American Hotel Income Properties REIT LP Reports Third Quarter Results

VANCOUVER, BC—(Marketwired – November 08, 2017) –

  • Third quarter revenue more than doubles from same quarter last year
  • Third quarter FFO increases 93.0%; AFFO increases 87.6%
  • 33 more properties in hotel portfolio compared to same period last year has high–graded the composition of company assets
  • New U.S. dollar ticker to trade alongside Canadian dollar ticker on TSX

(All numbers are in U.S. dollars unless otherwise indicated)

American Hotel Income Properties REIT LP (“AHIP“, “the Company“) (TSX: HOT.UN) (TSX: HOT.DB.U), which has 115 select–service hotels located across the United States, announced today its financial results for the three and nine months ended September 30, 2017.

During the third quarter, revenues more than doubled, to $90.3 million, EBITDA rose by 107.6% to $30.1 million, funds from operations (“FFO“) increased by 93.0% to $19.3 million, while adjusted funds from operations (“AFFO“) rose 87.6% to $16.7 million, in each case, as a result of the addition of new hotels.

“Our third quarter results reflect the impact of the 33 premium branded hotels we acquired in the last 12 months, which improved the geographic diversification of our properties and supported our overall RevPAR growth of 25.2%. Revenue and EBITDA more than doubled from the same quarter last year, while our payout ratio improved to 76%,” said Rob O'Neill, CEO, AHIP. “Our recently announced agreement with Wyndham to rebrand 46 of our Rail Hotels will further bolster our occupancy rates and complement our rail crew contract revenue by leveraging Wyndham's strong reservations network, brand recognition and customer rewards program to increase the productive capacity of our unused Rail Hotel guestrooms. We believe the incremental revenue and earnings accretion from this strategy will enhance the margins of our Rail Hotel Portfolio and create additional value for our Unitholders.”

Ian McAuley, President of AHIP added, “During the third quarter our Hotel Manager and their dedicated hotel staff successfully navigated the surge of guests seeking accommodation in Florida during Hurricane Irma. We are grateful to confirm that our properties sustained only minor damage due to the storm and would like to thank our hotel guests for their confidence and business during that challenging time. The increased occupancy rates at several of our Florida hotels, provided a strong contribution to our third quarter performance.”

Mr. McAuley continued: “To better cater to our unitholders' needs and provide more clarity in a changing currency environment, we are pleased to announce the addition of a new U.S. dollar ticker (HOT.U), that will trade alongside our existing Canadian dollar ticker (HOT.UN) on the TSX. This new investment option will provide our unitholders with the choice of investing in either currency, and will also provide our unitholders with a unit price benchmark resistant to Canadian and U.S. dollar foreign exchange impacts. The new ticker will begin trading on the TSX on November 10, 2017.”

THREE MONTHS ENDED SEPTEMBER 30, 2017 FINANCIAL HIGHLIGHTS

  • Total revenues for the quarter increased by 102.9% to $90.3 million compared to $44.5 million for the same quarter last year as a result of the acquisition of new hotels between reporting periods.
  • Total portfolio revenue per available room (“RevPAR“) grew 25.2% from the same quarter last year, led by occupancy increases of 3.2% and average daily rate (“ADR“) increases of 21.3%, reflecting AHIP's recent acquisitions of higher performing, premium branded, select–service properties located within larger secondary markets.
  • RevPAR for Branded Hotels increased 17.4% from the same quarter of 2016. Pro–Forma RevPAR, which includes operating results for acquired hotels in periods prior to their ownership by AHIP, was particularly strong for Florida, Tennessee and Oklahoma with RevPAR growth rates of 17.5%, 11.7% and 11.0%, respectively. This was offset by pro–forma RevPAR declines in Pennsylvania (–8.2%), Texas (–6.4%) and Virginia (–4.4%) caused by new supply.
  • Same property metrics: 33 additional hotel properties have been added to AHIP's portfolio compared to the same period last year. As a result, same property metrics represent the performance of only 71% of AHIP's total hotels, and approximately half of AHIP's Branded hotels during the third quarter.
    • Total portfolio same–property revenues for the quarter were $42.7 million (Q3 2016 – $43.4 million) with Rail Hotel revenues decreasing due to lower guaranteed revenues from rail crew contracts and Branded Hotel revenues impacted by the entrance of new supply in certain markets and displacement occurring at two Virginia properties undergoing mandatory PIP renovations.
    • Same–property RevPAR for Branded Hotels declined 1.7% relative to Q3 2016 due to displacement from renovations that occurred at two properties and increased supply in certain markets, particularly Pittsburgh and Amarillo, leading to more aggressive pricing to maintain market share. This was offset by strong performance at the Florida hotels despite the impacts of Hurricane Irma. When excluding the two weaker markets of Amarillo and Pittsburgh, same–property RevPAR for the quarter would have increased by 2.6%.
    • Same–property RevPAR for Rail Hotels declined 2.0% relative to Q3 2016, as a result of fewer guaranteed room nights from rail crew lodging contracts. AHIP believes the recently announced Wyndham branding agreement will drive improved RevPAR at its Rail Hotels in the future, through improved brand recognition and increased transient guest occupancy of rooms not used for rail crew lodging contracts.
    • Total portfolio same–property NOI was $14.8 million (2016 – $16.3 million), which was lower as a result of lower revenues and higher operating costs. As 33 hotels were acquired in the last 12 months and are therefore excluded from same–property metrics, same–property NOI represented only 43.5% of AHIP's total NOI.
  • Net income for the third quarter was $8.8 million, a 125.6% increase compared to net income of $3.9 million in the prior period. Diluted net income per Unit increased by 22.2% to $0.11 compared to a diluted net income per Unit of $0.09 in the same quarter of last year.
  • For the period, FFO was up 93.0% to $19.3 million (Q3 2016 – $10.0 million) and AFFO was up 87.6% to $16.7 million (Q3 2016 – $8.9 million) as a result of the net addition of 33 new hotels over the past three quarters.
  • For the quarter, Diluted FFO per Unit was up 4.2% to $0.25 (Q3 2016 – $0.24) and Diluted AFFO per Unit was unchanged at $0.21 (Q3 2016 – $0.21).
  • EBITDA for the quarter was up 107.6% to $30.1 million compared to $14.5 million in the same period last year and EBITDA margin increased by 80 basis points to 33.3% (2016 – 32.5%).
  • The AFFO payout ratio improved during the quarter to 76.1% (2016 – 82.5%).
  • AHIP's interest coverage ratio for the third quarter was 3.6x (2016 – 4.0x).
  • AHIP's mortgages have an average term of 7.8 years (2016 – 7.5 years) and a fixed weighted average interest rate of 4.61% (2016 – 4.56%).
  • AHIP paid monthly distributions of $0.054 per Unit during the quarter, which is equivalent to $0.648 per Unit on an annualized basis.
  • As at June 30, 2017, AHIP had an unrestricted cash balance of $22.5 million and an unutilized revolving line of credit of $10.0 million. AHIP also had a restricted cash balance of $52.2 million, including $35.8 million on deposit for upcoming PIP renovations.
  • AHIP's debt–to–gross book value as at September 30, 2017 was 53.7% within AHIP's target range of 50% to 55%.

NINE MONTHS ENDED SEPTEMBER 30, 2017 FINANCIAL HIGHLIGHTS

  • Total revenues for the first nine months of 2017 increased by 71.4% to $221.5 million compared to $129.2 million for the same period last year as a result of the acquisition of new hotels between reporting periods.
  • Total portfolio RevPAR growth for the period was 19.2% led by occupancy increases of 3.6% and ADR increases of 15.0%.
  • Same–property RevPAR for Branded Hotels declined by 0.6%, from the first nine months of 2016. Same–property RevPAR was up in Florida and Oklahoma with same–property RevPAR gains of 11.4% and 2.8%, respectively compared to same–property RevPAR declines of 10.3% in Pittsburgh and 7.0% in Amarillo. When excluding the two weaker markets, same–property RevPAR for the period would have increased by 2.4%.
  • Net income for the nine months ended Sept. 30, 2017 was $5.7 million, compared to net income of $5.9 million in the prior period. This decline was a result of higher business acquisition costs and an impairment charge incurred during Q2 2017. Diluted net income per Unit was $0.09 compared to a diluted net income per Unit of $0.16 in the same period of last year.
  • For the period, FFO was up 63.9% to $45.4 million (2016 – $27.7 million) and AFFO was up 60.5% to $39.0 million (2016 – $24.3 million) as a result of a net addition of 33 hotels over the past three quarters.
  • For the first nine months of 2017, Diluted FFO per Unit was $0.68 (2016 – $0.74) and Diluted AFFO per Unit was $0.58 (2016 – $0.65).
  • EBITDA for the period was up 72.0% to $69.3 million compared to $40.3 million in the same period last year and EBITDA margin increased by 10 basis points to 31.3% (2016 – 31.2%).
  • The AFFO payout ratio for the first nine months of 2017 was 84.0% (2016 – 77.1%).
  • AHIP's interest coverage ratio for the first nine months was 3.4x (2016 – 3.8x).

THIRD QUARTER DEVELOPMENTS

  • On September 21, 2017, AHIP announced that three senior executives purchased an aggregate of 225,620 units through open market purchases increasing insider ownership to 2.8%.
  • With the unprecedented impact of natural disasters that have occurred in the United States over the last several months, AHIP is grateful to confirm that none of its assets sustained major damage during the Florida or Texas hurricanes and floods, and the Company had no hotels directly or indirectly affected by the California wildfires.

SUBSEQUENT EVENTS

  • On November 1, 2017, AHIP announced a 15–year strategic branding agreement with Wyndham Hotel Group (“Wyndham“) to rebrand 46 Oak Tree Inn hotels under various Wyndham brands and to better market the excess room capacity available at its Rail hotels. While rail crew lodging contracts continue to be the major driver of the occupancy at these hotels, the available guestrooms were being underutilized. Through this agreement, AHIP will gain access to Wyndham's world–class reservations network, brand recognition, and customer rewards program to drive incremental transient guests and revenue at these hotels.
    • Under the terms of the agreement, AHIP will convert 14 hotels to the Baymont Inn and Suites brand, 29 hotels to the Travelodge brand, and two hotels to the Super 8 brand. The Fargo hotel will remain a Days Inn hotel. AHIP expects to spend approximately $4.0 million over the next 24 months to accommodate new signage, brand standards and property improvement plans.
    • As a result of the significant number of hotels being converted to Wyndham brands, AHIP believes it negotiated favourable terms as part of this 15–year agreement, with carve outs related to rail crew lodging contracts.
  • As a result of the significant Wyndham branding agreement, AHIP intends to rename its reporting segments, beginning Q1 2018, as “Premium Branded” hotels (currently Branded Hotels) and “Economy Lodging” hotels (currently Rail hotels).
  • AHIP completed the acquisition of two Rail Hotels:
    • Fargo, North Dakota: On October 13, 2017, AHIP acquired the 74–guestroom Days Inn Fargo, located in Fargo, North Dakota, for a total investment (inclusive of purchase price and expected renovations), before closing costs and post–acquisition adjustments, of approximately $3.8 million, or $50,700 per key. This hotel has a rail crew lodging agreement that currently guarantees 77% of the available guestrooms. The Days Inn Fargo was re–licensed with terms consistent with the new Wyndham license agreement.
    • Whitefish, Montana: On November 7, 2017, AHIP acquired a 64–guestroom hotel in Whitefish, Montana, for a total investment (inclusive of purchase price and expected renovations), before closing costs and post–acquisition adjustments, of approximately $3.7 million, or $57,800 per key. The hotel will soon be rebranded under one of Wyndham's brands. The hotel has a rail crew lodging agreement that presently guarantees 60% of the available guestrooms.
  • On November 1, 2017, AHIP announced that it had entered into a new Master Agreement with one of its largest and most significant railway customers for all its future rail crew lodging contracts. This new Master Agreement will allow both parties to expedite future contracts and contract renewals, and underscores the long–term commitment this railway customer has to using AHIP's hotels for future rail crew lodging needs.
  • On November 10, 2017, AHIP's units will launch an additional ticker on the Toronto Stock Exchange (“TSX“) that trades in U.S. dollars. The new ticker, HOT.U, will trade alongside AHIP's existing Canadian denominated ticker, HOT.UN, and will provide investors with the option of purchasing the Company's units in either currency. The addition of the U.S. ticker is well aligned with AHIP's U.S. dollar distributions and U.S. dollar financial disclosures. It will also provide an investment alternative for unitholders that is shielded from unit price movement resulting solely from U.S. / Canadian dollar foreign exchange fluctuations.

The information in this news release should be read in conjunction with AHIP's unaudited condensed consolidated interim financial statements and management's discussion and analysis (“MD&A“) for the three and nine months ended September 30, 2017 which are available on AHIP's website at www.ahipreit.com and on SEDAR at www.sedar.com.

Q3 2017 FINANCIAL RESULTS CONFERENCE CALL

Management will host a conference call at 4:00 p.m. (Eastern), 1:00 p.m. (Pacific) on Thursday, November 9, 2017 to review the financial results and corporate results for the three and nine months ended September 30, 2017.

To participate in this conference call, please dial one of the following numbers at least five minutes prior to the commencement of the call, and ask to join the American Hotel Income Properties' Q3 2017 earnings call.

Dial in numbers: North America Toll free: 1–877–291–4570
  International or local Toronto: 1–647–788–4919

CONFERENCE CALL REPLAY

If you cannot participate on Thursday, November 9, 2017, a replay of the conference call will be available by dialing one of the following replay numbers. You will be able to dial in and listen to the conference call replay two hours after the call end time, and the replay will be available until Thursday, November 30, 2017. An audio recording of this conference call will also be available at www.ahipreit.com under the “News and Events” tab.

Please enter replay PIN number 7084529 followed by the # key.

Replay dial in numbers: North America Toll free: 1–800–585–8367
  International or local Toronto: 1–416–621–4642

NON–IFRS MEASURES

Certain non–IFRS financial measures are included in this news release, which include NOI, EBITDA, FFO, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, interest coverage ratio, AFFO payout ratio and debt–to–gross book value. These terms are not measures recognized under International Financial Reporting Standards (“IFRS“) and do not have standardized meanings prescribed by IFRS. Real estate issuers often refer to NOI, FFO, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, and AFFO payout ratio as supplemental measures of performance and interest coverage ratio and debt–to–gross book value as supplemental measures of financial condition.

Debt–to–gross book value, NOI, EBITDA, FFO, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, interest coverage ratio and payout ratio should not be construed as alternatives to measurements determined in accordance with IFRS as indicators of AHIP's performance or financial condition. AHIP's method of calculating NOI, EBITDA, FFO, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, interest coverage ratio, AFFO payout ratio and debt–to–gross book value may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers. For further information, including reconciliations of certain of these non–IFRS financial measures to the closest comparable IFRS measure, please refer to AHIP's MD&A dated November 7, 2017, which is available on SEDAR at www.sedar.com and on AHIP's website at www.ahipreit.com.

FORWARD–LOOKING INFORMATION

Certain statements in this news release may constitute “forward–looking” information that involves known and unknown risks, uncertainties and other factors, and it may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward–looking information. Forward–looking information generally can be identified by the use of terms and phrases such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “feel”, “intend”, “may”, “plan”, “predict”, “project”, “subject to”, “will”, “would”, and similar terms and phrases, including references to assumptions. Some of the specific forward–looking statements in this news release include, but are not limited to, statements with respect to: management's belief that the agreement with Wyndham will bolster occupancy rates at AHIP's Rail Hotels, increase the productive capacity of unused Rail Hotel guestrooms, enhance the margins for the Rail Hotel Portfolio and create additional value for Unitholders; AHIP gaining access to Wyndham's world–class reservations network, brand recognition and customer rewards program to drive incremental transient guests and revenues at the rebranded hotels; the rebranding of 46 hotels in AHIP's Rail Hotel portfolio under Wyndham's Baymont Inn and Suites®, Travelodge®, and Super 8® brands; the rebranding of the Rail Hotel in Whitefish, Montana under one of Wyndham's brands; the expected costs and timing of the rebranding; the Fargo hotel remaining a Days Inn; the trading of AHIP's units in U.S. dollars on the TSX, the expected benefits thereof and the timing of the commencement of such trading option; the expectation that the new Master Agreement will allow both parties to expedite future contracts and contract renewals; the long term commitment of the rail partner that is party to the new Master Agreement to using AHIP's hotels for future rail crew lodging needs; and AHIP's long–term objectives.

Forward–looking information is based on a number of key expectations and assumptions made by AHIP, including, without limitation: a reasonably stable North American economy and stock market; the continued strength of the U.S. lodging industry; AHIP will be able to successfully integrate properties acquired into its portfolio; capital markets will provide AHIP with readily available access to equity and/or debt financing on terms acceptable to AHIP; the accuracy of third party reports with respect to lodging industry data; the value of the U.S. dollar; the successful rebranding of AHIP's Rail Hotels; the rebranding of AHIP's Rail Hotels achieving its intended results; the costs and timing of the rebranding being consistent with management's current estimates; the ability to successfully integrate the new Rail Hotel acquisitions into AHIP's existing portfolio of rail hotels; AHIP's rail partner not terminating the Master Agreement and continuing to rely on AHIP for its future rail crew lodging needs;. Although the forward–looking information contained in this news release is based on what AHIP's management believes to be reasonable assumptions, AHIP cannot assure investors that actual results will be consistent with such information.

Forward–looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward–looking statements involve significant risks and uncertainties and should not be read as guarantees of future performance or results. Those risks and uncertainties include, among other things, risks related to: general economic conditions; future growth potential; Unit prices; liquidity; tax risk; tax laws currently in effect remaining unchanged; ability to access capital markets; competition for real property investments; environmental matters; the value of the U.S. dollar; and changes in legislation or regulations. Management believes that the expectations reflected in forward–looking statements are based upon reasonable assumptions and information currently available; however, management can give no assurance that actual results will be consistent with these forward–looking statements. Additional information about risks and uncertainties is contained in AHIP's MD&A dated November 7, 2017 and annual information form for the year ended December 31, 2016, copies of which are available on SEDAR at www.sedar.com.

The forward–looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward–looking information reflects management's current beliefs and is based on information currently available to AHIP. The forward–looking information is made as of the date of this news release and AHIP assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

ADDITIONAL INFORMATION

Additional information relating to AHIP, including AHIP's unaudited condensed consolidated interim financial statements for the three and nine months ended September 30, 2017, AHIP's MD&A dated November 7, 2017, and other public filings are available on SEDAR at www.sedar.com.

ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT LP

American Hotel Income Properties REIT LP (TSX: HOT.UN) (TSX: HOT.DB.U), or AHIP, is a limited partnership formed to invest in hotel real estate properties located substantially in the United States. AHIP currently has 115 hotels, and is actively engaged in growing its portfolio of premium branded, select–service hotels in larger secondary markets that have diverse and stable demand. AHIP hotels operate under brands affiliated with Marriott, Hilton, IHG, Wyndham and Choice Hotels through license agreements. The company's long–term objectives are to build on its proven track record of successful investment, deliver reliable and consistent U.S. dollar denominated distributions to unitholders, and generate value through the continued growth of its diversified hotel portfolio. More information is available at www.ahipreit.com.

   
   
THIRD QUARTER HIGHLIGHTS AND KEY PERFORMANCE INDICATORS  
   
(US$000s unless noted and except per Unit amounts)   Three months ended September 30, 2017     Three months ended September 30, 2016     Nine months ended September 30, 2017     Nine months ended September 30, 2016  
                                 
Number of rooms (1)     11,570       7,119       11,570       7,119  
Number of properties (1)     113       80       113       80  
Number of restaurants (1)     41       31       41       31  
                                 
Occupancy rate     77.9 %     75.5 %     75.4 %     72.8 %
Average daily room rate   $ 99.16     $ 81.72     $ 95.54     $ 83.05  
Revenue per available room   $ 77.25     $ 61.70     $ 72.04     $ 60.46  
                                 
Revenues   $ 90,311     $ 44,508     $ 221,488     $ 129,169  
Net operating income   $ 34,018     $ 17,261     $ 80,604     $ 49,354  
Net income and comprehensive income   $ 8,816     $ 3,880     $ 5,702     $ 5,882  
                                 
EBITDA   $ 30,099     $ 14,460     $ 69,326     $ 40,283  
EBITDA Margin %     33.3 %     32.5 %     31.3 %     31.2 %
                                 
Funds from operations (FFO)   $ 19,306     $ 10,023     $ 45,429     $ 27,686  
Diluted FFO per Unit   $ 0.25     $ 0.24     $ 0.68     $ 0.74  
                                 
Adjusted funds from operations (AFFO)   $ 16,653     $ 8,874     $ 38,986     $ 24,284  
Diluted AFFO per Unit   $ 0.21     $ 0.21     $ 0.58     $ 0.65  
                                 
Distributions declared   $ 12,669     $ 7,323     $ 32,759     $ 18,724  
AFFO Payout Ratio     76.1 %     82.5 %     84.0 %     77.1 %
                                 
Debt–to–Gross Book Value (1)     53.7 %     43.9 %     53.7 %     43.9 %
Debt–to–EBITDA (2)     9.3x       6.1x       9.3x       6.1x  
Interest Coverage Ratio     3.6x       4.0x       3.4x       3.8x  
Weighted average loan face interest rate (1)     4.61 %     4.56 %     4.61 %     4.56 %
Weighted average loan term to maturity (1)     7.8 years       7.5 years       7.8 years       7.5 years  
                                 
Number of Units outstanding (1)     78,033,606       45,086,159       78,033,606       45,086,159  
Diluted weighted average number of Units outstanding     78,253,220       42,483,493       66,853,148       37,537,524  
                                 
Same property Occupancy rate (3)     76.5 %     75.5 %     74.2 %     72.9 %
Same property Average daily room rate (3)   $ 79.43     $ 82.09     $ 80.04     $ 83.24  
Same property RevPAR (3)   $ 60.76     $ 61.98     $ 59.39     $ 60.68  
Same property Revenues (3)   $ 42,709     $ 43,416     $ 123,484     $ 125,896  
Same property Net operating income (3)   $ 14,827     $ 16,291     $ 42,452     $ 46,812  
Same property NOI Margin % (3)     34.7 %     37.5 %     34.4 %     37.2 %
                                 

(1) At period end.
(2) Aggregate amount of debt at face value divided by annualized EBITDA.
(3) Same–property metrics only represent 71% of AHIP's hotels for Q3 2017 (as at Sept. 30, 2017)

Northland Power Reports 23% Higher Third Quarter Gross Profit and 13% Higher Adjusted EBITDA

TORONTO, ON—(Marketwired – November 08, 2017) –

Not for distribution to U.S. newswire services or for dissemination in the United States or its possessions. Any failure to comply with this restriction may constitute a violation of U.S. securities law.

Northland Power Inc. (“Northland” or the “Company“) (TSX: NPI) (TSX: NPI.PR.A) (TSX: NPI.PR.B) (TSX: NPI.PR.C) (TSX: NPI.DB.B) (TSX: NPI.DB.C) today reported financial results for the three and nine months ended September 30, 2017.

“The third quarter represented another period of great progress across the business,” commented John Brace, Northland's Chief Executive Officer. “Deutsche Bucht, 100% owned by Northland Power, successfully achieved financial close. Nordsee One is nearing completion, and already earning significant pre–completion revenues.” Mr. Brace continued, “Looking ahead, we continue to pursue an exciting pipeline of domestic and international development projects. And we have added Troy Patton to our team in the role of Chief Operations Officer, further demonstrating our ability to attract top performers and our commitment to maximize the value of our operating assets throughout their lifecycle. We continue to be confident about the future of the Company and accordingly, our Board plans to increase the Company's dividend for the first dividend payable in January 2018 by 11% to $0.10 per share monthly, which is an increase to $1.20 per share annually.”

Third Quarter Highlights:

Financial

  • Sales increased 11.1% or $29.5 million and gross profit increased 23.0% or $49.5 million compared to the same quarter last year primarily due to contributions from Gemini and pre–completion revenues from Nordsee One, combined with positive contributions from McLean's and Grand Bend. These positive variances were partially offset by lower contributions from Kingston.
  • Adjusted EBITDA (a non–IFRS measure) increased 13% or $18.3 million compared to the same quarter last year primarily due to contributions from Gemini and pre–completion revenues from Nordsee One, partially offset by higher plant operating costs and management and administration costs.
  • Free cash flow per share (a non–IFRS measure) increased to $0.26 from $0.19 in the same quarter last year primarily as a result of a full quarter of contribution from Gemini partially offset by a lower contribution from Kingston and the commencement of scheduled loan repayments at Gemini in the quarter.
  • Net income increased $63.6 million compared to the same quarter last year primarily due to non–cash gains related to financial derivative contracts and an increase in gross profit, partially offset by higher depreciation expense, plant operating costs and corporate management and administration costs, lower deferred tax recoveries and higher finance costs.

Sales and net income, as reported under IFRS, include consolidated results of entities not wholly–owned by Northland, whereas the above non–IFRS measures, Adjusted EBITDA and free cash flow, only include Northland's net interest.

Construction

  • Nordsee One – 332 MW offshore wind farm, German North Sea – Construction continues to progress according to the project plan. On September 22, 2017, the 54th and final wind turbine was successfully installed and all turbines were earning pre–completion revenues at full rates. As at November 8, 2017, 53 turbines have completed their reliability test. Takeover activities have commenced and Northland expects the commissioning of all turbines and earning of full project revenues to occur by the end of 2017. Final construction close–out and term conversion of the financing is expected to occur prior to the end of the first quarter of 2018.
  • Deutsche Bucht – 252 MW offshore wind project, German North Sea – On August 17, 2017, Northland acquired a 100% interest in the Deutsche Bucht Offshore Wind project (“DeBu“). Financial close for DeBu, with all equity contributed and all debt required fully committed by project lenders, occurred on August 18, 2017. All key construction contracts have been signed and manufacturing has commenced, with project completion expected by the end of 2019. The total estimated project cost is approximately EUR1.3 billion (CAD $1.9 billion). Northland has invested EUR460.6 million of corporate funds, sourced from EUR279.6 million of cash on hand and EUR181.0 million from Northland's corporate revolver facility.

Other

  • Planned Increase in Dividend – The Board of Directors plans to approve an increase in Northland's common share dividend from $0.09 per month ($1.08 annually) at present to $0.10 per month ($1.20 annually) commencing with the dividend record date of December 29, 2017 for dividends payable on January 15, 2018. The Board of Directors expects to review the dividend policy on a regular basis to balance growth requirements and investor preferences.
  • Appointment of Chief Operations Officer – On September 18, 2017, Troy Patton joined Northland as its Chief Operations Officer. Mr. Patton has more than 20 years of experience in the power generation industry, including operations with naval nuclear reactors and gas turbines, wind and solar plants. His post–military career includes senior roles at General Electric and Vestas Wind Systems. Mr. Patton has worked extensively in Europe and Asia and most recently served as Chief Executive Officer of Northern Power Systems, a U.S.–based provider of utility and distributed power solutions.
  • Restructuring of Ground–Mounted Solar Debt – On August 22, 2017, Northland favourably restructured the project debt relating to seven of its ground–mounted solar facilities primarily to align the financing with Northland's ownership interest and reduce loan margins and certain reserving requirements.
             
Summary of Consolidated Results            
(in thousands of dollars, except per share amounts)   Three months ended September 30,   Nine months ended September 30,
    2017   2016   2017   2016
FINANCIALS                        
  Sales   $ 295,243   $ 265,746     $ 981,645   $ 620,500  
  Gross Profit     265,006     215,522       871,691     482,890  
  Operating Income     103,511     105,559       435,670     231,988  
  Net Income (Loss)     31,710     (31,901 )     193,555     (100,176 )
  Adjusted EBITDA (1)     160,226     141,916       526,501     349,783  
  Cash Provided by Operating Activities     172,505     158,806       591,365     375,388  
  Free Cash Flow (1)     45,288     32,144       186,553     123,326  
  Cash Dividends Paid to Common and Class A Shareholders     33,200     34,075       100,053     105,100  
  Total Dividends Declared to Common and Class A Shareholders (2)     47,144     46,484       140,913     138,970  
                         
Per share information                        
  Free Cash Flow (1)   $ 0.260   $ 0.187     $ 1.070   $ 0.716  
  Total Dividends Declared to Common and Class A Shareholders (2)   $ 0.270   $ 0.270     $ 0.810   $ 0.810  
                         
ENERGY VOLUMES                        
  Electricity (megawatt hours) (3)     1,409,409     1,641,555       4,430,747     4,356,820  
(1) Refer to the Non–IFRS Financial Measures section of this press release for further information.
(2) Total dividends to Common and Class A Shareholders represent dividends declared including dividends received in cash or in shares under the DRIP.
(3) Includes Gemini and Nordsee One pre–completion production volumes, which totalled 120,262 and 963,470 MWhs for the three and nine months ended September 30, 2017, respectively, and 279,247 and 379,802 MWhs for the same periods last year. A portion of the related pre–completion revenues are included in sales.
 

Third Quarter Results Summary

Offshore wind facilities
Electricity production, including pre–completion production, during the three months ended September 30, 2017 was 244,250 MWh higher compared to the same quarter last year primarily due to all of Gemini's turbines producing power throughout the quarter. Nordsee One project remained under construction at the end of the quarter but generated 120,262 MWh in pre–completion production. Sales of $143.0 million and adjusted EBITDA of $74.3 million were driven by revenues from Gemini and a portion of pre–completion revenues from Nordsee One. Adjusted EBITDA includes Northland's share of both projects' overhead costs (management and administration) during construction which do not qualify for capitalization under IFRS.

Thermal facilities
Electricity production was 467,486 MWh lower compared to the same quarter last year primarily due to a lack of dispatches being made under the Kingston Remarketing Initiative and the Iroquois Falls EDC and fewer dispatch starts and hours at Thorold. While sales were $30.3 million lower as a result of these factors compared to the same quarter last year, operating income and adjusted EBITDA were only $6.4 million and $10.0 million lower, respectively, primarily as a result of lower plant operating and other costs.

On–shore renewable facilities
Electricity production of 264,456 MWh was comparable to the same quarter last year. Sales for the third quarter of 2017 were consistent with the same quarter in 2016 as a result of higher results at Grand Bend and McLean's being offset by the impact of higher than usual cloud cover at the solar facilities. Plant operating costs were $1.4 million higher primarily due to one–time maintenance costs. As a result of the above factors, operating income and adjusted EBITDA for the renewable facilities were lower by $1.3 million and $1.6 million, respectively.

Management and administration costs
Management and administration (M&A) costs of $21.4 million were $4.5 million higher than the same quarter last year, of which corporate M&A costs were $2.7 million higher primarily due to higher personnel costs ($0.9 million) and higher early–stage development activities ($0.3 million). Facility M&A costs were $1.8 million higher primarily due to personnel, office and other costs related to Gemini that are no longer capitalized due to commencement of commercial operations.

Finance costs
Finance costs, net, increased $9.1 million compared to the third quarter of last year primarily due to interest costs at Gemini no longer being capitalized.

Non–cash fair value gains
Non–cash fair value gains of $12.8 million for the third quarter of 2017 (compared to a $79.3 million loss last year) is primarily due to an $11.7 million gain in the fair value of Northland's financial derivative contracts. Effective January 1, 2017, Northland has adopted IFRS 9 and elected to apply hedge accounting which allows Northland to record the effective portion of mark–to–market adjustments on its derivative contracts in other comprehensive income. The fair value adjustments are non–cash items which will reverse over time, and have no impact on the cash obligations of Northland or its projects. Further details are provided in Note 5 of the unaudited interim condensed consolidated financial statements for the period ended September 30, 2017.

Net income
The factors described above resulted in net income of $31.7 million for the third quarter of 2017, compared to a $31.9 million loss for the third quarter of 2016.

Adjusted EBITDA
Northland's adjusted EBITDA for the three months ended September 30, 2017 was $18.3 million higher than the third quarter of 2016.

The significant factors increasing adjusted EBITDA were:

  • $19.3 million as a result of pre–completion revenues at Nordsee One;
  • $10.9 million as a result of full commercial operations at Gemini; and
  • $2.3 million as a result of higher availability at Kirkland Lake.

The favourable results were partially offset by:

  • $11.6 million as a result of the Kingston Remarketing Initiative;
  • $1.3 million as a result of lower production at the solar facilities;
  • $0.4 million increase in relevant corporate M&A costs primarily related to personnel costs and early–stage development projects; and
  • $0.5 million lower operating income from Northland's other operating facilities.

Free Cash Flow, Payout Ratio and Dividends to Shareholders

Free cash flow of $45.3 million for the third quarter of 2017 was $13.1 million higher than the corresponding period in 2016.

Significant factors increasing free cash flow were:

  • $54.7 million increase in contributions at Gemini which operated for a full quarter;
  • $5.4 million increase in Northland's portion of the Gemini interest income now being recognized; and
  • $4.1 million reduction in operations–related capital expenditures.

Factors decreasing free cash flow were:

  • $28.3 million increase in net interest expense related to Gemini senior debt;
  • $11.6 million decrease due to the impact of the Kingston Remarketing Initiative;
  • $4.9 million negative variance largely associated with prepayments to North Battleford's gas turbine maintenance agreement provider;
  • $3.0 million increase in debt service costs primarily due to the inclusion of Gemini and Grand Bend debt; and
  • $2.7 million increase in relevant corporate M&A costs primarily related to early–stage development projects and personnel costs.

For the three months ended September 30, 2017, common share and Class A Share dividends declared for the quarter totaled $0.27 per share. The increase in quarterly free cash flow from 2016, described above, was the primary reason for the improvement in the quarterly cash payout ratio to 73.3%, or 104.0% if all dividends were paid out in cash (i.e. excluding the effect of Northland's DRIP).

Outlook

Northland actively pursues new power development opportunities that encompass a range of clean technologies, including natural gas, wind, solar and hydro.

Management continues to expect adjusted EBITDA in 2017 to be in the range of $710 million to $750 million and free cash flow per share to be in the range of $1.18 to $1.30 per share. Nordsee One's net pre–completion revenue is excluded from the free cash flow calculation because the expected cash generated is primarily used to fund construction costs pursuant to the credit agreement.

Non–IFRS Measures

This press release includes references to Northland's adjusted EBITDA and free cash flow which are not measures prescribed by International Financial Reporting Standards (IFRS). Adjusted EBITDA and free cash flow do not have any standardized meaning under IFRS and, as presented, may not be comparable to similar measures presented by other companies. These measures should not be considered alternatives to net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. Rather, these measures are provided to complement IFRS measures in the analysis of Northland's results of operations from management's perspective. Management believes that adjusted EBITDA and free cash flow are widely accepted financial indicators used by investors to assess the performance of a company and its ability to generate cash through operations. Refer to the SECTION 1: Overview, SECTION 4.2: Consolidated Results and SECTION 6: Equity, Liquidity and Capital Resources of the current MD&A for an explanation of these terms and for reconciliations to the nearest IFRS measure.

Earnings Conference Call

Northland will hold an earnings conference call on November 9 at 10:00 am EST to discuss its 2017 third quarter results. John Brace, Northland's Chief Executive Officer, Paul Bradley, Northland's Chief Financial Officer, and Mike Crawley, Northland's Executive Vice President, Business Development will discuss the financial results and company developments before opening the call to questions from analysts and shareholders.

Conference call details are as follows:
Date: Thursday, November 9, 2017
Start Time: 10:00 a.m. EST
Phone Number: Toll free within North America: 1–844–284–3434

For those unable to attend the live call, an audio recording will be available on Northland's website at (www.northlandpower.ca) from the afternoon of November 10 until November 24, 2017.

ABOUT NORTHLAND

Northland is an independent power producer founded in 1987, and publicly traded since 1997. Northland develops, builds, owns and operates facilities that produce 'clean' (natural gas) and 'green' (wind, solar, and hydro) energy, providing sustainable long–term value to shareholders, stakeholders, and host communities.

The Company owns or has a net economic interest in 1,754 MW of operating generating capacity and 584 MW (534 MW net interest to Northland) of generating capacity under construction, representing an 85% equity stake in Nordsee One and a 100% interest in Deutsche Bucht.

Northland's cash flows are diversified over four geographically separate regions and regulatory jurisdictions in Canada and Europe.

Northland's common shares, Series 1, Series 2 and Series 3 preferred shares and Series B and Series C convertible debentures trade on the Toronto Stock Exchange under the symbols NPI, NPI.PR.A, NPI.PR.B, NPI.PR.C, NPI.DB.B, and NPI.DB.C, respectively.

FORWARD–LOOKING STATEMENTS

This press release contains certain forward–looking statements that are provided for the purpose of presenting information about management's current expectations and plans. Readers are cautioned that such statements may not be appropriate for other purposes. Forward–looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as “expects,” “anticipates,” “plans,” “predicts,” “believes,” “estimates,” “intends,” “targets,” “projects,” “forecasts” or negative versions thereof and other similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” These statements may include, without limitation, statements regarding future adjusted EBITDA, free cash flows, dividend payments and dividend payout ratios; the construction, completion, attainment of commercial operations, cost and output of development projects; litigation claims; plans for raising capital; and the future operations, business, financial condition, financial results, priorities, ongoing objectives, strategies and outlook of Northland and its subsidiaries. These statements are based upon certain material factors or assumptions that were applied in developing the forward–looking statements, including the design specifications of development projects, the provisions of contracts to which Northland or a subsidiary is a party, management's current plans and its perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward–looking statements are based upon management's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties. Some of the factors that could cause results or events to differ from current expectations include, but are not limited to, natural events, construction risks, counterparty risks, operational risks, risks relating to co–ownership, the variability of revenues from generating facilities powered by intermittent renewable resources, power market risks and possible inflation risks and the other factors described in the “Risks and Uncertainties” section of Northland's 2016 Annual Report and the 2016 Annual Information Form dated March 2, 2017, both of which can be found at www.sedar.com under Northland's profile and on Northland's website at www.northlandpower.ca. Northland's actual results could differ materially from those expressed in, or implied by, these forward–looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward–looking statements will transpire or occur.

The forward–looking statements contained in this release are based on assumptions that were considered reasonable on November 8, 2017. Other than as specifically required by law, Northland undertakes no obligation to update any forward–looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

EyeMD EMR Healthcare Systems, Inc. Announces Acquisition of Healthcare Internet Technologies ASC Software

BONITA SPRINGS, FL—(Marketwired – November 08, 2017) – EyeMD EMR Healthcare Systems, Inc. has acquired a software product specifically designed for eye care ambulatory surgical centers (ASC) from Owings Mills, Md.–based HCIT. The acquisition strengthens the EyeMD EMR portfolio of ophthalmology–specific technologies and positions the company to rapidly move ahead in bringing an ASC solution to the market.

“By adding a tightly–integrated, EMR–agnostic software system specifically designed for ambulatory surgery centers, we can provide our customers with superior tools to better manage the clinical and surgical experience for our users and their patients,” says Abdiel Marin, the CEO of EyeMD EMR Healthcare Systems. Terms of the deal were not disclosed.

The acquisition reflects the company's strategy for accelerated growth by staying well ahead of the curve and providing the best customer experience possible explains Mr. Marin. “It gives us opportunities to reach practices that are not already using EyeMD EMR to help them improve efficiencies and achieve superior workflows between their practice and their surgery centers.”

“The acquisition gives us access to intellectual property that would otherwise only be obtained through years of hands–on experience,” Marin added. “As we evaluated our many options for providing solutions for ASC, it became clear this product featured concepts that are well ahead of any solution on the market and would serve as an excellent foundation for us to build on.”

The Bonita Springs, Fla.–based EyeMD EMR Healthcare Systems is already one of the fastest–growing companies in the U.S., earning a spot on the coveted Inc. 5000 list of companies for the third year in a row in 2016. “We believe this strategic acquisition positions us well to continue our hyper growth,” says Mr. Marin.

About EyeMD EMR Healthcare Systems, Inc.
EyeMD EMR Healthcare Systems specializes in developing and supplying electronic medical records software for ophthalmologists and related sub–specialties, including retina, cornea, pediatric ophthalmology and glaucoma. Ophthalmologists across the U.S. and around the world use EyeMD EMR software to improve electronic clinical documentation workflows and daily practice efficiencies. For more information or to request a live demonstration, visit www.eyemdemr.com or call 877–239–3367.

Image Available: http://www.marketwire.com/library/MwGo/2017/11/8/11G147622/Images/Inc5000GusAbs–300×200–891e782e293d8ff0bed756aaa302c86e.jpg

AirBoss Announces 3rd Quarter 2017 Results and Dividend

NEWMARKET, ON—(Marketwired – November 08, 2017) – AirBoss of America Corp. (TSX: BOS)

Quarterly Highlights:

(In US dollars unless otherwise noted)

  • Quarterly dividend paid of C$0.07 per common share
  • Basic and diluted EPS of $0.12 per common share
  • Appoints Chief Operating Officer
         
    Three Months ended
September 30
  Nine Months ended
September 30
(In thousands of US dollars)   2017   2016   2017   2016
Net Sales   71,837   66,666   215,641   204,588
Gross profit   10,094   11,478   32,958   37,715
EBITDA(1)   6,376   7,270   20,807   25,334
Net income   2,804   3,115   8,860   12,421
(In US dollars, except shares)                
Net income per share (EPS)                
  –Basic   0.12   0.13   0.38   0.54
  –Diluted   0.12   0.13   0.38   0.53
Common shares outstanding (millions)                
  –Basic   23.1   23.1   23.1   23.1
  –Diluted   23.5   23.5   23.5   23.6
                 

Dividend

The Board of Directors of the Company has approved a quarterly dividend of CAD $0.07 per common share, to be paid on January 15, 2018 to shareholders of record at December 29, 2017.

Consolidated Results

The third quarter of 2017 was challenging, with a highly competitive and volatile raw material price environment continuing as well as unusually severe weather conditions, which added further pressure. Overall, net sales in the quarter increased over 2016, driven by price increases at our Rubber Solutions division and by increased sales in the defense business within our Engineered Products division. However, overall profitability declined as gross margin pressure continued at Rubber Solutions, which was only partially offset by an improvement in the profitability of the defense business. Consolidated net sales in the quarter of $71,837 were up 7.8% compared to the third quarter of 2016, and year–to–date net sales of $215,641 were up 5.4% over 2016, as increased net sales at Rubber Solutions and within the defense business continued to offset decreases in the automotive business within Engineered Products. Consolidated gross profit for the quarter and year–to–date was down 12.1% and 12.6%, respectively, from 2016, reflecting the lower net sales in the automotive business at Engineered Products and the impact of higher material costs at Rubber Solutions. EBITDA in the third quarter was down 12.3% from Q3 2016, and down 17.9% year–to–date compared to 2016. At quarter end, the Company had cash and cash equivalents of $18,823.

Segment Results

At Rubber Solutions, net sales increased by 19.3% (to $30,793) in the quarter and by 18.6% (to $94,178) year–to–date, from the comparable periods in 2016. The increase in the quarter over 2016 was driven primarily by a 33.3% increase in material costs (which results in price increases to customers), and the increase year–to–date over 2016 was driven by both a 19.1% increase in material costs and a 5.2% increase in overall volume (measured in pounds shipped). For both the quarter and year–to–date the increase in net sales was reflected primarily in the off the road (“OTR”), oil and gas, mining and track sectors, partially offset by softness in the chemical sector.

Non–tolling volumes year–to–date have increased 7.5% over 2016, notwithstanding a marginal1.1% decrease in the third quarter compared to 2016. Tolling volumes in the quarter increased 2.6%, driven by an increase in niche tolling applications. Year–to–date, tolling volume decreased 9.5% compared to 2016, due to the impact of the sharp decline experienced in the first quarter of 2017 in conventional tolling applications, partially offset by an increase in niche tolling applications.

Gross profit at Rubber Solutions for the third quarter and year–to–date decreased to $3,316 and $14,565, respectively, from the comparable periods in 2016. These decreases were largely due to continuation of higher raw material costs and associated raw material price volatility (which impacts our timing and ability to fully align input cost increases with customer price increases), as well as some unscheduled maintenance and the impact from recent hurricanes affecting the continental United States. Year–to–date, these adverse factors were partially offset by the rectification of negative productivity impacts experienced in the first half of 2016 (related to the 2015 transfer of production from the former Vermont facility to the Acton Vale, Quebec facility). As a percentage of net sales, gross profit in the third quarter was 10.8%, down from 18.6% in the comparable period in 2016, and year–to–date was 15.5%, down from 19.7% in 2016.

At Engineered Products, net sales for the third quarter increased by 0.5% over 2016, to $41,044, but decreased on a year–to–date basis by 3.0%, to $121,463. Increased net sales in the defense business were offset by decreases in the automotive business for these periods.

Net sales in the automotive business decreased in the third quarter and year–to–date by 3.4% and 6.7%, respectively, compared to 2016. As previously disclosed, these relative decreases were largely in the bushings and boot product lines as a result of customer specification changes that led to reduced net sales for those parts, and in muffler hangers as a result of the completion of a large program in the second half of 2016. These lower net sales were partly offset in the relevant periods by increased demand in dampers and induction bonding applications.

Net sales in the defense business increased 21.6% in the third quarter of 2017 over last year, particularly in the extreme cold weather boot (“ECW”) and shelter product lines. Year–to–date, net sales increased 21.5% compared to last year, driven by increases in ECW, shelters, bunny boots and gloves. These higher net sales were partly offset by decreases in the powered air purifying respirator (“PAPR”) line and, particularly for the year–to–date, a decrease in over–boots following the completion of a contract with final shipments in the first quarter of 2016.

Despite the improvements in sales and profitability in the defense business, the lower net sales in the automotive business resulted in gross profit at Engineered Profits being marginally higher in the third quarter, at $6,778 (16.5% of net sales), compared to $6,685 (16.4% of net sales) in 2016, and declining year–to–date to $18,393 (15.1% of sales), compared to $22,054 (17.6% in 2016).

Overview and Outlook

The current environment experienced at Rubber Solutions is expected to continue for the remainder of the year, due to ongoing price competition and material cost volatility, although we expect volume to remain similar to the third quarter. To mitigate this pressure, we are reviewing our purchasing and pricing strategies with a view to being more proactive in the marketplace. In addition, the success we have experienced to date in diversifying our customer base and product offerings has resulted in an expanded range of compounds, with widely varying volume demands, to an increasing number of diverse customers. This evolution in our Rubber Solutions business has required us to focus on identifying and making adjustments to our processes, from product development to commercialization and full–scale production, to maximize efficiencies and optimize capacity utilization. These efforts will be led by our recently appointed COO and President of Rubber Solutions, Chris Bitsakakis. We look forward to leveraging Mr. Bitsakakis' manufacturing expertise and experience in the implementation of our identified process improvement opportunities.

Within Engineered Products, the recently strengthened management team in the automotive business continues to identify and implement process improvements, which are beginning to stabilize profitability in the business. Our new business development and engineering leaders are developing proactive strategies to attain new multi–year programs to replace programs that have expired or are near the end of their platform life. These activities are necessarily focusing on platforms that start production in 2018/2019 or later and will likely not have a significant impact on the near term. As a result, we expect net sales in the automotive business in the fourth quarter to be at similar levels to the year–to–date. In our defense business, the year–to–date has seen significant improvements in sales and profitability and, based on anticipated activity in the fourth quarter, we expect the full year 2017 to be the strongest year the defense business has had in several years. Levels of potential tendering activity worldwide, as well as the rate of inquiries we continue to receive, point to continued momentum into early 2018.

Based on current trends, management expects that consolidated net sales and gross profit in the fourth quarter will show an improvement over Q4 2016, which will help reduce the negative gap in 2017 profitability compared to 2016, on a full year basis. Management will intensify its focus on stabilizing and improving gross profit margins across the businesses in order to more fully realize the benefits of the trend of increasing net sales.

A conference call to discuss the quarterly results is scheduled for 9:00 a.m. Eastern on Thursday, November 9, 2017. Please go to http://www.gowebcasting.com/8986 or dial in to the following numbers: 416–340–2218 or Toll Free: 1–800–478–9326. Conference ID: 4275274.

AirBoss of America Corp. is a group of complementary businesses using compounding technology and engineering expertise to create value for its customers. With a capacity to process approximately 400 million turn pounds of rubber annually, AirBoss Rubber Solutions is one of North America's largest custom rubber compounders and a leading supplier of essential calendered and extruded products for a broad range of applications. AirBoss Engineered Products is a world leader in the supply of life saving products for the military and a leading supplier of innovative anti–vibration solutions to the North American automotive market. The Company's shares trade on the TSX under the symbol BOS. Visit www.airbossofamerica.com.

Note (1): Non – IFRS Financial Measures: EBITDA does not have any standardized meanings prescribed by IFRS. Such measure is neither required by, nor calculated in accordance with IFRS, and therefore is considered a Non–IFRS financial measure. The Company discloses EBITDA, a financial measurement used by interested parties and investors to monitor the ability of an issuer to generate cash from operations for debt service, financing working capital and capital expenditures and paying dividends. It should not be considered as an alternative to, or more meaningful than net income (or any other IFRS financial measure) as an indicator of the Company's performance. Because EBITDA excludes some, but not all, items that affect net income, the EBITDA presented by the Company may not be comparable to similarly titled measures of other companies. A reconciliation of EBITDA to net income is presented below.

         
    Three months ended
September 30
  Nine months ended
September 30
In thousands of US dollars   2017   2016   2017   2016
Net income   2,804   3,115   8,860   12,421
Finance costs   582   670   2,095   2,177
Depreciation and amortization   2,643   2,560   8,036   7,678
Income tax expense   347   925   1,816   3,058
EBITDA   6,376   7,270   20,807   25,334
                 

FORWARD LOOKING STATEMENT DISCLAIMER

Certain statements contained or incorporated by reference herein, including those that express management's expectations or estimates of future developments or AirBoss' future performance, constitute “forward–looking statements” within the meaning of applicable securities laws, and can generally be identified by words such as “will”, “may”, “could” “expects”, “believes”, “anticipates”, “forecasts”, “plans”, “intends” or similar expressions. These statements are not historical facts but instead represent management's expectations, estimates and projections regarding future events and performance.

Forward–looking statements are necessarily based upon a number of opinions, estimates and assumptions that, while considered reasonable by management at the time the statements are made, are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies. AirBoss cautions that such forward–looking statements involve known and unknown contingencies, uncertainties and other risks that may cause AirBoss' actual financial results, performance or achievements to be materially different from its estimated future results, performance or achievements expressed or implied by those forward–looking statements. Numerous factors could cause actual results to differ materially from those in the forward–looking statements, including without limitation: impact of general economic conditions; its dependence on key customers; cyclical trends in the tire and automotive, construction, mining and retail industries; sufficient availability of raw materials at economical costs; weather conditions affecting raw materials, production and sales; AirBoss' ability to maintain existing customers or develop new customers in light of increased competition; AirBoss' ability to successfully integrate acquisitions of other businesses and/or companies or to realize on the anticipated benefits thereof, changes in accounting policies and methods, including uncertainties associated with critical accounting assumptions and estimates; changes in the value of the Canadian dollar relative to the US dollar; changes in tax laws and potential litigation; ability to obtain financing on acceptable terms; environmental damage caused by it and non–compliance with environmental laws and regulations; potential product liability and warranty claims and equipment malfunction. This list is not exhaustive of the factors that may affect any of AirBoss' forward–looking statements.

All of the forward–looking information in this press release is expressly qualified by these cautionary statements. Investors are cautioned not to put undue reliance on forward–looking statements. All subsequent written and oral forward–looking statements attributable to AirBoss or persons acting on its behalf are expressly qualified in their entirety by this notice. Forward–looking information contained herein is made as of the date of this press release and, whether as a result of new information, future events or otherwise, AirBoss disclaims any intent or obligation to update publicly these forward–looking statements except as required by applicable laws. Risks and uncertainties about AirBoss' business are more fully discussed in the Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2016 Annual Report to Shareholders under the heading “Risk Factors”.

Kinross reports 2017 third-quarter results

TORONTO, ON—(Marketwired – November 08, 2017) – Kinross Gold Corporation (TSX: K) (NYSE: KGC) today announced its results for the third–quarter ended September 30, 2017.

(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 18 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)

2017 third–quarter highlights:

  • Production1: 653,993 gold equivalent ounces (Au eq. oz.), compared with 684,129 Au eq. oz. in Q3 2016.
  • Revenue: $828.0 million, compared with $910.2 million in Q3 2016.
  • Production cost of sales(2): $662 per Au eq. oz., compared with $719 in Q3 2016.
  • All–in sustaining cost2: $937 per Au eq. oz. sold, compared with $1,001 in Q3 2016. All–in sustaining cost per gold ounce (Au oz.) sold on a by–product basis was $927 in Q3 2017, compared with $987 in Q3 2016.
  • Operating cash flow: $197.7 million, compared with $266.2 million in Q3 2016.
  • Adjusted operating cash flow2: $320.8 million, compared with $320.3 million for Q3 2016.
  • Reported net earnings(3): Net earnings increased to $60.1 million, or $0.05 per share, compared with net earnings of $2.5 million, or $0.00 per share, in Q3 2016.
  • Adjusted net earnings2,3: $84.1 million, or $0.07 per share, compared with adjusted net earnings of $128.7 million, or $0.10 per share, in Q3 2016.
  • Organic development projects:
    • In mid–September 2017, the Company announced that it was proceeding with the Tasiast Phase Two and Round Mountain Phase W projects. Phase Two is expected to transform Tasiast into a large, world–class mine with low costs while Phase W is expected to extend mining by five years at Round Mountain.
    • The Tasiast Phase One expansion continues to advance on time and on budget and is expected to reach full commercial production towards the end of Q2 2018. Plant construction is now 77% complete.
    • Construction for the Tasiast Phase Two expansion is on schedule to start early next year, with engineering now 25% complete.
    • At the Round Mountain Phase W project, stripping and initial construction is on schedule to begin early next year, pending the permitting process. The Decision Record from the U.S. Bureau of Land Management was received in October 2017 and state permits are proceeding as planned.
    • At the Bald Mountain Vantage Complex, overall engineering work is now 70% complete and initial construction work is expected to commence in Q1 2018.
    • At the Moroshka project located near Kupol, development of the twin declines is progressing on schedule.
  • Outlook: Kinross is tracking towards the high end of its 2017 guidance for production (2.5 – 2.7 million Au eq. oz.), and the low end for both production cost of sales ($660 – $720 per Au eq. oz.) and all–in sustaining cost ($925 – $1,025 per Au eq. oz.). The Company expects to be within its capital expenditures guidance of $900 million (+/– 5%).
  • Balance sheet: As of September 30, 2017, Kinross had cash and cash equivalents of $992.1 million, and available credit of $1,512.2 million, for total liquidity of approximately $2.5 billion.The Company has no scheduled debt repayments until 2021.

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 13 to 17 of this news release.
3 Net earnings/loss figures in this release represent “net earnings (loss) attributable to common shareholders”.

CEO Commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to 2017 third–quarter results:

“Kinross 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 among our peers.

“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.

“We are continuing to deliver and have strong operational momentum as we head into year end.”

Financial results

Summary of financial and operating results

       
  Three months ended   Nine months ended
  September 30,   September 30,
(in millions, except ounces, per share amounts, and per ounce amounts) 2017 2016   2017 2016
Operating Highlights                  
Total gold equivalent ounces(a)                  
  Produced(c)   660,564   690,311     2,038,797   2,057,844
  Sold(c)   645,235   680,327     1,987,113   2,035,475
                   
Attributable gold equivalent ounces(a)                  
  Produced(c)   653,993   684,129     2,020,823   2,042,859
  Sold(c)   638,659   674,070     1,968,189   2,020,219
                   
Financial Highlights                  
Metal sales $ 828.0 $ 910.2   $ 2,492.7 $ 2,569.2
Production cost of sales $ 427.5 $ 490.0   $ 1,342.9 $ 1,454.4
Depreciation, depletion and amortization $ 207.6 $ 213.8   $ 629.1 $ 617.2
Impairment charges $ $ 139.6   $ $ 139.6
Operating earnings (loss) $ 80.1 $ (30.1 ) $ 233.6 $ 81.9
Net earnings attributable to common shareholders $ 60.1 $ 2.5   $ 227.8 $ 12.5
Basic earnings per share attributable to common shareholders $ 0.05 $ 0.00   $ 0.18 $ 0.01
Diluted earnings per share attributable to common shareholders $ 0.05 $ 0.00   $ 0.18 $ 0.01
Adjusted net earnings attributable to common shareholders(b) $ 84.1 $ 128.7   $ 162.4 $ 143.9
Adjusted net earnings per share(b) $ 0.07 $ 0.10   $ 0.13 $ 0.12
Net cash flow provided from operating activities $ 197.7 $ 266.2   $ 585.2 $ 796.6
Adjusted operating cash flow(b) $ 320.8 $ 320.3   $ 802.5 $ 715.1
Average realized gold price per ounce $ 1,283 $ 1,336   $ 1,254 $ 1,261
Consolidated production cost of sales per equivalent ounce(c) sold(b) $ 663 $ 720   $ 676 $ 715
Attributable(a) production cost of sales per equivalent ounce(c) sold(b) $ 662 $ 719   $ 674 $ 713
Attributable(a) production cost of sales per ounce sold on a by–product basis(b) $ 645 $ 695   $ 658 $ 694
Attributable(a) all–in sustaining cost per ounce sold on a by–product basis(b) $ 927 $ 987   $ 924 $ 962
Attributable(a) all–in sustaining cost per equivalent ounce(c) sold(b) $ 937 $ 1,001   $ 933 $ 973
Attributable(a) all–in cost per ounce sold on a by–product basis(b) $ 1,155 $ 1,074   $ 1,117 $ 1,030
Attributable(a) all–in cost per equivalent ounce(c) sold(b) $ 1,158 $ 1,085   $ 1,121 $ 1,039
(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 13 to 17 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 third quarter of 2017 was 75.91:1, compared with 68.05:1 for the third quarter of 2016 and for the first nine months of 2017 was 72.94:1, compared with 73.61:1 for the first nine months of 2016.
     

Unless otherwise noted, the following operating and financial results are based on third–quarter 2017 gold equivalent production. Production and cost measures are on an attributable basis:

Production: 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, Bald Mountain and Fort Knox.

Production cost of sales per Au oz. on a by–product basis2 decreased to $645 in Q3 2017, compared with $695 in Q3 2016, based on Q3 2017 attributable gold sales of 621,720 ounces and attributable silver sales of 1,285,860 ounces.

All–in sustaining cost: All–in sustaining cost per Au eq. oz. sold2 decreased to $937 in Q3 2017, compared with $1,001 in Q3 2016. All–in sustaining cost per Au oz. sold on a by–product basis2 decreased to $927 in Q3 2017, compared with $987 in Q3 2016.

Average realized gold price: The average realized gold price in Q3 2017 was $1,283 per ounce, compared with $1,336 per ounce in Q3 2016.

Revenue: Revenue from metal sales decreased to $828.0 million in Q3 2017, compared with $910.2 million during the same period in 2016, mainly due to lower gold equivalent ounces sold and the lower average realized gold price.

Margins: Kinross' attributable margin per Au eq. oz. sold4 was $621 for Q3 2017, compared with a Q3 2016 margin of $617 per Au eq. oz.

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.”

Operating cash flow: Adjusted operating cash flow2 was $320.8 million for Q3 2017, compared with $320.3 million for Q3 2016.

Net operating cash flow was $197.7 million for Q3 2017, compared with $266.2 million for Q3 2016.

Earnings: Adjusted net earnings2,3 were $84.1 million, or $0.07 per share, for Q3 2017, compared with adjusted net earnings of $128.7 million, or $0.10 per share, for Q3 2016, mainly as a result of a decrease in revenue and income tax recovery recognized in the quarter, compared with the same period in 2016.

Reported net earnings3 increased to $60.1 million, or $0.05 per share, for Q3 2017, compared with net earnings of $2.5 million, or $0.00 per share, for Q3 2016 mainly as a result of a non–cash impairment charge recognized in the same period last year and lower production cost of sales.

Capital expenditures: Capital expenditures increased to $204.7 million for Q3 2017, compared with $153.8 million for the same period last year, primarily due to Tasiast Phase One expansion project costs and increased spending at Fort Knox, partly offset by lower spending at Kupol.

Operating results
Mine–by–mine summaries for 2017 third–quarter operating results may be found on pages eight and 12 of this news release. Highlights include the following:

Americas

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 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, 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.

At Maricunga, production was better than expected, as the rinsing of the heap materials placed on the pads prior to the suspension of mining activities continued to achieve strong results. Cost of sales per ounce was higher compared with the previous quarter mainly due to higher contractor costs. Production is expected to be at a similar level for the fourth quarter.

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 unfavourable foreign exchange rates.

West Africa

Tasiast 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.

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.

Organic development projects

In mid–September 2017, the Company announced that it was proceeding with the Tasiast Phase Two and Round Mountain Phase W expansion projects. Phase Two is expected to transform Tasiast into a large, world–class mine with low costs and Phase W is expected to extend mining by five years at Round Mountain.

Tasiast Phase One project development is progressing well, and continues to be on time and on budget, with full commercial production expected towards the end of Q2 2018. Plant construction is now 77% complete. Crusher installation has started and conveyor installation is progressing well for both the stockpile and SAG feed. The gearless motor drives for the SAG mill are now in place and work on the stator windings has begun. Significant progress has been made at the downstream portion of the plant, including the cyclones, three leach tanks, elution circuit and pumping and piping. Electrical work is ramping up across the project and the tailings storage facility is now ready for tailings deposition.

Construction for the Tasiast Phase Two project is on schedule to commence in early 2018. Procurement for long lead items, including the power plant, has begun. Overall engineering is now 25% complete and commercial terms for the EPCM package have been finalized.

At the Round Mountain Phase W project, stripping and initial construction work is expected to begin in early 2018, pending the completion of the permitting process. The Decision Record from the U.S. Bureau of Land Management was received in October 2017 and state permits are proceeding as planned. Detailed engineering continues to advance and procurement activities for long lead items and mining equipment have commenced. Initial low grade Phase W ore is expected to be encountered in mid–2019.

At the Bald Mountain Vantage Complex project, overall engineering is now 70% complete. The permitting process is proceeding as planned and initial construction work is on schedule to begin in Q1 2018. The proposed heap leach pad and associated processing facilities and infrastructure is expected to accommodate a total capacity of 68 million tonnes of ore.

At the Moroshka satellite deposit in Russia, located approximately four kilometres east of Kupol, development of the twin declines is proceeding on schedule, with construction of surface infrastructure now complete.

At the Tasiast Sud project, located 10 kilometres south of Tasiast, the pre–feasibility study that is contemplating a potential dump leach operation that would combine materials from multiple deposits in the area, and the trucking of high grade ore to the Tasiast mill, is progressing well and is expected to be completed in the second half of 2018. The accelerated infill drilling campaign, which is evaluating the potential for additions to mineral resource estimates at year end, has generated encouraging results and completed 21,700 metres of drilling in 245 holes as of the end of September.

Balance sheet

As of September 30, 2017, Kinross had cash and cash equivalents of $992.1 million, compared with $1,061.3 million as of June 30, 2017. The Company also had available credit of $1,512.2 million as of September 30, 2017 for total liquidity of approximately $2.5 billion.

During the third quarter, the Company completed a $500.0 million offering of 4.50% debt securities and used the net proceeds, along with cash on hand, to repay its term loan due August 2020. As a result, the Company has no scheduled debt repayments until 2021.

On July 28, 2017, the Company extended the maturity date of its $1,500.0 million revolving credit facility by one year from August 10, 2021 to August 10, 2022.

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 18 of this news release.

Kinross' 2017 production guidance took into account the potential curtailment at Paracatu and is tracking towards the high end of the range of approximately 2.5 – 2.7 million Au eq. oz., with robust year–to–date production from Maricunga, Kettle River–Buckhorn and Round Mountain strengthening the Company's portfolio.

Kinross is tracking towards the low end for both its production cost of sales guidance range of $660 – $720 per Au eq. oz. and its all–in sustaining cost guidance range of $925 – $1,025 per Au eq. oz. sold.

The Company expects to meet its 2017 capital expenditures forecast of approximately $900 million (+/– 5%).

Other operating costs are now expected to be $140 – $150 million for 2017, compared with the previous guidance range of $80 – $90 million, mainly as a result of the temporary curtailment at Paracatu, VAT and other tax related items, and Kettle River–Buckhorn reclamation costs.

Board update

The Board of Directors of Kinross has appointed Mr. Kerry Dyte, Q.C, ICD.D as a Director. Mr. Dyte has over 30 years of experience in the legal field and over 20 years of experience as a senior executive in the resource industry. Mr. Dyte was most recently the Executive Vice–President, General Counsel and Corporate Secretary of Cenovus Energy Inc. Mr. Dyte has played a key leadership role in a variety of major corporate transactions including mergers and acquisitions, financings and project development, during his career.

Mr. John M.H. Huxley, who has been a Kinross Board member since 1993, has decided to retire effective as of December 31, 2017. Kinross' Board of Directors and management team would like to thank Mr. Huxley for his many contributions and his distinguished directorship on the Board.

Conference call details

In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, November 9, 2017 at 8:00 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

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

Canada & US toll–free – 1–800–319–6413; Passcode – 1740 followed by #.
Outside of Canada & US – 1–604–638–9010; Passcode –1740followed 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 news release should be read in conjunction with Kinross' 2017 third–quarter unaudited Financial Statements and Management's Discussion and Analysis report at www.kinross.com. Kinross' 2017 third–quarter unaudited Financial Statements and Management's Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished to 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. Our focus is on delivering value based on the core principles of operational excellence, balance sheet strength, disciplined growth and responsible mining. Kinross maintains listings on the Toronto Stock Exchange (symbol: K) and the New York Stock Exchange (symbol: KGC).

Review of operations

                                       
                                       
Three months ended September 30,       Gold equivalent ounces                              
  Produced     Sold     Production cost of sales ($millions)     Production cost of sales/equivalent ounce sold
  2017     2016     2017       2016     2017     2016     2017   2016
                                                     
Fort Knox 101,047     110,396     101,077       107,444     $ 64.8     $ 79.8     $ 641   $ 743
Round Mountain 120,743     93,215     120,944       88,477       75.7       73.7       626     833
Bald Mountain 80,677     32,675     67,598       30,174       46.7       30.9       691     1,024
Kettle River – Buckhorn 17,132     28,241     17,385       28,104       10.3       17.1       592     608
Paracatu 46,971     111,889     53,076       111,796       53.0       77.5       999     693
Maricunga 20,463     39,253     14,129       39,458       8.1       37.5       573     950
Americas Total 387,033     415,669     374,209       405,453       258.6       316.5       691     781
                                                     
Kupol 145,759     178,032     142,821       181,508       74.8       82.4       524     454
Russia Total 145,759     178,032     142,821       181,508       74.8       82.4       524     454
                                                     
Tasiast 62,065     34,793     62,448       30,793       46.1       38.1       738     1,237
Chirano (100%) 65,707     61,817     65,757       62,573       48.0       53.0       730     847
West Africa Total 127,772     96,610     128,205       93,366       94.1       91.1       734     976
                                                     
Operations Total 660,564     690,311     645,235       680,327       427.5       490.0       663     720
Less Chirano non–controlling interest (10%) (6,571 )   (6,182 )   (6,576 )     (6,257 )     (4.8 )     (5.3 )            
Attributable Total 653,993     684,129     638,659       674,070     $ 422.7     $ 484.7     $ 662   $ 719
                                                     
                                                     
 
                                             
Nine months ended September 30,       Gold equivalent ounces                              
  Produced     Sold     Production cost of sales ($millions)     Production cost of sales/equivalent ounce sold
  2017     2016     2017       2016     2017     2016     2017   2016
                                                     
Fort Knox 285,933     295,417     287,055       292,958     $ 181.2     $ 219.4     $ 631   $ 749
Round Mountain 338,683     278,954     333,853       270,597       220.9       205.4       662     759
Bald Mountain 177,635     85,801     163,553       76,879       121.9       87.2       745     1,134
Kettle River – Buckhorn 72,664     81,584     73,138       81,176       36.4       57.5       498     708
Paracatu 293,936     358,039     293,408       355,251       250.4       244.9       853     689
Maricunga 72,088     142,633     30,115       142,310       13.0       127.4       432     895
Americas Total 1,240,939     1,242,428     1,181,122       1,219,171       823.8       941.8       697     772
                                                     
Kupol 435,150     554,120     435,489       556,089       227.1       243.5       521     438
Russia Total 435,150     554,120     435,489       556,089       227.1       243.5       521     438
                                                     
Tasiast 182,966     111,448     181,263       107,651       135.2       120.6       746     1,120
Chirano (100%) 179,742     149,848     189,239       152,564       156.8       148.5       829     973
West Africa Total 362,708     261,296     370,502       260,215       292.0       269.1       788     1,034
                                                     
Operations Total 2,038,797     2,057,844     1,987,113       2,035,475       1,342.9       1,454.4       676     715
Less Chirano non–controlling interest (10%) (17,974 )   (14,985 )   (18,924 )     (15,256 )     (15.7 )     (14.9 )            
Attributable Total 2,020,823     2,042,859     1,968,189       2,020,219     $ 1,327.2     $ 1,439.5     $ 674   $ 713
                                                     
 
 

Consolidated balance sheets

(unaudited expressed in millions of United States dollars, except share amounts)
             
    As at  
    September 30,     December 31,  
    2017     2016  
                 
Assets                
  Current assets                
    Cash and cash equivalents   $ 992.1     $ 827.0  
    Restricted cash     12.3       11.6  
    Accounts receivable and other assets     162.0       127.3  
    Current income tax recoverable     89.9       111.9  
    Inventories     1,042.0       986.8  
    Unrealized fair value of derivative assets     15.0       16.1  
    Assets classified as held for sale     2.5        
        2,315.8       2,080.7  
  Non–current assets                
    Property, plant and equipment     4,809.6       4,917.6  
    Goodwill     162.7       162.7  
    Long–term investments     204.2       142.9  
    Investments in associate and joint ventures     24.0       163.6  
    Unrealized fair value of derivative assets     2.7       6.0  
    Other long–term assets     479.2       411.3  
    Deferred tax assets     90.9       94.5  
Total assets   $ 8,089.1     $ 7,979.3  
                 
Liabilities                
  Current liabilities                
    Accounts payable and accrued liabilities   $ 459.2     $ 464.8  
    Current income tax payable     15.0       72.6  
    Current portion of provisions     72.1       93.2  
    Current portion of unrealized fair value of derivative liabilities     0.5       7.1  
    Liabilities classified as held for sale     37.6        
        584.4       637.7  
  Non–current liabilities                
    Long–term debt     1,732.0       1,733.2  
    Provisions     853.7       861.2  
    Other long–term liabilities     127.4       172.2  
    Deferred tax liabilities     375.3       390.7  
Total liabilities     3,672.8       3,795.0  
                 
Equity                
  Common shareholders' equity                
    Common share capital   $ 14,902.5     $ 14,894.2  
    Contributed surplus     237.1       238.3  
    Accumulated deficit     (10,798.3 )     (11,026.1 )
    Accumulated other comprehensive income     38.4       39.1  
Total common shareholders' equity     4,379.7       4,145.5  
  Non–controlling interest     36.6       38.8  
Total equity     4,416.3       4,184.3  
Total liabilities and equity   $ 8,089.1     $ 7,979.3  
                 
Common shares                
  Authorized     Unlimited       Unlimited  
  Issued and outstanding     1,246,993,687       1,245,049,712  
                 
                 

Consolidated statements of operations

(unaudited expressed in millions of United States dollars, except share and per share amounts)
    Three months ended     Nine months ended  
    September 30,     September 30,     September 30,     September 30,  
    2017     2016     2017     2016  
                                 
Revenue                                
  Metal sales   $ 828.0     $ 910.2     $ 2,492.7     $ 2,569.2  
                                 
Cost of sales                                
  Production cost of sales     427.5       490.0       1,342.9       1,454.4  
  Depreciation, depletion and amortization     207.6       213.8       629.1       617.2  
  Impairment charges           139.6             139.6  
Total cost of sales     635.1       843.4       1,972.0       2,211.2  
Gross profit     192.9       66.8       520.7       358.0  
  Other operating expense     55.1       27.2       116.3       97.2  
  Exploration and business development     26.1       29.8       72.0       68.3  
  General and administrative     31.6       39.9       98.8       110.6  
Operating earnings (loss)     80.1       (30.1 )     233.6       81.9  
  Other income (expense) – net     (1.2 )     2.1       123.5       15.3  
  Equity in losses of associate and joint ventures     (0.1 )     (0.3 )     (1.0 )     (0.2 )
  Finance income     3.3       2.1       9.4       5.6  
  Finance expense     (32.3 )     (31.0 )     (89.3 )     (96.5 )
Earnings before tax     49.8       (57.2 )     276.2       6.1  
  Income tax recovery (expense) – net     10.3       59.4       (50.6 )     2.7  
Net earnings   $ 60.1     $ 2.2     $ 225.6     $ 8.8  
Net earnings (loss) attributable to:                                
  Non–controlling interest   $     $ (0.3 )   $ (2.2 )   $ (3.7 )
  Common shareholders   $ 60.1     $ 2.5     $ 227.8     $ 12.5  
Earnings per share attributable to common shareholders                                
                                 
  Basic   $ 0.05     $ 0.00     $ 0.18     $ 0.01  
  Diluted   $ 0.05     $ 0.00     $ 0.18     $ 0.01  
                                 
Weighted average number of common shares outstanding (millions)                                
  Basic     1,247.0       1,244.9       1,246.5       1,221.0  
  Diluted     1,257.1       1,256.5       1,256.5       1,231.8  

Consolidated statements of cash flows

(unaudited expressed in millions of United States dollars)  
    Three months ended     Nine months ended  
    September 30,     September 30,     September 30,     September 30,  
    2017     2016     2017     2016  
Net inflow (outflow) of cash related to the following activities:                                
                                 
Operating:                                
Net earnings   $ 60.1     $ 2.2     $ 225.6     $ 8.8  
Adjustments to reconcile net earnings to net cash provided from operating activities:                                
  Depreciation, depletion and amortization     207.6       213.8       629.1       617.2  
  Gain on disposition of associate and other interests – net                 (11.0 )      
  Reversal of impairment charges                 (97.0 )      
  Impairment charges           139.6             139.6  
  Equity in losses of associate and joint ventures     0.1       0.3       1.0       0.2  
  Share–based compensation expense     3.5       3.7       10.1       10.8  
  Finance expense     32.3       31.0       89.3       96.5  
  Deferred tax expense (recovery)     3.7       (46.7 )     (13.5 )     (150.7 )
  Foreign exchange losses (gains) and other     1.6       (23.6 )     (45.0 )     (7.3 )
  Reclamation expense     11.9             13.9        
  Changes in operating assets and liabilities:                                
    Accounts receivable and other assets     (76.5 )     (55.5 )     (33.4 )     (51.9 )
    Inventories     (60.7 )     (16.9 )     (65.8 )     67.0  
    Accounts payable and accrued liabilities     46.1       40.3       28.3       155.3  
Cash flow provided from operating activities     229.7       288.2       731.6       885.5  
  Income taxes paid     (32.0 )     (22.0 )     (146.4 )     (88.9 )
Net cash flow provided from operating activities     197.7       266.2       585.2       796.6  
                                 
Investing:                                
  Additions to property, plant and equipment     (204.7 )     (153.8 )     (584.3 )     (407.3 )
  Business acquisition                       (588.0 )
  Net additions to long–term investments and other assets     (32.9 )     (35.4 )     (48.0 )     (55.5 )
  Net proceeds from the sale of property, plant and equipment     1.5       1.1       6.3       8.0  
  Net proceeds from disposition of associate and other interests                 267.5        
  Decrease (increase) in restricted cash     0.4       (0.1 )     (0.7 )     (1.0 )
  Interest received and other     1.9       1.1       5.2       2.6  
Net cash flow used in investing activities     (233.8 )     (187.1 )     (354.0 )     (1,041.2 )
Financing:                                
  Issuance of common shares on exercise of options           1.8       0.8       2.8  
  Proceeds from issuance of equity                       275.7  
  Proceeds from issuance of debt     494.7             494.7       175.0  
  Repayment of debt     (500.0 )     (250.0 )     (500.0 )     (425.0 )
  Interest paid     (28.4 )     (37.2 )     (62.9 )     (70.4 )
  Other     (1.1 )     (3.3 )     (1.6 )     (3.3 )
Net cash flow used in financing activities     (34.8 )     (288.7 )     (69.0 )     (45.2 )
Effect of exchange rate changes on cash and cash equivalents     1.7       (2.2 )     2.9       2.3  
Increase (decrease) in cash and cash equivalents     (69.2 )     (211.8 )     165.1       (287.5 )
Cash and cash equivalents, beginning of period     1,061.3       968.2       827.0       1,043.9  
Cash and cash equivalents, end of period   $ 992.1     $ 756.4     $ 992.1     $ 756.4  
                                 
                                 
 
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   Q3 2017   100   7,490   3,228   6,088   0.78   0.26   81%   101,047   101,077   $ 64.8   $ 641   $ 25.4   $ 20.5
Q2 2017   100   5,353   3,069   5,830   0.86   0.26   84%   91,848   91,237     57.9     635     21.4     20.0
Q1 2017   100   5,242   2,933   3,885   0.75   0.23   83%   93,038   94,741     58.5     617     28.0     22.5
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
Round Mountain   Q3 2017   100   6,906   865   5,177   1.73   0.50   81%   120,743   120,944   $ 75.7   $ 626   $ 14.7   $ 34.9
Q2 2017   100   8,136   979   5,685   1.35   0.52   78%   115,191   108,811     69.7     641     8.6     28.3
Q1 2017   100   5,947   951   4,548   1.14   0.51   82%   102,749   104,098     75.5     725     6.3     28.9
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
Bald Mountain (8)   Q3 2017   100   7,090     7,105     1.09   nm   80,677   67,598   $ 46.7   $ 691   $ 12.6   $ 24.6
Q2 2017   100   5,174     5,159     0.58   nm   49,881   54,308     41.4     762     15.6     16.2
Q1 2017   100   3,660     3,660     0.69   nm   47,077   41,647     33.8     812     15.7     14.1
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
Kettle River– Buckhorn   Q3 2017   100     43     4.36     67%   17,132   17,385   $ 10.3   $ 592   $   $ 0.1
Q2 2017   100   91   95     11.45     90%   30,966   30,858     12.4     402         0.1
Q1 2017   100   98   96     9.95     93%   24,566   24,895     13.7     550         0.4
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         1.0
Paracatu   Q3 2017   100   227   4,067     0.42     69%   46,971   53,076   $ 53.0   $ 999   $ 32.6   $ 30.6
Q2 2017   100   10,422   13,333     0.43     77%   138,869   137,056     99.5     726     31.4     36.7
Q1 2017   100   10,226   11,892     0.38     73%   108,096   103,276     97.9     948     25.9     33.5
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
Maricunga (8)   Q3 2017   100             nm   20,463   14,129   $ 8.1   $ 573   $   $ 1.7
Q2 2017   100             nm   15,624   7,415     1.9     256     0.1     0.6
Q1 2017   100             nm   36,001   8,571     3.0     350     0.1     1.2
Q4 2016   100             nm   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
Russia Kupol (3)(4)(6)   Q3 2017   100   491   451     9.69     95%   145,759   142,821   $ 74.8   $ 524   $ 14.4   $ 41.4
Q2 2017   100   489   440     9.78     95%   146,013   149,187     80.5     540     15.4     44.5
Q1 2017   100   448   417     10.23     95%   143,378   143,481     71.8     500     5.4     55.0
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
West Africa Tasiast   Q3 2017   100   2,139   764   576   2.42   0.67   93%   62,065   62,448   $ 46.1   $ 738   $ 93.8   $ 16.7
Q2 2017   100   975   728   87   2.35   0.59   93%   56,278   52,703     42.1     799     95.2     18.8
Q1 2017   100   1,037   746   75   2.41   0.50   92%   64,623   66,112     47.0     711     71.1     25.3
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
Chirano – 100%   Q3 2017   90   456   886     2.51     92%   65,707   65,757   $ 48.0   $ 730   $ 7.7   $ 34.8
Q2 2017   90   613   822     2.48     92%   55,782   57,787     51.2     886     10.1     36.8
Q1 2017   90   845   852     2.25     92%   58,253   65,695     57.6     877     17.9     34.5
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
Chirano – 90%   Q3 2017   90   456   886     2.51     92%   59,136   59,181   $ 43.2   $ 730   $ 6.9   $ 31.3
Q2 2017   90   613   822     2.48     92%   50,204   52,009     46.1     886     9.1     33.1
Q1 2017   90   845   852     2.25     92%   52,428   59,125     51.8     877     16.1     31.1
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
(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: Q3 (2017) 81.50 g/t, 85.8%; Q2 (2017) 78.20 g/t, 84.7%; Q1 (2017) 83.03 g/t, 85.4%; Q4 (2016) 99.05 g/t, 86.6%; Q3 (2016) 104.36 g/t, 90.0%.
(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: Q3 2017: 75.91:1; Q2 2017: 73.01:1; Q1 2017: 69.99:1; Q4 2016: 70.88:1; Q3 2016: 68.05:1.
(6)   Dvoinoye ore processed and grade were as follows: Q3 (2017) 111,330 tonnes, 15.37 g/t; Q2 (2017) 111,664 tonnes, 15.79 g/t; Q1 (2017) 120,255 tonnes, 14.67 g/t ; Q4 (2016) 120,000 tonnes, 21.24 g/t ; Q3 (2016) 117,814 tonnes, 18.96 g/t.
(7)   Capital expenditures are presented on a cash basis, consistent with the statement of cash flows.
(8)   “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 to adjusted net earnings for the periods presented:

                         
    Adjusted Earnings  
  (in millions, except per share amounts)   Three months ended     Nine months ended  
    September 30,     September 30,  
    2017     2016     2017     2016  
                                 
Net earnings attributable to common shareholders – as reported   $ 60.1     $ 2.5     $ 227.8     $ 12.5  
                                 
Adjusting items:                                
  Foreign exchange (gains) losses     2.7       (0.9 )     5.1       8.1  
  Gain on disposition of associate and interests and other assets – net     (0.2 )     (0.3 )     (9.8 )     (6.8 )
  Foreign exchange gains on translation of tax basis and foreign exchange on deferred income taxes within income tax expense     (12.1 )     (16.9 )     (10.9 )     (54.7 )
  Acquisition costs                       7.8  
  Tax benefits realized upon acquisition                       (27.7 )
  Impairment charges           139.6             139.6  
  Taxes in respect of prior years     9.9       (11.5 )     39.0       37.6  
  Reversal of impairment charges(a)                 (97.0 )      
  Tasiast and Maricunga suspension related costs           17.7             40.4  
  Paracatu curtailment related costs     15.1             15.1        
  Reclamation and remediation expense     11.9             11.9        
  Chile weather event related costs     1.7             3.3        
  Insurance recoveries           (3.0 )     (17.5 )     (17.5 )
  Other(b)           1.6       1.2       2.0  
  Tax effect of the above adjustments     (5.0 )     (0.1 )     (5.8 )     2.6  
      24.0       126.2       (65.4 )     131.4  
Adjusted net earnings attributable to common shareholders   $ 84.1     $ 128.7     $ 162.4     $ 143.9  
Weighted average number of common shares outstanding – Basic     1,247.0       1,244.9       1,246.5       1,221.0  
Adjusted net earnings per share     0.07       0.10       0.13       0.12  
                                 
(a)   During the nine months ended September 30, 2017, the Company recognized a reversal of impairment charges related to the disposal of its 25% interest in Cerro Casale.
(b)   Other includes non–hedge derivatives losses (gains), transaction costs and restructuring 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     Nine months ended  
    September 30,     September 30,  
    2017     2016     2017   2016  
                               
Net cash flow provided from operating activities – as reported   $ 197.7     $ 266.2     $ 585.2   $ 796.6  
                               
  Adjusting items:                              
  Working capital changes:                              
    Accounts receivable and other assets     76.5       55.5       33.4     51.9  
    Inventories     60.7       16.9       65.8     (67.0 )
    Accounts payable and other liabilities, including taxes     (14.1 )     (18.3 )     118.1     (66.4 )
      123.1       54.1       217.3     (81.5 )
Adjusted operating cash flow   $ 320.8     $ 320.3     $ 802.5   $ 715.1  
                               
                               

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     Nine months ended  
September 30,     September 30,  
    2017     2016     2017     2016  
                                 
Production cost of sales – as reported   $ 427.5     $ 490.0     $ 1,342.9     $ 1,454.4  
Less: portion attributable to Chirano non–controlling interest     (4.8 )     (5.3 )     (15.7 )     (14.9 )
Attributable production cost of sales   $ 422.7     $ 484.7     $ 1,327.2     $ 1,439.5  
                                 
Gold equivalent ounces sold     645,235       680,327       1,987,113       2,035,475  
Less: portion attributable to Chirano non–controlling interest     (6,576 )     (6,257 )     (18,924 )     (15,256 )
Attributable gold equivalent ounces sold     638,659       674,070       1,968,189       2,020,219  
Consolidated production cost of sales per equivalent ounce sold   $ 663     $ 720     $ 676     $ 715  
Attributable production cost of sales per equivalent ounce sold   $ 662     $ 719     $ 674     $ 713  
                                 
                                 

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     Nine months ended  
    September 30,     September 30,  
    2017     2016     2017     2016  
                         
Production cost of sales – as reported   $ 427.5     $ 490.0     $ 1,342.9     $ 1,454.4  
Less: portion attributable to Chirano non–controlling interest     (4.8 )     (5.3 )     (15.7 )     (14.9 )
Less: attributable silver revenues     (21.8 )     (32.0 )     (67.0 )     (80.6 )
Attributable production cost of sales net of silver by–product revenue   $ 400.9     $ 452.7     $ 1,260.2     $ 1,358.9  
                                 
Gold ounces sold     628,280       657,501       1,933,711       1,974,242  
Less: portion attributable to Chirano non–controlling interest     (6,560 )     (6,242 )     (18,884 )     (15,218 )
Attributable gold ounces sold     621,720       651,259       1,914,827       1,959,024  
Attributable production cost of sales per ounce sold on a by–product basis   $ 645     $ 695     $ 658     $ 694  
                                 
                                 

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     Nine months ended  
    September 30,     September 30,  
    2017     2016     2017     2016  
                         
Production cost of sales – as reported   $ 427.5     $ 490.0     $ 1,342.9     $ 1,454.4  
Less: portion attributable to Chirano non–controlling interest(1)     (4.8 )     (5.3 )     (15.7 )     (14.9 )
Less: attributable(2) silver revenues(3)     (21.8 )     (32.0 )     (67.0 )     (80.6 )
Attributable(2) production cost of sales net of silver by–product revenue   $ 400.9     $ 452.7     $ 1,260.2     $ 1,358.9  
Adjusting items on an attributable(2) basis:                                
  General and administrative(4)     31.6       39.9       98.8       110.6  
  Other operating expense – sustaining(5)     15.6       0.2       35.7       10.0  
  Reclamation and remediation – sustaining(6)     23.7       25.3       65.9       80.7  
  Exploration and business development – sustaining(7)     13.6       14.0       38.5       38.4  
  Additions to property, plant and equipment – sustaining(8)     91.2       110.8       270.3       286.5  
All–in Sustaining Cost on a by–product basis – attributable(2)   $ 576.6     $ 642.9     $ 1,769.4     $ 1,885.1  
  Other operating expense – non–sustaining(5)     24.7       6.0       44.2       13.4  
  Reclamation and remediation – non–sustaining(6)     1.5             4.6        
  Exploration – non–sustaining(7)     12.3       15.7       33.0       29.3  
  Additions to property, plant and equipment – non–sustaining(8)     102.7       34.8       288.4       89.8  
All–in Cost on a by–product basis – attributable(2)   $ 717.8     $ 699.4     $ 2,139.6     $ 2,017.6  
Gold ounces sold     628,280       657,501       1,933,711       1,974,242  
Less: portion attributable to Chirano non–controlling interest(9)     (6,560 )     (6,242 )     (18,884 )