Other Income – Net
(in millions)
Insurance recoveries
Net (losses) gains on dispositions of assets
Foreign exchange losses - net
Net non-hedge derivative (losses) gains
Other - net
Other income (expense) - net
(a)
"nm" means not meaningful.
Other income – net increased to $79.2 million in 2021 from $7.4 million in 2020 largely due to initial insurance recoveries of $90.0
million for the mill fire at Tasiast, of which $28.5 million was received in 2021.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Finance Expense
(in millions)
Accretion of reclamation and remediation obligations
Interest expense, including accretion of lease liabilities
Finance expense
Years ended December 31,
2021
$
14.2
71.5
85.7
2020
$
23.0
89.6
112.6
Change
$
(8.8)
(18.1)
(26.9)
% Change
(38%)
(20%)
(24%)
$
$
$
Interest expense in 2021 decreased to $71.5 million, compared to $89.6 million in 2020, due to the full repayment of the revolving
credit facility in September 2020, and reduced interest resulting from the repayment of senior notes on June 1, 2021. Interest expense
capitalized in 2021 was $48.3 million, compared to $49.1 million in 2020.
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 2021, the Company recorded income tax expense of $250.7 million, compared to income tax expense of $439.8 million in 2020. The
$250.7 million of income tax expense in 2021 included $24.1 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, and additional tax expenses of
$49.9 million in respect of the settlement of tax amounts relating to prior years. Income tax expense decreased in 2021 compared to
2020 largely due to lower operating mine profitability compared to 2020. In 2020, the $439.8 million income tax expense included
$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, an additional deferred tax expense of $76.2 million related to the reversal of
impairment charges at Chirano and Lobo‐Marte, as well as $25.4 million net tax benefit from U.S. tax law changes legislated through
the U.S. Cares Act. Kinross' combined federal and provincial statutory tax rate for both 2021 and 2020 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 in 2020. 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.
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
6. LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes Kinross’ cash flow activity:
(in millions)
Cash Flow:
Provided from operating activities
Used in investing activities
Used in financing activities
Effect of exchange rate changes on cash and cash equivalents
(Decrease) 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,
2021
2020
Change % Change(a)
$
$
$
1,135.2
(1,192.6)
(623.2)
1.2
(679.4)
1,210.9
531.5
1,957.6
(1,249.1)
(67.7)
(5.0)
635.8
575.1
1,210.9
(822.4)
56.5
(555.5)
6.2
(1,315.2)
635.8
(679.4)
$
$
$
(42%)
5%
nm
124%
nm
111%
(56%)
Cash and cash equivalents balances decreased by $679.4 million in 2021 compared to an increase of $635.8 million in 2020. Detailed
discussions regarding cash flow movements are noted below.
Operating Activities
2021 vs. 2020
Net cash flow provided from operating activities decreased by $822.4 million in 2021 compared to 2020, mainly due to the decrease
in operating earnings largely related to the temporary suspension of milling operations at Tasiast, higher net taxes paid and
unfavourable working capital movements.
Investing Activities
2021 vs. 2020
Net cash flow used in investing activities was $1,192.6 million in 2021, compared to $1,249.1 million in 2020. The primary uses of cash
were for capital expenditures of $938.6 million, as well as the final installment of $141.5 million paid for the Chulbatkan license.
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 and a 70% interest in the Manh Choh project.
The following table presents a breakdown of capital expenditures(a) on a cash basis:
(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,
2021
2020
Change
% Change
$
113.1
125.5
39.0
127.9
26.5
259.4
39.7
$
138.7
159.1
103.8
152.3
32.7
224.8
27.2
$
(25.6)
(33.6)
(64.8)
(24.4)
(6.2)
34.6
12.5
207.5
938.6
$
77.5
916.1
$
130.0
22.5
$
(18%)
(21%)
(62%)
(16%)
(19%)
15%
46%
168%
2%
(a)
(b)
(c)
“Capital expenditures” is as reported as “Additions to property, plant and equipment” on the condensed consolidated statement of cash flows.
Includes $1.5 million of capital expenditures at Dvoinoye during 2021 (2020 - $2.3 million).
“Corporate and other” includes corporate and other non-operating assets (including Chulbatkan, Kettle River-Buckhorn, La Coipa, Lobo-Marte,
Manh Choh and Maricunga).
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KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
In 2021, capital expenditures increased by $22.5 million, compared to 2020. This increase was a result of increased expenditures for
development activities at La Coipa, the feasibility study at Lobo-Marte and the pre-feasibility and feasibility studies at Udinsk, and an
increase in capital stripping at Tasiast. These increases were partially offset by reduced capital stripping at Bald Mountain, Round
Mountain and Fort Knox.
Financing Activities
2021 vs. 2020
Balance Sheet
(in millions)
Current assets
Total assets
Cash and cash equivalents
Total liabilities
Common shareholders' equity
Non-controlling interests
Net cash flow used in financing activities was $623.2 million in 2021, compared to $67.7 million in 2020. In 2021, net cash flow used
in financing activities included the $500.0 million repayment of senior notes on June 1, 2021, dividends paid to common shareholders
of $151.1 million, payments of $100.2 million for the repurchase and cancellation of shares, and interest paid of $46.9 million. In 2021,
the Company drew $200.0 million on its revolving credit facility.
In 2020, the $100.0 million outstanding on the revolving credit facility as at December 31, 2019 was repaid in early February. On March
20, 2020, the Company drew $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 $200.0 million from the
Tasiast loan. Total interest paid was $111.0 million in 2020, of which $63.1 million was included in financing activities. The Company
declared dividends in September and November 2020, resulting in payments of $75.5 million in the fourth quarter of 2020.
Current liabilities, including current portion of long-term debt
$
741.4
$
1,348.4
$
615.5
Total debt and credit facilities, including current portion
$
1,629.9
$
1,923.9
$
1,837.4
As at December 31,
2021
2020
2019
$
531.5
$
1,210.9
$
575.1
$
1,948.9
$
2,449.7
$
1,824.7
$
10,428.1
$
10,933.2
$
9,076.0
$
3,778.5
$
4,270.2
$
3,743.4
$
6,580.9
$
6,596.5
$
5,318.5
$
68.7
$
66.5
$
14.1
At December 31, 2021, Kinross had cash and cash equivalents of $531.5 million, a decrease of $679.4 million from the balance as at
December 31, 2020, primarily due to the $500.0 million repayment of senior notes on June 1, 2021, capital expenditures of $938.6
million, the final installment of $141.5 million for the Chulbatkan license paid on January 15, 2021, dividends paid to common
shareholders of $151.1 million, and payments of $100.2 million for the repurchase and cancellation of shares related to the NCIB
program. These decreases were partially offset by cash flow provided from operating activities of $1,135.2 million. Current assets
decreased by $500.8 million to $1,948.9 million mainly due to the decrease in cash and cash equivalents, partially offset by an increase
in inventories and accounts receivable. Total assets decreased by $505.1 million to $10,428.1 million mainly due to the decrease in
current assets. Current liabilities decreased by $607.0 million to $741.4 million primarily due to the $500.0 million repayment of senior
notes and the payment of the final installment for the Chulbatkan license of $141.5 million. Total liabilities decreased by $491.7 million
to $3,778.5 million, mainly due to the decrease in 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 Manh Choh 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 $1,090.9
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 Manh Choh 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
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
6. LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes Kinross’ cash flow activity:
(in millions)
Cash Flow:
Provided from operating activities
Used in investing activities
Used in financing activities
Effect of exchange rate changes on cash and cash equivalents
(Decrease) 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,
2021
2020
Change % Change(a)
$
1,135.2
$
1,957.6
$
(822.4)
(42%)
(1,192.6)
(1,249.1)
(623.2)
1.2
(679.4)
1,210.9
(67.7)
(5.0)
635.8
575.1
56.5
(555.5)
6.2
(1,315.2)
635.8
$
531.5
$
1,210.9
$
(679.4)
5%
nm
124%
nm
111%
(56%)
Cash and cash equivalents balances decreased by $679.4 million in 2021 compared to an increase of $635.8 million in 2020. Detailed
discussions regarding cash flow movements are noted below.
Net cash flow provided from operating activities decreased by $822.4 million in 2021 compared to 2020, mainly due to the decrease
in operating earnings largely related to the temporary suspension of milling operations at Tasiast, higher net taxes paid and
unfavourable working capital movements.
Net cash flow used in investing activities was $1,192.6 million in 2021, compared to $1,249.1 million in 2020. The primary uses of cash
were for capital expenditures of $938.6 million, as well as the final installment of $141.5 million paid for the Chulbatkan license.
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 and a 70% interest in the Manh Choh project.
The following table presents a breakdown of capital expenditures(a) on a cash basis:
Years ended December 31,
2021
2020
Change
% Change
$
113.1
$
138.7
$
(25.6)
159.1
103.8
152.3
32.7
224.8
27.2
(33.6)
(64.8)
(24.4)
(6.2)
34.6
12.5
125.5
39.0
127.9
26.5
259.4
39.7
207.5
$
938.6
$
916.1
$
22.5
77.5
130.0
(18%)
(21%)
(62%)
(16%)
(19%)
15%
46%
168%
2%
“Capital expenditures” is as reported as “Additions to property, plant and equipment” on the condensed consolidated statement of cash flows.
Includes $1.5 million of capital expenditures at Dvoinoye during 2021 (2020 - $2.3 million).
“Corporate and other” includes corporate and other non-operating assets (including Chulbatkan, Kettle River-Buckhorn, La Coipa, Lobo-Marte,
Manh Choh and Maricunga).
Operating Activities
2021 vs. 2020
Investing Activities
2021 vs. 2020
(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)
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
In 2021, capital expenditures increased by $22.5 million, compared to 2020. This increase was a result of increased expenditures for
development activities at La Coipa, the feasibility study at Lobo-Marte and the pre-feasibility and feasibility studies at Udinsk, and an
increase in capital stripping at Tasiast. These increases were partially offset by reduced capital stripping at Bald Mountain, Round
Mountain and Fort Knox.
Financing Activities
2021 vs. 2020
Net cash flow used in financing activities was $623.2 million in 2021, compared to $67.7 million in 2020. In 2021, net cash flow used
in financing activities included the $500.0 million repayment of senior notes on June 1, 2021, dividends paid to common shareholders
of $151.1 million, payments of $100.2 million for the repurchase and cancellation of shares, and interest paid of $46.9 million. In 2021,
the Company drew $200.0 million on its revolving credit facility.
In 2020, the $100.0 million outstanding on the revolving credit facility as at December 31, 2019 was repaid in early February. On March
20, 2020, the Company drew $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 $200.0 million from the
Tasiast loan. Total interest paid was $111.0 million in 2020, of which $63.1 million was included in financing activities. The Company
declared dividends in September and November 2020, resulting in payments of $75.5 million in the fourth quarter of 2020.
Balance Sheet
(in millions)
Cash and cash equivalents
Current assets
Total assets
2021
As at December 31,
2020
2019
$
531.5
$
1,210.9
$
575.1
$
1,948.9
$
2,449.7
$
1,824.7
$
10,428.1
$
10,933.2
$
9,076.0
Current liabilities, including current portion of long-term debt
$
741.4
$
1,348.4
$
615.5
Total debt and credit facilities, including current portion
$
1,629.9
$
1,923.9
$
1,837.4
Total liabilities
Common shareholders' equity
Non-controlling interests
$
3,778.5
$
4,270.2
$
3,743.4
$
6,580.9
$
6,596.5
$
5,318.5
$
68.7
$
66.5
$
14.1
At December 31, 2021, Kinross had cash and cash equivalents of $531.5 million, a decrease of $679.4 million from the balance as at
December 31, 2020, primarily due to the $500.0 million repayment of senior notes on June 1, 2021, capital expenditures of $938.6
million, the final installment of $141.5 million for the Chulbatkan license paid on January 15, 2021, dividends paid to common
shareholders of $151.1 million, and payments of $100.2 million for the repurchase and cancellation of shares related to the NCIB
program. These decreases were partially offset by cash flow provided from operating activities of $1,135.2 million. Current assets
decreased by $500.8 million to $1,948.9 million mainly due to the decrease in cash and cash equivalents, partially offset by an increase
in inventories and accounts receivable. Total assets decreased by $505.1 million to $10,428.1 million mainly due to the decrease in
current assets. Current liabilities decreased by $607.0 million to $741.4 million primarily due to the $500.0 million repayment of senior
notes and the payment of the final installment for the Chulbatkan license of $141.5 million. Total liabilities decreased by $491.7 million
to $3,778.5 million, mainly due to the decrease in 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 Manh Choh 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 $1,090.9
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 Manh Choh 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
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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.
As at December 31, 2021, 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.
As of February 15, 2022, there were 1,244.3 million common shares of the Company issued and outstanding. In addition, at the same
date, the Company had 3.8 million share purchase options outstanding under its share option plan.
Other
On February 16, 2022, the Board of Directors declared a dividend of $0.03 per common share payable on March 24, 2022 to
shareholders of record on March 9, 2022.
Financings and Credit Facilities
Senior notes
The Company’s $1,250.0 million of senior notes consist of $500.0 million principal amount of 5.950% notes due in 2024, $500.0 million
principal amount of 4.50% notes due in 2027 and $250.0 million principal amount of 6.875% notes due in 2041.
On June 1, 2021, the Company redeemed all outstanding 5.125% senior notes due September 1, 2021, which had an aggregate
principal amount of $500.0 million. These notes were redeemed at a redemption price equal to their principal amount outstanding
plus accrued and unpaid interest of $6.4 million.
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 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
On July 23, 2021, the Company amended its $1,500.0 million revolving credit facility to extend the maturity date to July 23, 2026.
As at December 31, 2021, the Company had utilized $206.5 million (December 31, 2020 - $7.5 million) of its $1,500.0 million revolving
credit facility, of which $6.5 million was used for letters of credit. In 2021, the Company drew down $200.0 million on the revolving
credit facility. Subsequent to December 31, 2021, the Company drew $1,100.0 million on the revolving credit facility.
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, 2021, interest charges and fees are as follows:
Type of credit
Revolving credit facility
Letters of credit
Standby fee applicable to unused availability
LIBOR plus 1.45%
0.967-1.45%
0.290%
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, 2021.
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. On December 15, 2021, the agreement was amended to cancel the remaining
$100.0 million available to be drawn.
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 and principal payments to be
made in June and December for the term of the loan. Principal repayments of $20.0 million are due in June and December 2022.
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The Company has a $300.0 million Letter of Credit guarantee facility with Export Development Canada (“EDC”) with a maturity date
of June 30, 2022. Total fees related to letters of credit under this facility were 0.75% of the utilized amount. As at December 31, 2021,
$232.3 million (December 31, 2020 - $228.9 million) was utilized under this facility.
In addition, at December 31, 2021, the Company had $180.8 million (December 31, 2020 - $175.6 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 0.80%.
As at December 31, 2021, $308.2 million (December 31, 2020 - $290.1 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%.
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,
2021
2020
$
(206.5)
$
(7.5)
(232.3)
(228.9)
$
(438.8)
$
(236.4)
$
1,293.5
$
1,492.5
67.7
71.1
$
1,361.2
$
1,563.6
Total debt of $1,629.9 million as at December 31, 2021 consists of $1,241.9 million related to the senior notes, $200.0 million related
to the revolving credit facility, and $188.0 million related to the Tasiast loan. The current portion of this debt relates to the semi-
annual principal repayments on the Tasiast loan of $40.0 million due in 2022.
Liquidity Outlook
to the Tasiast loan.
As at December 31, 2021, the Company has $40.0 million in scheduled principal debt repayments due in the next 12 months relating
We believe that the Company’s existing cash and cash equivalents balance of $531.5 million, available credit of $1,361.2 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, lease liabilities, and working capital requirements currently estimated for the next 12 months. 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.
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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.
As at December 31, 2021, 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.
As of February 15, 2022, there were 1,244.3 million common shares of the Company issued and outstanding. In addition, at the same
date, the Company had 3.8 million share purchase options outstanding under its share option plan.
Other
On February 16, 2022, the Board of Directors declared a dividend of $0.03 per common share payable on March 24, 2022 to
shareholders of record on March 9, 2022.
Financings and Credit Facilities
Senior notes
The Company’s $1,250.0 million of senior notes consist of $500.0 million principal amount of 5.950% notes due in 2024, $500.0 million
principal amount of 4.50% notes due in 2027 and $250.0 million principal amount of 6.875% notes due in 2041.
On June 1, 2021, the Company redeemed all outstanding 5.125% senior notes due September 1, 2021, which had an aggregate
principal amount of $500.0 million. These notes were redeemed at a redemption price equal to their principal amount outstanding
plus accrued and unpaid interest of $6.4 million.
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 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
On July 23, 2021, the Company amended its $1,500.0 million revolving credit facility to extend the maturity date to July 23, 2026.
As at December 31, 2021, the Company had utilized $206.5 million (December 31, 2020 - $7.5 million) of its $1,500.0 million revolving
credit facility, of which $6.5 million was used for letters of credit. In 2021, the Company drew down $200.0 million on the revolving
credit facility. Subsequent to December 31, 2021, the Company drew $1,100.0 million on the revolving credit facility.
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, 2021, interest charges and fees are as follows:
Type of credit
Revolving credit facility
Letters of credit
Standby fee applicable to unused availability
LIBOR plus 1.45%
0.967-1.45%
0.290%
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, 2021.
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. On December 15, 2021, the agreement was amended to cancel the remaining
$100.0 million available to be drawn.
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 and principal payments to be
made in June and December for the term of the loan. Principal repayments of $20.0 million are due in June and December 2022.
The Company has a $300.0 million Letter of Credit guarantee facility with Export Development Canada (“EDC”) with a maturity date
of June 30, 2022. Total fees related to letters of credit under this facility were 0.75% of the utilized amount. As at December 31, 2021,
$232.3 million (December 31, 2020 - $228.9 million) was utilized under this facility.
In addition, at December 31, 2021, the Company had $180.8 million (December 31, 2020 - $175.6 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 0.80%.
As at December 31, 2021, $308.2 million (December 31, 2020 - $290.1 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%.
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,
2021
2020
$
(206.5)
$
(7.5)
(232.3)
(228.9)
$
(438.8)
$
(236.4)
$
1,293.5
$
1,492.5
67.7
71.1
$
1,361.2
$
1,563.6
Total debt of $1,629.9 million as at December 31, 2021 consists of $1,241.9 million related to the senior notes, $200.0 million related
to the revolving credit facility, and $188.0 million related to the Tasiast loan. The current portion of this debt relates to the semi-
annual principal repayments on the Tasiast loan of $40.0 million due in 2022.
Liquidity Outlook
As at December 31, 2021, the Company has $40.0 million in scheduled principal debt repayments due in the next 12 months relating
to the Tasiast loan.
We believe that the Company’s existing cash and cash equivalents balance of $531.5 million, available credit of $1,361.2 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, lease liabilities, and working capital requirements currently estimated for the next 12 months. 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
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Contractual Obligations and Commitments
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Fair values of derivative instruments
The following table summarizes our long-term financial liabilities and off-balance sheet contractual obligations as at December 31,
2021:
The fair values of derivative instruments are noted in the table below:
(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
2022
2023-2026
2027 & thereafter
$
1,650.0
$
40.0
$
788.0
$
822.0
62.8
34.5
1,012.6
1,098.0
637.7
21.7
17.8
756.2
42.8
89.3
30.1
15.5
248.4
328.5
262.7
11.0
1.2
8.0
726.7
285.7
$
4,495.6
$
967.8
$
1,673.2
$
1,854.6
(a) Debt repayments are based on amounts due pursuant to the terms of existing indebtedness.
(b)
Includes both capital and operating commitments, of which $201.9 million relates to commitments for capital expenditures.
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,
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, 2021 and their respective maturities:
Foreign currency
2022
2023
2024
Brazilian real zero cost collars (in millions of U.S. dollars)
$
105.6
$
68.4
$
27.6
2016, the SMA issued a series of resolutions ordering CMM to temporarily curtail pumping from its wells.
Average put strike (Brazilian real)
Average call strike (Brazilian real)
4.79
6.78
5.13
7.34
5.55
9.01
Canadian dollar forward buy contracts (in millions of U.S. dollars)
$
50.4
$
15.0
$
-
Average rate (Canadian dollar)
1.31
1.29
-
Chilean peso zero cost collars (in millions of U.S. dollars)
$
63.6
$
42.0
$
-
Average put strike (Chilean peso)
Average call strike (Chilean peso)
760
992
810
1,040
-
-
Russian rouble zero cost collars (in millions of U.S. dollars)
$
46.8
$
33.6
$
9.0
Average put strike (Russian rouble)
Average call strike (Russian rouble)
Energy
WTI oil swap contracts (barrels)
Average price
74.5
97.5
76.2
99.2
1,056,600
565,200
80.0
104.6
-
$
48.13
$
39.58
$
-
Subsequent to December 31, 2021, the following new derivative contracts were entered into:
$35.5 million Russian rouble zero cost collar contracts with an average put strike of 80.2 and an average call strike of 97.6
maturing from 2022 to 2024; and
$1,100.0 million of Canadian dollar forward contracts at an average rate of 1.27, maturing in 2022.
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, 2021, 4,365,000 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, 2021 or December 31,
2020.
Foreign currency forward and collar contracts
$
(4.5)
$
(4.3)
As at December 31,
2021
2020
40.4
1.7
7.6
(11.0)
$
37.6
$
(7.7)
(in millions)
Asset (liability)
Energy swap contracts
Total return swap contracts
Other legal matters
results of operations or cash flows.
Maricunga regulatory proceedings
In May 2015, Chilean environmental enforcement authority (“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
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 required CMM to, among other things,
submit a restoration plan to the SMA for approval. CMM appealed the Valle Ancho ruling to the Supreme Court. The CDE appealed to
the Supreme Court in both cases and asserted in the Valle Ancho matter that the Environmental Tribunal erred by not ordering a
complete shutdown of Maricunga’s groundwater wells. On January 7, 2022, the Supreme Court annulled the Tribunal’s rulings in both
cases on procedural grounds and remanded the matters to the Tribunal for further proceedings.
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. In addition, the EPA notified SGC that SGC is a potentially responsible party (“PRP”) under CERCLA and may be
jointly and severally liable for cleanup of the District or cleanup costs incurred by the EPA in the District.
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2021 ANNUAL REPORT KINROSS GOLD
$
$
$
$
(4.5)
40.4
1.7
37.6
(4.3)
7.6
(11.0)
(7.7)
As at December 31,
2021
2020
The following table summarizes our long-term financial liabilities and off-balance sheet contractual obligations as at December 31,
The fair values of derivative instruments are noted in the table below:
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Fair values of derivative instruments
(in millions)
Asset (liability)
Foreign currency forward and collar contracts
Energy swap contracts
Total return swap contracts
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Contractual Obligations and Commitments
2021:
(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
$
1,650.0
$
40.0
$
788.0
$
822.0
2022
2023-2026
2027 & thereafter
Total
62.8
34.5
1,012.6
1,098.0
637.7
21.7
17.8
756.2
42.8
89.3
30.1
15.5
248.4
328.5
262.7
The following table provides a summary of derivative contracts outstanding at December 31, 2021 and their respective maturities:
Foreign currency
2022
2023
2024
Brazilian real zero cost collars (in millions of U.S. dollars)
$
105.6
$
68.4
$
27.6
Canadian dollar forward buy contracts (in millions of U.S. dollars)
$
50.4
$
15.0
$
-
Chilean peso zero cost collars (in millions of U.S. dollars)
$
63.6
$
42.0
$
-
Russian rouble zero cost collars (in millions of U.S. dollars)
$
46.8
$
33.6
$
9.0
4.79
6.78
1.31
760
992
74.5
97.5
5.13
7.34
1.29
810
1,040
76.2
99.2
Average put strike (Brazilian real)
Average call strike (Brazilian real)
Average rate (Canadian dollar)
Average put strike (Chilean peso)
Average call strike (Chilean peso)
Average put strike (Russian rouble)
Average call strike (Russian rouble)
WTI oil swap contracts (barrels)
Energy
Average price
1,056,600
565,200
$
48.13
$
39.58
$
-
Subsequent to December 31, 2021, the following new derivative contracts were entered into:
$35.5 million Russian rouble zero cost collar contracts with an average put strike of 80.2 and an average call strike of 97.6
maturing from 2022 to 2024; and
$1,100.0 million of Canadian dollar forward contracts at an average rate of 1.27, maturing in 2022.
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, 2021, 4,365,000 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, 2021 or December 31,
2020.
11.0
1.2
8.0
726.7
285.7
5.55
9.01
-
-
-
80.0
104.6
-
(a) Debt repayments are based on amounts due pursuant to the terms of existing indebtedness.
(b)
Includes both capital and operating commitments, of which $201.9 million relates to commitments for capital expenditures.
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.
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.
Maricunga regulatory proceedings
$
4,495.6
$
967.8
$
1,673.2
$
1,854.6
Other legal matters
In May 2015, Chilean environmental enforcement authority (“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 required CMM to, among other things,
submit a restoration plan to the SMA for approval. CMM appealed the Valle Ancho ruling to the Supreme Court. The CDE appealed to
the Supreme Court in both cases and asserted in the Valle Ancho matter that the Environmental Tribunal erred by not ordering a
complete shutdown of Maricunga’s groundwater wells. On January 7, 2022, the Supreme Court annulled the Tribunal’s rulings in both
cases on procedural grounds and remanded the matters to the Tribunal for further proceedings.
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. In addition, the EPA notified SGC that SGC is a potentially responsible party (“PRP”) under CERCLA and may be
jointly and severally liable for cleanup of the District or cleanup costs incurred by the EPA in the District.
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 sought 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 was 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 sought 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 were 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 and first quarter of 2021, SGC and Kinross reached settlements with the Navajo Nation, the State of New
Mexico, and the State of Utah. The Court has entered Consent Decrees approving these settlements and dismissed the claims with
prejudice. In the second quarter of 2021, SGC and Environmental Restoration dismissed their mutual cross claims with prejudice.
In the first quarter of 2021, the Court granted SGC’s motion for summary judgment against the individual Navajo members based on
a statute of repose defense. In April 2021, the Court granted Kinross Gold Corporation and Kinross Gold U.S.A., Inc.’s motion for
summary judgment against the individual Navajo members based personal jurisdiction grounds and, subsequently, in July 2021 denied
a motion to certify this order for interlocutory appeal. In May 2021, the Court partially granted Kinross Gold Corporation’s motion for
summary judgment based on a lack of specific jurisdiction as to the United States’ cross-claims, but granted the United States the right
to file a motion asserting personal jurisdiction under alternative grounds. On October 4, 2021, the Court denied the United States’
motion for summary judgment on this alternative ground for personal jurisdiction over Kinross Gold Corporation.
In October 2021, SGC and Kinross reached a settlement in principle with the United States and the State of Colorado. The settlement
remains subject to entry of a Consent Decree by the Court approving the settlement after a public comment period closes. The Consent
Decree was lodged with the Court on January 20, 2022 and the Federal Register notice inviting public comment was published on
January 27, 2022. In addition, SGC and Kinross reached an agreement with the State of Colorado to resolve potential natural resource
damage claims with respect to the District based on a payment by SGC of $1.6M. This settlement is subject to entry of a Consent
Decree which has been lodged with the Court for approval and a public comment period which has now closed.
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 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, 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 the 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 the 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, the WDOE may issue an AO or other directives to the Company.
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 May 10, 2021, asserted 133 alleged violations had occurred in the first quarter of 2021. 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 timely filed. Following its review of
these reports, WDOE may issue an AO or other directives to the Company. The NOVs are 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. Crown filed a counterclaim seeking an accounting of how OHA spent funds paid out under a prior
settlement. OHA succeeded in obtaining a dismissal of this claim. Crown refiled the claim in state court where proceedings have been
stayed by mutual agreement of the parties. 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. On June 16, 2021, the Court granted the plaintiffs’ motion for partial summary
judgement as to certain of Crown and KGUSA’s defenses. On July 9, 2021, Crown and KGUSA filed a motion for certification of this
ruling for immediate appeal, which motion was denied on November 30, 2021.
Guarantor summarized financial information
The obligations of the Company under the senior notes were guaranteed at December 31, 2021 by the following 100% owned and
consolidated 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., and
White Ice Ventures Limited. All guarantees by the guarantor subsidiaries are joint and several, and full and unconditional, subject to
certain customary release provisions contained in the indenture governing the senior notes. The guarantees are unsecured senior
obligations of the respective guarantor subsidiaries and rank equally with all other unsecured senior obligations. The guarantees are
effectively subordinated to any secured indebtedness and other secured liabilities of the respective guarantor subsidiaries. The
obligations of each guarantor subsidiary under its respective guarantee is limited to an amount not to exceed the maximum amount
that can be guaranteed by law or without resulting in its obligations under such guarantee being voidable or unenforceable under
applicable laws relating to fraudulent transfer, or under similar laws affecting the rights of creditors generally.
During the year ended December 31, 2021, a change was made to the guarantor subsidiaries such that Red Back Mining (Ghana)
Limited and KG Far East (Luxembourg) Sarl were no longer guarantors.
The summarized financial information of Kinross Gold Corporation, as issuer of the senior notes, and the guarantor subsidiaries is
presented on a combined basis with intercompany balances and transactions between Kinross Gold Corporation and the guarantor
subsidiaries eliminated. Kinross Gold Corporation’s or the guarantor subsidiaries' equity in the earnings (losses) of and other gains
34
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 sought 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 was 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 sought 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 were 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 and first quarter of 2021, SGC and Kinross reached settlements with the Navajo Nation, the State of New
Mexico, and the State of Utah. The Court has entered Consent Decrees approving these settlements and dismissed the claims with
prejudice. In the second quarter of 2021, SGC and Environmental Restoration dismissed their mutual cross claims with prejudice.
In the first quarter of 2021, the Court granted SGC’s motion for summary judgment against the individual Navajo members based on
a statute of repose defense. In April 2021, the Court granted Kinross Gold Corporation and Kinross Gold U.S.A., Inc.’s motion for
summary judgment against the individual Navajo members based personal jurisdiction grounds and, subsequently, in July 2021 denied
a motion to certify this order for interlocutory appeal. In May 2021, the Court partially granted Kinross Gold Corporation’s motion for
summary judgment based on a lack of specific jurisdiction as to the United States’ cross-claims, but granted the United States the right
to file a motion asserting personal jurisdiction under alternative grounds. On October 4, 2021, the Court denied the United States’
motion for summary judgment on this alternative ground for personal jurisdiction over Kinross Gold Corporation.
In October 2021, SGC and Kinross reached a settlement in principle with the United States and the State of Colorado. The settlement
remains subject to entry of a Consent Decree by the Court approving the settlement after a public comment period closes. The Consent
Decree was lodged with the Court on January 20, 2022 and the Federal Register notice inviting public comment was published on
January 27, 2022. In addition, SGC and Kinross reached an agreement with the State of Colorado to resolve potential natural resource
damage claims with respect to the District based on a payment by SGC of $1.6M. This settlement is subject to entry of a Consent
Decree which has been lodged with the Court for approval and a public comment period which has now closed.
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 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, 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 the 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 the 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, the WDOE may issue an AO or other directives to the Company.
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 May 10, 2021, asserted 133 alleged violations had occurred in the first quarter of 2021. 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 timely filed. Following its review of
these reports, WDOE may issue an AO or other directives to the Company. The NOVs are 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. Crown filed a counterclaim seeking an accounting of how OHA spent funds paid out under a prior
settlement. OHA succeeded in obtaining a dismissal of this claim. Crown refiled the claim in state court where proceedings have been
stayed by mutual agreement of the parties. 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. On June 16, 2021, the Court granted the plaintiffs’ motion for partial summary
judgement as to certain of Crown and KGUSA’s defenses. On July 9, 2021, Crown and KGUSA filed a motion for certification of this
ruling for immediate appeal, which motion was denied on November 30, 2021.
Guarantor summarized financial information
The obligations of the Company under the senior notes were guaranteed at December 31, 2021 by the following 100% owned and
consolidated 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., and
White Ice Ventures Limited. All guarantees by the guarantor subsidiaries are joint and several, and full and unconditional, subject to
certain customary release provisions contained in the indenture governing the senior notes. The guarantees are unsecured senior
obligations of the respective guarantor subsidiaries and rank equally with all other unsecured senior obligations. The guarantees are
effectively subordinated to any secured indebtedness and other secured liabilities of the respective guarantor subsidiaries. The
obligations of each guarantor subsidiary under its respective guarantee is limited to an amount not to exceed the maximum amount
that can be guaranteed by law or without resulting in its obligations under such guarantee being voidable or unenforceable under
applicable laws relating to fraudulent transfer, or under similar laws affecting the rights of creditors generally.
During the year ended December 31, 2021, a change was made to the guarantor subsidiaries such that Red Back Mining (Ghana)
Limited and KG Far East (Luxembourg) Sarl were no longer guarantors.
The summarized financial information of Kinross Gold Corporation, as issuer of the senior notes, and the guarantor subsidiaries is
presented on a combined basis with intercompany balances and transactions between Kinross Gold Corporation and the guarantor
subsidiaries eliminated. Kinross Gold Corporation’s or the guarantor subsidiaries' equity in the earnings (losses) of and other gains
34
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
from, intercompany receivables and payables with, and investments in non‐guarantor subsidiaries are presented separately in, and
have been excluded from, the accompanying supplemental summarized combined financial information. As a result of the change in
guarantor subsidiaries noted above, the accompanying supplemental summarized combined financial information for the comparative
periods have been recast.
Summarized combined statement of operations information
(in millions)
Revenue
Cost of sales
Gross profit
Operating earnings
Net earnings before equity in the earnings (losses) of, and other gains from,
non‐ guarantor subsidiaries
Equity in the earnings (losses) of, and other gains from, non‐guarantor subsidiaries
Net earnings
Net earnings attributable to common shareholders
Summarized combined balance sheet information
(in millions)
Current assets
Current assets – with non‐guarantor subsidiaries
Non‐current assets
Non‐current assets – with non‐guarantor subsidiaries
Current liabilities
Current liabilities – with non‐guarantor subsidiaries
Non‐current liabilities
Non‐current liabilities – with non‐guarantor subsidiaries
7. SUMMARY OF QUARTERLY INFORMATION
Years ended December 31,
2020
2021
$
$
2,285.8
1,799.3
486.5
293.2
2,288.6
1,460.8
827.8
670.4
187.3
33.9
221.2
221.2
$
462.5
879.9
1,342.4
1,342.4
$
As at December 31,
2021
$
1,019.5
1,937.9
3,931.3
4,346.2
428.1
618.9
2,294.8
1,312.2
2020
$
1,135.2
1,869.4
4,185.5
4,622.8
982.8
674.1
2,118.4
1,441.1
(in millions, except per share amounts)
Metal sales
Q4
879.5
$
Q3
862.5
$
Q2
1,000.9
$
Q1
986.5
$
Q4
1,195.1
$
Q3
1,131.3
$
Q2
1,007.2
$
Q1
879.8
$
2021
2020
Net (loss) earnings attributable to
common shareholders
Basic (loss) earnings per share
attributable to common shareholders
Diluted (loss) earnings per share
attributable to common shareholders
Net cash flow provided from operating
activities
$
(2.7)
$
(44.9)
$
119.3
$
149.5
$
783.3
$
240.7
$
195.7
$
122.7
$
-
$
(0.04)
$
0.09
$
0.12
$
0.62
$
0.19
$
0.16
$
0.10
$
-
$
(0.04)
$
0.09
$
0.12
$
0.62
$
0.19
$
0.15
$
0.10
$
197.3
$
269.9
$
388.2
$
279.8
$
681.1
$
544.1
$
432.8
$
299.6
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 2021, revenue decreased to $879.5 million on total gold equivalent ounces sold of 489,710, compared to
$1,195.1 million on sales of 637,169 total gold equivalent ounces during the fourth quarter of 2020, largely related to the temporary
suspension of milling operations at Tasiast. The average gold price realized in the fourth quarter of 2021 was $1,797 per ounce
compared to $1,875 per ounce in 2020.
Production cost of sales in the fourth quarter of 2021 decreased by 3% compared to the same period in 2020, due to decreases in gold
equivalent ounces sold at Tasiast and Round Mountain, partially offset by an increase in gold equivalent ounces sold at Fort Knox,
higher operating waste mined and increases in mining costs at Paracatu, and higher operating waste mined at Bald Mountain.
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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 2021, the Company recorded after-tax impairment and asset derecognition charges of $106.1 million related
to metal inventory and property, plant and equipment at Bald Mountain. The after-tax inventory impairment charge of $69.9 million
resulted from a reduction in the estimate of recoverable ounces on the Vantage heap leach pad at December 31, 2021 due to the
presence of carbonaceous ore. Property, plant and equipment related to the Vantage heap leach pad was also derecognized, resulting
in an after-tax charge of $36.2 million. 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.
Net cash flow provided from operating activities decreased to $197.3 million in the fourth quarter of 2021, compared to $681.1 million
in the same period in 2020, primarily due to the decrease in operating earnings as a result of the temporary suspension of milling
operations at Tasiast, and unfavourable working capital movements.
On September 30, 2020, the Company acquired a 70% interest in the Manh Choh project in Alaska from Royal Gold, Inc. and CORE
Alaska, LLC 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, 2021.
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
On May 14, 2020, the IASB issued amendments to IAS 16 Property, Plant and Equipment. Details of this accounting change are
disclosed in Note 4 of the audited consolidated financial statements.
37
2021 ANNUAL REPORT KINROSS GOLD
Net earnings attributable to common shareholders
$
221.2
$
1,342.4
periods have been recast.
Summarized combined statement of operations information
(in millions)
Revenue
Cost of sales
Gross profit
Operating earnings
non‐ guarantor subsidiaries
Net earnings
Net earnings before equity in the earnings (losses) of, and other gains from,
Equity in the earnings (losses) of, and other gains from, non‐guarantor subsidiaries
Summarized combined balance sheet information
(in millions)
Current assets
Non‐current assets
Current liabilities
Current assets – with non‐guarantor subsidiaries
Non‐current assets – with non‐guarantor subsidiaries
Current liabilities – with non‐guarantor subsidiaries
Non‐current liabilities
Non‐current liabilities – with non‐guarantor subsidiaries
7. SUMMARY OF QUARTERLY INFORMATION
Years ended December 31,
2021
2020
$
2,285.8
$
2,288.6
1,799.3
486.5
293.2
187.3
33.9
221.2
1,937.9
3,931.3
4,346.2
428.1
618.9
2,294.8
1,312.2
1,460.8
827.8
670.4
462.5
879.9
1,342.4
1,869.4
4,185.5
4,622.8
982.8
674.1
2,118.4
1,441.1
As at December 31,
2021
2020
$
1,019.5
$
1,135.2
(in millions, except per share amounts)
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Metal sales
$
879.5
$
862.5
$
1,000.9
$
986.5
$
1,195.1
$
1,131.3
$
1,007.2
$
879.8
2021
2020
$
(2.7)
$
(44.9)
$
119.3
$
149.5
$
783.3
$
240.7
$
195.7
$
122.7
attributable to common shareholders
$
-
$
(0.04)
$
0.09
$
0.12
$
0.62
$
0.19
$
0.16
$
0.10
attributable to common shareholders
$
-
$
(0.04)
$
0.09
$
0.12
$
0.62
$
0.19
$
0.15
$
0.10
Net (loss) earnings attributable to
common shareholders
Basic (loss) earnings per share
Diluted (loss) earnings per share
Net cash flow provided from operating
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 2021, revenue decreased to $879.5 million on total gold equivalent ounces sold of 489,710, compared to
$1,195.1 million on sales of 637,169 total gold equivalent ounces during the fourth quarter of 2020, largely related to the temporary
suspension of milling operations at Tasiast. The average gold price realized in the fourth quarter of 2021 was $1,797 per ounce
compared to $1,875 per ounce in 2020.
Production cost of sales in the fourth quarter of 2021 decreased by 3% compared to the same period in 2020, due to decreases in gold
equivalent ounces sold at Tasiast and Round Mountain, partially offset by an increase in gold equivalent ounces sold at Fort Knox,
higher operating waste mined and increases in mining costs at Paracatu, and higher operating waste mined at Bald Mountain.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
from, intercompany receivables and payables with, and investments in non‐guarantor subsidiaries are presented separately in, and
have been excluded from, the accompanying supplemental summarized combined financial information. As a result of the change in
guarantor subsidiaries noted above, the accompanying supplemental summarized combined financial information for the comparative
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 2021, the Company recorded after-tax impairment and asset derecognition charges of $106.1 million related
to metal inventory and property, plant and equipment at Bald Mountain. The after-tax inventory impairment charge of $69.9 million
resulted from a reduction in the estimate of recoverable ounces on the Vantage heap leach pad at December 31, 2021 due to the
presence of carbonaceous ore. Property, plant and equipment related to the Vantage heap leach pad was also derecognized, resulting
in an after-tax charge of $36.2 million. 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.
Net cash flow provided from operating activities decreased to $197.3 million in the fourth quarter of 2021, compared to $681.1 million
in the same period in 2020, primarily due to the decrease in operating earnings as a result of the temporary suspension of milling
operations at Tasiast, and unfavourable working capital movements.
On September 30, 2020, the Company acquired a 70% interest in the Manh Choh project in Alaska from Royal Gold, Inc. and CORE
Alaska, LLC 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, 2021.
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.
activities
$
197.3
$
269.9
$
388.2
$
279.8
$
681.1
$
544.1
$
432.8
$
299.6
Accounting Changes
On May 14, 2020, the IASB issued amendments to IAS 16 Property, Plant and Equipment. Details of this accounting change are
disclosed in Note 4 of the audited consolidated financial statements.
36
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
10. RISK ANALYSIS
The business of Kinross contains significant risk due to the nature of mining, exploration, and development activities. Certain risk
factors, including but not limited to those listed below, are similar across the mining industry while others are specific to Kinross. The
risk factors below may include details of how Kinross seeks to mitigate these risks where possible. For additional discussion of risk
factors please refer to the Company’s Annual Information Form for the year ended December 31, 2020, 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, 2021, which will be filed on SEDAR on or about March 31, 2022.
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 2021, the Company’s average realized gold price increased to $1,797 per ounce from $1,774 per ounce in 2020. 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 materially. 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 instability or 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, such as where insurance cannot be obtained at a reasonable cost. 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,
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 operations of the Company 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 tailings 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 operating 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
39
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
10. RISK ANALYSIS
The business of Kinross contains significant risk due to the nature of mining, exploration, and development activities. Certain risk
factors, including but not limited to those listed below, are similar across the mining industry while others are specific to Kinross. The
risk factors below may include details of how Kinross seeks to mitigate these risks where possible. For additional discussion of risk
factors please refer to the Company’s Annual Information Form for the year ended December 31, 2020, 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, 2021, which will be filed on SEDAR on or about March 31, 2022.
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 2021, the Company’s average realized gold price increased to $1,797 per ounce from $1,774 per ounce in 2020. 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 materially. 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 instability or 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, such as where insurance cannot be obtained at a reasonable cost. 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,
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 operations of the Company 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 tailings 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 operating 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
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30836 Q30 - KINROSS AR-Proof.pdf - p50 (March 31, 2022 01:56:32)
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Outbreak of Infectious Disease or Pandemic
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Mineral Reserve and Mineral Resource Estimates
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
pandemic 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 manage 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 expenditures 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.
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. Such estimates are, in large part, based on interpretations of
geological data obtained from drill holes and other sampling techniques. Actual mineralization or formations may be different from
those predicted. It may also take many years from the initial phase of drilling before production is possible. 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, 2021, 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 events occur, material write-downs of Kinross’
investments in mining properties or the discontinuation of development or production might be required, and there could be material
delays in the development of new projects and reduced income and cash flow. There is no assurance that Kinross will achieve indicated
levels of gold or silver recovery or obtain the prices assumed in determining the mineral reserves.
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, mineralization of
the area to be mined, the projected cost of mining 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
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 approvals. 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 permits and approvals and permit requirements, are 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.
40
41
MDA 40
30836 Q30 - KINROSS AR-Proof.pdf - p51 (March 31, 2022 01:56:32)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Outbreak of Infectious Disease or Pandemic
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Mineral Reserve and Mineral Resource Estimates
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
pandemic 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 manage 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 expenditures 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.
40
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. Such estimates are, in large part, based on interpretations of
geological data obtained from drill holes and other sampling techniques. Actual mineralization or formations may be different from
those predicted. It may also take many years from the initial phase of drilling before production is possible. 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, 2021, 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 events occur, material write-downs of Kinross’
investments in mining properties or the discontinuation of development or production might be required, and there could be material
delays in the development of new projects and reduced income and cash flow. There is no assurance that Kinross will achieve indicated
levels of gold or silver recovery or obtain the prices assumed in determining the mineral reserves.
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, mineralization of
the area to be mined, the projected cost of mining 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
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 approvals. 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 permits and approvals and permit requirements, are 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.
41 MDA
41
30836 Q30 - KINROSS AR-Proof.pdf - p52 (March 31, 2022 01:56:33)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Production and Cost Estimates
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Uncertainty in Mauritania
The Company prepares estimates of future production, operating costs and capital costs for its operations. Despite the Company’s
best efforts to budget and estimate such costs, as a result of the substantial expenditures involved in the development of mineral
projects and the fluctuation and increase of costs over time, development projects may be prone to material cost overruns. Kinross’
actual production and costs may vary from estimates for a variety of reasons, including: increased competition for resources and
development inputs; cost inflation affecting the mining industry in general; actual ore mined varying from estimates of grade, tonnage,
dilution and metallurgical and other characteristics; a lower than expected recovery rate; 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, explosives, electricity, natural gas, steel, concrete and
cyanide), labour, and equipment (including parts) to conduct its mining operations and development projects. A shortage of, or
inability to procure, 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 inflation and 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.
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, including
in respect of Ukraine and allegations of cyberattacks) 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.
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
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.
In July 2021 the Company announced that it had signed a definitive agreement with the Government of Mauritania to enhance the
parties’ partnership. There can be no assurance that further disputes will not arise between the parties including disputes with respect
to the matters addressed by the 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 the RCRA and state law equivalents, 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 and is currently involved in a related legal action with the State of Washington and an environmental non-governmental
organization. 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, Finland, 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.
42
43
MDA 42
30836 Q30 - KINROSS AR-Proof.pdf - p53 (March 31, 2022 01:56:33)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Production and Cost Estimates
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Uncertainty in Mauritania
The Company prepares estimates of future production, operating costs and capital costs for its operations. Despite the Company’s
best efforts to budget and estimate such costs, as a result of the substantial expenditures involved in the development of mineral
projects and the fluctuation and increase of costs over time, development projects may be prone to material cost overruns. Kinross’
actual production and costs may vary from estimates for a variety of reasons, including: increased competition for resources and
development inputs; cost inflation affecting the mining industry in general; actual ore mined varying from estimates of grade, tonnage,
dilution and metallurgical and other characteristics; a lower than expected recovery rate; 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, explosives, electricity, natural gas, steel, concrete and
cyanide), labour, and equipment (including parts) to conduct its mining operations and development projects. A shortage of, or
inability to procure, 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 inflation and 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.
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, including
in respect of Ukraine and allegations of cyberattacks) 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.
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
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.
In July 2021 the Company announced that it had signed a definitive agreement with the Government of Mauritania to enhance the
parties’ partnership. There can be no assurance that further disputes will not arise between the parties including disputes with respect
to the matters addressed by the 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 the RCRA and state law equivalents, 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 and is currently involved in a related legal action with the State of Washington and an environmental non-governmental
organization. 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, Finland, 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.
42
43
43 MDA
30836 Q30 - KINROSS AR-Proof.pdf - p54 (March 31, 2022 01:56:33)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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
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 increased taxes on gold and silver mining in 2021. 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 authorities may also require a more rigorous and time-consuming
assessment of a requested permit than anticipated in the form of an Environmental Impact Statement versus a more streamlined
Environmental Assessment. The loss of such permits, the requirements of such permits, third-party challenges to such permits, delays
in the permitting process or the inability to obtain such permits may hinder or delay 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, Community Relations and Indigenous Groups
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, local communities and other third parties.
Certain of Kinross’ properties may be subject to the rights or the asserted rights of various community stakeholders, including
indigenous people. Operating in such areas may trigger various international and national laws, codes, resolutions, conventions,
guidelines, and impose obligations on governments and the Company to respect the rights of indigenous people. These obligations
may, among other things, require the government or the Company to consult, or enter into agreements, with communities near the
Company’s mines, development projects or exploration activities regarding actions affecting local stakeholders, prior to granting the
Company mining rights, permits, approvals or other authorizations.
Consultation and other rights of First Nations or indigenous peoples may require accommodation including undertakings regarding
employment, royalty payments, procurement, other financial payments and other matters. This may affect the Company’s ability to
acquire effective mineral title, permits or licences in these jurisdictions, including in some parts of Canada, in which title or other rights
are claimed by First Nations and other indigenous peoples, and may affect the timetable and costs of development and operation of
mineral properties in these jurisdictions.
There is an increasing level of public concern relating to the perceived effect of mining activities on indigenous communities. The
evolving expectations related to human rights, indigenous rights and environmental protection may result in opposition to the
Company’s current or future activities. Such opposition may be directed through legal or administrative proceedings, against the
government and/or the Company, or expressed in manifestations such as protests, delayed or protracted consultations, blockades or
other forms of public expression against the Company’s activities or against the government’s position. There can be no assurance
that these relationships can be successfully managed. Intervention by the aforementioned groups may have a material adverse effect
on the Company’s reputation, results of operations and financial performance.
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. In November 2021, the Court of Appeals stayed the case indefinitely while the Appellants
pursue a rule-making petition with the Department of the Interior. These rights may also be impacted by changes in applicable laws
and regulations relating to mining claims in the United States.
Competition
The mineral exploration and mining business is competitive in all of its phases. In the search for and the acquisition of attractive
mineral properties, Kinross competes with numerous other companies and individuals, including competitors with greater financial,
technical and other resources than Kinross. The ability of the Company to operate successfully in the future will depend not only on
its ability to develop its present properties, but also on its ability to select and acquire suitable new producing properties or prospects
for mineral exploration. Kinross may be unable to compete successfully with its competitors in acquiring such properties or prospects
on terms it considers acceptable, if at all.
Joint Arrangements
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
2022, sensitivity to a 10% change in the gold price is estimated to have an approximate $374 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 2022, sensitivity to a 10% change in the silver price is estimated to have an approximate $18 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.
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2021 ANNUAL REPORT KINROSS GOLD
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
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 increased taxes on gold and silver mining in 2021. 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.
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 authorities may also require a more rigorous and time-consuming
assessment of a requested permit than anticipated in the form of an Environmental Impact Statement versus a more streamlined
Environmental Assessment. The loss of such permits, the requirements of such permits, third-party challenges to such permits, delays
in the permitting process or the inability to obtain such permits may hinder or delay 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, Community Relations and Indigenous Groups
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, local communities and other third parties.
Certain of Kinross’ properties may be subject to the rights or the asserted rights of various community stakeholders, including
indigenous people. Operating in such areas may trigger various international and national laws, codes, resolutions, conventions,
guidelines, and impose obligations on governments and the Company to respect the rights of indigenous people. These obligations
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
may, among other things, require the government or the Company to consult, or enter into agreements, with communities near the
Company’s mines, development projects or exploration activities regarding actions affecting local stakeholders, prior to granting the
Company mining rights, permits, approvals or other authorizations.
Consultation and other rights of First Nations or indigenous peoples may require accommodation including undertakings regarding
employment, royalty payments, procurement, other financial payments and other matters. This may affect the Company’s ability to
acquire effective mineral title, permits or licences in these jurisdictions, including in some parts of Canada, in which title or other rights
are claimed by First Nations and other indigenous peoples, and may affect the timetable and costs of development and operation of
mineral properties in these jurisdictions.
There is an increasing level of public concern relating to the perceived effect of mining activities on indigenous communities. The
evolving expectations related to human rights, indigenous rights and environmental protection may result in opposition to the
Company’s current or future activities. Such opposition may be directed through legal or administrative proceedings, against the
government and/or the Company, or expressed in manifestations such as protests, delayed or protracted consultations, blockades or
other forms of public expression against the Company’s activities or against the government’s position. There can be no assurance
that these relationships can be successfully managed. Intervention by the aforementioned groups may have a material adverse effect
on the Company’s reputation, results of operations and financial performance.
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. In November 2021, the Court of Appeals stayed the case indefinitely while the Appellants
pursue a rule-making petition with the Department of the Interior. These rights may also be impacted by changes in applicable laws
and regulations relating to mining claims in the United States.
Competition
The mineral exploration and mining business is competitive in all of its phases. In the search for and the acquisition of attractive
mineral properties, Kinross competes with numerous other companies and individuals, including competitors with greater financial,
technical and other resources than Kinross. The ability of the Company to operate successfully in the future will depend not only on
its ability to develop its present properties, but also on its ability to select and acquire suitable new producing properties or prospects
for mineral exploration. Kinross may be unable to compete successfully with its competitors in acquiring such properties or prospects
on terms it considers acceptable, if at all.
Licenses and Permits
Joint Arrangements
Certain of the operations in which the Company has an interest are operated through joint arrangements with other mining
companies. Any failure of such other companies to meet their obligations to Kinross or to third parties could have a material adverse
effect on the joint arrangement. In addition, Kinross may be unable to exert control over strategic decisions made in respect of such
properties.
Disclosures about Market Risks
To determine its market risk sensitivities, Kinross uses an internally generated financial forecast model that is sensitized to, among
other things, various gold prices, currency exchange rates, interest rates and energy prices. The variable with the greatest impact is
the gold price, and Kinross prepares a base case scenario and then sensitizes it by a 10% increase and decrease in the gold price. For
2022, sensitivity to a 10% change in the gold price is estimated to have an approximate $374 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 2022, sensitivity to a 10% change in the silver price is estimated to have an approximate $18 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.
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30836 Q30 - KINROSS AR-Proof.pdf - p56 (March 31, 2022 01:56:33)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Hedging Risks
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Credit Ratings and Debt Markets
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, 2021, 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 U.S. dollars. The costs of Kinross are incurred principally in Canadian dollars, U.S.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 U.S.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, 2021.
Litigation Risk
Legal proceedings may be brought against Kinross, for example, litigation based on its business activities, environmental laws, tax
matters, volatility in its stock price or failure to comply with its disclosure obligations, which could have a material adverse effect on
Kinross’ financial condition or prospects. Regulatory and government agencies may bring legal proceedings in connection with the
enforcement of applicable laws and regulations, and as a result Kinross may be subject to expenses of investigations and defense,
fines or penalties for violations if proven, and potentially cost and expense to remediate, increased operating costs or changes to
operations, and cessation of operations if ordered to do so or required in order to resolve such proceedings. 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.
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.
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 investment grade debt
markets and the related cost of debt financing is dependent upon maintaining investment grade 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.
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
As at December 31, 2021, the Company had $1,361.2 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
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Hedging Risks
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Credit Ratings and Debt Markets
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, 2021, 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 U.S. dollars. The costs of Kinross are incurred principally in Canadian dollars, U.S.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 U.S.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
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, 2021.
approval.
Litigation Risk
Legal proceedings may be brought against Kinross, for example, litigation based on its business activities, environmental laws, tax
matters, volatility in its stock price or failure to comply with its disclosure obligations, which could have a material adverse effect on
Kinross’ financial condition or prospects. Regulatory and government agencies may bring legal proceedings in connection with the
enforcement of applicable laws and regulations, and as a result Kinross may be subject to expenses of investigations and defense,
fines or penalties for violations if proven, and potentially cost and expense to remediate, increased operating costs or changes to
operations, and cessation of operations if ordered to do so or required in order to resolve such proceedings. 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.
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.
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 investment grade debt
markets and the related cost of debt financing is dependent upon maintaining investment grade 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.
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, 2021, the Company had $1,361.2 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
46
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30836 Q30 - KINROSS AR-Proof.pdf - p58 (March 31, 2022 01:56:33)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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
on numerous assumptions, some of which may be subjective, and it is possible that actual fair value could be significantly different
than those estimates.
Climate Risks
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.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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,
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
48
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30836 Q30 - KINROSS AR-Proof.pdf - p59 (March 31, 2022 01:56:34)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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.
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
on numerous assumptions, some of which may be subjective, and it is possible that actual fair value could be significantly different
Impairment
than those estimates.
Climate Risks
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.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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,
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
48
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30836 Q30 - KINROSS AR-Proof.pdf - p60 (March 31, 2022 01:56:34)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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.
11. SUPPLEMENTAL INFORMATION
Reconciliation of Non-GAAP Financial Measures and Ratios
The Company has included certain non-GAAP financial measures and ratios in this document. These measures and ratios are not
defined under IFRS and should not be considered in isolation. The Company believes that these measures and ratios, together with
measures and ratios determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying
performance of the Company. The inclusion of these measures and ratios is meant to provide additional information and should not
be used as a substitute for performance measures prepared in accordance with IFRS. These measures and ratios 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 and ratios
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 and ratios,
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 and ratios are not necessarily indicative of net earnings
and earnings per share measures and ratios as determined under IFRS.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
The following table provides a reconciliation of net earnings to adjusted net earnings for the periods presented:
(in millions, except per share amounts)
Net earnings 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
Impairment charges (reversals) and asset derecognition - net (a)
COVID-19 costs (b)
Tasiast insurance recoveries
Tasiast mill fire related costs
Round Mountain pit wall stabilization costs
Mediation settlement provision
Tasiast definitive agreement settlement
U.S. CARES Act net benefit
Tasiast strike costs
Gain on disposition of royalty portfolio
Other(c)
Tax effects of the above adjustments
Years ended December 31,
2021
2020
2019
$
221.2
$
1,342.4
$
718.6
7.3
(0.6)
4.7
24.1
86.3
144.5
34.8
(90.0)
60.3
50.1
42.1
10.0
-
-
-
19.0
(65.8)
320.1
101.2
51.3
(650.9)
64.1
-
-
-
-
-
-
(25.4)
8.3
6.8
61.7
(375.6)
1.6
33.3
(361.8)
-
-
-
-
-
-
-
-
(72.7)
33.0
71.5
(295.7)
Adjusted net earnings attributable to common shareholders
Weighted average number of common shares outstanding - Basic
Adjusted net earnings per share
Basic earnings per share attributable to common shareholders
$
541.3
$
966.8
$
422.9
1,259.1
1,257.2
1,252.3
$
0.43
$
0.77
$
0.34
$
0.18
$
1.07
$
0.57
(a) During the year ended December 31, 2021, the Company recognized impairment and asset derecognition charges of $144.5 million at Bald
Mountain, of which $95.2 million related to impairment of metal inventory and $49.3 million related to the derecognition of property, plant and
equipment. The tax impacts of the impairment and derecognition charges were income tax recoveries of $25.3 million and $13.1 million,
respectively. 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 COVID-19 related labour, health and safety, donations and other support program costs.
(c) Other includes various non-recurring impacts, such as one-time costs at sites, and recurring impacts, such as gains and losses on the sale of assets
and hedges, which the Company believes are not reflective of the Company’s underlying performance for the reporting period.
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30836 Q30 - KINROSS AR-Proof.pdf - p61 (March 31, 2022 01:56:34)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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.
11. SUPPLEMENTAL INFORMATION
Reconciliation of Non-GAAP Financial Measures and Ratios
The Company has included certain non-GAAP financial measures and ratios in this document. These measures and ratios are not
defined under IFRS and should not be considered in isolation. The Company believes that these measures and ratios, together with
measures and ratios determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying
performance of the Company. The inclusion of these measures and ratios is meant to provide additional information and should not
be used as a substitute for performance measures prepared in accordance with IFRS. These measures and ratios 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 and ratios
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 and ratios,
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 and ratios are not necessarily indicative of net earnings
and earnings per share measures and ratios as determined under IFRS.
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
The following table provides a reconciliation of net earnings to adjusted net earnings for the periods presented:
(in millions, except per share amounts)
Net earnings 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
Impairment charges (reversals) and asset derecognition - net (a)
COVID-19 costs (b)
Tasiast insurance recoveries
Tasiast mill fire related costs
Round Mountain pit wall stabilization costs
Mediation settlement provision
Tasiast definitive agreement settlement
U.S. CARES Act net benefit
Tasiast strike costs
Gain on disposition of royalty portfolio
Other(c)
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
Basic earnings per share attributable to common shareholders
Years ended December 31,
2021
$
221.2
2020
$
1,342.4
2019
$
718.6
4.7
7.3
(0.6)
24.1
86.3
144.5
34.8
(90.0)
60.3
50.1
42.1
10.0
-
-
-
19.0
(65.8)
320.1
541.3
1,259.1
0.43
0.18
101.2
51.3
(650.9)
64.1
-
-
-
-
-
(25.4)
8.3
-
6.8
61.7
(375.6)
966.8
1,257.2
0.77
1.07
1.6
33.3
(361.8)
-
-
-
-
-
-
-
-
(72.7)
33.0
71.5
(295.7)
422.9
1,252.3
0.34
0.57
$
$
$
$
$
$
$
$
$
(a) During the year ended December 31, 2021, the Company recognized impairment and asset derecognition charges of $144.5 million at Bald
Mountain, of which $95.2 million related to impairment of metal inventory and $49.3 million related to the derecognition of property, plant and
equipment. The tax impacts of the impairment and derecognition charges were income tax recoveries of $25.3 million and $13.1 million,
respectively. 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 COVID-19 related labour, health and safety, donations and other support program costs.
(b)
(c) Other includes various non-recurring impacts, such as one-time costs at sites, and recurring impacts, such as gains and losses on the sale of assets
and hedges, which the Company believes are not reflective of the Company’s underlying performance for the reporting period.
50
51
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30836 Q30 - KINROSS AR-Proof.pdf - p62 (March 31, 2022 01:56:34)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Free Cash Flow
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Attributable Production Cost of Sales per Equivalent Ounce Sold
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.
Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP ratio 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 free cash flow for the periods presented:
The following table provides a reconciliation of attributable production cost of sales per equivalent ounce sold for the periods
Years ended December 31,
2020
2019
2021
presented:
$
$
$
$
$
$
1,957.6
(916.1)
1,041.5
1,135.2
(938.6)
196.6
1,224.9
(1,060.2)
164.7
(in millions)
Net cash flow provided from operating activities - as reported
Less: Additions to property, plant and equipment
Free cash flow
Adjusted Operating Cash Flow
(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 (c)
Attributable (b) gold equivalent ounces sold
Attributable (b) production cost of sales per equivalent ounce sold
Consolidated production cost of sales per equivalent ounce sold (d)
See page 56 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,
2021
2020
2019
$
1,726.1
$
1,725.7
$
1,778.9
(20.2)
(19.6)
(19.0)
$
1,705.9
$
1,706.1
$
1,759.9
2,075,738
2,375,548
2,512,758
(14,829)
(16,621)
(20,186)
2,060,909
2,358,927
2,492,572
$
828
$
723
$
706
$
832
$
726
$
708
Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP ratio 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 ratio 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.
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(e)
Attributable(b) production cost of sales net of silver by-product revenue
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest (c)
Attributable(b) gold ounces sold
Attributable(b) production cost of sales per ounce sold on a by-product basis
Consolidated production cost of sales per equivalent ounce sold (d)
See page 56 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2021
2020
2019
$
1,726.1
$
1,725.7
$
1,778.9
(20.2)
(107.9)
(19.6)
(91.0)
(19.0)
(75.1)
$
1,598.0
$
1,615.1
$
1,684.8
2,015,068
2,324,324
2,458,839
(14,806)
(16,589)
(20,161)
2,000,262
2,307,735
2,438,678
$
799
$
700
$
691
$
832
$
726
$
708
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,
2021
2020
2019
$
1,135.2
$
1,957.6
$
1,224.9
-
-
16.7
The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the
50.0
86.7
38.0
174.7
1,309.9
$
120.9
6.8
(172.6)
(44.9)
1,912.7
$
64.5
(53.8)
(50.8)
(23.4)
1,201.5
$
52
53
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30836 Q30 - KINROSS AR-Proof.pdf - p63 (March 31, 2022 01:56:34)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Free Cash Flow
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
Attributable Production Cost of Sales per Equivalent Ounce Sold
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
Adjusted Operating Cash Flow
Years ended December 31,
2021
2020
2019
$
1,135.2
$
1,957.6
$
1,224.9
(938.6)
(916.1)
(1,060.2)
$
196.6
$
1,041.5
$
164.7
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,
2021
2020
2019
$
1,135.2
$
1,957.6
$
1,224.9
-
50.0
86.7
38.0
174.7
-
120.9
6.8
(172.6)
(44.9)
16.7
64.5
(53.8)
(50.8)
(23.4)
Adjusted operating cash flow
$
1,309.9
$
1,912.7
$
1,201.5
Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP ratio 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 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 (c)
Attributable (b) gold equivalent ounces sold
Attributable (b) production cost of sales per equivalent ounce sold
Consolidated production cost of sales per equivalent ounce sold (d)
See page 56 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,
2021
2020
2019
$
1,726.1
$
1,725.7
$
1,778.9
(20.2)
(19.6)
(19.0)
$
1,705.9
$
1,706.1
$
1,759.9
2,075,738
2,375,548
2,512,758
(14,829)
(16,621)
(20,186)
2,060,909
2,358,927
2,492,572
$
828
$
723
$
706
$
832
$
726
$
708
Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP ratio 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 ratio provides
investors with the ability to better evaluate Kinross’ production cost of sales per ounce on a comparable basis with other major gold
producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-product accounting.
The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the
periods presented:
(in millions, except ounces and production cost of sales per ounce)
Production cost of sales - as reported
Less: portion attributable to Chirano non-controlling interest (a)
Less: attributable (b) silver revenue(e)
Attributable(b) production cost of sales net of silver by-product revenue
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest (c)
Attributable(b) gold ounces sold
Attributable(b) production cost of sales per ounce sold on a by-product basis
Consolidated production cost of sales per equivalent ounce sold (d)
See page 56 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2021
2020
2019
$
1,726.1
$
1,725.7
$
1,778.9
(20.2)
(107.9)
(19.6)
(91.0)
(19.0)
(75.1)
$
1,598.0
$
1,615.1
$
1,684.8
2,015,068
2,324,324
2,458,839
(14,806)
(16,589)
(20,161)
2,000,262
2,307,735
2,438,678
$
799
$
700
$
691
$
832
$
726
$
708
52
53
53 MDA
30836 Q30 - KINROSS AR-Proof.pdf - p64 (March 31, 2022 01:56:35)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 and ratios presented by the Company may not be comparable to similar measures and ratios
presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing
measures and ratios 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(e)
Attributable(b) production cost of sales net of silver by-product revenue
Adjusting items on an attributable (b) basis:
General and administrative (f)
Other operating expense - sustaining(g)
Reclamation and remediation - sustaining(h)
Exploration and business development - sustaining(i)
Additions to property, plant and equipment - sustaining(j)
Lease payments - sustaining(k)
All-in Sustaining Cost on a by-product basis - attributable (b)
Other operating expense - non-sustaining(g)
Reclamation and remediation - non-sustaining(h)
Exploration and business development - non-sustaining(i)
Additions to property, plant and equipment - non-sustaining(j)
Lease payments - non-sustaining(k)
All-in Cost on a by-product basis - attributable (b)
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest (c)
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
Consolidated production cost of sales per equivalent ounce sold (d)
See page 56 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2021
2020
2019
$
1,726.1
$
1,725.7
$
1,778.9
(20.2)
(107.9)
(19.6)
(91.0)
(19.0)
(75.1)
$
1,598.0
$
1,615.1
$
1,684.8
126.6
10.6
43.2
40.0
386.0
32.8
117.9
9.6
54.0
48.3
373.5
19.7
123.6
24.7
48.2
66.0
415.1
12.7
$
2,237.2
$
2,238.1
$
2,375.1
38.1
3.4
91.3
544.6
1.0
55.9
5.0
43.3
536.9
1.0
57.0
6.9
46.7
637.9
1.6
$
2,915.6
$
2,880.2
$
3,125.2
2,015,068
(14,806)
2,000,262
2,324,324
2,458,839
(16,589)
(20,161)
2,307,735
2,438,678
$
1,118
$
970
$
974
$
1,458
$
1,248
$
1,282
$
832
$
726
$
708
The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP measures
and ratios, 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 (f)
Other operating expense - sustaining(g)
Reclamation and remediation - sustaining(h)
Exploration and business development- sustaining(i)
Additions to property, plant and equipment - sustaining(j)
Lease payments - sustaining(k)
All-in Sustaining Cost - attributable (b)
Other operating expense - non-sustaining(g)
Reclamation and remediation - non-sustaining(h)
Exploration and business development - non-sustaining(i)
Additions to property, plant and equipment - non-sustaining(j)
Lease payments - non-sustaining(k)
All-in Cost - attributable (b)
Gold equivalent ounces sold
Less: portion attributable to Chirano non-controlling interest (c)
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
Consolidated production cost of sales per equivalent ounce sold (d)
See page 56 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2021
2020
2019
$
1,726.1
$
1,725.7
$
1,778.9
(20.2)
(19.6)
(19.0)
$
1,705.9
$
1,706.1
$
1,759.9
$
2,345.1
$
2,329.1
$
2,450.2
126.6
10.6
43.2
40.0
386.0
32.8
38.1
3.4
91.3
544.6
1.0
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
$
3,023.5
$
2,971.2
$
3,200.3
2,075,738
(14,829)
2,060,909
2,375,548
2,512,758
(16,621)
(20,186)
2,358,927
2,492,572
$
1,138
$
987
$
983
$
1,467
$
1,260
$
1,284
$
832
$
726
$
708
54
55
MDA 54
30836 Q30 - KINROSS AR-Proof.pdf - p65 (March 31, 2022 01:56:35)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
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 and ratios presented by the Company may not be comparable to similar measures and ratios
presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing
measures and ratios 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(e)
Attributable(b) production cost of sales net of silver by-product revenue
Adjusting items on an attributable (b) basis:
General and administrative (f)
Other operating expense - sustaining(g)
Reclamation and remediation - sustaining(h)
Exploration and business development - sustaining(i)
Additions to property, plant and equipment - sustaining(j)
Lease payments - sustaining(k)
All-in Sustaining Cost on a by-product basis - attributable (b)
Other operating expense - non-sustaining(g)
Reclamation and remediation - non-sustaining(h)
Exploration and business development - non-sustaining(i)
Additions to property, plant and equipment - non-sustaining(j)
Lease payments - non-sustaining(k)
All-in Cost on a by-product basis - attributable (b)
Gold ounces sold
Less: portion attributable to Chirano non-controlling interest (c)
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
Consolidated production cost of sales per equivalent ounce sold (d)
See page 56 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2021
2020
2019
$
1,726.1
$
1,725.7
$
1,778.9
(20.2)
(107.9)
(19.6)
(91.0)
(19.0)
(75.1)
$
1,598.0
$
1,615.1
$
1,684.8
$
2,237.2
$
2,238.1
$
2,375.1
126.6
10.6
43.2
40.0
386.0
32.8
38.1
3.4
91.3
544.6
1.0
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
$
2,915.6
$
2,880.2
$
3,125.2
2,015,068
(14,806)
2,000,262
2,324,324
2,458,839
(16,589)
(20,161)
2,307,735
2,438,678
$
1,118
$
970
$
974
$
1,458
$
1,248
$
1,282
$
832
$
726
$
708
The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP measures
and ratios, 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 (f)
Other operating expense - sustaining(g)
Reclamation and remediation - sustaining(h)
Exploration and business development- sustaining(i)
Additions to property, plant and equipment - sustaining(j)
Lease payments - sustaining(k)
All-in Sustaining Cost - attributable (b)
Other operating expense - non-sustaining(g)
Reclamation and remediation - non-sustaining(h)
Exploration and business development - non-sustaining(i)
Additions to property, plant and equipment - non-sustaining(j)
Lease payments - non-sustaining(k)
All-in Cost - attributable (b)
Gold equivalent ounces sold
Less: portion attributable to Chirano non-controlling interest (c)
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
Consolidated production cost of sales per equivalent ounce sold (d)
See page 56 of this MD&A for details of the footnotes referenced within the table above.
Years ended December 31,
2021
2020
2019
$
1,726.1
$
1,725.7
$
1,778.9
(20.2)
(19.6)
(19.0)
$
1,705.9
$
1,706.1
$
1,759.9
126.6
10.6
43.2
40.0
386.0
32.8
117.9
9.6
54.0
48.3
373.5
19.7
123.6
24.7
48.2
66.0
415.1
12.7
$
2,345.1
$
2,329.1
$
2,450.2
38.1
3.4
91.3
544.6
1.0
55.9
5.0
43.3
536.9
1.0
57.0
6.9
46.7
637.9
1.6
$
3,023.5
$
2,971.2
$
3,200.3
2,075,738
(14,829)
2,060,909
2,375,548
2,512,758
(16,621)
(20,186)
2,358,927
2,492,572
$
1,138
$
987
$
983
$
1,467
$
1,260
$
1,284
$
832
$
726
$
708
54
55
55 MDA
30836 Q30 - KINROSS AR-Proof.pdf - p66 (March 31, 2022 01:56:35)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
(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 Manh Choh (70%) costs.
“Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces sold from the Chirano mine.
“Consolidated production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces
sold.
“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 and business development 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
classified as either sustaining or non-sustaining based on a determination of the type of expense and requirement for general or growth related
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, 2021, primarily related to major projects at Tasiast, La Coipa, Udinsk, Fort Knox, and Round Mountain. 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.
“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.
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) “Outlook”, “Project Updates and New Developments”, “Other Developments”
and “Liquidity Outlook” and include, without limitation, statements with respect to our guidance for production, production costs of sales, all-in sustaining cost
of sales, all-in cost, cash flow, free cash flow, expenses and capital expenditures; the declaration, payment and sustainability of the Company’s dividends or share
repurchases; 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 greenhouse gas emissions reduction targets; 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, restarting suspended or disrupted operations;
environmental risks and proceedings; and resolution of pending litigation. The words “advance”, “anticipate”, “believe”, “continue”, “estimates”, “expects”,
“explore”, “forecast”, “future”, “growth”, “goal”, “guidance”, “opportunities”, “outlook”, “plan”, “potential”, “progress”, “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, 2021 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 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; water and power supply and continued operation of the tailings reprocessing facility at Paracatu; permitting and development of the Lobo-
Marte project; the ramp-up of production at the La Coipa project; 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,
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 the tax code in Mauritania, the European Union’s General Data Protection Regulation or similar legislation in other jurisdictions, 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), the modification or revocation of Russia’s international tax treaties, 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 Manh Choh 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) attributable 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
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) potential direct or indirect operational impacts resulting from infectious diseases or pandemics such as the
ongoing COVID-19 pandemic; (17) 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; (18)
changes in national and local government legislation or other government actions, particularly in response to the COVID-19 pandemic; (19) 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, and the ongoing Sunnyside settlement regarding potential
liability under the U.S. Comprehensive Environmental Response Compensation and Liability Act); (20) that the benefits of the definitive agreement with the
Government of Mauritania will result in increased stability at the Company’s operations in Mauritania; (21) the Company’s financial results, cash flows and future
prospects being consistent with Company expectations in amounts sufficient to permit sustained dividend payments; (22) the impacts of the pit wall issues at
Round Mountain being consistent with the Company’s expectations; (23) that the Great Bear Resources acquisition will close in accordance with, and on the
timeline contemplated by, the terms and conditions of the relevant agreements, on a basis consistent with our expectations; (24) the anticipated mineralization
of the Dixie Project being consistent with expectations and the potential benefits to Kinross from the project and any upside from the project; and (25) the
Company’s estimates regarding the timing of completion of the 21k and 24k projects. 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
56
57
MDA 56
30836 Q30 - KINROSS AR-Proof.pdf - p67 (March 31, 2022 01:56:36)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
(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)
(d)
(e)
sold.
gold production.
“Attributable” includes Kinross' share of Chirano (90%) production and costs, and Manh Choh (70%) costs.
“Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces sold from the Chirano mine.
“Consolidated production cost of sales per equivalent ounce sold” is defined as production cost of sales divided by total gold equivalent ounces
“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
(f)
“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.
(g)
“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.
(h)
“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.
(i)
“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 and business development 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
classified as either sustaining or non-sustaining based on a determination of the type of expense and requirement for general or growth related
operations.
(j)
“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, 2021, primarily related to major projects at Tasiast, La Coipa, Udinsk, Fort Knox, and Round Mountain. 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.
(k)
“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.
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) “Outlook”, “Project Updates and New Developments”, “Other Developments”
and “Liquidity Outlook” and include, without limitation, statements with respect to our guidance for production, production costs of sales, all-in sustaining cost
of sales, all-in cost, cash flow, free cash flow, expenses and capital expenditures; the declaration, payment and sustainability of the Company’s dividends or share
repurchases; 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 greenhouse gas emissions reduction targets; 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, restarting suspended or disrupted operations;
environmental risks and proceedings; and resolution of pending litigation. The words “advance”, “anticipate”, “believe”, “continue”, “estimates”, “expects”,
“explore”, “forecast”, “future”, “growth”, “goal”, “guidance”, “opportunities”, “outlook”, “plan”, “potential”, “progress”, “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, 2021 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 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; water and power supply and continued operation of the tailings reprocessing facility at Paracatu; permitting and development of the Lobo-
Marte project; the ramp-up of production at the La Coipa project; 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,
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 the tax code in Mauritania, the European Union’s General Data Protection Regulation or similar legislation in other jurisdictions, 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), the modification or revocation of Russia’s international tax treaties, 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 Manh Choh 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) attributable 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
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) potential direct or indirect operational impacts resulting from infectious diseases or pandemics such as the
ongoing COVID-19 pandemic; (17) 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; (18)
changes in national and local government legislation or other government actions, particularly in response to the COVID-19 pandemic; (19) 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, and the ongoing Sunnyside settlement regarding potential
liability under the U.S. Comprehensive Environmental Response Compensation and Liability Act); (20) that the benefits of the definitive agreement with the
Government of Mauritania will result in increased stability at the Company’s operations in Mauritania; (21) the Company’s financial results, cash flows and future
prospects being consistent with Company expectations in amounts sufficient to permit sustained dividend payments; (22) the impacts of the pit wall issues at
Round Mountain being consistent with the Company’s expectations; (23) that the Great Bear Resources acquisition will close in accordance with, and on the
timeline contemplated by, the terms and conditions of the relevant agreements, on a basis consistent with our expectations; (24) the anticipated mineralization
of the Dixie Project being consistent with expectations and the potential benefits to Kinross from the project and any upside from the project; and (25) the
Company’s estimates regarding the timing of completion of the 21k and 24k projects. 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
56
57
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2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the year ended December 31, 2021
government or citizens of, persons or companies domiciled in, or the Company’s business, operations or other activities in, any such jurisdiction; fluctuations in
the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as fuel and electricity); price inflation of goods and
services; 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 31, 2021 and the “Cautionary Statement on Forward-Looking Information” in our greenhouse gas emissions news release dated
February 16, 2022. 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 $20 impact on attributable production cost of sales per equivalent
ounce sold4.
Specific to the Russian rouble, a 10% change in the exchange rate would be expected to result in an approximate $25 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 $30 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 attributable 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 attributable 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.
4 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.
58
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2021 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 16, 2022
ANDREA S. FREEBOROUGH
Executive Vice-President and Chief Financial Officer
Toronto, Canada
February 16, 2022
1 FS
1
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2021 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, 2021, and has concluded
that such internal control over financial reporting is effective.
Basis for Opinion
The effectiveness of Kinross’ internal control over financial reporting as of December 31, 2021 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 16, 2022
ANDREA S. FREEBOROUGH
Executive Vice-President and Chief Financial Officer
Toronto, Canada
February 16, 2022
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, 2021 and 2020, 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, 2021 and 2020, 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, 2021, 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 16, 2022 expressed an unqualified opinion
on the effectiveness of the Company’s internal control over financial reporting.
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 Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates 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 a critical audit matter 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 matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Indicators of impairment or reversal of impairment for property, plant and equipment
As discussed in Note 7v. to the consolidated financial statements, the carrying value of the Company’s property, plant and equipment was $7,617.7
million as of December 31, 2021. As discussed in Note 3xii. to the consolidated financial statements, 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.
We identified the evaluation of indicators of impairment or reversal of impairment for property, plant and equipment as a critical audit matter. Assessing
the Company’s evaluation of indicators of impairment or reversal of impairment involved the application of significant auditor judgment. Specifically,
significant judgment was required to evaluate the future gold prices and the mineral reserves and mineral resources, on which the assumptions for
recoverable production are based.
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 Company’s process to assess indicators of impairment or reversal of impairment. This included
controls related to the determination of future gold price and mineral reserves and mineral resources. We assessed the competence, capabilities and
objectivity of the Company’s personnel who prepared the mineral reserves and mineral resources estimate, 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 used
in the Company’s assessment by comparing to third party estimates.
Chartered Professional Accountants, Licensed Public Accountants
We have served as the Company’s auditor since 2005.
/s/ KPMG LLP
Toronto, Canada
February 16, 2022
2
3
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2021 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.
The effectiveness of Kinross’ internal control over financial reporting as of December 31, 2021 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
President and Chief Executive Officer
Executive Vice-President and Chief Financial Officer
J. PAUL ROLLINSON
Toronto, Canada
February 16, 2022
ANDREA S. FREEBOROUGH
Toronto, Canada
February 16, 2022
Management has evaluated the design and operation of Kinross’ internal control over financial reporting as of December 31, 2021, and has concluded
that such internal control over financial reporting is effective.
Basis for Opinion
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, 2021 and 2020, 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, 2021 and 2020, 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, 2021, 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 16, 2022 expressed an unqualified opinion
on the effectiveness of the Company’s internal control over financial reporting.
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 Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates 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 a critical audit matter 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 matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Indicators of impairment or reversal of impairment for property, plant and equipment
As discussed in Note 7v. to the consolidated financial statements, the carrying value of the Company’s property, plant and equipment was $7,617.7
million as of December 31, 2021. As discussed in Note 3xii. to the consolidated financial statements, 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.
We identified the evaluation of indicators of impairment or reversal of impairment for property, plant and equipment as a critical audit matter. Assessing
the Company’s evaluation of indicators of impairment or reversal of impairment involved the application of significant auditor judgment. Specifically,
significant judgment was required to evaluate the future gold prices and the mineral reserves and mineral resources, on which the assumptions for
recoverable production are based.
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 Company’s process to assess indicators of impairment or reversal of impairment. This included
controls related to the determination of future gold price and mineral reserves and mineral resources. We assessed the competence, capabilities and
objectivity of the Company’s personnel who prepared the mineral reserves and mineral resources estimate, 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 used
in the Company’s assessment by comparing to third party estimates.
/s/ KPMG LLP
Chartered Professional Accountants, Licensed Public Accountants
We have served as the Company’s auditor since 2005.
Toronto, Canada
February 16, 2022
2
3
3 FS
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2021 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 (the Company) internal control over financial reporting as of December 31, 2021, 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, 2021, 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, 2021 and 2020, 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
16, 2022 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 16, 2022
4
FS 4
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KINROSS GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
(expressed in millions of United States dollars, except share amounts)
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable and other assets
Current income tax recoverable
Inventories
Unrealized fair value of derivative assets
Non-current assets
Property, plant and equipment
Goodwill
Long-term investments
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
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,
December 31,
2021
2020
$
531.5
$
1,210.9
Note 7
Note 7
Note 7
Note 7
Note 10
Note 7
Note 7
Note 7
Note 9
Note 7
Note 18
Note 12
Note 14
Note 7
Note 6
Note 12
Note 14
Note 13
Note 18
11.4
214.5
10.2
1,151.3
30.0
1,948.9
7,617.7
158.8
98.2
7.1
590.9
6.5
95.0
40.0
90.0
23.7
-
741.4
1,589.9
847.9
35.1
127.4
436.8
13.7
115.8
29.9
1,072.9
6.5
2,449.7
7,653.5
158.8
113.0
18.3
537.2
2.7
114.5
499.7
63.8
49.7
141.5
1,348.4
1,424.2
861.1
46.3
102.4
487.8
$
10,428.1
$
10,933.2
Note 7
$
492.7
$
479.2
$
3,778.5
$
4,270.2
Note 15
$
4,427.7
$
4,473.7
10,664.4
(8,492.4)
(18.8)
6,580.9
68.7
10,709.0
(8,562.5)
(23.7)
6,596.5
66.5
$
6,649.6
$
6,663.0
Note 20
Note 12, 15 and 22
$
10,428.1
$
10,933.2
Unlimited
Unlimited
Note 15 1,244,332,772
1,258,320,461
Accumulated other comprehensive income (loss)
Note 7
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
5
Director
2021 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 (the Company) internal control over financial reporting as of December 31, 2021, 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, 2021, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
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, 2021 and 2020, 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
16, 2022 expressed an unqualified opinion on those consolidated financial statements.
Commission.
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.
Chartered Professional Accountants, Licensed Public Accountants
/s/ KPMG LLP
Toronto, Canada
February 16, 2022
KINROSS GOLD CORPORATION
CONSOLIDATED BALANCE SHEETS
(expressed in millions of United States dollars, except share amounts)
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable and other assets
Current income tax recoverable
Inventories
Unrealized fair value of derivative assets
Non-current assets
Property, plant and equipment
Goodwill
Long-term investments
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,
2021
December 31,
2020
$
531.5
11.4
214.5
10.2
1,151.3
30.0
1,948.9
$
1,210.9
13.7
115.8
29.9
1,072.9
6.5
2,449.7
7,617.7
158.8
98.2
7.1
590.9
6.5
10,428.1
$
7,653.5
158.8
113.0
18.3
537.2
2.7
10,933.2
$
$
492.7
95.0
40.0
90.0
23.7
-
$
479.2
114.5
499.7
63.8
49.7
141.5
741.4
1,348.4
1,589.9
847.9
35.1
127.4
436.8
3,778.5
$
1,424.2
861.1
46.3
102.4
487.8
4,270.2
$
Note 7
Note 7
Note 7
Note 7
Note 10
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
$
$
4,427.7
10,664.4
(8,492.4)
(18.8)
6,580.9
68.7
6,649.6
4,473.7
10,709.0
(8,562.5)
(23.7)
6,596.5
66.5
6,663.0
$
$
Note 20
Note 12, 15 and 22
$
10,428.1
$
10,933.2
Unlimited
Note 15 1,244,332,772
Unlimited
1,258,320,461
4
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
5 FS
/s/ Kerry D. Dyte
Kerry D. Dyte
Director
5
30836 Q30 - KINROSS AR-Proof.pdf - p74 (March 31, 2022 01:56:38)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(expressed in millions of United States dollars, except share and per share amounts)
KINROSS GOLD CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(expressed in millions of United States dollars)
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges (reversals) and asset derecognition - 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 (loss) earnings 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,
2021
December 31,
2020
$
3,729.4
$
4,213.4
1,726.1
840.9
144.5
2,711.5
1,017.9
294.6
133.1
126.6
463.6
79.2
12.3
(85.7)
469.4
(250.7)
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)
$
218.7
$
1,358.7
$
(2.5)
$
16.3
$
221.2
$
1,342.4
$
$
0.18
0.17
$
$
1.07
1.06
1,259.1
1,269.1
1,257.2
1,268.0
Note 8
Note 7
Note 7
Note 7
Note 18
Note 17
The accompanying notes are an integral part of these consolidated financial statements.
Years ended
December 31,
December 31,
2021
2020
Net earnings
$
218.7
$
1,358.7
Other comprehensive income (loss), net of tax:
Items that will not be reclassified to profit or loss:
Note 7
Equity investments at fair value through other comprehensive
income ("FVOCI") - 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 ("AOCI")(c)
(19.8)
0.3
38.2
(13.5)
4.9
(27.7)
24.1
(3.3)
Total comprehensive income
$
223.6
$
1,355.4
Attributable to non-controlling interests
Attributable to common shareholders
$
(2.5)
$
16.3
$
226.1
$
1,339.1
(a) Net of tax expense of $nil (2020 - $nil).
(b) Net of tax expense (recovery) of $12.4 million (2020 - $(12.5) million).
(c) Net of tax (recovery) expense of $(3.5) million (2020 - $10.4 million).
The accompanying notes are an integral part of these consolidated financial statements.
6
FS 6
7
30836 Q30 - KINROSS AR-Proof.pdf - p75 (March 31, 2022 01:56:38)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(expressed in millions of United States dollars, except share and per share amounts)
KINROSS GOLD CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(expressed in millions of United States dollars)
Impairment charges (reversals) and asset derecognition - net
Note 8
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
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 (loss) earnings attributable to:
Non-controlling interests
Common shareholders
Earnings per share attributable to common shareholders
Weighted average number of common shares outstanding
Note 17
Basic
Diluted
(millions)
Basic
Diluted
The accompanying notes are an integral part of these consolidated financial statements.
Note 7
Note 7
Note 7
Note 18
Years ended
December 31,
December 31,
2021
2020
$
3,729.4
$
4,213.4
1,726.1
840.9
144.5
2,711.5
1,017.9
294.6
133.1
126.6
463.6
79.2
12.3
(85.7)
469.4
(250.7)
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)
$
218.7
$
1,358.7
$
(2.5)
$
16.3
$
221.2
$
1,342.4
$
0.18
$
0.17
$
1.07
$
1.06
1,259.1
1,269.1
1,257.2
1,268.0
Years ended
December 31,
December 31,
2021
2020
Net earnings
$
218.7
$
1,358.7
Other comprehensive income (loss), net of tax:
Items that will not be reclassified to profit or loss:
Note 7
Equity investments at fair value through other comprehensive
income ("FVOCI") - 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 ("AOCI")(c)
(19.8)
0.3
38.2
(13.5)
4.9
(27.7)
24.1
(3.3)
Total comprehensive income
$
223.6
$
1,355.4
Attributable to non-controlling interests
Attributable to common shareholders
$
(2.5)
$
16.3
$
226.1
$
1,339.1
(a) Net of tax expense of $nil (2020 - $nil).
(b) Net of tax expense (recovery) of $12.4 million (2020 - $(12.5) million).
(c) Net of tax (recovery) expense of $(3.5) million (2020 - $10.4 million).
The accompanying notes are an integral part of these consolidated financial statements.
6
7 FS
7
30836 Q30 - KINROSS AR-Proof.pdf - p76 (March 31, 2022 01:56:38)
DT
2021 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
Impairment charges (reversals) and asset derecognition - net
Share-based compensation expense
Finance expense
Deferred tax (recovery) expense
Foreign exchange losses and other
Reclamation expense
Changes in operating assets and liabilities:
Accounts receivable and other assets
Inventories
Accounts payable and accrued liabilities
Cash flow provided from operating activities
Income taxes paid
Net cash flow provided from operating activities
Investing:
Additions to property, plant and equipment
Interest paid capitalized to property, plant and equipment
Acquisitions
Net additions to long-term investments and other assets
Net proceeds from the sale of property, plant and equipment
Decrease (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
Repurchase and cancellation of shares
Other - net
Net cash flow used in financing activities
Note 8
Note 12
Note 6
Note 12
Note 12
Note 12
Note 12
Note 15
Note 15
Effect of exchange rate changes on cash and cash equivalents
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
The accompanying notes are an integral part of these consolidated financial statements.
Years ended
December 31,
2021
December 31,
2020
$
218.7
$
1,358.7
840.9
144.5
10.8
85.7
(63.7)
72.9
0.1
(50.0)
(86.7)
265.4
1,438.6
(303.4)
1,135.2
(938.6)
(51.1)
(141.5)
(66.3)
1.3
2.3
1.3
(1,192.6)
200.0
(500.0)
(46.9)
(33.8)
(151.1)
-
(100.2)
8.8
(623.2)
1.2
(679.4)
1,210.9
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
$ 531.5
$ 1,210.9
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
Repurchase and cancellation of shares
Options exercised, including cash
Balance at the end of the period
Contributed surplus
Balance at the beginning of the period
Repurchase and cancellation of shares
Share-based compensation
Transfer from common share capital on reduction of stated capital
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 income (loss), net of tax
Balance at the end of the period
Total accumulated deficit and accumulated other comprehensive loss
Years ended
December 31,
December 31,
2021
2020
$
4,473.7
$
14,926.2
$
4,427.7
$
4,473.7
$
10,709.0
$
242.1
-
7.8
(62.9)
9.1
-
(37.3)
10.8
(18.1)
(10,473.4)
7.8
-
13.1
10,473.4
-
13.7
(20.2)
Note 15
Note 15
Note 15
Note 15
Note 15
$
(8,562.5)
$
(9,829.4)
(151.1)
221.2
(75.5)
1,342.4
$
(8,492.4)
$
(8,562.5)
$
(23.7)
$
(20.4)
4.9
(3.3)
$
(18.8)
$
(23.7)
$
(8,511.2)
$
(8,586.2)
Transfer of fair value of exercised options and restricted shares
Balance at the end of the period
$
10,664.4
$
10,709.0
Total common shareholders' equity
$
6,580.9
$
6,596.5
Net (loss) earnings attributable to non-controlling interests
Non-controlling interest resulting from Manh Choh acquisition
Note 6
Non-controlling interests
Balance at the beginning of the period
Funding from non-controlling interest
Dividends paid to non-controlling interest
Balance at the end of the period
Total equity
$
66.5
$
14.1
(2.5)
4.7
-
-
16.3
41.0
1.1
(6.0)
$
68.7
$
66.5
$
6,649.6
$
6,663.0
The accompanying notes are an integral part of these consolidated financial statements.
8
FS 8
9
30836 Q30 - KINROSS AR-Proof.pdf - p77 (March 31, 2022 01:56:39)
DT
2021 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
Impairment charges (reversals) and asset derecognition - net
Note 8
Share-based compensation expense
Finance expense
Deferred tax (recovery) expense
Foreign exchange losses and other
Reclamation expense
Changes in operating assets and liabilities:
Accounts receivable and other assets
Inventories
Accounts payable and accrued liabilities
Cash flow provided from operating activities
Income taxes paid
Net cash flow provided from operating activities
Investing:
Acquisitions
Additions to property, plant and equipment
Interest paid capitalized to property, plant and equipment
Net additions to long-term investments and other assets
Net proceeds from the sale of property, plant and equipment
Decrease (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
Repurchase and cancellation of shares
Other - net
Net cash flow used in financing activities
Effect of exchange rate changes on cash and cash equivalents
(Decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of period
Years ended
December 31,
December 31,
2021
2020
$
218.7
$
1,358.7
840.9
144.5
10.8
85.7
(63.7)
72.9
0.1
(50.0)
(86.7)
265.4
1,438.6
(303.4)
1,135.2
(938.6)
(51.1)
(141.5)
(66.3)
1.3
2.3
1.3
200.0
(500.0)
(46.9)
(33.8)
(151.1)
-
(100.2)
8.8
(623.2)
1.2
(679.4)
1,210.9
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
950.0
(850.0)
(63.1)
(20.7)
(75.5)
(6.0)
-
(2.4)
(67.7)
(5.0)
635.8
575.1
Note 12
Note 6
Note 12
Note 12
Note 12
Note 12
Note 15
Note 15
Cash and cash equivalents, end of period
$ 531.5
$ 1,210.9
The accompanying notes are an integral part of these consolidated financial statements.
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
Repurchase and cancellation of shares
Options exercised, including cash
Balance at the end of the period
Contributed surplus
Balance at the beginning 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 income (loss), net of tax
Balance at the end of the period
Transfer from common share capital on reduction of stated capital
Repurchase and cancellation of shares
Share-based compensation
Transfer of fair value of exercised options and restricted shares
Balance at the end of the period
Note 15
Note 15
$
$
10,709.0
-
(37.3)
10.8
(18.1)
10,664.4
$
242.1
10,473.4
-
13.7
(20.2)
10,709.0
$
Years ended
December 31,
December 31,
2021
2020
Note 15
Note 15
$
4,473.7
-
7.8
(62.9)
9.1
4,427.7
$
$
14,926.2
(10,473.4)
7.8
-
13.1
4,473.7
$
Note 15
$
(8,562.5)
$
(9,829.4)
(151.1)
221.2
(75.5)
1,342.4
$
(8,492.4)
$
(8,562.5)
$
$
$
$
(23.7)
4.9
(18.8)
66.5
(2.5)
-
4.7
-
68.7
(20.4)
(3.3)
(23.7)
14.1
16.3
41.0
1.1
(6.0)
66.5
Total accumulated deficit and accumulated other comprehensive loss
$
(8,511.2)
$
(8,586.2)
Total common shareholders' equity
$
6,580.9
$
6,596.5
(1,192.6)
(1,249.1)
Non-controlling interests
Balance at the beginning of the period
Net (loss) earnings attributable to non-controlling interests
Non-controlling interest resulting from Manh Choh acquisition
Funding from non-controlling interest
Dividends paid to non-controlling interest
Balance at the end of the period
Note 6
$
$
$
$
Total equity
$
6,649.6
$
6,663.0
The accompanying notes are an integral part of these consolidated financial statements.
8
9 FS
9
30836 Q30 - KINROSS AR-Proof.pdf - p78 (March 31, 2022 01:56:39)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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.
The consolidated financial statements of the Company for the year ended December 31, 2021 were authorized for issue in
accordance with a resolution of the Board of Directors on February 16, 2022.
2.
BASIS OF PRESENTATION
These consolidated financial statements for the year ended December 31, 2021 (“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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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
2021
2020
As at
December 31,
December 31,
Entity
Subsidiaries:
(Consolidated)
Kinross Brasil Mineração S.A. ("KBM")
Paracatu
Brazil
100%
100%
Compania Minera Mantos de Oro ("MDO")
Chile
100%
100%
La Coipa and Lobo-Marte /
Corporate and Other
Maricunga / Corporate and
Compania Minera Maricunga ("CMM")
Chirano Gold Mines Ltd.(a)
Tasiast Mauritanie Ltd. S.A.
Chukotka Mining and Geological
Other
Chirano
Tasiast
Kupol
Company
Northern Gold LLC
Udinsk Gold LLC(b)
Dvoinoye/ Kupol
Chulbatkan / Corporate
and Other
KG Mining (Bald Mountain) Inc. ("KGBM")
Bald Mountain
Fairbanks Gold Mining, Inc.
Fort Knox
100%
90%
100%
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
Chile
Ghana
Mauritania
Russian
Federation
Russian
Federation
Russian
Federation
USA
USA
USA
USA
USA
Round Mountain
100%
100%
Kettle River - Buckhorn /
Corporate and Other
Manh Choh / Corporate and
Other
100%
100%
70%
70%
Round Mountain Gold Corporation /
KG Mining (Round Mountain) Inc.
Echo Bay Minerals Company
Peak Gold, LLC(c) ("Manh Choh")
Interest in joint venture:
(Equity accounted)
Sociedad Contractual Minera Puren
Chile
65%
65%
Puren / Corporate and
Other
(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 project, in Russia. See Note 6i.
(c) On September 30, 2020, the Company acquired a 70% interest in the Manh Choh project in Alaska. See Note 6ii.
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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.
The consolidated financial statements of the Company for the year ended December 31, 2021 were authorized for issue in
accordance with a resolution of the Board of Directors on February 16, 2022.
2.
BASIS OF PRESENTATION
These consolidated financial statements for the year ended December 31, 2021 (“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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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.
Entity
Subsidiaries:
(Consolidated)
Property/ Segment
Location
2021
2020
As at
December 31,
December 31,
Kinross Brasil Mineração S.A. ("KBM")
Paracatu
Brazil
100%
100%
Compania Minera Mantos de Oro ("MDO")
Compania Minera Maricunga ("CMM")
Chirano Gold Mines Ltd.(a)
Tasiast Mauritanie Ltd. S.A.
Chukotka Mining and Geological
Company
Northern Gold LLC
Udinsk Gold LLC(b)
La Coipa and Lobo-Marte /
Corporate and Other
Maricunga / Corporate and
Other
Chirano
Tasiast
Kupol
Dvoinoye/ Kupol
Chulbatkan / Corporate
and Other
KG Mining (Bald Mountain) Inc. ("KGBM")
Bald Mountain
Fairbanks Gold Mining, Inc.
Fort Knox
Round Mountain Gold Corporation /
KG Mining (Round Mountain) Inc.
Echo Bay Minerals Company
Peak Gold, LLC(c) ("Manh Choh")
Interest in joint venture:
(Equity accounted)
Sociedad Contractual Minera Puren
Round Mountain
Kettle River - Buckhorn /
Corporate and Other
Manh Choh / Corporate and
Other
Chile
100%
100%
Chile
Ghana
Mauritania
Russian
Federation
Russian
Federation
Russian
Federation
USA
USA
USA
USA
USA
100%
90%
100%
100%
100%
100%
100%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
70%
70%
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 project, in Russia. See Note 6i.
(c) On September 30, 2020, the Company acquired a 70% interest in the Manh Choh project in Alaska. See Note 6ii.
10
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(a) Subsidiaries
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
iii. Cash and cash equivalents
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.
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.
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.
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.
iv. Short-term investments
v. Long-term investments
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 or 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.
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(a) Subsidiaries
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
iii. Cash and cash equivalents
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.
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 or 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.
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30836 Q30 - KINROSS AR-Proof.pdf - p82 (March 31, 2022 01:56:41)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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.
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
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
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
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.
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30836 Q30 - KINROSS AR-Proof.pdf - p83 (March 31, 2022 01:56:42)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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.
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
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
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
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.
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(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
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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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, 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.
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.
16
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
The Company categorizes property, plant and equipment based on the type of asset and/or the stage of operation or
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.
(a) Asset categories
development of the property.
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
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.
the date of the change.
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.
amount.
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
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
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, 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.
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.
16
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30836 Q30 - KINROSS AR-Proof.pdf - p86 (March 31, 2022 01:56:43)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
2020.
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DT
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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.
Settled).
Restricted Share Unit Plan (Cash-Settled): Cash-settled RPSUs are granted under the Restricted Share Unit Plan (Cash-
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, 2021 or December 31,
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
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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
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
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.
method.
cost.
(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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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, 2021 or December 31,
2020.
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
18
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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.
outstanding during the period. Diluted earnings per share amounts are calculated by dividing net earnings attributable to
common shareholders for the period by the diluted weighted average shares outstanding during the period.
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 per share
Earnings 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 per share amounts are calculated by dividing net
earnings attributable to common shareholders for the period by the weighted average number of common shares
Diluted earnings per share is calculated using the treasury method. The treasury method, which assumes that outstanding
stock options, warrants, RSUs and RPSUs with an average exercise price below the market price of the underlying shares,
are exercised and the assumed proceeds are used to repurchase common shares of the Company at the average market
price of the common shares for the period.
4.
RECENT ACCOUNTING PRONOUNCEMENTS
On May 14, 2020, the IASB issued amendments to IAS 16 Property, Plant and Equipment requiring proceeds from selling
items before the related item of property, plant and equipment is available for use to be recognized in profit or loss, together
with the costs of producing those items. The amendment is effective for annual periods beginning on or after January 1,
2022. The Company will apply this amendment to the La Coipa mine restart in 2022.
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
appropriately qualified persons. The estimation of future cash flows related to proven and probable mineral reserves is
20
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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.
outstanding during the period. Diluted earnings per share amounts are calculated by dividing net earnings attributable to
common shareholders for the period by the diluted weighted average shares outstanding during the period.
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 per share
Earnings 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 per share amounts are calculated by dividing net
earnings attributable to common shareholders for the period by the weighted average number of common shares
Diluted earnings per share is calculated using the treasury method. The treasury method, which assumes that outstanding
stock options, warrants, RSUs and RPSUs with an average exercise price below the market price of the underlying shares,
are exercised and the assumed proceeds are used to repurchase common shares of the Company at the average market
price of the common shares for the period.
4.
RECENT ACCOUNTING PRONOUNCEMENTS
On May 14, 2020, the IASB issued amendments to IAS 16 Property, Plant and Equipment requiring proceeds from selling
items before the related item of property, plant and equipment is available for use to be recognized in profit or loss, together
with the costs of producing those items. The amendment is effective for annual periods beginning on or after January 1,
2022. The Company will apply this amendment to the La Coipa mine restart in 2022.
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
appropriately qualified persons. The estimation of future cash flows related to proven and probable mineral reserves is
20
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
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”.
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.
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.
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.
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. The selected multiple applied to each CGU would take 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.
(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.
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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.
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”.
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.
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.
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.
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. The selected multiple applied to each CGU would take 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.
(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.
22
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(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.
6.
i.
ACQUISITIONS
Acquisition of Chulbatkan license
On January 16, 2020, the Company closed the acquisition of the Chulbatkan license and paid 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. On January 15, 2021, the remaining $141.5 million was paid in cash, settling the related deferred payment
obligation.
ii.
Acquisition of 70% interest in the Manh Choh project
On September 30, 2020, the Company acquired a 70% interest in the Manh Choh (formerly known as “Peak”) project in
Alaska for total cash consideration of $93.7 million. The acquisition was accounted for as an asset acquisition with a 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.
Long-term portion of ore in stockpiles and ore on leach pads (a),(b),(c)
24
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DT
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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)
Trade receivables
Prepaid expenses
VAT receivable
Deposits
Other(a)
iv.
Inventories:
Ore in stockpiles (a)
Ore on leach pads (b),(c)
In-process
Finished metal
Materials and supplies (c)
(a) Restricted cash relates to loan escrow judicial deposits and environmental indemnity deposits.
iii.
Accounts receivable and other assets:
(a) Other includes $61.5 million related to initial insurance recoveries for the Tasiast mill fire. See Note 7xiii.
December 31,
December 31,
2021
2020
$
386.8
$
562.0
144.7
648.9
$
531.5
$
1,210.9
December 31,
December 31,
2021
2020
$
11.4
$
13.7
December 31,
December 31,
2021
2020
$
3.3
$
8.1
31.9
79.5
16.6
83.2
21.6
46.6
28.9
10.6
$
214.5
$
115.8
December 31,
December 31,
2021
2020
$
250.7
$
277.4
589.1
111.4
64.0
459.9
1,475.1
(323.8)
498.8
108.0
50.3
448.2
1,382.7
(309.8)
$
1,151.3
$
1,072.9
(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 Bald Mountain, Fort Knox, Round Mountain and Tasiast mines. Based on current mine plans,
the Company expects to place the last tonne of ore on its leach pads at Bald Mountain in 2024, Fort Knox in 2028 and Round Mountain
in 2029. The last tonne of ore was placed on the Tasiast leach pads during 2020. Material not scheduled for processing within the next
(c) During the years ended December 31, 2021 and 2020, impairment charges to inventories were recorded to reduce the carrying value of
12 months is included in other long-term assets. See Note 7viii.
inventory to its net realizable value. See Note 8i.
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(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
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
and resource tax assets.
(h) Contingencies
date such changes occur.
6.
i.
ACQUISITIONS
Acquisition of Chulbatkan license
On January 16, 2020, the Company closed the acquisition of the Chulbatkan license and paid 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. On January 15, 2021, the remaining $141.5 million was paid in cash, settling the related deferred payment
obligation.
ii.
Acquisition of 70% interest in the Manh Choh project
On September 30, 2020, the Company acquired a 70% interest in the Manh Choh (formerly known as “Peak”) project in
Alaska for total cash consideration of $93.7 million. The acquisition was accounted for as an asset acquisition with a total
purchase price of $96.9 million, comprised of cash payments of $93.7 million and total transaction costs of $3.2 million,
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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,
2021
December 31,
2020
$
$
386.8
144.7
531.5
562.0
648.9
1,210.9
$
$
December 31,
2021
December 31,
2020
$
11.4
$
13.7
(a) Restricted cash relates to loan escrow judicial deposits and environmental indemnity deposits.
iii.
Accounts receivable and other assets:
Trade receivables
Prepaid expenses
VAT receivable
Deposits
Other(a)
December 31,
2021
December 31,
2020
$
3.3
31.9
79.5
16.6
$
8.1
21.6
46.6
28.9
$
83.2
214.5
$
10.6
115.8
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
iv.
Inventories:
Ore in stockpiles (a)
Ore on leach pads (b),(c)
In-process
Finished metal
Materials and supplies (c)
(a) Non-controlling interest has been recorded related to the 30% interest of Peak Gold, LLC that the Company did not acquire.
Long-term portion of ore in stockpiles and ore on leach pads (a),(b),(c)
December 31,
2021
December 31,
2020
$
250.7
589.1
111.4
64.0
$
277.4
498.8
108.0
50.3
459.9
1,475.1
(323.8)
1,151.3
$
448.2
1,382.7
(309.8)
1,072.9
$
(a) Other includes $61.5 million related to initial insurance recoveries for the Tasiast mill fire. See Note 7xiii.
(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 Bald Mountain, Fort Knox, Round Mountain and Tasiast mines. Based on current mine plans,
the Company expects to place the last tonne of ore on its leach pads at Bald Mountain in 2024, Fort Knox in 2028 and Round Mountain
in 2029. 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.
(c) During the years ended December 31, 2021 and 2020, impairment charges to inventories were recorded to reduce the carrying value of
inventory to its net realizable value. See Note 8i.
24
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
v.
Property, plant and equipment:
Cost
Balance at January 1, 2021
Additions
Capitalized interest
Disposals
Derecognition(d)
Other
Balance at December 31, 2021
Accumulated depreciation, depletion, and
amortization
Balance at January 1, 2021
Depreciation, depletion and amortization
Derecognition(d)
Disposals
Other
Balance at December 31, 2021
Mineral Interests
Land, plant and
equipment(a)
Development and
operating
properties(b)
Pre-development
properties(c)
$
10,190.0
501.2
25.0
(59.6)
$
10,136.2
416.7
19.8
-
$
465.3
46.9
3.5
-
Total
$
20,791.5
964.8
48.3
(59.6)
(134.4)
2.3
10,524.5
(14.1)
2.0
10,560.6
-
1.6
517.3
(148.5)
5.9
21,602.4
$
(6,471.3)
(556.2)
90.8
48.8
1.6
(6,886.3)
$
(6,666.7)
(437.7)
8.4
-
(2.4)
(7,098.4)
-
$
-
-
-
-
-
$
(13,138.0)
(993.9)
99.2
48.8
(0.8)
(13,984.7)
Net book value
$
3,638.2
$
3,462.2
$
517.3
$
7,617.7
Amount included above as at December 31, 2021:
Assets under construction
Assets not being depreciated(e)
$
399.9
$
326.5
$
65.2
$
791.6
$
646.5
$
661.0
$
517.3
$
1,824.8
(a) Additions includes $10.2 million of right-of-use assets for lease arrangements entered into during the year ended December 31, 2021.
Depreciation, depletion and amortization includes depreciation for leased right-of-use assets of $32.2 million during the year ended
December 31, 2021. The net book value of property, plant and equipment includes leased right-of use assets with an aggregate net
book value of $54.2 million as at December 31, 2021.
(b) At December 31, 2021, the significant development and operating properties are Fort Knox, Round Mountain, Bald Mountain, Paracatu,
Kupol, Tasiast, Chirano, La Coipa, and Lobo-Marte.
(c) At December 31, 2021, the significant pre-development properties are the Chulbatkan license area, including the Udinsk project, and
the Manh Choh project.
(d) During the year ended December 31, 2021, the Company derecognized property, plant and equipment related to the Vantage heap
leach pad at Bald Mountain. See Note 8ii.
(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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
Mineral Interests
Development and
Land, plant and
equipment(a)
operating
properties(b)
Pre-development
properties
Balance at January 1, 2020
$
9,715.0
$
9,540.6
$
13.4
$
19,269.0
Balance at December 31, 2020
10,190.0
10,136.2
Cost
Additions
Acquisitions(c)
Capitalized interest
Disposals
Other
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
535.5
8.2
22.8
(82.9)
(8.6)
(589.9)
160.5
73.8
(1.6)
539.9
15.4
25.5
-
14.8
(380.3)
528.5
-
-
Total
1,090.9
465.4
49.1
(83.0)
0.1
20,791.5
(970.2)
689.0
73.8
(1.6)
(13,138.0)
15.5
441.8
0.8
(0.1)
(6.1)
465.3
-
-
-
-
-
$
(6,114.1)
$
(6,814.9)
$
-
$
(12,929.0)
Balance at December 31, 2020
(6,471.3)
(6,666.7)
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
$
189.1
$
19.1
$
749.0
$
769.9
$
607.0
$
465.3
$
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
(b) At December 31, 2020, the significant development and operating properties are Fort Knox, Round Mountain, Bald Mountain, Paracatu,
book value of $76.2 million as at December 31, 2020.
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 Manh Choh
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 8ii.
(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.
Capitalized interest primarily relates to qualifying capital expenditures at Tasiast, Fort Knox, La Coipa, Round Mountain, and
Paracatu and had a weighted average borrowing rate of 5.78% and 5.20% during the years ended December 31, 2021 and
2020, respectively.
At December 31, 2021, $603.6 million of E&E assets were included in mineral interests (December 31, 2020 - $526.1 million).
During the year ended December 31, 2021, the Company had additions of $2.4 million to E&E assets and no transfers of E&E
assets to capitalized development. During the year ended December 31, 2020, the Company had additions of $457.3 million
to E&E assets, primarily related to the purchases of the Chulbatkan license area and a 70% interest in the Manh Choh 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, 2021, the Company capitalized $75.1 million and expensed $52.2 million of E&E costs
(year ended December 31, 2020 - $38.4 million and $19.1 million, respectively). Capitalized E&E costs are included as
investing cash flows while expensed E&E costs are included as operating cash flows.
26
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
v.
Property, plant and equipment:
Mineral Interests
Development and
Land, plant and
equipment(a)
operating
Pre-development
properties(b)
properties(c)
Balance at January 1, 2021
$
10,190.0
$
10,136.2
$
465.3
$
20,791.5
Balance at December 31, 2021
10,524.5
10,560.6
Cost
Additions
Capitalized interest
Disposals
Derecognition(d)
Other
Accumulated depreciation, depletion, and
amortization
Depreciation, depletion and amortization
Derecognition(d)
Disposals
Other
501.2
25.0
(59.6)
(134.4)
2.3
(556.2)
90.8
48.8
1.6
416.7
19.8
-
(14.1)
2.0
(437.7)
8.4
-
(2.4)
Total
964.8
48.3
(59.6)
(148.5)
5.9
21,602.4
(993.9)
99.2
48.8
(0.8)
(13,984.7)
46.9
3.5
1.6
517.3
-
-
-
-
-
-
-
Balance at January 1, 2021
$
(6,471.3)
$
(6,666.7)
$
-
$
(13,138.0)
Net book value
$
3,638.2
$
3,462.2
$
517.3
$
7,617.7
Amount included above as at December 31, 2021:
Assets under construction
Assets not being depreciated(e)
$
399.9
$
326.5
$
65.2
$
791.6
$
646.5
$
661.0
$
517.3
$
1,824.8
(a) Additions includes $10.2 million of right-of-use assets for lease arrangements entered into during the year ended December 31, 2021.
Depreciation, depletion and amortization includes depreciation for leased right-of-use assets of $32.2 million during the year ended
December 31, 2021. The net book value of property, plant and equipment includes leased right-of use assets with an aggregate net
(b) At December 31, 2021, the significant development and operating properties are Fort Knox, Round Mountain, Bald Mountain, Paracatu,
book value of $54.2 million as at December 31, 2021.
Kupol, Tasiast, Chirano, La Coipa, and Lobo-Marte.
the Manh Choh project.
leach pad at Bald Mountain. See Note 8ii.
(c) At December 31, 2021, the significant pre-development properties are the Chulbatkan license area, including the Udinsk project, and
(d) During the year ended December 31, 2021, the Company derecognized property, plant and equipment related to the Vantage heap
(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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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
$
9,540.6
539.9
$
13.4
15.5
$
19,269.0
1,090.9
8.2
22.8
(82.9)
(8.6)
10,190.0
15.4
25.5
-
14.8
10,136.2
441.8
0.8
(0.1)
(6.1)
465.3
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)
$
(6,814.9)
(380.3)
-
$
-
$
(12,929.0)
(970.2)
160.5
73.8
(1.6)
(6,471.3)
528.5
-
-
(6,666.7)
-
-
-
-
689.0
73.8
(1.6)
(13,138.0)
Balance at December 31, 2021
(6,886.3)
(7,098.4)
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
$
189.1
$
19.1
$
749.0
$
769.9
$
607.0
$
465.3
$
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 Manh Choh
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 8ii.
(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.
Capitalized interest primarily relates to qualifying capital expenditures at Tasiast, Fort Knox, La Coipa, Round Mountain, and
Paracatu and had a weighted average borrowing rate of 5.78% and 5.20% during the years ended December 31, 2021 and
2020, respectively.
At December 31, 2021, $603.6 million of E&E assets were included in mineral interests (December 31, 2020 - $526.1 million).
During the year ended December 31, 2021, the Company had additions of $2.4 million to E&E assets and no transfers of E&E
assets to capitalized development. During the year ended December 31, 2020, the Company had additions of $457.3 million
to E&E assets, primarily related to the purchases of the Chulbatkan license area and a 70% interest in the Manh Choh 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, 2021, the Company capitalized $75.1 million and expensed $52.2 million of E&E costs
(year ended December 31, 2020 - $38.4 million and $19.1 million, respectively). Capitalized E&E costs are included as
investing cash flows while expensed E&E costs are included as operating cash flows.
26
27 FS
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
vi.
Goodwill:
As at December 31, 2021 and 2020, goodwill of $158.8 million related entirely to Kupol. The significant estimates and
assumptions used in the Company’s impairment assessment are set out below. 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 the Kupol CGU to exceed its recoverable amount.
Gold price (per ounce)
Short-term
Long-term
Silver price (per ounce)
Short-term
Long-term
Oil (per barrel)
Short-term
Long-term
Discount rate
2021
2020
$1,700
$1,500
$20
$20
$70 (2022)
$60 (2023, 2024)
$55
$1,700
$1,500
$20
$20
$55
$55
3.63%
3.61%
vii.
Long-term investments:
Gains and losses on equity investments at FVOCI are recorded in AOCI as follows:
December 31, 2021
December 31, 2020
Investments in an accumulated gain position
Investments in an accumulated loss position
Net realized gains
Fair value
12.4
85.8
-
98.2
$
Gains (losses) in
AOCI(a)
0.7
(49.3)
2.9
(45.7)
$
Fair value
$ 80.9
32.1
-
$
113.0
Gains (losses) in
AOCI(a)
$ 18.2
(47.0)
2.9
$
(25.9)
$
$
(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, 2021 and 2020.
viii.
Other long-term assets:
Other operating expense
Years ended December 31,
2021
2020
$
294.6
$
186.5
December 31,
2021
December 31,
2020
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
ix.
Accounts payable and accrued liabilities:
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)
(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):
December 31,
December 31,
2021
2020
$
87.8
$
89.1
270.5
134.4
242.8
147.3
$
492.7
$
479.2
December 31,
December 31,
2021
2020
$
19.7
$
28.4
4.0
21.3
$
23.7
$
49.7
Long-term
Investments
Derivative
Contracts
$
(26.2)
$
5.8
$
(20.4)
$
(25.9)
$
2.2
$
(23.7)
0.3
-
-
(19.8)
(5.7)
2.1
33.6
(8.9)
Total
(5.4)
2.1
13.8
(8.9)
Balance at December 31, 2021
$
(45.7)
$
26.9
$
(18.8)
Balance at December 31, 2019
Other comprehensive income (loss) before tax
Balance at December 31, 2020
Other comprehensive income (loss) before tax
Tax
Tax
Consolidated Statements of Operations
xii.
Other operating expense:
Other operating expense of $294.6 million for the year ended December 31, 2021 includes environmental and other
operating expenses for non-operating mining sites of $69.1 million, costs associated with the temporary suspension of
milling operations and mill repair at Tasiast of $59.2 million, costs associated with stabilizing the north wall at Round
Mountain of $50.1 million, and labour, health and safety, donations and other support program costs associated with the
COVID-19 pandemic of $34.8 million.
Other operating expense of $186.5 million for the year ended December 31, 2020 includes labour, health and safety,
donations and other support program costs associated with the COVID-19 pandemic of $64.1 million, costs relating to the
temporary suspension of site activities as a result of the Tasiast strike in the second quarter of 2020 of $8.3 million, and
environmental and other operating expenses for non-operating mining sites of $46.0 million.
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
323.8
7.3
110.8
45.8
25.0
15.1
63.1
590.9
$
$
(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, 2021, long-term ore in stockpiles was at the Company’s Kupol, Paracatu and Tasiast 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, 2021.
(c)
See Note 10 for details of the non-current portion of unrealized fair value of derivative assets.
28
FS 28
29
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
vi.
Goodwill:
As at December 31, 2021 and 2020, goodwill of $158.8 million related entirely to Kupol. The significant estimates and
assumptions used in the Company’s impairment assessment are set out below. 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 the Kupol CGU to exceed its recoverable amount.
Gold price (per ounce)
Silver price (per ounce)
Short-term
Long-term
Short-term
Long-term
Oil (per barrel)
Short-term
Long-term
Discount rate
2021
2020
$1,700
$1,500
$20
$20
$55
3.63%
$70 (2022)
$60 (2023, 2024)
$1,700
$1,500
$20
$20
$55
$55
3.61%
vii.
Long-term investments:
Gains and losses on equity investments at FVOCI are recorded in AOCI as follows:
December 31, 2021
December 31, 2020
Gains (losses) in
Gains (losses) in
Fair value
AOCI(a)
Fair value
AOCI(a)
Investments in an accumulated gain position
$
12.4
$
0.7
$ 80.9
$ 18.2
Investments in an accumulated loss position
Net realized gains
85.8
-
(49.3)
32.1
(47.0)
2.9
-
2.9
$
98.2
$
(45.7)
$
113.0
$
(25.9)
(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, 2021 and 2020.
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
December 31,
December 31,
2021
2020
$
323.8
$
309.8
7.3
110.8
45.8
25.0
15.1
63.1
6.0
124.1
9.1
25.0
10.5
52.7
$
590.9
$
537.2
(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, 2021, long-term ore in stockpiles was at the Company’s Kupol, Paracatu and Tasiast 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, 2021.
(c)
See Note 10 for details of the non-current portion of unrealized fair value of derivative assets.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
ix.
Accounts payable and accrued liabilities:
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,
2021
December 31,
2020
$
$
$
$
December 31,
2021
December 31,
2020
$
$
$
$
87.8
270.5
134.4
492.7
19.7
4.0
23.7
89.1
242.8
147.3
479.2
28.4
21.3
49.7
(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):
Long-term
Investments
Derivative
Contracts
Total
Balance at December 31, 2019
Other comprehensive income (loss) before tax
Tax
Balance at December 31, 2020
Other comprehensive income (loss) before tax
Tax
Balance at December 31, 2021
Consolidated Statements of Operations
xii.
Other operating expense:
Other operating expense
$
$
$
$
$
$
(26.2)
0.3
-
(25.9)
(19.8)
-
(45.7)
5.8
(5.7)
2.1
2.2
33.6
(8.9)
26.9
(20.4)
(5.4)
2.1
(23.7)
13.8
(8.9)
(18.8)
$
$
$
Years ended December 31,
2020
2021
$
294.6
$
186.5
Other operating expense of $294.6 million for the year ended December 31, 2021 includes environmental and other
operating expenses for non-operating mining sites of $69.1 million, costs associated with the temporary suspension of
milling operations and mill repair at Tasiast of $59.2 million, costs associated with stabilizing the north wall at Round
Mountain of $50.1 million, and labour, health and safety, donations and other support program costs associated with the
COVID-19 pandemic of $34.8 million.
Other operating expense of $186.5 million for the year ended December 31, 2020 includes labour, health and safety,
donations and other support program costs associated with the COVID-19 pandemic of $64.1 million, costs relating to the
temporary suspension of site activities as a result of the Tasiast strike in the second quarter of 2020 of $8.3 million, and
environmental and other operating expenses for non-operating mining sites of $46.0 million.
28
29 FS
29
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
xiii.
Other income – net:
Insurance recoveries(a)
Net (losses) gains on dispositions of assets
Foreign exchange losses - net
Net non-hedge derivative (losses) gains
Other - net
Years ended December 31,
2020
2021
$
$
91.1
(9.5)
(4.7)
(1.0)
3.3
79.2
10.8
1.2
(7.3)
1.0
1.7
7.4
$
$
(a) During the year ended December 31, 2021, the Company recognized $90.0 million of initial insurance recoveries related to the Tasiast
mill fire, of which $28.5 million has been received as of December 31, 2021.
xiv.
Finance expense:
Years ended December 31,
2020
2021
Accretion of reclamation and remediation obligations
Interest expense, including accretion of debt and lease liabilities(a), (b)
$
$
(14.2)
(71.5)
(85.7)
(23.0)
(89.6)
(112.6)
$
$
(a) During the years ended December 31, 2021 and 2020, $48.3 million and $49.1 million, respectively, of interest was capitalized to
was an income tax recovery of $13.1 million.
property, plant and equipment. See Note 7v.
(b) During the years ended December 31, 2021 and 2020, accretion of lease liabilities was $3.8 million and $3.0 million, respectively.
Total interest paid, including interest capitalized, during the year ended December 31, 2021 was $98.0 million (year ended
December 31, 2020 - $111.0 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,
2020
2021
Salaries, short-term incentives, and other benefits
Share-based payments
Other
$
$
710.6
19.5
16.4
746.5
707.9
30.7
16.3
754.9
$
$
30
FS 30
31
30836 Q30 - KINROSS AR-Proof.pdf - p99 (March 31, 2022 01:56:53)
DT
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
8.
IMPAIRMENT CHARGES (REVERSALS) AND ASSET DERECOGNITION – NET
Inventories (i)
Property, plant and equipment (ii)
i.
Inventories
Years ended December 31,
2021
2020
$
95.2
$
38.1
49.3
(689.0)
$
144.5
$
(650.9)
During the year ended December 31, 2021, the Company recognized an impairment charge of $95.2 million related to metal
inventory as a result of a reduction in the estimate of recoverable ounces on the Bald Mountain Vantage heap leach pad due
to the presence of carbonaceous ore. The tax impact of the impairment was an income tax recovery of $25.3 million.
During the year ended December 31, 2020, the Company recognized impairment charges of $38.1 million to reduce the
carrying value of certain materials and supplies inventories to net realizable value.
ii.
Property, plant and equipment
During the year ended December 31, 2021, the Company derecognized property, plant and equipment related to the
Vantage heap leach pad at Bald Mountain, which resulted in a charge of $49.3 million. The tax impact of the derecognition
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.
The significant estimates and assumptions used for the CGUs tested in the Company’s impairment assessment for the year
ended December 31, 2020 were as follows:
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 per ounce;
estimated short-term and long-term oil prices of $55 per barrel;
real discount rates of between 4.49% and 6.82%.
9.
INVESTMENT IN JOINT VENTURE
values:
Investment in joint venture - Puren
There are no publicly quoted market prices for Puren.
The Company’s Puren joint venture investment is accounted for under the equity method and had the following carrying
December 31,
December 31,
2021
2020
$
7.1
$
18.3
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
xiii.
Other income – net:
Insurance recoveries(a)
Net (losses) gains on dispositions of assets
Foreign exchange losses - net
Net non-hedge derivative (losses) gains
Other - net
Years ended December 31,
2021
2020
$
91.1
$
10.8
(9.5)
(4.7)
(1.0)
3.3
1.2
(7.3)
1.0
1.7
$
79.2
$
7.4
Years ended December 31,
2021
2020
$
(14.2)
$
(23.0)
(71.5)
(89.6)
$
(85.7)
$
(112.6)
(a) During the year ended December 31, 2021, the Company recognized $90.0 million of initial insurance recoveries related to the Tasiast
mill fire, of which $28.5 million has been received as of December 31, 2021.
xiv.
Finance expense:
Accretion of reclamation and remediation obligations
Interest expense, including accretion of debt and lease liabilities(a), (b)
(a) During the years ended December 31, 2021 and 2020, $48.3 million and $49.1 million, respectively, of interest was capitalized to
property, plant and equipment. See Note 7v.
(b) During the years ended December 31, 2021 and 2020, accretion of lease liabilities was $3.8 million and $3.0 million, respectively.
Total interest paid, including interest capitalized, during the year ended December 31, 2021 was $98.0 million (year ended
December 31, 2020 - $111.0 million). See Note 12v.
xv.
Employee benefits expenses:
exploration and business development expenses:
The following employee benefits expenses are included in production cost of sales, general and administrative, and
Salaries, short-term incentives, and other benefits
$
710.6
$
707.9
Share-based payments
Other
Years ended December 31,
2021
2020
19.5
16.4
30.7
16.3
$
746.5
$
754.9
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
8.
IMPAIRMENT CHARGES (REVERSALS) AND ASSET DERECOGNITION – NET
Years ended December 31,
2020
2021
Inventories (i)
Property, plant and equipment (ii)
i.
Inventories
$
$
95.2
49.3
144.5
38.1
(689.0)
(650.9)
$
$
During the year ended December 31, 2021, the Company recognized an impairment charge of $95.2 million related to metal
inventory as a result of a reduction in the estimate of recoverable ounces on the Bald Mountain Vantage heap leach pad due
to the presence of carbonaceous ore. The tax impact of the impairment was an income tax recovery of $25.3 million.
During the year ended December 31, 2020, the Company recognized impairment charges of $38.1 million to reduce the
carrying value of certain materials and supplies inventories to net realizable value.
ii.
Property, plant and equipment
During the year ended December 31, 2021, the Company derecognized property, plant and equipment related to the
Vantage heap leach pad at Bald Mountain, which resulted in a charge of $49.3 million. The tax impact of the derecognition
was an income tax recovery of $13.1 million.
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.
The significant estimates and assumptions used for the CGUs tested in the Company’s impairment assessment for the year
ended December 31, 2020 were as follows:
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 per ounce;
estimated short-term and long-term oil prices of $55 per barrel;
real discount rates of between 4.49% and 6.82%.
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,
2021
$
7.1
December 31,
2020
$
18.3
30
31 FS
31
30836 Q30 - KINROSS AR-Proof.pdf - p100 (March 31, 2022 01:56:54)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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, 2021 include:
Equity investments at FVOCI
Derivative contracts:
Foreign currency forward and collar contracts
Energy swap contracts
Total return swap contracts
$
Level 1
98.2
Level 2
Level 3
$
-
$
-
Aggregate
Fair Value
98.2
$
(4.5)
-
40.4
-
-
1.7
$ 98.2 $ 37.6
-
-
-
$
-
(4.5)
40.4
1.7
$ 135.8
During the year ended December 31, 2021, 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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
The following table summarizes information about derivative contracts outstanding at December 31, 2021 and 2020:
Total return swap contracts (iii)
1.7
- (11.0)
Total all contracts
$ 37.6 $ 26.9 $ (7.7)
$ 2.2
December 31, 2021
December 31, 2020
Asset / (Liability)
Fair Value
Asset / (Liability)
AOCI
Fair Value
AOCI
$ (4.5) $ (3.5) $ (4.3) $ (2.5)
40.4 30.4 7.6
4.7
-
$
30.0
15.1
$
45.1
$
(4.0)
(3.5)
$
(7.5)
$
37.6
$ 6.5
10.5
$ 17.0
$ (21.3)
(3.4)
$ (24.7)
$ (7.7)
Currency contracts
Foreign currency forward and collar
contracts(a) (i)
Commodity contracts
Energy swap contracts(b) (ii)
Other contracts
Unrealized fair value of derivative assets
Current
Non-current
Unrealized fair value of derivative liabilities
Current
Non-current
Total net fair value
as a result of settling the contracts.
a result of settling the contracts.
(a) Of the total amount recorded in AOCI at December 31, 2021, $(1.1) million will be reclassified out of AOCI within the next 12 months
(b) Of the total amount recorded in AOCI at December 31, 2021, $19.1 million will be reclassified out of AOCI within the next 12 months as
(i)
Foreign currency forward and collar contracts
The following table provides a summary of foreign currency forward and collar contracts outstanding at December 31, 2021
and their respective maturities:
Foreign currency
2022
2023
2024
Brazilian real zero cost collars (in millions of U.S. dollars)
$
105.6
$
68.4
$
27.6
Average put strike (Brazilian real)
Average call strike (Brazilian real)
Average rate (Canadian dollar)
Average put strike (Chilean peso)
Average call strike (Chilean peso)
Average put strike (Russian rouble)
Average call strike (Russian rouble)
Canadian dollar forward buy contracts (in millions of U.S. dollars)
$
50.4
$
15.0
$
-
Chilean peso zero cost collars (in millions of U.S. dollars)
$
63.6
$
42.0
$
-
Russian rouble zero cost collars (in millions of U.S. dollars)
$
46.8
$
33.6
$
9.0
4.79
6.78
1.31
760
992
74.5
97.5
5.13
7.34
1.29
810
1,040
76.2
99.2
5.55
9.01
-
-
-
80.0
104.6
32
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33
30836 Q30 - KINROSS AR-Proof.pdf - p101 (March 31, 2022 01:56:56)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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, 2021 include:
Equity investments at FVOCI
Derivative contracts:
Level 1
Level 2
Level 3
$
98.2
$
-
$
-
$
98.2
Foreign currency forward and collar contracts
-
Energy swap contracts
Total return swap contracts
-
-
(4.5)
40.4
1.7
-
-
-
$ 98.2 $ 37.6
$
-
$ 135.8
During the year ended December 31, 2021, 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.
Aggregate
Fair Value
(4.5)
40.4
1.7
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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
The following table summarizes information about derivative contracts outstanding at December 31, 2021 and 2020:
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, 2021
December 31, 2020
Asset / (Liability)
Fair Value
Asset / (Liability)
AOCI
Fair Value
AOCI
$ (4.5) $ (3.5) $ (4.3) $ (2.5)
40.4 30.4 7.6
1.7
- (11.0)
4.7
-
Total all contracts
$ 37.6 $ 26.9 $ (7.7)
$ 2.2
Unrealized fair value of derivative assets
Current
Non-current
Unrealized fair value of derivative liabilities
Current
Non-current
Total net fair value
$
$
$
$
$
30.0
15.1
45.1
(4.0)
(3.5)
(7.5)
37.6
$ 6.5
10.5
$ 17.0
$ (21.3)
(3.4)
$ (24.7)
$ (7.7)
(a) Of the total amount recorded in AOCI at December 31, 2021, $(1.1) 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, 2021, $19.1 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, 2021
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)
Chilean peso zero cost collars (in millions of U.S. dollars)
Average put strike (Chilean peso)
Average call strike (Chilean peso)
Russian rouble zero cost collars (in millions of U.S. dollars)
Average put strike (Russian rouble)
Average call strike (Russian rouble)
2022
$
2023
2024
$
$
$
$
$
$
$
105.6
4.79
6.78
50.4
1.31
63.6
760
992
46.8
74.5
97.5
68.4
5.13
7.34
15.0
1.29
42.0
810
1,040
33.6
76.2
99.2
$
27.6
5.55
9.01
-
$
-
$
-
-
-
9.0
$
80.0
104.6
32
33 FS
33
30836 Q30 - KINROSS AR-Proof.pdf - p102 (March 31, 2022 01:56:57)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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,
2021:
$93.6 million of Brazilian real zero cost collars, maturing from 2022 to 2024, with average put and call strikes of 5.29
and 7.78, respectively;
$53.4 million of Canadian dollar forward buy contracts, maturing from 2022 to 2023, at an average rate of 1.28;
$105.6 million of Chilean peso zero cost collars, maturing from 2022 to 2023, with average put and call strikes of 780
and 1,011, respectively; and
$33.0 million of Russian rouble zero cost collars, maturing from 2022 to 2024, with average put and call strikes of 75.7
and 97.5, respectively.
At December 31, 2021, 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 $3.8 million (December 31, 2020 - $5.8 million loss);
Canadian dollar forward buy contracts – unrealized gain of $1.3 million (December 31, 2020 - $2.2 million gain);
Chilean peso zero cost collar contracts – unrealized loss of $1.4 million (December 31, 2020 - $nil); and
Russian rouble zero cost collar contracts – unrealized gain of $0.4 million (December 31, 2020 - $1.1 million gain).
Ensure the Company has sufficient cash available to support the mining, exploration, and other areas of the business in
(ii)
Energy swap contracts
The Company is exposed to changes in energy prices through its consumption of diesel and other fuels, and the price of
electricity in some electricity supply contracts. The Company enters into energy swap contracts that protect against the risk
of fuel price increases. Fuel is consumed in the operation of mobile equipment and electricity generation.
The following table provides a summary of energy swap contracts outstanding at December 31, 2021 and their respective
maturities:
Energy
WTI oil swap contracts (barrels)
Average price ($/barrel)
2022
2023
2024
1,056,600
48.13
$
565,200
39.58
$
-
$
-
During 2021, the following new energy swap contracts were entered into:
234,000 barrels of WTI oil swap contracts at an average rate of $69.16 per barrel maturing in 2022.
At December 31, 2021, the unrealized gain on energy swap contracts recorded in AOCI is as follows:
WTI oil swap contracts – unrealized gain of $30.4 million (December 31, 2020 - $4.7 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, 2021, 4,365,000 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, 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 Note 8ii.
(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.
34
FS 34
35
30836 Q30 - KINROSS AR-Proof.pdf - p103 (March 31, 2022 01:56:59)
DT
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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.
Capital management
The Company’s objectives when managing capital are to:
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:
i.
December 31,
December 31,
2021
2020
$ 1,589.9
$ 1,424.2
40.0
499.7
$ 1,629.9
$ 1,923.9
$ 6,580.9
$ 6,596.5
19.9%
0 – 30%
22.6%
0 – 30%
Long-term debt and credit facilities
Current portion of long-term debt and credit facilities
Total debt
Common shareholders' equity
Company target
Total debt / total debt and common shareholders' equity ratio
ii.
Gold and silver price risk management
or December 31, 2020.
iii.
Currency risk management
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, 2021
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, Chilean pesos, Brazilian reais, and Russian roubles as part of this risk management strategy. The Company is also
2021 ANNUAL REPORT KINROSS GOLD
$93.6 million of Brazilian real zero cost collars, maturing from 2022 to 2024, with average put and call strikes of 5.29
$53.4 million of Canadian dollar forward buy contracts, maturing from 2022 to 2023, at an average rate of 1.28;
$105.6 million of Chilean peso zero cost collars, maturing from 2022 to 2023, with average put and call strikes of 780
$33.0 million of Russian rouble zero cost collars, maturing from 2022 to 2024, with average put and call strikes of 75.7
At December 31, 2021, the unrealized gain or loss on foreign currency forward and collar contracts recorded in AOCI is as
Brazilian real zero cost collar contracts – unrealized loss of $3.8 million (December 31, 2020 - $5.8 million loss);
Canadian dollar forward buy contracts – unrealized gain of $1.3 million (December 31, 2020 - $2.2 million gain);
Chilean peso zero cost collar contracts – unrealized loss of $1.4 million (December 31, 2020 - $nil); and
(ii)
Energy swap contracts
The Company is exposed to changes in energy prices through its consumption of diesel and other fuels, and the price of
electricity in some electricity supply contracts. The Company enters into energy swap contracts that protect against the risk
of fuel price increases. Fuel is consumed in the operation of mobile equipment and electricity generation.
The following table provides a summary of energy swap contracts outstanding at December 31, 2021 and their respective
2021:
and 7.78, respectively;
and 1,011, respectively; and
and 97.5, respectively.
follows:
maturities:
Energy
WTI oil swap contracts (barrels)
Average price ($/barrel)
2022
2023
2024
1,056,600
565,200
-
$
48.13
$
39.58
$
-
During 2021, the following new energy swap contracts were entered into:
234,000 barrels of WTI oil swap contracts at an average rate of $69.16 per barrel maturing in 2022.
At December 31, 2021, the unrealized gain on energy swap contracts recorded in AOCI is as follows:
WTI oil swap contracts – unrealized gain of $30.4 million (December 31, 2020 - $4.7 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, 2021, 4,365,000 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, 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 Note 8ii.
(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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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,
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:
Russian rouble zero cost collar contracts – unrealized gain of $0.4 million (December 31, 2020 - $1.1 million gain).
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,
2021
$ 1,589.9
40.0
$ 1,629.9
$ 6,580.9
19.9%
0 – 30%
December 31,
2020
$ 1,424.2
499.7
$ 1,923.9
$ 6,596.5
22.6%
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, 2021
or December 31, 2020.
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, Chilean pesos, Brazilian reais, and Russian roubles as part of this risk management strategy. The Company is also
34
35 FS
35
30836 Q30 - KINROSS AR-Proof.pdf - p104 (March 31, 2022 01:57:01)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
exposed to the impact of currency fluctuations on its monetary assets and liabilities. The Company may from time to time
manage the exposure on the net monetary items.
At December 31, 2021, 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
$
$
$
$
$
$
(40.0)
(131.3)
25.7
25.5
(4.3)
3.9
10% strengthening in
U.S. dollar
Effect on earnings before
taxes, gain (loss)(a)
$
$
$
$
$
$
3.6
11.9
(2.3)
(2.3)
0.4
(0.4)
10% weakening in
U.S. dollar
Effect on earnings before
taxes, gain (loss)(a)
$
$
$
$
$
$
(4.4)
(14.6)
2.9
2.8
(0.5)
0.4
$
(2.6)
$
0.3
$
(0.4)
(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, Swedish Krona, British pound, Australian dollar and South African rand.
(b)
At December 31, 2021, 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, Chilean peso and Russian rouble.
Canadian dollar
Brazilian real
Chilean peso
Russian rouble
10% strengthening in
U.S. dollar
Effect on OCI before
taxes, (loss)(a)
$
$
$
$
(6.1)
(6.8)
(4.4)
(3.7)
10% weakening in
U.S. dollar
Effect on OCI before
taxes, gain(a)
$
$
$
$
7.4
7.5
4.8
5.5
(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, 2021, 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)
$
11.3
$
(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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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, 2021 -
$531.5 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, 2021 are as follows:
2022
2023-2026
2027+
Total
Within 1 year(b)
2 to 5 years
More than 5 years
Long-term debt(a)
$
2,251.9
$
121.6
$
1,025.5
$
1,104.8
Includes the full face value of the senior notes, drawdowns on the revolving credit facility, Tasiast loan, and estimated interest.
(b) Represents estimated interest on the senior notes, revolving credit facility and Tasiast loan, due within the next 12 months.
(a)
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,
2021, 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
December 31, 2021
December 31, 2020
Interest Rates
Nominal
Amount
Deferred
Financing
Costs
Carrying
Amount(a)
Fair
Value(b)
Carrying
Amount(a)
Fair
Value(b)
Senior notes
4.50%-6.875%
$
1,248.2
$
(6.3)
$
1,241.9
$
1,432.7
$
1,739.8
$
1,999.5
Revolving credit facility
LIBOR plus 1.45%
Tasiast loan
(iii) LIBOR plus 4.380%
200.0
200.0
-
$
200.0
(12.0)
$
188.0
200.0
200.0
-
-
184.1
200.0
(i)
(ii)
Total long-term and current debt
Less: current portion
Long-term debt and credit facility
$
1,648.2
$
(18.3)
$
1,629.9
$
1,832.7
$
1,923.9
$
2,199.5
(40.0)
-
(40.0)
-
(499.7)
(509.3)
$
1,608.2
$
(18.3)
$
1,589.9
$
1,832.7
$
1,424.2
$
1,690.2
(a)
Includes transaction costs on senior notes and Tasiast loan financings.
(b) The fair value of senior notes is primarily determined using quoted market determined variables. See Note 10(c).
2022
2023
2024
2025
2026
$
-
$
-
$
500.0
$
-
$
-
$
750.0
$
1,250.0
-
40.0
-
36.0
-
32.0
-
4.0
200.0
16.0
-
72.0
200.0
200.0
$
40.0
$
36.0
$
532.0
$
4.0
$
216.0
$
822.0
$
1,650.0
2027 and
thereafter
Total
Scheduled debt repayments
Senior notes
Revolving credit facility
Tasiast loan
Total debt payable
(i)
Senior notes
2041.
The Company’s $1,250.0 million of senior notes consist of $500.0 million principal amount of 5.950% notes due in 2024,
$500.0 million principal amount of 4.50% notes due in 2027 and $250.0 million principal amount of 6.875% notes due in
On June 1, 2021, the Company redeemed all outstanding 5.125% senior notes due September 1, 2021, which had an
aggregate principal amount of $500.0 million. These notes were redeemed at a redemption price equal to their principal
amount outstanding plus accrued and unpaid interest of $6.4 million.
36
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DT
2021 ANNUAL REPORT KINROSS GOLD
Canadian dollar
Brazilian real
Chilean peso
Russian rouble
Ghanaian cedi
Other(b)
Canadian dollar
Brazilian real
Chilean peso
Russian rouble
manage the exposure on the net monetary items.
At December 31, 2021, 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.
10% strengthening in
10% weakening in
U.S. dollar
U.S. dollar
Foreign currency net
working capital
Effect on earnings before
Effect on earnings before
taxes, gain (loss)(a)
taxes, gain (loss)(a)
$
(40.0)
$
3.6
$
(4.4)
$
(131.3)
$
11.9
$
(14.6)
$
25.7
$
(2.3)
$
2.9
$
25.5
$
(2.3)
$
2.8
$
3.9
$
(0.4)
$
0.4
$
(2.6)
$
0.3
$
(0.4)
Mauritanian ouguiya
$
(4.3)
$
0.4
$
(0.5)
(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.
(b)
Includes Euro, Swedish Krona, British pound, Australian dollar and South African rand.
At December 31, 2021, 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, Chilean peso and Russian rouble.
10% strengthening in
10% weakening in
U.S. dollar
U.S. dollar
Effect on OCI before
Effect on OCI before
taxes, (loss)(a)
taxes, gain(a)
$
(6.1)
$
7.4
$
(6.8)
$
7.5
$
(4.4)
$
4.8
$
(3.7)
$
5.5
(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, 2021, 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
(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.
10% increase in
10% decrease in
price
price
Effect on OCI before
Effect on OCI before
taxes, gain(a)
taxes, (loss)(a)
$
11.3
$
(11.3)
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
exposed to the impact of currency fluctuations on its monetary assets and liabilities. The Company may from time to time
v.
Liquidity risk
The Company manages liquidity risk by maintaining adequate cash and cash equivalent balances (December 31, 2021 -
$531.5 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, 2021 are as follows:
Long-term debt(a)
(a)
(b) Represents estimated interest on the senior notes, revolving credit facility and Tasiast loan, due within the next 12 months.
Includes the full face value of the senior notes, drawdowns on the revolving credit facility, Tasiast loan, and estimated interest.
$
$
$
1,025.5
2,251.9
1,104.8
Total
2022
Within 1 year(b)
$
121.6
2023-2026
2027+
2 to 5 years
More than 5 years
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,
2021, 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
Nominal
Amount
December 31, 2021
Deferred
Financing
Costs
Carrying
Amount(a)
December 31, 2020
Fair
Value(b)
Carrying
Amount(a)
Fair
Value(b)
Senior notes
Revolving credit facility
Tasiast loan
Total long-term and current debt
Less: current portion
Long-term debt and credit facility
4.50%-6.875%
(i)
(ii)
LIBOR plus 1.45%
(iii) LIBOR plus 4.380%
1,248.2
200.0
200.0
1,648.2
(40.0)
1,608.2
$
$
(6.3)
-
(12.0)
(18.3)
-
(18.3)
$
$
$
$
1,241.9
200.0
188.0
1,629.9
(40.0)
1,589.9
$
$
1,432.7
200.0
200.0
1,832.7
-
1,832.7
$
$
$
$
$
$
$
$
$
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
Includes transaction costs on senior notes and Tasiast loan 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
Revolving credit facility
Tasiast loan
Total debt payable
(i)
Senior notes
2022
-
$
-
40.0
40.0
$
2023
-
$
-
36.0
36.0
$
2024
$
500.0
-
32.0
532.0
$
2025
-
$
-
4.0
4.0
$
2026
-
$
200.0
16.0
216.0
$
2027 and
thereafter
750.0
$
-
72.0
822.0
$
Total
1,250.0
200.0
200.0
1,650.0
$
$
The Company’s $1,250.0 million of senior notes consist of $500.0 million principal amount of 5.950% notes due in 2024,
$500.0 million principal amount of 4.50% notes due in 2027 and $250.0 million principal amount of 6.875% notes due in
2041.
On June 1, 2021, the Company redeemed all outstanding 5.125% senior notes due September 1, 2021, which had an
aggregate principal amount of $500.0 million. These notes were redeemed at a redemption price equal to their principal
amount outstanding plus accrued and unpaid interest of $6.4 million.
36
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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 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
On July 23, 2021, the Company amended its $1,500.0 million revolving credit facility to extend the maturity date to July 23,
2026.
As at December 31, 2021, the Company had utilized $206.5 million (December 31, 2020 - $7.5 million) of its $1,500.0 million
revolving credit facility, of which $6.5 million was used for letters of credit. In 2021, the Company drew down $200.0 million
on the revolving credit facility. Subsequent to December 31, 2021, the Company drew $1,100.0 million on the revolving
credit facility.
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, 2021, interest charges and fees are
as follows:
Type of credit
Revolving credit facility
Letters of credit
Standby fee applicable to unused availability
LIBOR plus 1.45%
0.967-1.45%
0.290%
The revolving credit facility’s credit agreement contains various covenants including limits on indebtedness, asset sales and
liens. The Company was in compliance with its financial covenant in the credit agreement at December 31, 2021.
(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. On December 15, 2021, the agreement was amended to cancel
the remaining $100.0 million available to be drawn.
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
and principal payments to be made in June and December for the term of the loan. Principal repayments of $20.0 million
are due in June and December 2022.
As at December 31, 2021, 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 Company has a $300.0 million Letter of Credit guarantee facility with Export Development Canada (“EDC”) with a
maturity date of June 30, 2022. Total fees related to letters of credit under this facility were 0.75% of the utilized amount.
As at December 31, 2021, $232.3 million (December 31, 2020 - $228.9 million) was utilized under this facility.
In addition, at December 31, 2021, the Company had $180.8 million (December 31, 2020 - $175.6 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 0.80%.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
As at December 31, 2021, $308.2 million (December 31, 2020 - $290.1 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
Long-term debt
Lease
Accrued interest
and credit facilities
liabilities
payable(a)
Total
$
1,923.9
$
74.7
$
33.7
$
2,032.3
Balance as at January 1, 2021
Changes from financing cash flows
Debt issued
Debt repayments
Interest paid
Payment of lease liabilities
Other changes
Capitalized interest
Capitalized interest paid
Additions of lease liabilities
Other
Balance as at January 1, 2020
Changes from financing cash flows
Debt issued
Debt repayments
Interest paid
Payment of lease liabilities
Other changes
Capitalized interest
Capitalized interest paid
Additions of lease liabilities
Other
Interest expense and accretion
$
-
$
3.8
$
67.7
$
71.5
Balance as at December 31, 2021
$
1,629.9
$
54.8
$
25.3
$
1,710.0
(a)
Included in Accounts payable and accrued liabilities.
Long-term debt
Lease
Accrued interest
and credit facilities
liabilities
payable(a)
Total
$
1,837.4
$
54.9
$
33.3
$
1,925.6
200.0
(500.0)
-
-
1,623.9
-
-
-
6.0
6.0
950.0
(850.0)
1,937.4
-
-
-
-
-
(13.5)
(13.5)
-
-
-
-
-
-
-
-
-
-
(33.8)
40.9
10.2
(0.1)
13.9
(20.7)
34.2
38.2
(0.7)
40.5
-
-
(46.9)
-
(13.2)
48.3
(51.1)
-
(26.4)
38.5
-
-
(63.1)
-
(29.8)
49.1
(47.9)
-
(24.3)
63.5
200.0
(500.0)
(46.9)
(33.8)
1,651.6
48.3
(51.1)
10.2
(20.5)
58.4
950.0
(850.0)
(63.1)
(20.7)
1,941.8
49.1
(47.9)
38.2
(38.5)
90.5
Interest expense and accretion
$
-
$
3.0
$
86.6
$
89.6
Balance as at December 31, 2020
$
1,923.9
$
74.7
$
33.7
$
2,032.3
(a)
Included in Accounts payable and accrued liabilities.
38
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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 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
2026.
credit facility.
On July 23, 2021, the Company amended its $1,500.0 million revolving credit facility to extend the maturity date to July 23,
As at December 31, 2021, the Company had utilized $206.5 million (December 31, 2020 - $7.5 million) of its $1,500.0 million
revolving credit facility, of which $6.5 million was used for letters of credit. In 2021, the Company drew down $200.0 million
on the revolving credit facility. Subsequent to December 31, 2021, the Company drew $1,100.0 million on the revolving
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, 2021, interest charges and fees are
as follows:
Type of credit
Revolving credit facility
Letters of credit
Standby fee applicable to unused availability
LIBOR plus 1.45%
0.967-1.45%
0.290%
The revolving credit facility’s credit agreement contains various covenants including limits on indebtedness, asset sales and
liens. The Company was in compliance with its financial covenant in the credit agreement at December 31, 2021.
(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. On December 15, 2021, the agreement was amended to cancel
the remaining $100.0 million available to be drawn.
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
and principal payments to be made in June and December for the term of the loan. Principal repayments of $20.0 million
are due in June and December 2022.
As at December 31, 2021, 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 Company has a $300.0 million Letter of Credit guarantee facility with Export Development Canada (“EDC”) with a
maturity date of June 30, 2022. Total fees related to letters of credit under this facility were 0.75% of the utilized amount.
As at December 31, 2021, $232.3 million (December 31, 2020 - $228.9 million) was utilized under this facility.
In addition, at December 31, 2021, the Company had $180.8 million (December 31, 2020 - $175.6 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 0.80%.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
As at December 31, 2021, $308.2 million (December 31, 2020 - $290.1 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, 2021
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
Other
Balance as at December 31, 2021
(a)
Included in Accounts payable and accrued liabilities.
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
Other
Balance as at December 31, 2020
(a)
Included in Accounts payable and accrued liabilities.
Long-term debt
and credit facilities
Lease
liabilities
$
1,923.9
$
74.7
Accrued interest
payable(a)
$
33.7
Total
$
2,032.3
200.0
(500.0)
-
-
1,623.9
-
-
-
(33.8)
40.9
-
-
(46.9)
-
(13.2)
200.0
(500.0)
(46.9)
(33.8)
1,651.6
-
$
-
-
-
6.0
6.0
1,629.9
$
3.8
$
-
-
10.2
(0.1)
13.9
54.8
$
$
$
67.7
48.3
(51.1)
-
(26.4)
38.5
25.3
71.5
48.3
(51.1)
10.2
(20.5)
58.4
1,710.0
$
$
Long-term debt
and credit facilities
Lease
liabilities
$
1,837.4
$
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
-
$
-
-
-
(13.5)
(13.5)
1,923.9
$
3.0
$
-
-
38.2
(0.7)
40.5
74.7
$
$
$
86.6
49.1
(47.9)
-
(24.3)
63.5
33.7
89.6
49.1
(47.9)
38.2
(38.5)
90.5
2,032.3
$
$
38
39 FS
39
30836 Q30 - KINROSS AR-Proof.pdf - p108 (March 31, 2022 01:57:07)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
13.
LEASES
Current portion of lease liabilities
Long-term lease liabilities
December 31,
2021
December 31,
2020
$
19.7
$
28.4
35.1
46.3
$
54.8
$
74.7
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, 2021:
Lease liabilities
$
62.8
$
21.7
Total
2022
Within 1 year
2023-2026
1 to 5 years
$
30.1
2027+
More than 5 years
$
11.0
The following table summarizes such lease payments that have been expensed for the years ended December 31, 2021 and
2020:
Leases with a term of 12 months or less
Leases of low-value assets
Leases with variable lease payments
December 31,
2021
December 31,
2020
$
6.5
$
4.8
0.3
36.5
0.1
31.2
$
43.3
$
36.1
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
14.
PROVISIONS
Balance at January 1, 2021
Additions
Reductions
Reclamation spending
Accretion
Reclamation expense
Current portion
Non-current portion
$
896.1
$
28.8
$
924.9
Reclamation and
remediation
obligations (i)
23.0
(40.7)
(25.7)
14.2
0.1
Other
48.5
(6.4)
-
-
-
Total
71.5
(47.1)
(25.7)
14.2
0.1
41.9 48.1 90.0
825.1 22.8 847.9
$ 867.0 $ 70.9 $ 937.9
Balance at December 31, 2021
$
867.0
$
70.9
$
937.9
(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, 2021 is a $0.1 million expense (year ended December
31, 2020 - $6.6 million) 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 2022 and 2044. The discount rates used in estimating the site restoration cost
obligation were between 1.3% and 10.3% for the year ended December 31, 2021 (year ended December 31, 2020 – 0.4%
and 13.3%), and the inflation rates used were between 2.3% and 5.3% for the year ended December 31, 2021 (year ended
December 31, 2020 - 2.1% 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, 2021, letters of credit totaling $384.7 million (December 31, 2020 - $379.9
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, 2021, $307.4 million (December 31, 2020 - $289.3 million) of surety
bonds were outstanding as security over reclamation and remediation obligations with respect to Kinross’ properties in the
United States. The surety bonds were issued pursuant to arrangements with international insurance companies.
40
FS 40
41
30836 Q30 - KINROSS AR-Proof.pdf - p109 (March 31, 2022 01:57:08)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
13.
LEASES
Current portion of lease liabilities
Long-term lease liabilities
December 31,
December 31,
2021
2020
$
19.7
$
28.4
35.1
46.3
$
54.8
$
74.7
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
The following table summarizes total undiscounted lease liability maturities as at December 31, 2021:
Lease liabilities
$
62.8
$
21.7
$
30.1
$
11.0
2022
2023-2026
2027+
Total
Within 1 year
1 to 5 years
More than 5 years
The following table summarizes such lease payments that have been expensed for the years ended December 31, 2021 and
basis.
2020:
Leases with a term of 12 months or less
Leases of low-value assets
Leases with variable lease payments
December 31,
December 31,
2021
2020
$
6.5
$
4.8
0.3
36.5
0.1
31.2
$
43.3
$
36.1
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
14.
PROVISIONS
Reclamation and
remediation
obligations (i)
Other
Total
Balance at January 1, 2021
Additions
Reductions
Reclamation spending
Accretion
Reclamation expense
Balance at December 31, 2021
Current portion
Non-current portion
$
$
$
896.1
23.0
(40.7)
(25.7)
14.2
0.1
867.0
28.8
48.5
(6.4)
-
-
-
70.9
924.9
71.5
(47.1)
(25.7)
14.2
0.1
937.9
$
$
$
41.9 48.1 90.0
825.1 22.8 847.9
$ 867.0 $ 70.9 $ 937.9
(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, 2021 is a $0.1 million expense (year ended December
31, 2020 - $6.6 million) 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 2022 and 2044. The discount rates used in estimating the site restoration cost
obligation were between 1.3% and 10.3% for the year ended December 31, 2021 (year ended December 31, 2020 – 0.4%
and 13.3%), and the inflation rates used were between 2.3% and 5.3% for the year ended December 31, 2021 (year ended
December 31, 2020 - 2.1% 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, 2021, letters of credit totaling $384.7 million (December 31, 2020 - $379.9
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, 2021, $307.4 million (December 31, 2020 - $289.3 million) of surety
bonds were outstanding as security over reclamation and remediation obligations with respect to Kinross’ properties in the
United States. The surety bonds were issued pursuant to arrangements with international insurance companies.
40
41 FS
41
30836 Q30 - KINROSS AR-Proof.pdf - p110 (March 31, 2022 01:57:09)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
15.
COMMON SHARE CAPITAL
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
16.
SHARE-BASED PAYMENTS
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, 2021 and 2020 is as follows:
Share-based compensation expense recorded during the years ended December 31, 2021 and 2020 was as follows:
Year ended
Year ended
December 31, 2021
December 31, 2020
Number of shares
(000's)
Amount Number of shares
(000's)
Amount
Share option plan expense (i)
Restricted share unit plan expense, including restricted performance shares (ii)
19.2
Common shares
Balance at January 1,
Transfer to contributed surplus on reduction of stated capital(a)
Repurchase and cancellation of shares (ii)
Issued under share option and restricted share plans
Balance at end of period
Total common share capital
1,258,320
$
4,473.7
1,253,766
$
14,926.2
-
(17,608)
3,621
1,244,333
-
(62.9)
16.9
4,427.7
$
-
-
4,554
1,258,320
(10,473.4)
-
20.9
4,473.7
$
$
4,427.7
$
4,473.7
(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, 2021:
Per share
Total
amount paid
Dividends declared and paid during the periods:
Three months ended March 31, 2021
Three months ended June 30, 2021
Three months ended September 30, 2021
Three months ended December 31, 2021
Total
$
0.03
0.03
0.03
0.03
$
$
37.8
37.9
37.8
37.6
151.1
During the year ended December 31, 2020, dividends of $0.03 per common share were declared on September 17, 2020
and November 4, 2020, and a total of $75.5 million in dividends were paid in the year ended December 31, 2020.
On February 16, 2022 the Board of Directors declared a dividend of $0.03 per common share payable on March 24, 2022 to
shareholders of record on March 9, 2022.
There were no dividends declared but unpaid at December 31, 2021 or December 31, 2020.
ii. Repurchase and cancellation of common shares
On July 28, 2021, Kinross received approval from the Toronto Stock Exchange to establish a normal course issuer bid (“NCIB”)
program. Under the NCIB program, the Company is authorized to purchase up to 63,096,676 of its common shares (out of
the 1,261,933,539 common shares outstanding as at July 27, 2021) representing 5% of the Company’s issued and outstanding
common shares, during the period starting on August 3, 2021 and ending on August 2, 2022.
During the year ended December 31, 2021, the Company repurchased and cancelled 17,608,678 common shares for $100.2
million at an average price of $5.69 per share as part of its authorized NCIB program. The book value of the cancelled shares
was $62.9 million and was treated as a reduction to common share capital. The portion of the consideration paid for the
repurchased shares in excess of their book value was treated as a reduction to contributed surplus.
42
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30836 Q30 - KINROSS AR-Proof.pdf - p111 (March 31, 2022 01:57:10)
DT
Years ended December 31,
2021
2020
$ 0.3
$
1.0
1.4
2.8
$ 23.7
$
34.4
29.7
1.3
2.4
Deferred share units expense (iii)
Employer portion of employee share purchase plan (iv)
Total share-based compensation expense
(i)
Share option plan
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 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, 2021 expire at various dates through 2026. The number of common
shares available for the granting of options as at December 31, 2021 was 14.8 million.
The following table summarizes the status of the share option plan and changes during the years ended December 31, 2021
and 2020:
2021
2020
Weighted average
Weighted average
Number of options
exercise price
Number of options
exercise price
(000's)
(CDN$/option)
(000's)
(CDN$/option)
5,601
$
4.68
10,170
$
5.16
(1,624)
(213)
-
3,764
3,273
5.13
4.97
-
$
4.47
$
4.47
(2,566)
(808)
(1,195)
5,601
3,813
4.90
5.02
8.03
$
4.68
$
4.68
Balance at January 1
Exercised
Forfeited
Expired
Outstanding at end of period
Exercisable at end of period
31, 2020 - CDN$8.63).
For the year ended December 31, 2021, the weighted average share price at the date of exercise was CDN$8.56 (December
The following table summarizes information about the stock options outstanding and exercisable at December 31, 2021:
Exercise price range in CDN$:
3.73 4.25
4.26 4.75
4.76 5.06
Number of
options
(000’s)
1,335
1,078
1,351
3,764
Options outstanding
Options exercisable
Weighted
average
Weighted
average
remaining
exercise price
contractual life
(CDN$)
(years)
Number of
options
(000’s)
1,335
587
1,351
3,273
0.53
3.89
2.72
2.28
Weighted
average
Weighted
average
remaining
exercise price
contractual life
(CDN$)
(years)
3.89
4.59
4.99
0.53
3.97
2.72
2.05
$
4.47
$
4.47
No options were granted during the year ended December 31, 2021 and 2020.
3.87
4.58
4.98
43
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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, 2021 and 2020 is as follows:
Transfer to contributed surplus on reduction of stated capital(a)
Repurchase and cancellation of shares (ii)
Issued under share option and restricted share plans
-
(17,608)
3,621
-
(62.9)
16.9
Common shares
Balance at January 1,
Balance at end of period
Total common share capital
Year ended
Year ended
December 31, 2021
December 31, 2020
Number of shares
Amount Number of shares
Amount
(000's)
1,258,320
$
4,473.7
1,253,766
$
14,926.2
(000's)
-
-
4,554
(10,473.4)
-
20.9
1,244,333
$
4,427.7
1,258,320
$
4,473.7
$
4,427.7
$
4,473.7
(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, 2021:
Dividends declared and paid during the periods:
Three months ended March 31, 2021
Three months ended June 30, 2021
Three months ended September 30, 2021
Three months ended December 31, 2021
Total
Per share
amount paid
Total
$
0.03
$
37.8
0.03
0.03
0.03
37.9
37.8
37.6
$
151.1
During the year ended December 31, 2020, dividends of $0.03 per common share were declared on September 17, 2020
and November 4, 2020, and a total of $75.5 million in dividends were paid in the year ended December 31, 2020.
On February 16, 2022 the Board of Directors declared a dividend of $0.03 per common share payable on March 24, 2022 to
shareholders of record on March 9, 2022.
There were no dividends declared but unpaid at December 31, 2021 or December 31, 2020.
ii. Repurchase and cancellation of common shares
On July 28, 2021, Kinross received approval from the Toronto Stock Exchange to establish a normal course issuer bid (“NCIB”)
program. Under the NCIB program, the Company is authorized to purchase up to 63,096,676 of its common shares (out of
the 1,261,933,539 common shares outstanding as at July 27, 2021) representing 5% of the Company’s issued and outstanding
common shares, during the period starting on August 3, 2021 and ending on August 2, 2022.
During the year ended December 31, 2021, the Company repurchased and cancelled 17,608,678 common shares for $100.2
million at an average price of $5.69 per share as part of its authorized NCIB program. The book value of the cancelled shares
was $62.9 million and was treated as a reduction to common share capital. The portion of the consideration paid for the
repurchased shares in excess of their book value was treated as a reduction to contributed surplus.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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, 2021 and 2020 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,
2020
2021
$ 0.3
19.2
1.4
2.8
$ 23.7
$
$
1.0
29.7
1.3
2.4
34.4
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 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, 2021 expire at various dates through 2026. The number of common
shares available for the granting of options as at December 31, 2021 was 14.8 million.
The following table summarizes the status of the share option plan and changes during the years ended December 31, 2021
and 2020:
2021
2020
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
Exercised
Forfeited
Expired
Outstanding at end of period
Exercisable at end of period
5,601
(1,624)
(213)
-
3,764
3,273
$
$
4.68
5.13
4.97
-
4.47
4.47
10,170
(2,566)
(808)
(1,195)
5,601
3,813
$
$
$
$
5.16
4.90
5.02
8.03
4.68
4.68
For the year ended December 31, 2021, the weighted average share price at the date of exercise was CDN$8.56 (December
31, 2020 - CDN$8.63).
The following table summarizes information about the stock options outstanding and exercisable at December 31, 2021:
Exercise price range in CDN$:
3.73 4.25
4.26 4.75
4.76 5.06
Options outstanding
Options exercisable
Number of
options
(000’s)
1,335
1,078
1,351
3,764
Weighted
average
exercise price
(CDN$)
3.87
4.58
4.98
4.47
$
Weighted
average
remaining
contractual life
(years)
0.53
3.89
2.72
2.28
Number of
options
(000’s)
1,335
587
1,351
3,273
Weighted
average
exercise price
(CDN$)
3.89
4.59
4.99
4.47
$
Weighted
average
remaining
contractual life
(years)
0.53
3.97
2.72
2.05
No options were granted during the year ended December 31, 2021 and 2020.
42
43 FS
43
30836 Q30 - KINROSS AR-Proof.pdf - p112 (March 31, 2022 01:57:11)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(ii)
Restricted share 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, 2021 was 20.9 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, 2021
and 2020:
2021
2020
Number of units
(000's)
Weighted average
fair value
(CDN$/unit)
Number of units
(000's)
Weighted average
fair value
(CDN$/unit)
$
$
Balance at January 1
Granted
Reinvested
Redeemed
Forfeited
Outstanding at end of period
6,475
3,017
175
(3,748)
(626)
5,293
$
$
As at December 31, 2021, the Company had recognized a liability of $10.6 million (December 31, 2020 - $17.6 million) within
employee related accrued liabilities (see Note 7ix) in respect of its cash-settled RSUs.
(b) Restricted performance share units
The RPSUs are subject to certain vesting requirements and vest at the end of three years. The vesting requirements are
based on certain performance criteria over the vesting period established by the Company.
The following table summarizes information about the RPSUs and related changes during the years ended December 31,
2021 and 2020:
2021
2020
Number of units
(000's)
Weighted average
fair value
(CDN$/unit)
Number of units
(000's)
Weighted average
fair value
(CDN$/unit)
$
$
Balance at January 1
Granted
Reinvested
Redeemed
Forfeited
Outstanding at end of period
4,459
1,378
77
(1,739)
(394)
3,781
$
$
8,512
3,106
-
(4,199)
(944)
6,475
4,937
1,436
-
(1,575)
(339)
4,459
5.86
8.80
6.82
5.36
6.84
7.81
5.95
8.37
6.90
4.92
6.66
7.25
4.68
7.42
-
4.78
5.17
5.86
5.16
7.76
-
5.32
5.02
5.95
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(iii)
Deferred share unit plan
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, 2021 and 2020 are as follows:
DSUs granted (000's)
Weighted average grant-date fair value (CDN$/ unit)
Years ended December 31,
2021
2020
234
203
$ 7.55 $ 8.66
There were 1,296,882 DSUs outstanding, for which the Company had recognized a liability of $7.5 million, as at December
31, 2021 (December 31, 2020 - $10.4 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, 2021 was $2.8 million (year ended
December 31, 2020 - $2.4 million).
17.
EARNINGS PER SHARE
Basic and diluted net earnings attributable to common shareholders of Kinross for the year ended December 31, 2021 was
$221.2 million (year ended December 31, 2020 - $1,342.4 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 earnings per common share for the following periods:
(Number of common shares in thousands)
Basic weighted average shares outstanding:
Weighted average shares dilution adjustments:
Stock options(a)
Restricted share units
Restricted performance share units
Diluted weighted average shares outstanding
Weighted average shares dilution adjustments - exclusions:(b)
Stock options(a)
Restricted share units
Restricted performance share units
Years ended December 31,
2021
2020
1,259,059
1,257,163
1,269,146
1,267,970
1,942
3,203
4,942
-
-
-
3,218
2,929
4,660
165
-
-
(a) Dilutive stock options were determined using the Company’s average share price for the year. For the years ended December 31,
2021 and 2020, the average share price used was $6.56 and $7.00, respectively.
(b) These adjustments were excluded as they are anti-dilutive.
44
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30836 Q30 - KINROSS AR-Proof.pdf - p113 (March 31, 2022 01:57:13)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(ii)
Restricted share plans
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
(iii)
Deferred share unit plan
The Company has a Restricted Share Plan and a Restricted Share Unit Plan (Cash-Settled) whereby RSUs and RPSUs may be
granted to employees, officers and contractors of the Company. Under the Restricted Share Plan, the aggregate number of
shares reserved for issuance may not exceed 50 million common shares. The number of common shares available for the
granting of restricted shares under this plan as at December 31, 2021 was 20.9 million.
(a) Restricted share units
RSUs are generally exercisable into one common share entitling the holder to acquire the common share for no additional
consideration. RSUs vest over a three year period.
The following table summarizes information about all RSUs and related changes during the years ended December 31, 2021
and 2020:
Balance at January 1
Granted
Reinvested
Redeemed
Forfeited
2021
2020
Weighted average
Weighted average
Number of units
fair value
Number of units
(000's)
6,475
3,017
175
(3,748)
(626)
(CDN$/unit)
$
5.86
8.80
6.82
5.36
6.84
fair value
(CDN$/unit)
$
4.68
7.42
-
4.78
5.17
(000's)
8,512
3,106
-
(4,199)
(944)
Outstanding at end of period
5,293
$
7.81
6,475
$
5.86
As at December 31, 2021, the Company had recognized a liability of $10.6 million (December 31, 2020 - $17.6 million) within
employee related accrued liabilities (see Note 7ix) in respect of its cash-settled RSUs.
(b) Restricted performance share units
The RPSUs are subject to certain vesting requirements and vest at the end of three years. The vesting requirements are
based on certain performance criteria over the vesting period established by the Company.
The following table summarizes information about the RPSUs and related changes during the years ended December 31,
2021 and 2020:
Balance at January 1
Granted
Reinvested
Redeemed
Forfeited
2021
2020
Weighted average
Weighted average
Number of units
fair value
Number of units
(000's)
4,459
1,378
77
(1,739)
(394)
(CDN$/unit)
$
5.95
8.37
6.90
4.92
6.66
fair value
(CDN$/unit)
$
5.16
7.76
-
5.32
5.02
(000's)
4,937
1,436
-
(1,575)
(339)
Outstanding at end of period
3,781
$
7.25
4,459
$
5.95
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, 2021 and 2020 are as follows:
DSUs granted (000's)
Weighted average grant-date fair value (CDN$/ unit)
Years ended December 31,
2020
2021
203
$ 7.55 $ 8.66
234
There were 1,296,882 DSUs outstanding, for which the Company had recognized a liability of $7.5 million, as at December
31, 2021 (December 31, 2020 - $10.4 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, 2021 was $2.8 million (year ended
December 31, 2020 - $2.4 million).
17.
EARNINGS PER SHARE
Basic and diluted net earnings attributable to common shareholders of Kinross for the year ended December 31, 2021 was
$221.2 million (year ended December 31, 2020 - $1,342.4 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 earnings per common share for the following periods:
(Number of common shares in thousands)
Basic weighted average shares outstanding:
Weighted average shares dilution adjustments:
Stock options(a)
Restricted share units
Restricted performance share units
Diluted weighted average shares outstanding
Weighted average shares dilution adjustments - exclusions:(b)
Stock options(a)
Restricted share units
Restricted performance share units
Years ended December 31,
2021
2020
1,259,059
1,257,163
1,942
3,203
4,942
1,269,146
3,218
2,929
4,660
1,267,970
-
-
-
165
-
-
(a) Dilutive stock options were determined using the Company’s average share price for the year. For the years ended December 31,
2021 and 2020, the average share price used was $6.56 and $7.00, respectively.
(b) These adjustments were excluded as they are anti-dilutive.
44
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
18.
INCOME TAX EXPENSE
The following table shows the components of the current and deferred tax expense:
Current tax expense
Current period
Settlement or adjustment for prior periods
Deferred tax expense
Origination and reversal of temporary differences
Change in unrecognized deferred tax assets
Total tax expense
Years ended December 31,
2021
2020
$
264.5
49.9
$
297.7
(75.8)
(136.0)
72.3
$
250.7
334.6
(116.7)
439.8
$
The Company settled tax amounts relating to prior taxation years resulting in an additional $49.9 million of tax expense
during 2021.
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.
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
True-up of prior provisions to tax filings
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
Settlement of prior period taxes
Other
Effective tax rate
2021
2020
26.5%
26.5%
0.2%
(0.4%)
4.7%
7.5%
(1.1%)
(0.1%)
-
6.3%
1.2%
-
11.1%
(2.5%)
53.4%
1.7%
(0.9%)
5.5%
(0.4%)
-
(0.7%)
(6.9%)
1.7%
0.1%
(1.4%)
0.5%
(1.2%)
24.5%
46
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30836 Q30 - KINROSS AR-Proof.pdf - p115 (March 31, 2022 01:57:15)
DT
December 31,
December 31,
2021
2020
$
49.0
$
51.1
1.8
118.6
20.6
90.8
280.8
1.3
662.7
47.1
5.2
123.3
20.8
54.4
254.8
2.4
677.5
60.0
$
430.3
$
485.1
December 31,
December 31,
2021
2020
$
485.1
$
269.3
(63.7)
8.9
217.9
(2.1)
$
430.3
$
485.1
December 31,
December 31,
2021
2020
$
572.0
$
535.2
$
363.9
$
394.1
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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
Losses
Deferred tax liabilities
Accrued expenses and other
Property, plant and equipment
Inventory capitalization
Deferred tax liabilities - net
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
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.
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, 2021 is $9.4 billion (December 31, 2020 - $8.9 billion).
Deferred tax assets have not been recognized in respect of the following items:
Deductible temporary differences
Tax losses
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 operating losses that can be applied against future taxable profit:
Country
Canada
United States(a)
Chile
Brazil
Russia
Mauritania
Barbados
Luxembourg
Other
Amount
$ 1,053.6
37.6
130.2
1.6
24.7
4.8
144.6
77.2
89.1
Expiry Date
2027 - 2041
2022 - 2040
No expiry
No expiry
No expiry
2022 - 2026
2023 - 2027
Various
Various
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
47
(a) Utilization of the United States loss carry forwards will be limited in any year as a result of the previous changes in ownership.
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
18.
INCOME TAX EXPENSE
The following table shows the components of the current and deferred tax expense:
Current tax expense
Current period
Settlement or adjustment for prior periods
Deferred tax expense
Origination and reversal of temporary differences
Change in unrecognized deferred tax assets
Total tax expense
Years ended December 31,
2021
2020
$
264.5
$
297.7
49.9
(75.8)
(136.0)
72.3
334.6
(116.7)
$
250.7
$
439.8
2021
2020
26.5%
26.5%
0.2%
(0.4%)
4.7%
7.5%
(1.1%)
(0.1%)
6.3%
1.2%
-
-
11.1%
(2.5%)
53.4%
1.7%
(0.9%)
5.5%
(0.4%)
-
(0.7%)
(6.9%)
1.7%
0.1%
(1.4%)
0.5%
(1.2%)
24.5%
The Company settled tax amounts relating to prior taxation years resulting in an additional $49.9 million of tax expense
during 2021.
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.
The reconciliation of the combined Canadian federal and provincial statutory income tax rate to the effective tax rate is as
Difference in foreign tax rates and foreign exchange on deferred income taxes within income
follows:
Combined statutory income tax rate
Increase (decrease) resulting from:
Mining taxes
Percentage of depletion
tax expense
Change in unrecognized deferred tax assets
True-up of prior provisions to tax filings
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
Settlement of prior period taxes
Other
Effective tax rate
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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
Losses
Deferred tax liabilities
Accrued expenses and other
Property, plant and equipment
Inventory capitalization
Deferred tax liabilities - net
December 31,
2021
December 31,
2020
$
49.0
1.8
118.6
20.6
90.8
280.8
$
51.1
5.2
123.3
20.8
54.4
254.8
1.3
662.7
47.1
430.3
$
2.4
677.5
60.0
485.1
$
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,
2021
$
December 31,
2020
$
485.1
(63.7)
8.9
430.3
269.3
217.9
(2.1)
485.1
$
$
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, 2021 is $9.4 billion (December 31, 2020 - $8.9 billion).
Deferred tax assets have not been recognized in respect of the following items:
Deductible temporary differences
Tax losses
December 31,
2021
$
$
572.0
363.9
December 31,
2020
$
$
535.2
394.1
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 operating 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
$ 1,053.6
37.6
130.2
1.6
24.7
4.8
144.6
77.2
89.1
Expiry Date
2027 - 2041
2022 - 2040
No expiry
No expiry
No expiry
2022 - 2026
2023 - 2027
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.
46
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47
30836 Q30 - KINROSS AR-Proof.pdf - p116 (March 31, 2022 01:57:16)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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, Manh Choh, and Maricunga) 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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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, 2021:
Fort Knox
Mountain
Mountain
Paracatu
Kupol
Tasiast
Chirano
Total
Operating segments
Round
Bald
Non-operating
segments (a)
Corporate and
other(b),(c)
Year ended December 31, 2020:
Fort Knox
Mountain
Mountain
Paracatu
Kupol
Tasiast
Chirano
Total
Operating segments
Round
Bald
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges and asset derecognition
Total cost of sales
Gross profit (loss)
Other operating expense
Exploration and business development
General and administrative
Operating earnings (loss)
Other income - net
Finance income
Finance expense
Earnings before tax
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
Property, plant and equipment at:
December 31, 2021
Total assets at:
December 31, 2021
Property, plant and equipment at:
December 31, 2020
Total assets at:
December 31, 2020
$
473.3
466.6
352.1
987.9
862.8
314.7
267.0
5.0
$
3,729.4
267.2
109.8
-
377.0
0.7
3.7
-
$
96.3
235.9
65.2
-
301.1
165.5
51.3
5.6
-
177.5
195.9
144.5
517.9
(165.8)
1.7
7.2
-
412.1
180.6
-
592.7
395.2
9.9
0.9
-
306.2
70.5
376.7
486.1
26.7
16.7
-
-
123.6
136.9
-
260.5
54.2
116.9
4.3
-
201.6
73.0
274.6
(7.6)
0.9
11.9
-
-
$
91.9
108.6
(174.7)
384.4
442.7
(67.0)
(20.4)
(301.9)
$
463.6
Non-operating
segments (a)
Corporate and
other(b),(c)
(6.0)
$
1,017.9
2.0
9.0
-
11.0
86.5
82.8
126.6
1,726.1
840.9
144.5
2,711.5
294.6
133.1
126.6
79.2
12.3
(85.7)
$
469.4
187.2
$
2,296.3
3.7
10.2
(185.0)
(171.1)
59.8
58.4
117.9
1,725.7
842.3
(650.9)
1,917.1
186.5
92.5
117.9
7.4
4.3
(112.6)
$
1,798.5
Non-operating
segments (a)
Corporate and
other(b)
Non-operating
segments(a)
Corporate and
other(b)
$
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
2.6
4.8
-
$
74.4
219.6
49.6
-
269.2
296.3
3.9
5.6
-
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
$
67.0
286.8
(48.9)
$
1,899.4
Operating segments
Round
Bald
Fort Knox
Mountain
Mountain
Paracatu
Kupol
Tasiast
Chirano
Total
$
429.5
829.3
392.4
1,665.2
244.0
2,406.4
309.2
1,341.7
$
7,617.7
$
749.8
1,074.4
586.5
2,016.6
752.3
2,911.5
406.7
1,930.3
$
10,428.1
Operating segments
Round
Bald
Fort Knox
Mountain
Mountain
Paracatu
Kupol
Tasiast
Chirano
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, 2021(d)
$
126.7
140.7
40.1
112.6
26.6
320.6
47.8
205.5
$
1,020.6
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
(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, Manh Choh, and Maricunga).
(c) Corporate and other includes metal sales and operating losses of Maricunga of $5.0 million and $(17.8) million, respectively, for the
year ended December 31, 2021 ($16.1 million and $(12.5) million, respectively, for the year ended December 31, 2020) as Maricunga
continues to sell its remaining finished metals inventories after transitioning all processing activities to care and maintenance in 2019.
(d) Segment capital expenditures are presented on an accrual basis and include capitalized interest. Additions to property, plant and
equipment in the consolidated statements of cash flows are presented on a cash basis.
48
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
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, Manh Choh, and Maricunga) 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.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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, 2021:
Revenue
Metal sales
Cost of sales
Production cost of sales
Depreciation, depletion and amortization
Impairment charges and asset derecognition
Total cost of sales
Gross profit (loss)
Other operating expense
Exploration and business development
General and administrative
Operating earnings (loss)
Other income - net
Finance income
Finance expense
Earnings before tax
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
Property, plant and equipment at:
December 31, 2021
Total assets at:
December 31, 2021
Fort Knox
Round
Mountain
Bald
Mountain
Paracatu
Kupol
Tasiast
Chirano
Operating segments
Non-operating
segments (a)
Corporate and
other(b),(c)
Total
$
473.3
466.6
352.1
987.9
862.8
314.7
267.0
5.0
$
3,729.4
267.2
109.8
-
377.0
96.3
0.7
$
3.7
-
91.9
$
235.9
65.2
-
301.1
165.5
51.3
5.6
-
108.6
177.5
195.9
144.5
517.9
(165.8)
1.7
7.2
-
(174.7)
412.1
180.6
-
592.7
395.2
9.9
0.9
-
384.4
306.2
70.5
-
376.7
486.1
26.7
16.7
-
442.7
123.6
136.9
-
260.5
54.2
116.9
4.3
-
(67.0)
201.6
73.0
-
274.6
(7.6)
0.9
11.9
-
(20.4)
2.0
9.0
-
11.0
(6.0)
86.5
82.8
126.6
(301.9)
1,726.1
840.9
144.5
2,711.5
1,017.9
294.6
$
133.1
$
126.6
463.6
79.2
12.3
(85.7)
469.4
$
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
$
$
Operating segments
Fort Knox
Round
Mountain
Bald
Mountain
Paracatu
Kupol
Tasiast
Chirano
Non-operating
segments (a)
Corporate and
other(b)
Total
$
429.5
829.3
392.4
1,665.2
244.0
2,406.4
309.2
1,341.7
$
7,617.7
$
749.8
1,074.4
586.5
2,016.6
752.3
2,911.5
406.7
1,930.3
$
10,428.1
Capital expenditures for year ended December 31, 2021(d)
$
126.7
140.7
40.1
112.6
26.6
320.6
47.8
205.5
$
1,020.6
Property, plant and equipment at:
December 31, 2020
Total assets at:
December 31, 2020
Operating segments
Fort Knox
Round
Mountain
Bald
Mountain
Paracatu
Kupol
Tasiast
Chirano
Non-operating
segments(a)
Corporate and
other(b)
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
(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, Manh Choh, and Maricunga).
(c) Corporate and other includes metal sales and operating losses of Maricunga of $5.0 million and $(17.8) million, respectively, for the
year ended December 31, 2021 ($16.1 million and $(12.5) million, respectively, for the year ended December 31, 2020) as Maricunga
continues to sell its remaining finished metals inventories after transitioning all processing activities to care and maintenance in 2019.
(d) Segment capital expenditures are presented on an accrual basis and include capitalized interest. Additions to property, plant and
equipment in the consolidated statements of cash flows are presented on a cash basis.
48
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
ii.
Geographic segments
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
20.
COMMITMENTS AND CONTINGENCIES
The following table shows metal sales and property, plant and equipment by geographic region:
i.
Commitments
Geographic information(a)
United States
Russian Federation
Brazil
Chile
Mauritania
Ghana
Metal sales
Property, plant and equipment
Years ended December 31,
2020
2021
As at December 31,
2021
2020
$
1,292.0
862.8
987.9
5.0
314.7
267.0
$
1,318.9
904.6
960.7
16.1
718.0
295.1
$
$
1,818.5
616.1
1,672.7
779.9
2,419.9
310.6
$
2,043.7
604.0
1,721.5
653.5
2,289.2
341.6
Total
$
3,729.4
$
4,213.4
$
7,617.7
$
7,653.5
(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, 2021:
Fort Knox
Round
Mountain
Bald
Mountain Paracatu
Kupol
Tasiast
Chirano
Corporate
and other(a)
Total
Customer
1
2
3
4
% of total metal sales
$ 29.9 59.9 51.5 72.7 128.8 63.7 50.3 1.2
-
- - - 0.9
63.1 22.5 44.4 112.4 57.9 108.3 44.1
95.3 83.2 38.2 180.2
4.7 28.9 34.9 49.0 122.6 55.5 81.9
-
(a) The Corporate and other segment includes metal sales for Maricunga for the year ended December 31, 2021.
Year ended December
31, 2020:
Fort Knox
Round
Mountain
Bald
Mountain Paracatu
Kupol
Tasiast
Chirano
Corporate
and other(a)
Customer
1
2
3
% of total metal sales
$ 36.1 83.7 48.3 109.4 100.6 233.1 36.8 0.6
-
- 45.0 61.9 1.7
17.6 22.9 14.9 54.3 225.5 109.3 54.0
73.1 81.6 43.7 121.5
458.0
452.7
397.8
377.5
1,686.0
45.2%
Total
648.6
498.5
428.5
1,575.6
37.4%
$
$
(a) The Corporate and other segment includes metal sales for Maricunga for the year ended December 31, 2020.
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.
At December 31, 2021, the Company had future operating lease obligations of approximately $34.5 million (December 31,
2020 - $55.9 million), and future purchase commitments of approximately $1,012.6 million (December 31, 2020 - $935.0
million), of which $201.9 million relates to commitments for capital expenditures (December 31, 2020 - $153.1 million).
ii. Contingencies
General
Other legal matters
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.
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, Chilean environmental enforcement authority (“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 required CMM to, among other things, submit a restoration plan to the SMA for approval. CMM appealed
the Valle Ancho ruling to the Supreme Court. The CDE appealed to the Supreme Court in both cases and asserted in the Valle
Ancho matter that the Environmental Tribunal erred by not ordering a complete shutdown of Maricunga’s groundwater
wells. On January 7, 2022, the Supreme Court annulled the Tribunal’s rulings in both cases on procedural grounds and
remanded the matters to the Tribunal for further proceedings.
50
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DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
ii.
Geographic segments
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
20.
COMMITMENTS AND CONTINGENCIES
The following table shows metal sales and property, plant and equipment by geographic region:
i.
Commitments
Geographic information(a)
United States
Russian Federation
Brazil
Chile
Mauritania
Ghana
Total
Metal sales
Property, plant and equipment
Years ended December 31,
2021
2020
As at December 31,
2021
2020
$
1,292.0
$
1,318.9
$
1,818.5
$
2,043.7
862.8
987.9
5.0
314.7
267.0
904.6
960.7
16.1
718.0
295.1
$
616.1
1,672.7
779.9
2,419.9
310.6
604.0
1,721.5
653.5
2,289.2
341.6
$
3,729.4
$
4,213.4
$
7,617.7
$
7,653.5
(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
Round
Bald
31, 2021:
Fort Knox
Mountain
Mountain Paracatu
Kupol
Tasiast
Chirano
Total
Corporate
and other(a)
$ 29.9 59.9 51.5 72.7 128.8 63.7 50.3 1.2
63.1 22.5 44.4 112.4 57.9 108.3 44.1
-
95.3 83.2 38.2 180.2
- - - 0.9
4.7 28.9 34.9 49.0 122.6 55.5 81.9
-
(a) The Corporate and other segment includes metal sales for Maricunga for the year ended December 31, 2021.
Year ended December
Round
Bald
31, 2020:
Fort Knox
Mountain
Mountain Paracatu
Kupol
Tasiast
Chirano
Total
Corporate
and other(a)
$ 36.1 83.7 48.3 109.4 100.6 233.1 36.8 0.6
17.6 22.9 14.9 54.3 225.5 109.3 54.0
-
73.1 81.6 43.7 121.5
- 45.0 61.9 1.7
Customer
% of total metal sales
Customer
% of total metal sales
1
2
3
4
1
2
3
458.0
452.7
397.8
377.5
1,686.0
45.2%
648.6
498.5
428.5
1,575.6
37.4%
$
$
(a) The Corporate and other segment includes metal sales for Maricunga for the year ended December 31, 2020.
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.
At December 31, 2021, the Company had future operating lease obligations of approximately $34.5 million (December 31,
2020 - $55.9 million), and future purchase commitments of approximately $1,012.6 million (December 31, 2020 - $935.0
million), of which $201.9 million relates to commitments for capital expenditures (December 31, 2020 - $153.1 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, Chilean environmental enforcement authority (“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 required CMM to, among other things, submit a restoration plan to the SMA for approval. CMM appealed
the Valle Ancho ruling to the Supreme Court. The CDE appealed to the Supreme Court in both cases and asserted in the Valle
Ancho matter that the Environmental Tribunal erred by not ordering a complete shutdown of Maricunga’s groundwater
wells. On January 7, 2022, the Supreme Court annulled the Tribunal’s rulings in both cases on procedural grounds and
remanded the matters to the Tribunal for further proceedings.
50
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30836 Q30 - KINROSS AR-Proof.pdf - p120 (March 31, 2022 01:57:22)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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. In addition, the
EPA notified SGC that SGC is a potentially responsible party (“PRP”) under CERCLA and may be jointly and severally liable for
cleanup of the District or cleanup costs incurred by the EPA in the District.
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 sought 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 was 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 sought 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 were 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 and first quarter of 2021, SGC and Kinross reached settlements with the Navajo Nation, the
State of New Mexico, and the State of Utah. The Court has entered Consent Decrees approving these settlements and
dismissed the claims with prejudice. In the second quarter of 2021, SGC and Environmental Restoration dismissed their
mutual cross claims with prejudice.
In the first quarter of 2021, the Court granted SGC’s motion for summary judgment against the individual Navajo members
based on a statute of repose defense. In April 2021, the Court granted Kinross Gold Corporation and Kinross Gold U.S.A.,
Inc.’s motion for summary judgment against the individual Navajo members based personal jurisdiction grounds and,
subsequently, in July 2021 denied a motion to certify this order for interlocutory appeal. In May 2021, the Court partially
granted Kinross Gold Corporation’s motion for summary judgment based on a lack of specific jurisdiction as to the United
States’ cross-claims, but granted the United States the right to file a motion asserting personal jurisdiction under alternative
grounds. On October 4, 2021, the Court denied the United States’ motion for summary judgment on this alternative ground
for personal jurisdiction over Kinross Gold Corporation.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
In October 2021, SGC and Kinross reached a settlement in principle with the United States and the State of Colorado. The
settlement remains subject to entry of a Consent Decree by the Court approving the settlement after a public comment
period closes. The Consent Decree was lodged with the Court on January 20, 2022 and the Federal Register notice inviting
public comment was published on January 27, 2022. In addition, SGC and Kinross reached an agreement with the State of
Colorado to resolve potential natural resource damage claims with respect to the District based on a payment by SGC of
$1.6M. This settlement is subject to entry of a Consent Decree which has been lodged with the Court for approval and a
public comment period which has now closed.
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 2021 and 2020 other than compensation of key management personnel.
Key management personnel
Compensation of key management personnel of the Company is as follows:
Cash compensation - salaries, short-term incentives, and other benefits
$
8.2
$
7.4
Long-term incentives, including share-based payments
Termination and post-retirement benefits
Total compensation paid to key management personnel
Years ended December 31,
2021
2020
6.8
1.3
8.8
1.1
$
16.3
$
17.3
Key management personnel are defined as the Senior Leadership Team and members of the Board of Directors.
52
FS 52
53
30836 Q30 - KINROSS AR-Proof.pdf - p121 (March 31, 2022 01:57:23)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(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. In addition, the
EPA notified SGC that SGC is a potentially responsible party (“PRP”) under CERCLA and may be jointly and severally liable for
cleanup of the District or cleanup costs incurred by the EPA in the District.
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 sought 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 was 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 sought 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 were 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 and first quarter of 2021, SGC and Kinross reached settlements with the Navajo Nation, the
State of New Mexico, and the State of Utah. The Court has entered Consent Decrees approving these settlements and
dismissed the claims with prejudice. In the second quarter of 2021, SGC and Environmental Restoration dismissed their
mutual cross claims with prejudice.
In the first quarter of 2021, the Court granted SGC’s motion for summary judgment against the individual Navajo members
based on a statute of repose defense. In April 2021, the Court granted Kinross Gold Corporation and Kinross Gold U.S.A.,
Inc.’s motion for summary judgment against the individual Navajo members based personal jurisdiction grounds and,
subsequently, in July 2021 denied a motion to certify this order for interlocutory appeal. In May 2021, the Court partially
granted Kinross Gold Corporation’s motion for summary judgment based on a lack of specific jurisdiction as to the United
States’ cross-claims, but granted the United States the right to file a motion asserting personal jurisdiction under alternative
grounds. On October 4, 2021, the Court denied the United States’ motion for summary judgment on this alternative ground
for personal jurisdiction over Kinross Gold Corporation.
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
In October 2021, SGC and Kinross reached a settlement in principle with the United States and the State of Colorado. The
settlement remains subject to entry of a Consent Decree by the Court approving the settlement after a public comment
period closes. The Consent Decree was lodged with the Court on January 20, 2022 and the Federal Register notice inviting
public comment was published on January 27, 2022. In addition, SGC and Kinross reached an agreement with the State of
Colorado to resolve potential natural resource damage claims with respect to the District based on a payment by SGC of
$1.6M. This settlement is subject to entry of a Consent Decree which has been lodged with the Court for approval and a
public comment period which has now closed.
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 2021 and 2020 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,
2020
2021
Cash compensation - salaries, short-term incentives, and other benefits
Long-term incentives, including share-based payments
Termination and post-retirement benefits
Total compensation paid to key management personnel
$
$
8.2
6.8
1.3
16.3
7.4
8.8
1.1
17.3
$
$
Key management personnel are defined as the Senior Leadership Team and members of the Board of Directors.
52
53 FS
53
30836 Q30 - KINROSS AR-Proof.pdf - p122 (March 31, 2022 01:57:24)
DT
2021 ANNUAL REPORT KINROSS GOLD
KINROSS GOLD CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2021 and 2020
(Tabular amounts in millions of United States dollars, unless otherwise noted)
22.
SUBSEQUENT EVENT
Acquisition of Great Bear Resources
On December 8, 2021, Kinross announced that it had entered into a definitive agreement (“Agreement”) to acquire Great
Bear Resources Ltd. (“Great Bear”), which includes the Dixie project located in the Red Lake mining district in Ontario,
Canada.
Under the terms of the Agreement, Kinross has agreed to an upfront payment of approximately $1.4 billion (C$1.8 billion),
representing C$29.00 per Great Bear common share on a fully-diluted basis. The upfront payment will be payable at the
election of Great Bear shareholders in cash and Kinross common shares, subject to a pro-ration to a maximum cash
consideration of approximately $1.1 billion (C$1.4 billion) and a maximum of approximately 80.7 million Kinross common
shares. The Agreement also includes a payment of contingent consideration in the form of contingent value rights that may
be exchanged for 0.1330 of a Kinross common share per Great Bear common share. The contingent consideration will be
payable in connection with Kinross’ public announcement of commercial production at the Dixie project, provided that a
cumulative total of at least 8.5 million gold ounces of mineral reserves and measured and indicated mineral resources are
disclosed.
The acquisition was approved by shareholder vote on February 14, 2022 and is expected to close during the first quarter of
2022.
54
FS 54
30836 Q30 - KINROSS AR-Proof.pdf - p123 (March 31, 2022 01:57:25)
DT
2021 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, 2021
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
Chulbatkan
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
Russia
100.0%
100.0%
100.0%
–
34,810
6,169
40,979
448
–
466,811
467,259
5,040
48,563
53,603
–
813
776
1,589
563,430
–
0.3
0.3
0.3
0.6
–
0.4
0.4
1.5
1.3
1.3
–
3.5
5.8
4.6
0.5
–
375
61
40,980
196,575
128,609
436
366,164
8
–
6,499
17,560
160,702
70,055
6,507
248,317
244
1,961
9,144
63,910
2,205
73,054
–
91
144
235
56,497
149
4,965
61,611
9,383
749,146
0.6
0.3
0.7
0.5
1.6
1.3
0.3
1.1
2.2
2.2
2.2
798
2,092
2,976
40,980
231,385
134,778
5,866
407,143
890
6,733
774
18,008
160,702
536,866
8,397
715,576
646
4,443
14,184
112,473
5,089
126,657
1.6
11.7
5.6
2.0
1.0
2,964
56
894
56,497
962
5,741
3,914
63,200
23,266
1,312,576
0.6
0.3
0.7
0.5
1.6
1.3
0.4
0.6
2.0
1.8
1.8
1.6
4.7
5.6
2.0
0.8
798
2,467
3,037
6,302
898
6,733
7,273
14,904
890
6,404
7,294
2,964
147
1,038
4,149
32,649
Silver
Proven and Probable Mineral Reserves (1, 2, 3, 4, 5, 6)
Kinross Gold Corporation’s Share at December 31, 2021
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
55
USA
100.0%
Chile
100.0%
Russia
Russia
100.0%
100.0%
–
–
448
448
813
776
1,589
2,037
–
–
50.4
50.4
7.2
75.1
40.3
42.6
–
–
725
725
188
1,874
2,062
5,628
5,628
6.3
6.3
1,146
1,146
5,628
5,628
6.3
6.3
1,146
1,146
17,560
72.6
41,003
18,008
72.1
41,728
17,560
72.6
41,003
18,008
72.1
41,728
149
4,965
5,114
33.4
79.7
160
12,723
78.4
12,883
962
5,741
6,703
11.3
79.1
348
14,597
69.3
14,945
2,787
28,302
60.5
55,032
30,339
59.3
57,819
2021 ANNUAL REPORT KINROSS GOLD
30836 Q30 - KINROSS AR-Proof.pdf - p124 (March 31, 2022 01:57:26)
DT
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, 2021
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
7,685
–
331
–
17,166
6,136
–
35,555
138,606
180,297
8,285
8,466
16,751
–
3
259
262
214,476
0.8
0.3
–
6.4
–
0.7
1.7
–
0.8
0.3
0.4
1.4
1.0
1.2
–
5.9
9.9
9.9
0.5
233
77
–
68
–
191,375
168,931
1,133
6,110
137,974
378
505,523
344
–
905
1,225
22,045
99,440
312,171
170,464
2,474
604,120
380
279
659
–
1
83
84
17,005
61,318
78,323
43,373
57
1,460
44,890
3,595
1,232,856
0.5
0.3
6.5
4.0
0.7
0.6
1.5
0.7
0.6
0.3
0.6
1.2
1.2
1.2
3,359
1,600
236
778
2,989
200,525
176,616
1,133
6,441
137,974
8,962
522,689
1,068
2,366
6,166
1,749
28,181
99,440
347,726
309,070
11,349
784,417
641
2,309
25,290
69,784
2,950
95,074
0.9
10.4
7.7
1.2
0.6
1,280
19
362
43,373
60
1,719
1,661
45,152
24,922
1,447,332
0.6
0.3
6.5
4.1
0.7
0.6
1.6
0.7
0.6
0.3
0.5
1.3
1.2
1.2
0.9
10.1
8.0
1.2
0.6
3,592
1,677
236
846
2,989
9,340
1,412
2,366
7,071
2,974
13,823
1,021
2,588
3,609
1,280
20
445
1,745
28,517
NORTH AMERICA
Bald Mountain
Fort Knox
Kettle River
Manh Choh
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Lobo-Marte
Maricunga
Paracatu
Subtotal
AFRICA
Chirano
Tasiast
Subtotal
RUSSIA
Chulbatkan
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, 2021
Property
Location
Kinross
Interest
(%)
Measured
Indicated
Measured and Indicated
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
NORTH AMERICA
Manh Choh
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
USA
USA
70.0%
100.0%
Chile
100.0%
Russia
Russia
100.0%
100.0%
331
–
331
6,136
6,136
3
259
262
16.7
–
16.7
30.7
30.7
178
–
178
6,110
4,734
10,844
14.1
8.3
11.5
2,762
1,262
6,441
4,734
4,024
11,175
14.2
8.3
11.7
2,940
1,262
4,202
6,060
22,045
41.2
29,231
28,181
39.0
35,291
6,060
22,045
41.2
29,231
28,181
39.0
35,291
6.1
129.7
1
1,079
57
1,460
21.2
105.6
39
4,958
60
1,719
20.3
109.3
40
6,037
128.1
1,080
1,517
102.4
4,997
1,779
106.2
6,077
6,729
33.8
7,318
34,406
34.6
38,252
41,135
34.5
45,570
30836 Q30 - KINROSS AR-Proof.pdf - p125 (March 31, 2022 01:57:26)
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56
2021 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, 2021
Property
NORTH AMERICA
Bald Mountain
Fort Knox
Kettle River
Manh Choh
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Lobo-Marte
Maricunga
Paracatu
Subtotal
AFRICA
Chirano
Tasiast
Subtotal
RUSSIA
Chulbatkan
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, 2021
Property
NORTH AMERICA
Manh Choh
Round Mountain 7
Subtotal
SOUTH AMERICA
La Coipa 8
Subtotal
RUSSIA
Dvoinoye
Kupol
Subtotal
Total Silver
57
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)
45,716
85,071
1,816
941
84,111
217,655
2,923
18,474
153,276
75,592
250,265
5,443
12,678
18,121
4,473
58
992
5,523
491,564
0.5
0.2
6.5
2.7
0.5
0.5
1.2
0.7
0.6
0.3
0.5
1.9
2.4
2.2
0.7
24.1
8.3
2.3
0.6
669
672
378
81
1,418
3,218
109
445
2,782
817
4,153
335
971
1,306
103
45
266
414
9,091
Kinross
Interest
(%)
Location
Inferred
Tonnes
(kt)
Grade
(g/t)
Ounces
(koz)
USA
USA
70.0%
100.0%
941
374
1,315
Chile
100.0%
2,923
2,923
16.1
3.9
12.6
32.1
32.1
486
47
533
3,019
3,019
Russia
Russia
100.0%
100.0%
58
992
22.7
116.6
43
3,717
1,050
111.4
3,760
5,288
43.0
7,312
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2021 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 Dollar: 60.00
Chilean Peso to United States Dollar: 725.00
Brazilian Real to United States Dollar: 4.25
Ghanaian Cedi to United States Dollar: 5.50
Mauritanian Ouguiya to United States Dollar: 35.00
(2)
The Company’s mineral reserve and mineral resource estimates as at December 31, 2021 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 from the definitions in subpart 1300 of Regulation S-K
(“Subpart 1300”), which replaced the United States Securities and Exchange Commission (“SEC”) Industry Guide 7 as part of the SEC’s amendments to its disclosure
rules to modernize the mineral property disclosure requirements. These amendments became effective February 25, 2019 and registrants are required to comply with
the Subpart 1300 provisions by their first fiscal year beginning on or after January 1, 2021. While the definitions in Subpart 1300 are more similar to the definitions
in NI 43-101 and the CIM Definitions Standard than were the Industry Guide 7 provisions due to the adoption in Subpart 1300 of terms describing mineral reserves
and mineral resources that are “substantially similar” to the corresponding terms under the CIM Definition Standards, including the SEC now recognizing estimates
of “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” and amending its definitions of “proven mineral reserves” and
“probable mineral reserves” to be “substantially similar” to the corresponding CIM Definitions, the definitions in Subpart 1300 still differ from the requirements of, and
the definitions in, NI 43-101 and the CIM Definition Standards. U.S. investors are cautioned that while the above terms are “substantially similar” to CIM Definitions,
there are differences in the definitions in Subpart 1300 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 set forth
in Subpart 1300. U.S. investors are also cautioned that while the SEC recognizes “measured mineral resources”, “indicated mineral resources” and “inferred mineral
resources” under Subpart 1300, 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. 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 Subpart 1300 provisions 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 reporting pursuant to the Subpart 1300 provisions, which differ
from the requirements of NI 43-101 and the CIM Definition Standards.
For the above reasons, the mineral reserve and mineral resource estimates and related information in this AIF 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.
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.
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.
Rounding of values to the 000s may result in apparent discrepancies.
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 resources 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.
(4)
(5)
(6)
(7)
(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 50% 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 Manh Choh
assume a $1,400 per ounce gold price and a $20 per ounce silver 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.
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58
2021 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 level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting,
extraction could reasonably be justified. The reference point at which Mineral Reserves are defined, usually the point where the ore
is delivered to the processing plant, must be stated. It is important that, in all situations where the reference point is different, such
as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported.
The public disclosure of a Mineral Reserve must be demonstrated by a Pre-Feasibility Study or Feasibility Study.
A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral
Resource. The confidence in the Modifying Factors applying to a Probable Mineral Reserve is lower than that applying to a Proven
Mineral Reserve.
A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies
a high degree of confidence in the Modifying Factors.
59
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2021 ANNUAL REPORT KINROSS GOLD Summarized Five-Year Review
(in millions, except ounces, per share amounts and per ounce amounts)
Operating results
2021
2020
2019
2018
2017
Attributable production (Au eq. oz.)2,3
2,067,549
2,366,648
2,507,659
2,452,398
2,673,533
Metal sales
Consolidated production cost of sales per equivalent ounce sold3,4
Attributable production cost of sales per equivalent ounce sold*2,3,5
Attributable all-in sustaining cost per equivalent ounce sold*2,3,5
Net earnings (loss) attributable to common shareholders
Adjusted net earnings*5
Net cash flow provided from operating activities
Adjusted operating cash flow*5
Capital expenditures 10
Free cash flow*11
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 attributable
to common shareholders – basic
Adjusted net earnings per share*5
Market
Average realized gold price per ounce12
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
3,729.4
832
828
1,138
221.2
541.3
1,135.2
1,309.9
938.6
196.6
531.5
10,428.1
1,629.9
6,580.9
$
$
$
$
$
$
$
$
$
$
$
$
$
$
4,213.4 $
3,497.3 $
3,212.6 $
3,303.0
726 $
723 $
987 $
1,342.4 $
966.8 $
708 $
706 $
983 $
718.6 $
422.9 $
735 $
734 $
965 $
(23.6) $
128.1 $
1,957.6 $
1,224.9 $
788.7 $
670
669
954
445.4
178.7
951.6
1,912.7 $
1,201.5 $
874.2 $
1,166.7
916.1 $
1,060.2 $
1,005.2 $
1,041.5 $
164.7 $
(216.5) $
879.6
72.0
1,210.9 $
575.1 $
349.0 $
1,025.8
10,933.2 $
9,076.0 $
8,063.8 $
8,157.2
1,923.9 $ 1,837.4 $
1,735.0 $
1,732.6
6,596.5 $
5,318.5 $
4,506.7 $
4,583.6
0.18
$
1.07 $
0.57 $
(0.02) $
0.36
0.43
$
0.77 $
0.34 $
0.10 $
0.14
1,797
$
1,774 $
1,392 $
1,268 $
1,260
2021 Kinross Share Trading Data
TSX (Cdn dollars)
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
NYSE (U.S. dollars)
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
Low
$
$
$
$
$
$
$
$
10.37
10.06
8.40
8.94
8.15
8.34
6.70
7.13
$
$
$
$
$
$
$
$
7.75
7.56
6.56
6.35
6.12
6.10
5.18
4.90
*These figures are non-GAAP financial measures or ratios, as applicable.
Refer to Endnotes on page 65 for further details.
60
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2021 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”,
“Performance Highlights”, “2021 ESG Highlights” 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 or share repurchases; 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 greenhouse gas emissions reduction targets; 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, restarting suspended or disrupted operations; environmental risks and
proceedings; and resolution of pending litigation. The words “advance”, “believe”, “continue”, “estimates”, “expects”, “explore”,
“forecast”, “future”, “growth”, “goal”, “guidance”, “optimize”, “outlook”, “plan”, “potential”, “upside”, 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, 2021, and the Annual Information Form dated March 30, 2021 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 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; water and power supply and continued operation of the tailings
reprocessing facility at Paracatu; permitting and development of the Lobo-Marte project; ramp-up of production at the La Coipa
project; 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 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, 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 the tax code in Mauritania, the European Union’s General Data Protection Regulation
or similar legislation in other jurisdictions, 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), the modification or revocation of Russia’s international tax treaties, 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 Manh Choh 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
61
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2021 ANNUAL REPORT KINROSS GOLD 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) attributable 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 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) potential direct or indirect operational impacts resulting from infectious
diseases or pandemics such as the ongoing COVID-19 pandemic; (17) 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; (18) changes in national and local government
legislation or other government actions, particularly in response to the COVID-19 pandemic; (19) 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, and the ongoing Sunnyside settlement regarding potential liability under the U.S. Comprehensive
Environmental Response, Compensation, and Liability Act); (20) that the benefits of the definitive agreement with the Government
of Mauritania will result in increased stability at the Company’s operations in Mauritania; (21) the Company’s financial results, cash
flows and future prospects being consistent with Company expectations in amounts sufficient to permit sustained dividend
payments; (22) the impacts of the pit wall issues at Round Mountain and carbonaceous material at Bald Mountain being consistent
with the Company’s expectations; (23) the anticipated mineralization of the Dixie Project being consistent with expectations and the
potential benefits to Kinross from the project and any upside from the project; (24) the Company’s estimates regarding the timing
of completion of the 21k and 24k projects; (25) the Company’s ability to identify and implement a transition process, or other
alternative, of its Russian operations in compliance with applicable law and without adverse impacts (including but not limited to
accelerated bankruptcy or expropriation of the Company’s assets). 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 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); price inflation of goods and services; 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,
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62
2021 ANNUAL REPORT KINROSS GOLD 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, 2021, and the Annual Information Form dated March
30, 2021. 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.
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2021 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 $20 impact on attributable
production cost of sales per equivalent ounce sold.13
• Specific to the Russian rouble, a 10% change in the exchange rate would be expected to result in an approximate $25 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 $30 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 attributable 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 attributable 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 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.
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2021 ANNUAL REPORT KINROSS GOLD Endnotes
1 See Kinross Mineral Reserve and Mineral Resource Statement, estimated as at December 31, 2021, in this report.
2 “Attributable” includes Kinross’ share of Chirano (90%) production and costs, and Manh Choh (70%) costs.
3 “Gold equivalent ounces” includes 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 2021 was 71.51:1 (2020 – 86.32:1, 2019 –
85.99:1, 2018 – 80.74:1 and 2017 – 73.72:1).
4 “Consolidated production cost of sales per equivalent ounce sold” is defined as production cost of sales, as reported on
the consolidated statements of operations, divided by total gold equivalent ounces sold.
5 Attributable all-in sustaining cost per equivalent ounce sold, adjusted net earnings attributable to common shareholders,
adjusted operating cash flow, adjusted net earnings per share and attributable production cost of sales per equivalent
ounce sold figures are non-GAAP financial measures or ratios, as applicable, with no standardized meaning under IFRS
and therefore, may not be comparable to similar measures presented by other issuers. For definitions and reconciliations
of these non-GAAP measures and ratios, please refer to Section 11 – Supplemental Information of Kinross’ Management’s
Discussion and Analysis for the year ended December 31, 2021, which section is included within this Annual Report, and the
year ended December 31, 2018, which section is incorporated by reference herein and as filed on the Company’s website at
www.kinross.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
6 Operating cash flow figures in this report represent ‘‘net cash flow provided from operating activities,” as reported on the
consolidated statements of cash flows.
7 “Margins” per equivalent ounce sold is defined as average realized gold price per ounce less consolidated production cost
of sales per equivalent ounce sold.
8 Reported net earnings figures in this report represent “net earnings attributable to common shareholders,” as reported on
the consolidated statements of operations.
9 “Total liquidity” is defined as the sum of cash and cash equivalents, as reported on the consolidated balance sheets, and
available credit under the Company’s credit facilities (as calculated in Section 6 – Liquidity and Capital Resources of Kinross’
Management’s Discussion and Analysis for the year ended December 31, 2021).
10 “Capital expenditures” for the years ended December 31, 2021, 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.
11 “Free cash flow” is a non-GAAP financial measure with no standardized meaning under IFRS and therefore, may not be
comparable to similar measures presented by other issuers. For the definition and reconciliation of free cash flow for the years
ended December 31, 2021, 2020, 2019 and 2018, please refer to, as applicable, Section 11 – Supplemental Information of
Kinross’ Management’s Discussion and Analysis for the year ended December 31, 2021, which section is included within this
Annual Report, and the year ended December 31, 2020, which section is incorporated by reference herein and as filed on the
Company’s website at www.kinross.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. 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.
12 “Average realized gold price per ounce” is defined as gold metal sales divided by the total number of gold ounces sold.
13 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.
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Sustainability ImageTBDCorporate InformationCorporate InformationTransfer Agent and Registrar Computershare Investor Services Inc. Toronto, Ontario, Canada Toll-free: 1-800-564-6253Proxy Solicitation AgentKingsdale Proxy Advisors Toronto, Ontario, CanadaAnnual Meeting of ShareholdersDate: Wednesday, May 11, 2022 Time: 10:00 a.m. EDT Virtual via live webcast at: web.lumiagm.com/468209904 Meeting ID: 468-209-904 Password: kinross2022Legal CounselOsler, Hoskin & Harcourt LLP Toronto, Ontario, CanadaSullivan & Cromwell LLP New York, New York, United StatesAuditorsKPMG LLP Toronto, Ontario, CanadaContact InformationGeneralKinross 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.comInvestor RelationsChris Lichtenheldt, Vice-President, Investor Relations Telephone: 647-821-1736 Email: chris.lichtenheldt@kinross.comMedia RelationsLouie Diaz, Vice-President, Corporate Communications Telephone: 416-369-6469 Email: louie.diaz@kinross.comESGMichal Kowalczyk, Vice-President, ESG Strategy Telephone: 647-788-4150 Email: michal.kowalczyk@kinross.comShareholder InquiriesComputershare Investor Services Inc. 8th Floor, 100 University Avenue Toronto, Ontario, Canada M5J 2Y1 Toll-free: 1-800-564-6253 Toll-free facsimile: 1-888-453-0330PublicationsTo 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 ReportKinross provides a transparent account of its corporate responsibility performance annually. We publish a comprehensive Global Reporting Initiative Report, which is also mapped against the Sustainability Accounting Board Metal and Mining Standards. Read our 2021 Sustainability Report at kinross.com.@KinrossGold KINROSS GOLD CORPORATION
25 York Street, 17th Floor
Toronto, Ontario M5J 2V5
Canada
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