Distributing Economic Value*
The direct economic value we generated for our stakeholders in the reporting period included the following:
- Cost of Sales: Our attributable production cost of sales per gold equivalent ounce sold was $592 in 2011 and $506 in 2010, including labour, energy, consumables and maintenance costs, but excluding accretion, reclamation expenses, depreciation, depletion and amortization;
- Wages and Benefits: We provided payroll and benefits of $536.2 million in 2011 and $391.4 million in 2010;
- Shareholder Value: As a measure of our strong financial and operating performance, we paid dividends of $124.8 million to common shareholders of record in 2011 and $70.6 million in 2010. However, despite our strong operating and financial performance, our share under performance has resulted in a negative net return to shareholders in 2011. Our share underperformance has been the result of a number of factors, including significant external shocks to equity markets, including the debt crisis in Europe, and a significant increase in capital costs across the mining industry;
- Payments to Providers of Capital: Our interest and dividends paid to providers of capital in 2011 amounted to $134.6 million for the year compared with $85.9 million in 2010;
- Payments to Governments: We pay taxes and royalties in jurisdictions where we operate, including Canada, the United States, Brazil, Chile, Ecuador, Ghana, Mauritania and the Russian Federation. In 2011, we paid $546.5 million in income tax, mining tax, royalties and land use payments to various governments, compared with $438.2 million in 2010;
- Direct Community Investments and Donations: In 2011, Kinross contributed some $10.5 million in direct economic value through donations and community investments to our communities in Canada, the United States, Chile, Brazil, Ecuador, Ghana, Mauritania and Russia. In 2010, our contributions were $7.7 million;
- Pension Plans: Kinross does not currently have any active defined benefit plans in place;
- Government Financial Assistance: Kinross received $547,790 in financial aid from governments, apart from standard tax relief measures that are available to businesses in the jurisdictions where we operate in 2011;
- Local Recruitment: Wherever feasible, we hire employees locally and provide supply contracts to local and regionally based businesses. We have been able to successfully recruit the majority of our mine site operations and management teams from local talent pools. Approximately 97% of our total workforce, excluding contractors, is hired locally from the host community, region, state, province or country. To learn more go to The Kinross Benefit Footprint. See Case Study 4: Developing a Skilled Workforce in Mauritania;
- Direct and Indirect Economic Value: Kinross’ mining activities can help other economic sectors of society grow, particularly in remote regions and developing economies. In the Community section of this report, we discuss our community investment contributions in 2010 and 2011 – to schools, health care, local infrastructure, small business development, indigenous-related initiatives and other activities.
* Excludes Crixás unless otherwise stated.
Economic Value Distributed and Retained
|2011 5||2010 5|
|Direct Economic Value Generated||3,842.5||2,915.4|
|Economic Value Distributed|
|Operating Costs 1||1,232.6||1,215.0|
|Employee Wages and Benefits||536.2||391.4|
|Payments to Providers of Capital2||134.6||85.9|
|Payments to Governments 3||546.5||438.2|
|Community Investments 4||10.5||7.7|
|Economic Value Retained||1,382.1||777.2|
- For purposes of calculating economic value distributed and retained, operating costs exclude depreciation, depletion and amortization, and impairment charges. Wages and benefits, community investments, and payments to governments, other than income and mining taxes, normally form part of operating costs, but have been excluded as they appear on separate lines in the calculations.
- Payments to providers of capital include dividends paid to Kinross shareholders and interest paid on long-term debt.
- Payments to governments include income, mining and other taxes, certain royalties, and land use payments.
- Community investments include donations and investments in non-core infrastructure.
- Crixás related information for the current and prior periods has been excluded due to its disposal.
2011 Economic Value Distributed and Retained by Country 5
|Direct Economic Value Generated||Operating Costs 1||Employee Wages and Benefits||Payments to Providers of Capital 2||Payments to Governments 3||Community Investments 4||Economic Value Retained|
|Corporate and Other||0||155.1||111.4||132.7||56.7||1.9||[457.8]|
NOTE: Footnotes apply to both tables.