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Full Year 2012 compared to Full Year 2011
-- Gold production for 2012 totalled 387,076 ounces compared to 642,380 ounces in the prior year. The decreased gold production was mainly due to the March 2012 revised mine plan at Kumtor, as a result of the accelerated ice and waste movements in the SB Zone, which led to a 46% decrease in production at Kumtor year-over-year, partially offset by a 21% increase in production at Boroo, which was positively impacted by the start-up of the heap leach operation in October 2012.-- Revenues for 2012 decreased to $660.7 million compared to $1,020.3 million in 2011 due to a 40% decrease in ounces sold (390,533 ounces compared to 650,258 ounces), partially offset by an 8% increase in the realized gold price. The reduction in sales reflects the lower gold production at Kumtor (-46%) mostly due to lower volumes as a result of the revised mine plan. The average gold price for 2012 was $1,692 per ounce, compared to $1,569 per ounce realized in 2011.-- Operating cash cost per ounce produced for 2012 increased to $663 compared to $502 per ounce in 2011. The increase in 2012 reflects the impact of lower production levels due to lower grades and recoveries from the processing of stockpiled material at Kumtor and higher operating costs at both Kumtor and Boroo as discussed in "Operations Update". Operating cash cost per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures".-- All-in cash costs per ounce produced for 2012 increased to $1,882 compared to $929 per ounce in 2011. The increase in 2012 reflects the impact of lower production levels due to lower grades and recoveries from the processing of stockpiled materials at Kumtor, higher capitalized stripping and ice and waste unloading costs, and higher spending on capital at Kumtor and higher operating costs at both Kumtor and Boroo. All-in cash costs per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP Measures".-- Cost of sales in 2012 was $387.5 million compared to $382.3 million in 2011, reflecting the processing of lower grade, higher cost, stockpiled material at Kumtor for the period to September 2012, higher operating costs for labour, diesel and other consumables and increased DD&A. Cost of sales in 2012 also includes a charge of $7.2 million representing a metal reconciliation variance between the gold content estimated in the stockpiles and the gold actually recovered through processing. In 2011 costs of sales included a charge of $5.8 million for the settlement resulting from an audit by the Kyrgyz Social Fund, relating to the calculation of the premium for work conducted at high altitude at the Kumtor project. Depreciation, depletion, and amortization associated with production increased by 44% to $142.6 million in 2012 from $99.3 million in 2011 as a result of higher depreciation for the expanded mobile fleet at Kumtor and higher amortization of deferred stripping at both sites, partially offset by lower volumes.-- The Company recorded $60.9 million of abnormal mining costs at Kumtor in 2012 (nil in 2011) representing $24.8 million for the cost of removing the ice and waste from the high movement unload zone and $36.1 million of stripping costs during the period while little or no ore was mined.-- Other operating expenses for 2012 totalled $34.3 million, which includes $26.2 million spent on corporate social responsibility programs and $7.8 million for the closure of the underground project at Kumtor, compared to $15.5 million in 2011.-- Exploration expenditures in 2012 were $37.9 million compared to $39.6 million in 2011. Exploration expenditures in 2012 decreased slightly from 2011 reflecting reduced regional exploration programs in Kyrgyz Republic and the closure of the Reno, Nevada office and cessation of the US exploration program in mid-2012.-- A one-time accounting charge of $180.7 million was recorded in the fourth quarter of 2012 to reflect the de-recognition of the underground assets at Kumtor. This results from the decision in early November to expand the open pit at Kumtor which expansion will consume a major portion of the underground infrastructure.-- The net loss for 2012 was $184.0 million or $0.78 per share compared to net earnings of $370.9 million or $1.57 per share in 2011, reflecting the de-recognition of Kumtor's underground assets and lower earnings at Kumtor from the revised mining plan.-- Cash provided from operations for 2012 totalled $134.7 million compared to $434.9 million in 2011, primarily as a result of significantly lower earnings at Kumtor in 2012.-- Capital expenditures (spent and accrued) in 2012 were $410.6 million, which included sustaining capital of $40.8 million. Growth capital of $367.1 million in 2012 reflects $359.0 million of spending at Kumtor mainly on fleet expansion ($117 million), the stripping of cut-back 14B and 14A ($179.8 million) and on underground development of decline 1 and 2 ($30.0 million) and spending at Boroo of $7.7 million in 2012 mainly to strip Pit 6 prior to reaching ore. Capital expenditures in 2011 were $187.9 million, which included $34.6 million spent and accrued on sustaining capital projects and $153.3 million invested in growth capital.
