Kinross Tracking Towards High End Of 2017 Production
TORONTO, ON - J. Paul Rollinson, President and CEO of Kinross Gold Corporation said, “The company delivered strong third quarter results, bolstered by outperformance at our two Nevada mines and at Tasiast. We are on target to meet our annual guidance range for the sixth consecutive year, and are tracking towards the high end of our production and the low end of both our cost of sales and all-in sustaining cost guidance. We also generated solid cash flow and maintained one of the best balance sheets. Development at our suite of organic projects continues to proceed well. Tasiast Phase One is on track for full commercial production towards the end of Q2 2018 and engineering at Phase Two is now 25% complete. We also expect to start construction at Tasiast Phase Two, Round Mountain Phase W and the Vantage Complex at Bald Mountain early next year, as initial development work at all three projects is already in progress.
Kinross produced 653,993 attributable Au eq. oz. in Q3 2017, compared with production of 684,129 attributable Au eq. oz. in Q3 2016.
Production cost of sales: Production cost of sales per Au eq. oz.2 decreased to $662 for Q3 2017, compared with $719 for Q3 2016, mainly as a result of lower cost of sales per ounce at Round Mountain in Nevada, Bald Mountain in Nevada, and Fort Knox in Alaska.
At Fort Knox, production increased compared with Q2 2017 mainly due to more ore processed and ounces recovered from the heap leach, but decreased slightly compared with Q3 2016 primarily due to lower tonnes placed on the heap leach pad. Cost of sales per ounce was largely in line with Q2 2017 and was lower compared with Q3 2016 mainly as a result of a decrease in operating waste mined and lower contractor costs as the site began to transition more of its maintenance function to self-perform.
Kinross' Nevada operations outperformed during the quarter as both Round Mountain and Bald Mountain increased production and lowered cost of sales per ounce quarter-over-quarter and year-over-year. Round Mountain increased production by 30% over Q3 2016 mainly due to the highest mill grades since 2003, the year Kinross first started operating the mine. Production increased quarter-over-quarter mainly due to higher mill grades and recoveries. The high mill grade was also the main driver for the decrease in cost of sales per ounce, which was at its lowest level in five years. Lower labour and contractor costs also contributed to the 25% reduction in cost of sales per ounce compared with Q3 2016. Bald Mountain achieved record production during the quarter and continues to be on track to double annual production for 2017 compared with full-year 2016. Production increased compared with Q2 2017 and Q3 2016 mainly due to higher grades and a significant increase of tonnes placed on the heap leach pads. Cost of sales per ounce decreased compared with Q2 2017 and Q3 2016 mainly due to higher grades and more gold equivalent ounces sold. Additionally, maintenance costs decreased compared with Q3 2016.
Kettle River-Buckhorn in Washington produced approximately 17,000 gold equivalent ounces from its stockpiles during the quarter, as the last batch of ore was hauled from Buckhorn in July. Reclamation is now well underway at the site and exploration is continuing in the region. At Paracatu in Brazil, production was lower quarter-over-quarter and year-over-year due to the temporary curtailment of mining and Plant 2 operations as a result of lower than average rainfall in the region. The curtailment of mining and Plant 2 began in early July and continued through October, with Plant 1 running intermittently during that month mainly due to the slow start of this year's rainy season. The decrease was partly mitigated by production from the tailings reprocessing at Plant 1, which was higher than expected. Cost of sales per ounce was higher due to the reduction in production and gold equivalent ounces sold. Mining and processing activities re-started in early November at Paracatu, as the area received sufficient rainfall in late October. Paracatu is expected to resume normal production in Q4 as sufficient water becomes available. The Company continues to advance its water mitigation efforts to prepare for potential lower rainfall levels going forward. These efforts include securing ground water rights and installation of wells around the site.
In Russia, the region performed well in Q3 2017 with production from Kupol and Dvoinoye largely in line with Q2 2017. Production decreased compared with Q3 2016 mainly due to anticipated lower grades. Cost of sales per ounce was lower compared with Q2 2017 primarily as a result of lower fuel and maintenance costs and continued to be among the lowest in Kinross' portfolio. Cost of sales per ounce increased year-over-year mainly due to the lower grades, higher operating waste mined and unfavorable foreign exchange rates.
Tasiast In Africa performed well during the quarter, as production increased 10% compared with Q2 2017 primarily due to strong mill grades, the highest since 2010, and more tonnes processed from the dump leach. Cost of sales per ounce was lower compared with Q2 2017 mainly due to the higher grades and an increase in gold equivalent ounces sold. Production was higher and cost of sales per ounce lower compared with Q3 2016 due to higher mill grades and the impact of the temporary suspension of mining last year. And in Africa at Chirano, production was higher compared with Q2 2017 and Q3 2016 mainly due to, respectively, better mill performance as a result of a more stable supply of electricity from the country's power grid, and higher grades. Cost of sales per ounce was lower quarter-over-quarter mainly as a result of less operating waste mined and lower mining costs due to the cessation of open pit mining. Cost of sales per ounce was lower year-over-year mainly due to lower overhead and energy costs.