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Kinross reports 2016 fourth-quarter and full-year results

15.02.2017  |  Marketwired

Company achieves fifth straight year of meeting or exceeding production and cost guidance; 2016 operating cash flow up 32% to $1.1 billion year-over-year


TORONTO, ON--(Marketwired - February 15, 2017) - Kinross Gold Corp. (TSX: K) (NYSE: KGC) today announced its results for the fourth-quarter and year-end December 31, 2016.

(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 19 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)

2016 fourth-quarter highlights:

  • Production1: 746,291 gold equivalent ounces (Au eq. oz.), compared with 623,716 Au eq. oz. in Q4 2015.
  • Revenue: $902.8 million, compared with $706.2 million in Q4 2015.
  • Production cost of sales2: $712 per Au eq. oz., compared with $688 in Q4 2015.
  • All-in sustaining cost2: $1,012 per Au eq. oz. sold, compared with $991 in Q4 2015. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $1,010 in Q4 2016, compared with $988 in Q4 2015.
  • Adjusted operating cash flow2: $211.6 million, compared with $203.8 million in Q4 2015.
  • Operating cash flow: $302.6 million, compared with $182.2 million in Q4 2015.
  • Adjusted net loss2,3: $50.9 million, or $0.04 per share, compared with an adjusted loss of $68.8 million, or $0.06 per share, in Q4 2015.
  • Reported net loss3: $116.5 million, or $0.09 per share, compared with a reported loss of $841.9 million, or $0.73 per share, for Q4 2015.

2016 full-year highlights:

  • Production1: record 2,789,150 Au eq. oz., compared with 2,594,652 Au eq. oz. for full-year 2015.
  • Revenue: $3,472.0 million, compared with $3,052.2 million for full-year 2015.
  • Production cost of sales2: $712 per Au eq. oz., compared with $696 for full-year 2015.
  • All-in sustaining cost2: $984 per Au eq. oz. sold, compared with $975 for full-year 2015. All-in sustaining cost per Au oz. sold on a by-product basis was $975 for full-year 2016, compared with $971 per Au oz. sold for full-year 2015.
  • Adjusted operating cash flow2: $926.7 million, compared with $786.6 million for full-year 2015.
  • Operating cash flow: $1,099.2 million, compared with $831.6 million for full-year 2015.
  • Adjusted net earnings (loss)2,3: earnings of $93.0 million, or $0.08 per share, compared with an adjusted net loss of $91.0 million, or $0.08 per share, for full-year 2015.
  • Reported net loss3: $104.0 million, or $0.08 per share, compared with a reported loss of $984.5 million, or $0.86 per share, for full-year 2015.
  • Capital expenditures: $633.8 million, compared with $610.0 million for full-year 2015.
  • Balance sheet: The Company ended the year with cash and cash equivalents of $827.0 million, total liquidity of approximately $2.3 billion, and no debt maturities until 2020.

2017 outlook:

  • 2017 Outlook: Kinross expects to produce 2.5 - 2.7 million Au eq. oz. at a production cost of sales per Au eq. oz. of $660 - $720 and an all-in sustaining cost per Au eq. oz. of $925 - $1,025. Total capital expenditures are forecast to be approximately $900 million (+/- 5%), which includes sustaining capital of $420 million, in-line with previous levels, and non-sustaining capital of approximately $455 million to advance development projects, including Tasiast.

1 Unless otherwise stated, production figures in this news release are based on Kinross' 90% share of Chirano production.
2 These figures are non-GAAP financial measures and are defined and reconciled on pages 14 to 18 of this news release.
3 Net earnings/loss figures in this release represent "net earnings (loss) from continuing operations attributable to common shareholders".

CEO Commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to 2016 fourth-quarter and year-end results:

"Kinross ended 2016 on a strong note, establishing a new record of almost 2.8 million Au eq. oz. for full-year gold production, and meeting our annual guidance on production, costs, and capital expenditures for the fifth straight year. We generated operating cash flow of $1.1 billion for the full year, a 32% increase over the previous year, and improved our adjusted net earnings by more than $180 million.

"We are forecasting another year of solid production in 2017, with costs expected to be consistent with 2016 levels. We are making excellent progress advancing our development projects at Tasiast and Bald Mountain, and continue to advance attractive organic development opportunities at other sites. With cash and cash equivalents of $827 million at year-end, and total liquidity of approximately $2.3 billion, we have the balance sheet strength and financial flexibility to fund these organic opportunities and secure strong, steady production and cash flow in the years ahead.

"With an impressive operational track record, one of the strongest balance sheets in the industry, and exciting organic development opportunities, we believe Kinross continues to offer compelling relative value for shareholders." €‹

Financial results

Summary of financial and operating results

    Three months ended     Years ended  
    December 31,     December 31,  
(in millions, except ounces, per share amounts, and per  ounce amounts)   2016     2015     2016     2015  
Operating Highlights                                
Total gold equivalent ounces(a)                                
  Produced(c)     752,501       629,528       2,810,345       2,620,262  
  Sold(c)     743,427       638,040       2,778,902       2,634,867  
                                 
Attributable gold equivalent ounces(a)                                
  Produced(c)     746,291       623,716       2,789,150       2,594,652  
  Sold(c)     738,087       632,411       2,758,306       2,608,870  
                                 
Financial Highlights                                
Metal sales   $ 902.8     $ 706.2     $ 3,472.0     $ 3,052.2  
Production cost of sales   $ 529.4     $ 439.4     $ 1,983.8     $ 1,834.8  
Depreciation, depletion and amortization   $ 237.8     $ 235.0     $ 855.0     $ 897.7  
Impairment charges   $ -     $ 674.5     $ 139.6     $ 699.0  
Operating earnings (loss)   $ (35.6 )   $ (717.3 )   $ 46.3     $ (742.9 )
Net loss attributable to common shareholders   $ (116.5 )   $ (841.9 )   $ (104.0 )   $ (984.5 )
Basic loss per share attributable to common  shareholders   $ (0.09 )   $ (0.73 )   $ (0.08 )   $ (0.86 )
Diluted loss per share attributable to common  shareholders   $ (0.09 )   $ (0.73 )   $ (0.08 )   $ (0.86 )
Adjusted net earnings (loss) attributable to common  shareholders(b)   $ (50.9 )   $ (68.8 )   $ 93.0     $ (91.0 )
Adjusted net earnings (loss) per share(b)   $ (0.04 )   $ (0.06 )   $ 0.08     $ (0.08 )
Net cash flow provided from operating activities   $ 302.6     $ 182.2     $ 1,099.2     $ 831.6  
Adjusted operating cash flow(b)   $ 211.6     $ 203.8     $ 926.7     $ 786.6  
Average realized gold price per ounce   $ 1,217     $ 1,108     $ 1,249     $ 1,159  
Consolidated production cost of sales per equivalent  ounce(c)sold(b)   $ 712     $ 689     $ 714     $ 696  
Attributable(a)  production cost of sales per  equivalent ounce(c)sold(b)   $ 712     $ 688     $ 712     $ 696  
Attributable(a)  production cost of sales per  ounce sold on a by-product basis(b)   $ 701     $ 676     $ 696     $ 684  
Attributable(a)  all-in sustaining cost per  ounce sold on a by-product basis(b)   $ 1,010     $ 988     $ 975     $ 971  
Attributable(a)  all-in sustaining cost per  equivalent ounce(c)sold(b)   $ 1,012     $ 991     $ 984     $ 975  
Attributable(a)  all-in cost per ounce sold  on a by-product basis(b)   $ 1,192     $ 1,055     $ 1,073     $ 1,047  
Attributable(a)  all-in cost per equivalent  ounce(c)sold(b)   $ 1,189     $ 1,055     $ 1,079     $ 1,049  
     
(a)   "Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%) production.
(b)   The definition and reconciliation of these non-GAAP  financial measures is included onpage  14 to 18 of this news release.
(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 the fourth quarter of 2016 was 70.88:1, compared with 74.78:1 for  the fourth quarter of 2015; year to date 2016 was 72.95:1 compared with  73.92:1 for 2015.
     

The following operating and financial results are based on fourth-quarter and year-end 2016 gold equivalent production. Production and cost measures are on an attributable basis:

Production: Kinross produced 746,291 attributable Au eq. oz. in the fourth quarter of 2016, an increase compared with the fourth quarter of 2015, mainly due to the acquisition of Bald Mountain and the remaining 50% of Round Mountain that the Company did not already own.

Kinross produced 2,789,150 attributable Au eq. oz. for full-year 2016, which was within the Company's 2016 guidance range. This compares with 2,594,652 ounces for full-year 2015. The 7% year-over-year increase was primarily due to the acquisition described above.

Production cost of sales: Production cost of sales per Au eq. oz.2 was $712 for the fourth quarter of 2016, compared with $688 for the fourth quarter of 2015, largely due to a higher per ounce cost at Round Mountain and Paracatu, and higher cost ounces from Bald Mountain. Production cost of sales per Au oz. on a by-product basis2 was $701 in Q4 2016, compared with $676 in Q4 2015, based on Q4 2016 attributable gold sales of 718,343 ounces and attributable silver sales of 1,399,445 ounces.

Production cost of sales per Au eq. oz. was $712 for full-year 2016, which was within the Company's 2016 guidance range. This compares with production cost of sales of $696 per Au eq. oz. for full-year 2015. The full-year increase was mainly due to higher costs per ounce at Fort Knox and Chirano, and higher cost ounces from Bald Mountain. Production cost of sales per Au oz. on a by-product basis was $696 for full-year 2016, compared with $684 for full-year 2015, based on 2016 full-year attributable1 gold sales of 2,677,367 ounces and attributable silver sales of 5,909,364 ounces.

All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold2 was $1,012 in Q4 2016, compared with $991 in Q4 2015, mainly due to higher production cost of sales. All-in sustaining cost per Au oz. sold on a by-product basis2 was $1,010 in Q4 2016, compared with $988 in Q4 2015.

All-in sustaining cost per Au eq. oz. sold was $984 for full-year 2016, compared with $975 for full-year 2015, which was within the Company's 2016 guidance range. The year-over-year increase was mainly due to higher production cost of sales and higher capital expenditures. All-in sustaining cost per Au oz. sold on a by-product basis was $975 for full-year 2016, compared with $971 for full-year 2015.

Revenue: Revenue from metal sales was $902.8 million in the fourth quarter of 2016, compared with $706.2 million during the same period in 2015, due to higher gold sales and a higher average realized gold price.

Revenue was $3,472.0 million for full-year 2016, compared with $3,052.2 million for full-year 2015, due to higher gold sales and a higher average realized gold price.

Average realized gold price: The average realized gold price in Q4 2016 increased to $1,217 per ounce, compared with $1,108 per ounce in Q4 2015. The average realized gold price per ounce increased to $1,249 for full-year 2016, compared with $1,159 per ounce for full-year 2015.

Margins: Kinross' attributable margin per Au eq. oz. sold4 was $505 per Au eq. oz. for the fourth quarter of 2016, compared with the Q4 2015 margin of $420 per Au eq. oz. Full-year margin per Au eq. oz. was $537, compared with $463 for full-year 2015.

Operating cash flow: Adjusted operating cash flow2 was $211.6 million for the fourth quarter of 2016, compared with $203.8 million for Q4 2015. Adjusted operating cash flow for full-year 2016 was $926.7 million, compared with $786.6 million for full-year 2015.

Net operating cash flow was $302.6 million for the fourth quarter of 2016, compared with $182.2 million for Q4 2015. Operating cash flow for full-year 2016 was $1,099.2 million, compared with $831.6 million for full-year 2015.

Earnings/loss: Adjusted net loss2,3 was $50.9 million, or $0.04 per share, for Q4 2016, compared with an adjusted net loss of $68.8 million, or $0.06 per share, for Q4 2015. Full-year 2016 adjusted net earnings were $93.0 million, or $0.08 per share, compared with an adjusted net loss of $91.0 million, or $0.08 per share, for full-year 2015.

Reported net loss3 was $116.5 million, or $0.09 per share, for Q4 2016, compared with a loss of $841.9 million, or $0.73 per share, in Q4 2015. Full-year 2016 reported net loss was $104.0 million, or $0.08 per share, compared with a loss of $984.5 million, or $0.86 per share, for full-year 2015. The reported loss has significantly decreased due to lower impairment charges.

Capital expenditures: Capital expenditures increased to $226.5 million for Q4 2016, compared with $160.7 million for the same period last year, due mainly to increased spending at Tasiast and Bald Mountain.

Capital expenditures for full-year 2016 were $633.8 million, an increase compared with $610.0 million for 2015, primarily due to increased spending resulting from the Tasiast Phase One development and the acquisition of Bald Mountain and 50% of Round Mountain. Capital expenditures were below the Company's original guidance of $755 million, mainly due to deferred spending at Tasiast.

4 Attributable margin per equivalent ounce sold is a non-GAAP measure defined as "average realized gold price per ounce" less "attributable production cost of sales per gold equivalent ounce sold."

Balance sheet

As of December 31, 2016, Kinross had cash and cash equivalents of $827.0 million, compared with $1,043.9 million on December 31, 2015. The decrease was mainly a result of net cash used in the Nevada asset acquisition, capital expenditures, and debt repayment, partially offset by operating cash flow and net proceeds received from the equity issuance in 2016.

The Company has available credit of $1,430.4 million as of year-end 2016, for total liquidity of $2,257.4 million.

Kinross repaid $250 million in senior notes in September 2016, and has no debt maturities until 2020. With a strong balance sheet and excellent liquidity, the Company is well-positioned to fund its pipeline of organic development opportunities.

Operating results
Mine-by-mine summaries for 2016 fourth-quarter and full-year operating results may be found on pages nine and 13 of this news release. Highlights include the following:

Americas

The Americas region, which represented 60% of Kinross' production in 2016, performed well and met its production guidance range for the year. The 22% year-over-year increase in regional production was mainly a result of the acquisition of Bald Mountain and the 50% of Round Mountain the Company did not already own.

At Fort Knox, full-year production increased slightly compared with 2015 mainly as a result of record production from the heap leach, partially offset by lower mill grades. At Round Mountain, full-year production increased mainly as a result of the acquisition noted above, and higher grades and recoveries from the mill. Bald Mountain's production increased progressively over the year as a result of higher grades and an increased amount of ore placed on the leach pads. Kettle River-Buckhorn continued to perform well, despite nearing the end of its mine life, which is expected in Q1 2017. The mine increased its full-year production compared with 2015 mainly as a result of higher grades and mill recoveries, as successful drilling results allowed the operation to extend mine life. At Paracatu, full-year production was higher compared with 2015 mainly as a result of gold recovered from the Santo Antonio tailings reprocessing initiative, which produced approximately 74,200 Au eq. oz. in 2016, partially offset by lower mill recoveries. At Maricunga, production was lower year-over-year due to the suspension of mining operations in the third quarter of 2016.

In the fourth quarter, regional production was higher compared with Q3 2016 mainly as a result of increased production at Paracatu and Bald Mountain. Paracatu's increased production quarter-over-quarter is mainly due to a return to a full quarter of operations following the temporary curtailment of production in Q3 due to lack of rainfall.

The region ended the year within its production cost of sales per ounce guidance range for 2016. Fort Knox's full-year cost of sales per ounce was higher compared with the previous year mainly due to a higher percentage of operating waste mined. Kettle River-Buckhorn cost of sales per ounce for 2016 decreased compared with 2015 primarily due to lower labour and contractor costs. Paracatu cost of sales per ounce decreased versus 2015 mainly due to favourable foreign exchange movements net of currency hedges. Maricunga cost of sales per ounce decreased compared with 2015 as a result of higher than expected ounces recovered. During the quarter, cost of sales per ounce for the region was lower compared with the previous quarter, mainly as a result of decreases at Maricunga and Kettle River.

Russia

The region outperformed both its production and cost guidance ranges for the year, with production higher than the top end of its guidance and production cost of sales per ounce $19 below the low end of its guidance.

The combined full-year production at Kupol and Dvoinoye was lower compared with 2015 mainly as a result of lower grades at Dvoinoye, which were anticipated, and were partially offset by higher mill throughput. During the fourth quarter, production increased compared with Q3 2016 largely due to higher grades.

Full-year cost of sales per ounce was lower compared with the previous year mainly as a result of a decrease in labour and fuel costs due to favourable foreign exchange movements and lower maintenance costs. Cost of sales per ounce in Q4 2016 was lower compared with the previous quarter mainly due to higher grades.

The filter cake plant at Kupol is currently in commissioning, with construction now completed. The plant allows for tailings storage of the current mineral reserve estimate, and flexibility to permit additional storage for potential mine life extensions.

West Africa

The region performed well during the year, coming within its production guidance range despite temporary mining stoppages at Tasiast and the transition to the Paboase underground deposit at Chirano.

Tasiast full-year production was lower compared with 2015 mainly due to the temporary six-week suspension of mining. At Chirano, full-year production was lower compared with 2015 mainly due to lower grades as the site transitioned to mining the Paboase deposit. Both mines performed well in Q4 2016, with Tasiast substantially increasing production compared with Q3 2016 mainly due to higher grades and full quarterly production. Chirano production in Q4 2016 was up slightly compared with the previous quarter, as the site continued to mine higher grades and larger volumes at Paboase compared with the first half of 2016.

Full-year cost of sales per ounce at Tasiast was higher compared with the previous year mainly as a result of lower grades. Full-year cost of sales per ounce at Chirano was higher compared with 2015 mainly due to an increase in costs for power and lower grades. During the fourth quarter, Tasiast cost of sales was lower compared with Q3 2016 mainly as a result of higher grades. At Chirano, cost of sales per ounce in Q4 2016 decreased versus Q3 2016 mainly as a result of lower power costs and higher grades.

In late January, Tasiast was certified in full compliance under the International Cyanide Management Code, a voluntary code that focuses on the safe manufacture, transportation, storage, use and decommissioning of cyanide and associated facilities used for the production of gold. The Code was developed by the international mining industry under the guidance of the United Nations Environment Program with the goal of ensuring the responsible management of cyanide used in gold mining by protecting human health and the environment. Kinross was one of the original signatory companies, and all of the Company's operations around the world are now certified under the Code.

Outlook
The following section of the news release represents forward-looking information and users are cautioned that actual results may vary. We refer to the risks and assumptions contained in the Cautionary Statement on Forward-Looking Information on page 19 of this news release.

In 2017, Kinross expects to produce 2.5 - 2.7 million Au eq. oz. from its operations, which is consistent with the Company's average production over the past five years.

The forecast decrease compared with full-year 2016 production is mainly a result of the suspension of mining activities at Maricunga, the anticipated lower grades at the Russia operations due to mine sequencing, and the expected closure of Kettle River-Buckhorn in Q1 2017, partially offset by significantly higher forecast production at Bald Mountain, and expected increases from the West Africa region. Production guidance once again takes into consideration the potential for a temporary curtailment of mill operations at Paracatu due to the possibility of seasonal rainfall shortages in south central Brazil.

Production in the second half of 2017 is expected to be higher compared with the first half of the year, mainly due to the seasonal impact of the heap leaches at Fort Knox and Round Mountain, and the significantly higher production expected at Bald Mountain in Q4 2017 due to mine sequencing and a lag from the heap leach.

Production cost of sales per Au eq. oz. is expected to be in the range of $660 - $720 for 2017, the mid-point of which is lower compared with full-year 2016 production cost of sales of $712 per Au eq. oz. Lower production in the first half of 2017 is expected to result in higher production costs compared with the second half of 2017.

The Company has forecast an all-in sustaining cost of $925 - $1,025 per ounce sold on both a gold equivalent and by-product basis for 2017. The mid-point of the all-in sustaining cost guidance range is lower compared with 2016 all-in sustaining cost of sales of $984 per Au eq. oz.

The table below summarizes the 2017 forecasts for production and average production cost of sales on a gold equivalent and a by-product accounting basis:

     

Accounting basis
 
2017 (forecast)
Gold equivalent basis    
  Production (Au eq. oz.)   2.5 - 2.7 million
  Average production cost of sales per Au eq. oz.   $660 - $720
  All-in sustaining cost per Au eq. oz.   $925 - $1,025
By-product  basis    
  Gold ounces   2.4 - 2.6 million
  Silver ounces   4.9 - 5.3 million
  Average production cost of sales per Au oz.   $650 - $710
     

The following table provides a summary of the 2017 production and production cost of sales forecast by region:

             
Region   Forecast 2017 production
(Au eq. oz.)
  Percentage of total forecast production5   Forecast 2017 production cost of sales
($ per Au eq. oz.)
Americas   1.52- 1.63 million   61%   $680 - $750
West Africa (attributable)*   420,000 - 470,000   17%   $740 - $820
Russia   560,000 - 600,000   22%   $520 - $570
Total   2.5 - 2.7 million   100%   $660 - $720
*Based on Kinross' 90% share of Chirano
 

Material assumptions used to forecast 2017 production cost of sales are as follows:

  • a gold price of $1,200 per ounce,
  • a silver price of $16 per ounce,
  • an oil price of $60 per barrel,
  • foreign exchange rates of:
    • 3.25 Brazilian real to the U.S. dollar,
    • 1.25 Canadian dollars to the U.S. dollar,
    • 60 Russian rubles to the U.S. dollar,
    • 630 Chilean pesos to the U.S. dollar,
    • 4.00 Ghanaian cedi to the U.S. dollar,
    • 330 Mauritanian ouguiya to the U.S. dollar, and
    • 1.10 U.S. dollars to the Euro.

5 The percentages are calculated based on the mid-point of regional 2017 forecast production.

Taking into account existing currency and oil hedges:

  • a 10% change in foreign currency exchange rates would be expected to result in an approximate $15 impact on production cost of sales per ounce;
  • specific to the Russian ruble, a 10% change in the exchange rate would be expected to result in an approximate $16 impact on Russian production cost of sales per ounce;
  • specific to the Brazilian real, a 10% change in the exchange rate would be expected to result in an approximate $32 impact on Brazilian production cost of sales per ounce;
  • a $10 per barrel change in the price of oil would be expected to result in an approximate $2 impact on production cost of sales per ounce;
  • a $100 change in the price of gold would be expected to result in an approximate $4 impact on production cost of sales per ounce as a result of a change in royalties.

Total capital expenditures for 2017 are forecast to be approximately $900 million (including capitalized interest of approximately $25 million) and are summarized in the table below:

             
Region  
Forecast 2017
sustaining capital
(million)
  Forecast 2017
non-sustaining capital
(million)
  Total forecast capital
(million)
Americas   $295   $65   $360
West  Africa   $80   $375   $455
Russia   $40   $15   $55
Corporate   $5   $0   $5
Total   $420   $455   $875
Capitalized  interest           $25
TOTAL           $900
             

Sustaining capital includes the following forecast spending estimates:

  • Mine development: $75 million (Americas); $30 million (Russia)
  • Mobile equipment: $70 million (Americas); $20 million (West Africa); $10 million (Russia)
  • Tailings facilities: $65 million (Americas); $15 million (West Africa)
  • Leach facilities: $50 million (Americas)
  • Mill facilities: $30 million (Americas); $10 million (West Africa)

Non-sustaining capital includes the following forecast spending estimates:

  • Tasiast Project: $215 million
  • Development projects and other: $125 million
  • Tasiast West Branch stripping: $115 million

The 2017 forecast for exploration is approximately $70 million, none of which is expected to be capitalized, with 2017 overhead (general and administrative and business development expenses) forecast to be approximately $165 million, both of which are consistent with last year's guidance. Other operating costs expected to be incurred in 2017 are approximately $60 million, which includes approximately $30 million of care and maintenance costs in Chile.

Based on our assumed gold price and other inputs, net income tax expense is expected to be $90 million and taxes paid are expected to be $150 million, with both increasing at 26% of any profit resulting from higher gold prices. Depreciation, depletion and amortization is forecast to be approximately $350 per Au eq. oz.

Conference call details

In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, February 16, 2017 at 8 a.m. ET to discuss the results, followed by a question-and-answer session. To access the call, please dial:

Canada & US toll-free - 1-800-319-4610
Outside of Canada & US - 1-604-638-5340
UK toll-free: 0808-101-2791

Replay (available up to 14 days after the call):

Canada & US toll-free - 1-800-319-6413; Passcode - 00179 followed by #.
Outside of Canada & US - 1-604-638-9010; Passcode - 00179 followed by #.

You may also access the conference call on a listen-only basis via webcast at our website www.kinross.com. The audio webcast will be archived on our website at www.kinross.com.

This release should be read in conjunction with Kinross' 2016 year-end Financial Statements and Management's Discussion and Analysis report at www.kinross.com. Kinross' 2016 year-end Financial Statements and Management's Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished with the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.

About Kinross Gold Corporation

Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross maintains listings on the Toronto Stock Exchange (TSX: K) and the New York Stock Exchange (NYSE: KGC).

Review of operations

                                             
Three months ended December 31,   Gold  equivalent ounces                      
    Produced     Sold     Production  cost of sales  ($millions)     Production  cost of sales/equivalent ounce sold
    2016     2015     2016     2015     2016     2015     2016   2015
                                                     
Fort Knox   114,427     87,561     115,101     87,426     $ 82.8     $ 62.6     $ 719   $ 716
Round Mountain   99,310     51,034     107,313     52,882       86.6       37.0       807     700
Bald Mountain   44,343     -     34,585     -       44.5       -       1,287     -
Kettle River - Buckhorn   30,690     19,301     30,862     19,601       15.5       14.6       502     745
Paracatu   124,975     113,547     127,576     117,796       101.5       89.2       796     757
Maricunga   32,899     54,948     33,360     56,440       17.8       52.6       534     932
Americas Total   446,644     326,391     448,797     334,145       348.7       256.0       777     766
                                                     
Kupol   180,023     191,308     179,912     195,465       80.8       91.3       449     467
Russia Total   180,023     191,308     179,912     195,465       80.8       91.3       449     467
                                                     
Tasiast   63,728     53,706     61,318     52,146       58.7       49.9       957     957
Chirano (100%)   62,106     58,123     53,400     56,284       41.2       42.2       772     750
West Africa Total   125,834     111,829     114,718     108,430       99.9       92.1       871     849
                                                     
Operations Total   752,501     629,528     743,427     638,040       529.4       439.4       712     689
Less Chirano non-controlling  interest (10%)   (6,210 )   (5,812 )   (5,340 )   (5,629 )     (4.1 )     (4.2 )            
Attributable Total   746,291     623,716     738,087     632,411     $ 525.3     $ 435.2     $ 712   $ 688
                                                     
 
                                             
Years ended
December 31,
  Gold  equivalent ounces                      
    Produced     Sold     Production  cost of sales  ($millions)     Production  cost of sales/equivalent ounce sold
    2016     2015     2016     2015     2016     2015     2016   2015
                                                     
Fort Knox   409,844     401,553     408,059     402,104     $ 302.2     $ 252.8     $ 741   $ 629
Round Mountain   378,264     197,818     377,910     195,781       292.0       146.9       773     750
Bald Mountain   130,144     -     111,464     -       131.7       -       1,182     -
Kettle River - Buckhorn   112,274     97,368     112,038     97,576       73.0       81.6       652     836
Paracatu   483,014     477,662     482,827     484,732       346.4       374.3       717     772
Maricunga   175,532     212,155     175,670     214,055       145.2       216.1       827     1,010
Americas Total   1,689,072     1,386,556     1,667,968     1,394,248       1,290.5       1,071.7       774     769
                                                     
Kupol   734,143     758,563     736,001     764,613       324.3       362.8       441     474
Russia Total   734,143     758,563     736,001     764,613       324.3       362.8       441     474
                                                     
Tasiast   175,176     219,045     168,969     216,040       179.3       220.6       1,061     1,021
Chirano (100%)   211,954     256,098     205,964     259,966       189.7       179.7       921     691
West Africa Total   387,130     475,143     374,933     476,006       369.0       400.3       984     841
                                                     
Operations Total   2,810,345     2,620,262     2,778,902     2,634,867       1,983.8       1,834.8       714     696
Less Chirano non-controlling  interest (10%)   (21,195 )   (25,610 )   (20,596 )   (25,997 )     (19.0 )     (18.0 )            
Attributable Total   2,789,150     2,594,652     2,758,306     2,608,870     $ 1,964.8     $ 1,816.8     $ 712   $ 696
 

Consolidated balance sheets

(expressed in millions of  United States dollars, except share amounts)            
             
    As  at  
    December  31,     December  31,  
    2016     2015  
                 
Assets                
  Current assets                
    Cash and cash equivalents   $ 827.0     $ 1,043.9  
    Restricted cash     11.6       10.5  
    Accounts receivable and  other assets     127.3       108.2  
    Current income tax  recoverable     111.9       123.3  
    Inventories     986.8       1,005.2  
    Unrealized fair value of derivative  assets     16.1       1.0  
      2,080.7       2,292.1  
  Non-current assets                
    Property, plant and  equipment     4,917.6       4,593.7  
    Goodwill     162.7       162.7  
    Long-term investments     142.9       83.1  
    Investments in associate  and joint ventures     163.6       157.1  
    Unrealized fair value of  derivative assets     6.0       -  
    Other long-term assets     411.3       370.2  
    Deferred tax assets     94.5       76.5  
Total assets   $ 7,979.3     $ 7,735.4  
                 
Liabilities                
  Current liabilities                
    Accounts payable and  accrued liabilities   $ 464.8     $ 379.6  
    Current income tax payable     72.6       6.4  
    Current portion of  long-term debt     -       249.5  
    Current portion of  provisions     93.2       50.3  
    Current portion of  unrealized fair value of derivative liabilities     7.1       16.0  
      637.7       701.8  
  Non-current liabilities                
    Long-term debt     1,733.2       1,731.9  
    Provisions     861.2       720.8  
    Other long-term  liabilities     172.2       148.7  
    Deferred tax  liabilities     390.7       499.0  
Total liabilities     3,795.0       3,802.2  
                 
Equity                
  Common shareholders' equity                
    Common share capital   $ 14,894.2     $ 14,603.5  
    Contributed surplus     238.3       239.2  
    Accumulated deficit     (11,026.1 )     (10,922.1 )
    Accumulated other  comprehensive income (loss)     39.1       (31.3 )
Total common shareholders' equity     4,145.5       3,889.3  
  Non-controlling interest     38.8       43.9  
Total equity     4,184.3       3,933.2  
Total liabilities and equity   $ 7,979.3     $ 7,735.4  
                 
Common shares                
  Authorized     Unlimited       Unlimited  
  Issued and outstanding     1,245,049,712       1,146,540,188
 
                   

Consolidated statements of operations

(expressed in millions of  United States dollars, except per share and share amounts)  
    Years  ended  
    December 31,     December 31,  
    2016     2015  
                 
Revenue                
  Metal sales   $ 3,472.0     $ 3,052.2  
                 
Cost of sales                
  Production  cost of sales     1,983.8       1,834.8  
  Depreciation, depletion and amortization     855.0       897.7  
  Impairment  charges     139.6       699.0  
Total cost of sales     2,978.4       3,431.5  
Gross profit (loss)     493.6       (379.3 )
  Other  operating expense     209.3       76.2  
  Exploration  and business development     94.3       108.0  
  General and  administrative     143.7       179.4  
Operating earnings (loss)     46.3       (742.9 )
  Other income (expense) - net     22.5       (20.3 )
  Equity in  earnings (losses) of associate and joint ventures     (1.2 )     3.2  
  Finance income     7.5       8.3  
  Finance  expense     (134.6 )     (96.0 )
Loss before tax     (59.5 )     (847.7 )
  Income tax  expense - net     (49.6 )     (141.7 )
Net loss   $ (109.1 )   $ (989.4 )
Net loss attributable to:                
  Non-controlling interest   $ (5.1 )   $ (4.9 )
  Common shareholders   $ (104.0 )   $ (984.5 )
Loss per share attributable to  common shareholders                
                 
  Basic   $ (0.08 )   $ (0.86 )
  Diluted   $ (0.08 )   $ (0.86 )
                 
Weighted average number of  common shares outstanding  (millions)                
  Basic     1,227.0       1,146.0  
  Diluted     1,227.0       1,146.0  
                   

Consolidated statements of cash flows

(expressed in millions of  United States dollars)            
    Years  ended  
    December 31,     December 31,  
    2016     2015  
Net inflow (outflow) of cash  related to the following activities:                
                 
Operating:                
Net loss   $ (109.1 )   $ (989.4 )
Adjustments to reconcile net loss to net  cash provided from operating activities:                
  Depreciation, depletion and amortization     855.0       897.7  
  Impairment charges     139.6       699.0  
  Impairment of  investments                
  Equity in  losses (earnings) of associate and joint ventures     1.2       (3.2 )
  Share-based  compensation expense     13.5       17.1  
  Finance  expense     134.6       96.0  
  Deferred tax expense (recovery)     (149.7 )     53.0  
  Foreign exchange losses  and other     14.4       24.3  
  Reclamation expense (recovery)     27.2       (7.9 )
  Changes in  operating assets and liabilities:                
    Accounts  receivable and other assets     (21.2 )     91.0  
    Inventories     79.5       63.5  
    Accounts  payable and accrued liabilities     239.9       27.9  
Cash flow provided from operating  activities     1,224.9       969.0  
  Income taxes  paid     (125.7 )     (137.4 )
Net cash flow provided from  operating activities     1,099.2       831.6  
                 
Investing:                
  Additions to  property, plant and equipment     (633.8 )     (610.0 )
  Business  acquisition     (588.0 )     -  
  Net additions  to long-term investments and other assets     (59.8 )     (59.7 )
  Net proceeds  from the sale of property, plant and equipment     9.1       3.3  
  Decrease (increase) in restricted cash     (1.1 )     30.8  
  Interest  received and other     3.5       4.0  
Net cash flow used in investing  activities     (1,270.1 )     (631.6 )
Financing:                
  Issuance of  common shares on exercise of options     2.8       -  
  Proceeds from  issuance of equity     275.7       -  
  Proceeds from  issuance of debt     -       22.5  
  Repayment of  debt     (250.0 )     (102.5 )
  Interest paid     (73.5 )     (48.8 )
  Other     (3.3 )     (2.9 )
Net cash flow used in financing  activities     (48.3 )     (131.7 )
Effect of exchange rate changes  on cash and cash equivalents     2.3       (7.9 )
Increase (decrease) in cash and  cash equivalents     (216.9 )     60.4  
Cash and cash equivalents, beginning  of period     1,043.9       983.5  
Cash and cash equivalents, end  of period   $ 827.0     $ 1,043.9  
                 
             
Operating Summary            
    Mine   Period   Ownership   Tonnes  Ore Mined  (1)   Ore  
Processed (Milled)  (1)
  Ore  
Processed (Heap Leach)  (1)
  Grade (Mill)   Grade (Heap Leach)   Recovery  (2)   Gold  Eq Production  (5)   Gold  Eq Sales  (5)   Production  cost of sales   Production  cost of sales/oz   Cap  Ex  (7)   DD&A
            (%)   ('000  tonnes)   ('000  tonnes)   ('000  tonnes)   (g/t)   (g/t)   (%)   (ounces)   (ounces)     ($ millions)     ($/ounce)     ($ millions)     ($ millions)
Americas   Fort  Knox   Q4 2016   100   9,864   3,235   7,226   0.79   0.28   83%   114,427   115,101   $ 82.8   $ 719   $ 23.2   $ 22.5
Q3 2016   100   8,959   3,270   9,507   0.68   0.26   85%   110,396   107,444     79.8     743     13.8     20.4
Q2 2016   100   6,141   3,467   4,914   0.64   0.28   83%   97,221   97,625     77.4     793     15.2     22.3
Q1 2016   100   6,786   3,246   7,495   0.66   0.26   81%   87,800   87,889     62.2     708     18.0     23.5
Q4 2015   100   4,454   3,407   6,712   0.66   0.26   82%   87,561   87,426     62.6     716     35.3     31.7
Round  Mountain   Q4 2016   100   7,488   865   6,054   0.99   0.43   78%   99,310   107,313   $ 86.6   $ 807   $ 28.5   $ 33.6
Q3 2016   100   5,392   953   5,426   0.98   0.43   82%   93,215   88,477     73.7     833     14.8     24.2
Q2 2016   100   6,632   942   5,533   0.80   0.40   80%   92,813   91,646     71.3     778     12.3     20.8
Q1 2016  (8)   100(8)   4,018   869   3,071   1.17   0.44   83%   92,926   90,474     60.4     668     16.3     16.1
Q4 2015   50   6,392   898   3,724   0.86   0.42   77%   51,034   52,882     37.0     700     14.2     11.0
Bald  Mountain  (8), (9)   Q4 2016   100   3,627   -   3,627   -   0.72   nm   44,343   34,585   $ 44.5   $ 1,287   $ 17.7   $ 17.3
Q3 2016   100   3,081   -   3,081   -   0.66   nm   32,675   30,174     30.9     1,024     16.6     10.7
Q2 2016   100   2,182   -   2,182   -   0.48   nm   32,704   35,508     43.2     1,217     4.5     8.6
Q1 2016  (8)   100   1,766   -   1,766   -   0.62   nm   20,422   11,197     13.1     1,170     1.7     2.0
Kettle  River- Buckhorn   Q4 2016   100   128   122   -   8.49   -   94%   30,690   30,862   $ 15.5   $ 502   $ -   $ -
Q3 2016   100   123   111   -   8.14   -   94%   28,241   28,104     17.1     608     -     -
Q2 2016   100   101   101   -   7.40   -   93%   25,031   24,808     18.2     734     -     -
Q1 2016   100   86   107   -   7.23   -   92%   28,312   28,264     22.2     785     -     1.3
Q4 2015   100   84   90   -   9.67   -   92%   19,301   19,601     14.6     745     -     2.0
Paracatu   Q4 2016   100   10,675   11,962   -   0.44   -   73%   124,975   127,576   $ 101.5   $ 796   $ 47.9   $ 40.9
Q3 2016   100   12,597   11,084   -   0.48   -   73%   111,889   111,796     77.5     693     34.0     31.0
Q2 2016   100   12,109   12,331   -   0.44   -   70%   126,774   126,365     87.5     692     15.9     35.4
Q1 2016   100   11,825   11,439   -   0.44   -   73%   119,376   117,090     79.9     682     10.7     35.4
Q4 2015   100   10,730   9,738   -   0.51   -   76%   113,547   117,796     89.2     757     30.1     34.9
Maricunga  (9)   Q4 2016   100   -   -   -       -   -   32,899   33,360   $ 17.8   $ 534   $ 2.1   $ 1.2
Q3 2016   100   766   -   779       0.68   nm   39,253   39,458     37.5     950     0.9     10.8
Q2 2016   100   1,346   -   1,475       0.61   nm   44,304   45,362     42.6     939     1.3     11.6
Q1 2016   100   3,947   -   4,254   -   0.69   nm   59,076   57,490     47.3     823     0.8     10.8
Q4 2015   100   3,870   -   4,099   -   0.78   nm   54,948   56,440     52.6     932     4.7     8.2
Russia   Kupol  (3)(4)(6)   Q4 2016   100   503   426   -   12.46   -   95%   180,023   179,912   $ 80.8   $ 449   $ 21.1   $ 63.1
Q3 2016   100   492   440   -   11.79   -   95%   178,032   181,508     82.4     454     24.8     60.9
Q2 2016   100   513   428   -   12.75   -   95%   183,638   198,890     82.9     417     15.1     59.9
Q1 2016   100   494   416   -   13.92   -   95%   192,450   175,691     78.2     445     27.8     52.9
Q4 2015   100   449   429   -   13.81   -   96%   191,308   195,465     91.3     467     9.0     73.8
West  Africa   Tasiast   Q4 2016   100   1,683   736   454   2.39   0.46   91%   63,728   61,318   $ 58.7   $ 957   $ 68.7   $ 29.4
Q3 2016   100   2,462   457   1,585   1.78   0.45   91%   34,793   30,793     38.1     1,237     36.3     22.0
Q2 2016   100   1,937   489   1,542   1.39   0.45   92%   29,577   28,467     35.3     1,240     36.0     22.3
Q1 2016   100   1,891   777   1,187   1.51   0.41   91%   47,078   48,391     47.2     975     49.9     22.7
Q4 2015   100   1,318   689   587   2.27   0.55   89%   53,706   52,146     49.9     957     49.6     26.5
Chirano - 100%   Q4 2016   90   864   811   -   2.55   -   92%   62,106   53,400   $ 41.2   $ 772   $ 14.3   $ 28.4
Q3 2016   90   858   918   -   2.35   -   92%   61,817   62,573     53.0     847     9.5     30.0
Q2 2016   90   547   882   -   1.72   -   91%   43,561   42,312     48.3     1,142     11.1     25.8
Q1 2016   90   453   847   -   1.77   -   91%   44,470   47,679     47.2     990     11.7     25.7
Q4 2015   90   559   853   -   2.32   -   91%   58,123   56,284     42.2     750     11.6     44.1
Chirano - 90%   Q4 2016   90   864   811   -   2.55   -   92%   55,896   48,060   $ 37.1   $ 772   $ 12.9   $ 25.6
Q3 2016   90   858   918   -   2.35   -   92%   55,635   56,316     47.7     847     8.5     27.0
Q2 2016   90   547   882   -   1.72   -   91%   39,205   38,081     43.5     1,142     10.0     23.2
Q1 2016   90   453   847   -   1.77   -   91%   40,023   42,911     42.5     990     10.5     23.1
Q4 2015   90   559   853   -   2.32   -   91%   52,311   50,655     38.0     750     10.4     39.7
                                                                     
(1)   Tonnes of ore mined and processed represent 100% Kinross for all periods presented.
(2)   Due to the nature of heap leach operations, recovery  rates at Maricunga and Bald Mountain cannot be accurately measured on a  quarterly basis. Recovery rates at Fort Knox, Round Mountain and Tasiast  represent mill recovery only.
(3)   The Kupol segment includes the Kupol and Dvoinoye  mines.
(4)   Kupol silver grade and recovery were as follows: Q4 (2016) 99.05 g/t, 86.6%; Q3 (2016) 104.36 g/t, 90%; Q2 (2016) 105.89 g/t, 86.5%; Q1 (2016) 104.19 g/t, 88%; Q4 (2015) 100.58 g/t, 87%
(5)   Gold equivalent ounces include silver ounces produced  and sold converted to a gold equivalent based on the ratio of the average  spot market prices for the commodities for each period. The ratios for the  quarters presented are as follows: Q4 2016: 70.88:1; Q3 2016: 68.05:1; Q2  2016: 75.06:1; Q1 2016: 79.64:1; Q4 2015: 74.78:1
(6)   Dvoinoye ore processed and grade were as follows: Q4 (2016) 120,000 tonnes, 21.24 g/t ; Q3 (2016) 117,814 tonnes, 18.96 g/t ; Q2 (2016) 118,057 tonnes, 22.42 g/t; Q1 (2016) 129,675 tonnes, 22.69 g/t; Q4 (2015) 122,987 tonnes, 22.91 g/t
(7)   Capital expenditures are presented on a cash basis, consistent with the statement of cash flows.
(8)   On January 11, 2016, Kinross completed the acquisition  of 100% of the Bald Mountain gold mine and the remaining 50% interest in the  Round Mountain gold mine. The interim financial statements for the three  months ended March 31, 2016 were recasted to reflect the retrospective impact  of the finalization of the purchase price allocation.
(9)   "nm" means not meaningful.

Reconciliation of non-GAAP financial measures

The Company has included certain non-GAAP financial measures in this document. These measures are not defined under IFRS and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other issuers.

Adjusted net earnings attributable to common shareholders and adjusted net earnings per share are non-GAAP measures which determine the performance of the Company, excluding certain impacts which the Company believes are not reflective of the Company's underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, reassessment of prior year taxes and/or taxes otherwise not related to the current period, impairment charges, gains and losses and other one-time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results. Management believes that these measures, which are used internally to assess performance and in planning and forecasting future operating results, provide investors with the ability to better evaluate underlying performance, particularly since the excluded items are typically not included in public guidance. However, adjusted net earnings and adjusted net earnings per share measures are not necessarily indicative of net earnings and earnings per share measures as determined under IFRS.

The following table provides a reconciliation of net earnings (loss) to adjusted net earnings (loss) for the periods presented:

                 
    Adjusted  Earnings
(in millions, except share and per share  amounts)   Three  months ended   Years  ended
    December  31,   December  31,
    2016   2015   2016   2015
                                 
Net earnings (loss) attributable to common  shareholders - as reported   $ (116.5 )   $ (841.9 )   $ (104.0 )   $ (984.5 )
                                 
Adjusting items(a):                                
  Foreign exchange losses (gains)     (1.8 )     17.9       6.3       30.6  
  Losses (gains) on sale of other assets     (2.9 )     10.3       (9.7 )     16.2  
  Foreign exchange losses (gains) on translation of tax  basis and foreign exchange on deferred income taxes within income tax expense     (10.4 )     108.5       (65.1 )     132.9  
  Acquisition costs     -       -       7.8       -  
  Tax benefits realized upon acquisition     -       -       (27.7 )     -  
  Impairment charges     -       674.5       139.6       699.0  
  Taxes in respect of prior years     47.9       0.9       85.5       22.2  
  Chile weather event related costs     -       -       -       18.2  
  Impairment of investments     -       1.2       -       7.6  
  Tasiast and Maricunga suspension related costs     -       -       40.4       -  
  Reclamation and remediation expense (recovery)     27.2       (7.9 )     27.2       (7.9 )
  Insurance recoveries     -       (13.0 )     (13.0 )     (25.1 )
  Restructuring     -       10.3       1.7       22.2  
  Other(b)     6.3       1.8       2.1       5.8  
  Tax effect of above adjustments     (0.7 )     (31.4 )     1.9       (28.2 )
                                 
      65.6       773.1       197.0       893.5  
Adjusted net earnings (loss) attributable to common  shareholders   $ (50.9 )   $ (68.8 )   $ 93.0     $ (91.0 )
Weighted average number of common shares outstanding - Basic     1,245.0       1,146.5       1,227.0       1,146.0  
Adjusted net earnings (loss) per share     (0.04 )     (0.06 )     0.08       (0.08 )
                                 
(a) In the  third quarter of 2016, the Company amended its presentation of the  reconciliation of net earnings to adjusted net net earnings by presenting the  adjusting items on a pre-tax basis and including their tax impact as a  separate line item. As a result, the comparative periods have been recast to  reflect this change in presentation.  
(b) In 2016, other includes non-hedge derivatives losses (gains) and settlement  resulting from renegotiation of a labour agreement. In 2015, other includes  non-hedge derivatives losses (gain) and transaction costs.  

The Company makes reference to a non-GAAP measure for adjusted operating cash flow. Adjusted operating cash flow is defined as cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company's regular operating cash flow, and excluding changes in working capital. Working capital can be volatile due to numerous factors, including the timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The Company uses adjusted operating cash flow internally as a measure of the underlying operating cash flow performance and future operating cash flow-generating capability of the Company. However, the adjusted operating cash flow measure is not necessarily indicative of net cash flow from operations as determined under IFRS.

The following table provides a reconciliation of adjusted operating cash flow for the periods presented:

   
     
     
    Adjusted  Operating Cash Flow
(in millions)   Three  months ended   Years  ended
    December  31,   December  31,
    2016   2015   2016   2015
                                 
Net cash flow provided from operating activities - as  reported   $ 302.6     $ 182.2     $ 1,099.2     $ 831.6  
                                 
Adjusting items:                                
  Working capital changes:                                
    Accounts receivable and  other assets     (30.7 )     (83.6 )     21.2       (91.0 )
    Inventories     (12.5 )     46.9       (79.5 )     (63.5 )
    Accounts payable and other  liabilities, including taxes     (47.8 )     58.3       (114.2 )     109.5  
      (91.0 )     21.6       (172.5 )     (45.0 )
Adjusted operating cash flow   $ 211.6     $ 203.8     $ 926.7     $ 786.6  
                                 

Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of sales as per the consolidated financial statements divided by the total number of gold equivalent ounces sold. This measure converts the Company's non-gold production into gold equivalent ounces and credits it to total production.

Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company's non-gold production into gold equivalent ounces and credits it to total production.

Management uses these measures to monitor and evaluate the performance of its operating properties. The following table presents a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for the periods presented:

                         
    Consolidated  and Attributable Production Cost of Sales Per
Equivalent Ounce Sold
 
(in millions, except ounces and production  cost of sales per equivalent ounce)   Three  months ended     Years  ended  
December  31,     December  31,  
    2016     2015     2016     2015  
                                 
Production cost of sales - as reported   $ 529.4     $ 439.4     $ 1,983.8     $ 1,834.8  
Less: portion attributable to Chirano non-controlling  interest     (4.1 )     (4.2 )     (19.0 )     (18.0 )
Attributable production cost of sales   $ 525.3     $ 435.2     $ 1,964.8     $ 1,816.8  
                                 
Gold equivalent ounces sold     743,427       638,040       2,778,902       2,634,867  
Less: portion attributable to Chirano non-controlling  interest     (5,340 )     (5,629 )     (20,596 )     (25,997 )
Attributable gold equivalent ounces sold     738,087       632,411       2,758,306       2,608,870  
Consolidated production cost of sales per equivalent  ounce sold   $ 712     $ 689     $ 714     $ 696  
Attributable production cost of sales per equivalent  ounce sold   $ 712     $ 688     $ 712     $ 696  

Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP measure which calculates the Company's non-gold production as a credit against its per ounce production costs, rather than converting its non-gold production into gold equivalent ounces and crediting it to total production, as is the case in co-product accounting. Management believes that this measure provides investors with the ability to better evaluate Kinross' production cost of sales per ounce on a comparable basis with other major gold producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-product accounting.

The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the periods presented:

 
                 
    Attributable  Production Cost of Sales Per Ounce Sold on a
By-Product Basis
(in millions, except ounces and production  cost of sales per ounce)   Three  months ended   Years  ended
    December  31,   December  31,
    2016   2015   2016   2015
                                 
Production cost of sales - as reported   $ 529.4     $ 439.4     $ 1,983.8     $ 1,834.8  
Less: portion attributable to Chirano non-controlling  interest     (4.1 )     (4.2 )     (19.0 )     (18.0 )
Less: attributable silver revenues     (21.9 )     (20.1 )     (102.5 )     (82.5 )
Attributable production cost of sales net of silver  by-product revenue   $ 503.4     $ 415.1     $ 1,862.3     $ 1,734.3  
                                 
Gold ounces sold     723,670       619,449       2,697,912       2,562,219  
Less: portion attributable to Chirano non-controlling  interest     (5,327 )     (5,614 )     (20,545 )     (25,925 )
Attributable gold ounces sold     718,343       613,835       2,677,367       2,536,294  
Attributable production cost of sales per ounce sold on  a by-product basis   $ 701     $ 676     $ 696     $ 684  
                                 

In June 2013, the World Gold Council ("WGC") published its guidelines for reporting all-in sustaining costs and all-in costs. The WGC is a market development organization for the gold industry and is an association whose membership comprises leading gold mining companies including Kinross. Although the WGC is not a mining industry regulatory organization, it worked closely with its member companies to develop these non-GAAP measures. Adoption of the all-in sustaining cost and all-in cost metrics is voluntary and not necessarily standard, and therefore, these measures presented by the Company may not be comparable to similar measures presented by other issuers. The Company believes that the all-in sustaining cost and all-in cost measures complement existing measures reported by Kinross.

All-in sustaining cost includes both operating and capital costs required to sustain gold production on an ongoing basis. The value of silver sold is deducted from the total production cost of sales as it is considered residual production. Sustaining operating costs represent expenditures incurred at current operations that are considered necessary to maintain current production. Sustaining capital represents capital expenditures at existing operations comprising mine development costs and ongoing replacement of mine equipment and other capital facilities, and does not include capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.

All-in cost is comprised of all-in sustaining cost as well as operating expenditures incurred at locations with no current operation, or costs related to other non-sustaining activities, and capital expenditures for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.

Attributable all-in sustaining cost and all-in cost per ounce sold on a by-product basis are calculated by adjusting total production cost of sales, as reported on the consolidated statement of operations, as follows:

     
                           
    Attributable  All-In Sustaining Cost and All-In Cost Per Ounce
Sold on a By-Product Basis
 
(in millions, except ounces and costs per  ounce)   Three  months ended     Years  ended  
    December  31,     December  31,  
    2016     2015     2016     2015  
                                 
Production cost of sales - as reported   $ 529.4     $ 439.4     $ 1,983.8     $ 1,834.8  
Less: portion attributable to Chirano non-controlling  interest(1)     (4.1 )     (4.2 )     (19.0 )     (18.0 )
Less: attributable(2)  silver revenues(3)     (21.9 )     (20.1 )     (102.5 )     (82.5 )
Attributable(2)  production cost of sales net  of silver by-product revenue   $ 503.4     $ 415.1     $ 1,862.3     $ 1,734.3  
Adjusting items on an attributable(2)  basis:                                
  General and administrative(4)     33.1       38.9       143.7       160.6  
  Other operating expense - sustaining(5)     8.6       2.5       18.6       21.5  
  Reclamation and remediation - sustaining(6)     14.2       13.5       94.9       58.0  
  Exploration and business development - sustaining(7)     12.4       14.6       50.8       59.0  
  Additions to property, plant and equipment - sustaining(8)     153.6       122.0       440.1       428.5  
All-in Sustaining Cost on a by-product basis - attributable(2)   $ 725.3     $ 606.6     $ 2,610.4     $ 2,461.9  
  Other operating expense - non-sustaining(5)     12.2       3.2       25.6       20.8  
  Exploration - non-sustaining(7)     13.3       10.7       42.6       47.6  
  Additions to property, plant and equipment - non-sustaining(8)     70.3       34.7       160.1       132.7  
  Reclamation & remediation costs not related to  current operations(6)     34.9       (7.9 )     34.9       (7.9 )
All-in Cost on a by-product basis - attributable(2)   $ 856.0     $ 647.3     $ 2,873.6     $ 2,655.1  
Gold ounces sold     723,670       619,449       2,697,912       2,562,219  
Less: portion attributable to Chirano non-controlling  interest(9)     (5,327 )     (5,614 )     (20,545 )     (25,925 )
Attributable(2)  gold ounces sold     718,343       613,835       2,677,367       2,536,294  
Attributable(2)  all-in sustaining cost per  ounce sold on a by-product basis   $ 1,010     $ 988     $ 975     $ 971  
Attributable(2)  all-in cost per ounce sold  on a by-product basis   $ 1,192     $ 1,055     $ 1,073     $ 1,047  
                                 

The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under these non-GAAP measures, the Company's production of silver is converted into gold equivalent ounces and credited to total production.

Attributable all-in sustaining cost and all-in cost per equivalent ounce sold are calculated by adjusting total production cost of sales, as reported on the consolidated statement of operations, as follows:

                         
  Attributable  All-In Sustaining Cost and All-In Cost Per
Equivalent Ounce Sold
 
(in millions, except ounces and costs per  equivalent ounce) Three  months ended     Years  ended  
  December  31,     December  31,  
  2016     2015     2016     2015  
                               
Production cost of sales - as reported $ 529.4     $ 439.4     $ 1,983.8     $ 1,834.8  
Less: portion attributable to Chirano non-controlling  interest(1)   (4.1 )     (4.2 )     (19.0 )     (18.0 )
Attributable(2)  production cost of sales $ 525.3     $ 435.2     $ 1,964.8     $ 1,816.8  
Adjusting items on an attributable(2)  basis:                              
  General and administrative(4)   33.1       38.9       143.7       160.6  
  Other operating expense - sustaining(5)   8.6       2.5       18.6       21.5  
  Reclamation and remediation - sustaining(6)   14.2       13.5       94.9       58.0  
  Exploration and business development - sustaining(7)   12.4       14.6       50.8       59.0  
  Additions to property, plant and equipment - sustaining(8)   153.6       122.0       440.1       428.5  
All-in Sustaining Cost - attributable(2) $ 747.2     $ 626.7     $ 2,712.9     $ 2,544.4  
  Other operating expense - non-sustaining(5)   12.2       3.2       25.6       20.8  
  Exploration - non-sustaining(7)   13.3       10.7       42.6       47.6  
  Additions to property, plant and equipment - non-sustaining(8)   70.3       34.7       160.1       132.7  
  Reclamation & remediation costs not related to  current operations(6)   34.9       (7.9 )     34.9       (7.9 )
All-in Cost - attributable(2) $ 877.9     $ 667.4     $ 2,976.1     $ 2,737.6  
Gold equivalent ounces sold   743,427       638,040       2,778,902       2,634,867  
Less: portion attributable to Chirano non-controlling  interest(9)   (5,340 )     (5,629 )     (20,596 )     (25,997 )
Attributable(2)  gold equivalent ounces sold   738,087       632,411       2,758,306       2,608,870  
Attributable(2)  all-in sustaining cost per  equivalent ounce sold $ 1,012     $ 991     $ 984     $ 975  
Attributable(2)  all-in cost per equivalent  ounce sold $ 1,189     $ 1,055     $ 1,079     $ 1,049  
                               
                                 
(1) "Portion attributable to Chirano  non-controlling interest" represents the non-controlling interest (10%) in the production cost of sales for the Chirano mine.  
   
(2) "Attributable" includes Kinross' share  of Chirano (90%) production.                              
   
(3) "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.  
   
(4) "General and administrative" expenses  is as reported on the consolidated statement of operations, net of certain  severance expenses. General and administrative expenses are considered  sustaining costs as they are required to be absorbed on a continuing basis  for the effective operation and governance of the Company.  
   
(5) "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.  
   
(6) "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.  
   
(7) "Exploration and business development - sustaining" is calculated as "Exploration and business development" expenses  as reported on the consolidated statement of operations, less non-sustaining  exploration expenses. Exploration expenses are classified as either  sustaining or non-sustaining based on a determination of the type and  location of the exploration expenditure. Exploration expenditures within the  footprint of operating mines are considered costs required to sustain current  operations and so are included in sustaining costs. Exploration expenditures  focused on new ore bodies near existing mines (i.e. brownfield), new  exploration projects (i.e. greenfield) or for other generative exploration  activity not linked to existing mining operations are classified as  non-sustaining. Business development expenses are considered sustaining  costs as they are required for general operations.  
   
(8) "Additions to property, plant and equipment - sustaining" represents the majority of capital expenditures at existing  operations including capitalized exploration costs, capitalized stripping and  underground mine development costs, ongoing replacement of mine equipment and  other capital facilities and other capital expenditures and is calculated as  total additions to property, plant and equipment (as reported on the  consolidated statements of cash flows), less capitalized interest and  non-sustaining capital. Non-sustaining capital represents capital  expenditures for major growth projects as well as enhancement capital for  significant infrastructure improvements at existing operations. Non-sustaining capital expenditures during the three months ended December  31, 2016 primarily relate to projects at Tasiast and Bald Mountain. Non-sustaining capital expenditures during the twelve months ended December  31, 2016 primarily relate to projects at Tasiast, Round Mountain, Chirano and  Bald Mountain.  
   
(9) "Portion attributable to Chirano  non-controlling interest" represents the non-controlling interest (10%) in  the ounces sold from the Chirano mine.  
   

Cautionary statement on forward-looking information

All statements, other than statements of historical fact, contained or incorporated by reference in this news release 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 news release. Forward-looking statements contained in this news release, include, but are not limited to, those under the headings (or headings that include): "CEO commentary", "Outlook" and "Balance sheet", and include, without limitation, statements with respect to our guidance for production; production costs of sales, all-in sustaining cost and capital expenditures; and continuous improvement initiatives, as well as references to other possible events, the future price of gold and silver, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, success of exploration, development and mining activities, currency fluctuations, capital requirements, project studies, mine life extensions, restarting suspended or disrupted operations; continuous improvement initiatives; and resolution of pending litigation. The words "forward", "intend", "optimize", "opportunity", "phased", "projection", 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 news release, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth herein and in our most recently filed Annual Information Form and our Management's Discussion and Analysis as well as: (1) there being no significant disruptions affecting the operations of the Company whether due to extreme weather events (including, without limitation, excessive or lack of rainfall) and other or related natural disasters, labour disruptions (including but not limited to following workforce reductions), supply disruptions, power disruptions, damage to equipment or otherwise; (2) permitting, development, operations and production from the Company's operations being consistent with Kinross' current expectations including, without limitation, land acquisitions and permitting for the construction and operation of the new tailings facility, water and power supply and launch of the new tailings reprocessing facility at Paracatu; (3) political and legal developments in any jurisdiction in which the Company operates being consistent with its current expectations including, without limitation, the impact of any escalating political tensions and uncertainty in the Russian Federation and Ukraine or any related sanctions and any other similar restrictions or penalties imposed, or actions taken, by any government, including but not limited to potential power rationing, tailings facility regulation and amendments to mining laws in Brazil, potential amendments to water laws and/or other water use restrictions and regulatory actions in Chile, potential amendments to minerals and mining laws and dam safety regulation in Ghana, potential amendments to customs and mining laws (including but not limited amendments to the VAT) in Mauritania, and potential amendments to and enforcement of tax laws in Russia (including, but not limited to, the interpretation, implementation, application and enforcement of any such laws and amendments thereto), being consistent with Kinross' current expectations; (4) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately consistent with current levels; (5) certain price assumptions for gold and silver; (6) prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; (7) production and cost of sales forecasts for the Company meeting expectations; (8) the accuracy of the current mineral reserve and mineral resource estimates of the Company (including but not limited to ore tonnage and ore grade estimates) and mine plans for the Company's mining operations (including but not limited to throughput and recoveries being affected by metallurgical characteristics at Paracatu); (9) labour and materials costs increasing on a basis consistent with Kinross' current expectations; (10) the terms and conditions of the legal and fiscal stability agreements for the Tasiast and Chirano operations being interpreted and applied in a manner consistent with their intent and Kinross' expectations; (11) goodwill and/or asset impairment potential; and (12) access to capital markets, including but not limited to maintaining credit ratings consistent with the Company's current expectations. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: sanctions (any other similar restrictions or penalties) now or subsequently imposed, other actions taken, by, against, in respect of or otherwise impacting any jurisdiction in which the Company is domiciled or operates (including but not limited to the Russian Federation, Canada, the European Union and the United States), or any government or citizens of, persons or companies domiciled in, or the Company's business, operations or other activities in, any such jurisdiction; fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as fuel and electricity); changes in the discount rates applied to calculate the present value of net future cash flows based on country-specific real weighted average cost of capital; changes in the market valuations of peer group gold producers and the Company, and the resulting impact on market price to net asset value multiples; changes in various market variables, such as interest rates, foreign exchange rates, gold or silver prices and lease rates, or global fuel prices, that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under any financial obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation (including but not limited to income tax, advance income tax, stamp tax, withholding tax, capital tax, tariffs, value-added or sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, royalty, excise tax, customs/import or export taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with any related fine, penalty, surcharge, or interest imposed in connection with such taxes), controls, policies and regulations; the security of personnel and assets; political or economic developments in Canada, the United States, Chile, Brazil, Russia, Mauritania, Ghana, or other countries in which Kinross does business or may carry on business; business opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical difficulties in connection with mining or development activities; employee relations; litigation or other claims against, or regulatory investigations and/or any enforcement actions or sanctions in respect of the Company (and/or its directors, officers, or employees) including, but not limited to, securities class action litigation in Canada and/or the United States, or any investigations, enforcement actions and/or sanctions under any applicable anti-corruption, international sanctions and/or anti-money laundering laws and regulations in Canada, the United States or any other applicable jurisdiction; the speculative nature of gold exploration and development including, but not limited to, the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves; adverse changes in our credit rating; and contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards associated with the business of gold exploration, development and mining, including environmental hazards, tailings dam failures, 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 news release are qualified by these cautionary statements and those made in our other filings with the securities regulators of Canada and the United States including, but not limited to, the cautionary statements made in the "Risk Factors" section of our most recently filed Annual Information Form and the "Risk Analysis" section of our full year 2016 MD&A. These factors are not intended to represent a complete list of the factors that could affect Kinross. Kinross disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.

Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in this news release, we mean Kinross Gold Corp. 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 news release has been prepared under the supervision of Mr. John Sims, an officer of the Company who is a "qualified person" within the meaning of National Instrument 43-101.

For more information, please see Kinross' 2016 year-end Financial Statements, MD&A and Projects and Exploration news release at www.kinross.com



Contact

Media Contact
Louie Diaz
Director, Corporate Communications
phone: 416-369-6469
louie.diaz@kinross.com

Investor Relations Contact
Tom Elliott
Senior Vice-President, Investor Relations and Corporate Development
phone: 416-365-3390
tom.elliott@kinross.com


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