Kinross Gold Corporation · TSX:K
Kinross Gold — European Gold Forum 2017
51 slides from Kinross Gold's conference presentation, Apr 4, 2017
Slide 1: Kinross Gold Corporation
April 2017 KINROSS GOLD CORPORATION 11 www.kinross.com
Slide 2: Cautionary Statement on Forward-Looking Information
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION All statements, other than statements of historical fact, contained or incorporated by reference in or made in giving this presentation and responses to questions, including but not limited to any information as to the future performance of Kinross
Slide 3: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • Diverse portfolio of operating mines consistently meeting or outperforming our operational targets STRONG BALANCE SHEET & FINANCIAL FLEXIBILITY • $2.5B in liquidity with net debt to EBITDA ratio of 0.6x(i) • No debt maturities prior to 2
Slide 4: 2016 Highlights
Delivered Operational Excellence Strengthened Balance Sheet Repaid $1B of debt MET over past 5 years 5 or EXCEEDED $1.1B of cash $1.4 $1.1 $2.5B billion Consecutive 0.6x billion Years Guidance Net debt to EBITDA Cash Available credit *Figures are as at December 31, 2016, adjusted to reflect the sale
Slide 5: TSX Sub-Indices Performance
COMPELLING RELATIVE VALUE TSX SUB-INDICES PERFORMANCE S&P/TSX 2016 Performance S&P/TSX YTD 2017 Performance(i) Kinross 70.9% Kinross 11.9% Base Metals 52.0% Base Metals 7.1% Precious Metals 50.0% Technology 6.8% Materials 39.0% Consumer Discr. 6.7% Energy 36.5% Precious Metals 6.3% Industrials 22.6%
Slide 6: Enterprise Value versus Production
COMPELLING RELATIVE VALUE ENTERPRISE VALUE VERSUS PRODUCTION Market capitalization does not reflect significant scale of production and history of achieving guidance Enterprise Value(i) Net Debt to Historical Gold Production (Moz)(iii) Consensus Gold Production Estimates (Moz)(iii) (US$M) EBITDA(ii)
Slide 7: Operational Excellence
Operational Excellence 77 www.kinross.com
Slide 8: Diversified Portfolio of Operating Mines
OPERATIONAL EXCELLENCE DIVERSIFIED PORTFOLIO OF OPERATING MINES Over RUSSIA 60% of estimated 2017 gold equivalent production from mines located in the Americas AMERICAS Dvoinoye Kupol Fort Knox Kettle River-Buckhorn Bald Mountain Round Mountain 2017E GOLD EQUIVALENT PRODUCTION(2,3) Tasiast 22% Chira
Slide 9: Strong Operating Track Record
OPERATIONAL EXCELLENCE STRONG OPERATING TRACK RECORD Continuing our track record of meeting or outperforming our operational targets • Operations delivered solid results in 2016: FIVE consecutive years of meeting guidance RECORD production of 2.8M gold equivalent ounces(2) MET guidance for cos
Slide 10: 2017 Outlook
OPERATIONAL EXCELLENCE 2017 OUTLOOK(3) Forecasting another solid year from operations, with production and costs in-line with 2016 Kinross Total(2) Regional Forecast 2017E Unit Costs ($ per gold equivalent ounce) 2.5 to 2.7 Americas Cost of sales(4) $660 to $720 million 1.5 to 1.6Moz. 2017E Gold Equ
Slide 11: Balance Sheet Strength
Balance Sheet Strength 11 11 www.kinross.com
Slide 12: Solid Financial Position
STRONG BALANCE SHEET SOLID FINANCIAL POSITION Maintaining balance sheet strength & financial flexibility remain priority objectives LIQUIDITY POSITION MAINTAINING FINANCIAL FLEXIBILITY • Repaid $250M senior notes in September 2016 • Extended maturity dates of the $500M term loan and $1.5B credit fac
Slide 13: Sale of Cerro Casale Interest
STRONG BALANCE SHEET SALE OF CERRO CASALE INTEREST Agreement to sell 25% interest in Cerro Casale and 100% interest in Quebrada Seca STRENGTHENS BALANCE SHEET CONSIDERATION • Expect to use proceeds to further the strengthen balance sheet $260M in cash payable at closing Pro-forma cash balance: ~$1
Slide 14: 2017 Capital Expenditures Outlook
FINANCIAL DISCIPLINE 2017 CAPITAL EXPENDITURES OUTLOOK(3) Leveraging strong financial position to invest in development projects & our future 2017E Capital Expenditures ($ millions) Region Sustaining Non-Sustaining Regional Total Americas $295 $65 $360 West Africa $80 $375 $455 Russia $40 $15 $55 Co
Slide 15: Manageable Debt Profile
FINANCIAL DISCIPLINE MANAGEABLE DEBT PROFILE No significant debt maturities prior to 2020 Debt Schedule Debt Ratings Term Loan Senior notes Agency Rating $500 $500 $500 S&P BB+ (Positive) Moody’s Ba1 (Stable) Fitch BBB- (Stable) Interest Rates $250 Senior Notes due 2021 5.125% Senior Notes due 2024
Slide 16: Attractive Organic Development Projects
Attractive Organic Development Projects 16 16 www.kinross.com
Slide 17: Advancing Our Organic Projects
ATTRACTIVE ORGANIC DEVELOPMENT PROJECTS ADVANCING OUR ORGANIC PROJECTS Organic projects spanning all 3 of our operating regions offer opportunities to expand production or extend mine life at our operations Q2 2018 Q1 2018 Tasiast Phase 1 Full production Q4 2017 Moroshka Mining expected to commence
Slide 18: Tasiast Two-Phased Mill Expansion
TASIAST EXPANSION PROJECT TASIAST TWO-PHASED MILL EXPANSION • Two-phased approach offers an attractive path to Tasiast’s significant growth potential at a significantly lower forecast capital cost than previously estimated • Proceeding with Phase One of the expansion; full production expected in Q2
Slide 19: Large Orebody with Low Execution Risk
TASIAST EXPANSION PROJECT LARGE OREBODY WITH LOW EXECUTION RISK Challenge is to right-size the processing capacity to capture the full value and potential of Tasiast’s large mineral resource estimate RELATIVELY LOW-RISK BROWNFIELDS EXPANSION PROJECT • Have owned and operated the mine for over 5 year
Slide 20: Two-Phased Expansion Concept
TASIAST EXPANSION PROJECT TWO-PHASED EXPANSION CONCEPT PHASE ONE: EXPANSION TO 12,000 t/d Existing ball mills Gyratory Ore Oversized Leaching Refining crusher stockpile SAG mill PHASE TWO: EXPANSION TO 30,000 t/d Gyratory Ore Oversized New, larger ball Additional leaching Thickening crusher stockpil
Slide 21: Tasiast Two-Phased Mill Expansion
ATTRACTIVE ORGANIC DEVELOPMENT PROJECTS TASIAST TWO-PHASED MILL EXPANSION Combined Phase One and Two expansions expected to transform Tasiast into our largest producer with costs amongst the lowest in our portfolio Phase One Estimates(i) Phase Two Estimates(i) Average annual production 409,000 ounce
Slide 22: Tasiast Phase One Progressing Well
ATTRACTIVE ORGANIC DEVELOPMENT PROJECTS TASIAST PHASE ONE PROGRESSING WELL Phase One on schedule and on budget with full production expected in Q2 2018 SAG mill Pouring concrete for new crusher Unloading SAG mill shell New oxygen plant 2222 www.kinross.com
Slide 23: Developing Bald Mountain's Potential
ATTRACTIVE ORGANIC DEVELOPMENT PROJECTS DEVELOPING BALD MOUNTAIN’S POTENTIAL Kinross envisions Bald Mountain as a long-life asset with significant upside potential and mineral resource growth 2016: Doubled mineral reserve estimates ahead of schedule • Added 1.2 million ounces to proven and probable
Slide 24: Doubled Bald Mountain Gold Reserves
ATTRACTIVE ORGANIC DEVELOPMENT PROJECTS DOUBLED BALD MOUNTAIN GOLD RESERVES Successfully doubled gold reserve estimates ahead of schedule and replenished mineral resource estimates, providing opportunities for further reserve conversions Proven & Probable Mineral Reserve Estimates(1) South area 2,13
Slide 25: Bald Mountain Vantage Complex
ATTRACTIVE ORGANIC DEVELOPMENT PROJECTS BALD MOUNTAIN VANTAGE COMPLEX Vantage Complex (South area) Pre-Feasibility Study • Contemplates construction of a new heap leach facility and related infrastructure to develop Vantage Complex Combined 28 million tonnes of ore at average grade of 0.63 g/t D
Slide 26: Round Mountain Phase W
ATTRACTIVE ORGANIC DEVELOPMENT PROJECTS ROUND MOUNTAIN PHASE W Phase W is an opportunity to potentially extend estimated mine life • At year-end 2016, the work in support of the Phase W feasibility study: Upgrade of 1.3 million gold ounces to Measured & Indicated resources Added 1.7 million gold
Slide 27: Russia Satellite Deposits
ATTRACTIVE ORGANIC DEVELOPMENT PROJECTS RUSSIA SATELLITE DEPOSITS Development of satellite deposits located near Kupol and Dvoinoye in advanced stages September Northeast Moroshka • Located approximately 15 km northwest from • Located 4 km east of the Kupol mill Dvoinoye • Decline development and in
Slide 28: Kupol Vein System
EXPLORATION KUPOL VEIN SYSTEM Mineralization open in certain zones, with greatest potential for near-term extensions to the north and south • Comprehensive exploration review generated series of extension targets which were drilled during second half of 2016 • Continued drilling, geological interpre
Slide 29: Fort Knox East & South Wall
EXPLORATION FORT KNOX EAST & SOUTH WALL Positive intercepts during 2016 in the East and South Wall of the existing pit; additions to Fort Knox’s inferred resource estimate expected in 2017 East & South Wall significant drill intercepts Interval Au Hole ID From To (m) (g/t) FFC16-1483 36.6 65.5 29 0.
Slide 30: Kettle River: Curlew District
EXPLORATION KETTLE RIVER: CURLEW DISTRICT Promising opportunities in the Curlew District; infill drilling program planned for 2017 to test extensions of mineralized zones Plan Map of the Curlew District Cross Section Looking West N Historic K2 mine Workings Looking West K2 Mine Buckhorn K2 Mine Port
Slide 31: Compelling Relative Value
Compelling Relative Value 31 31 www.kinross.com
Slide 32: 2017E Production & All-In Sustaining Cost
COMPELLING RELATIVE VALUE 2017E PRODUCTION & ALL-IN SUSTAINING COST 2017E Gold Production 2017E All-In Sustaining Cost (million ounces) ($ per ounce) 6.0 $1,200 5.0 $1,000 4.0 $800 3.0 $600 2.0 $400 1.0 $200 0.0 $0 Barrick Barrick Newmont Newmont AngloGold Gold Fields Yamana AngloGold Yamana Kinross
Slide 33: Industry-Leading Balance Sheet
COMPELLING RELATIVE VALUE INDUSTRY-LEADING BALANCE SHEET Net debt to EBITDA ratio of 0.6x as of December 31, 2016* 2.5 Net Debt to EBITDA (LTM) 1.8 1.7 1.5 1.3 0.9 0.8 0.8 0.6 Yamana Goldcorp IAMGold AngloGold Barrick Gold Fields Newmont Agnico Kinross Source: Company reports; Bloomberg – net debt t
Slide 34: 2017E Metrics
COMPELLING RELATIVE VALUE 2017E METRICS Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities EV / 2017E EBITDA P / 2017E OPERATING CF 12.4 13.6 9.9 8.7 9.6 8.7 7.2 7.2 7.3 6.2 5.0 4.9 5.4 4.4 4.7 3.6 3.5 3.3 New
Slide 35: Building Momentum for the Future
2020E Expected start-up of 2018E potential TASIAST PHASE TWO TASIAST PHASE 2017E ONE expected to ramp up to full 2016 Stronger year production expected at Delivered SOLID BALD MOUNTAIN PRODUCTION of 2.8Moz. Building Momentum for the Future 3535 www.kinross.com
Slide 36: Appendix
Appendix 3636 www.kinross.com
Slide 37: Currency / Oil Benefits & Sensitivities
APPENDIX CURRENCY / OIL BENEFITS & SENSITIVITIES Well-positioned to benefit from favourable currency exchange and oil weakness • Benefits of favourable FX and oil prices 2017 Budget Assumptions & Sensitivities(3) partially offsetting lower gold prices Budget Spot(i) 110 Gold US$1,200 US$1,242 100 Oi
Slide 38: Fuel & Currency Hedges
APPENDIX FUEL & CURRENCY HEDGES Managing exposure to fluctuations in foreign currency and input commodity prices • Hedged rouble for first time since 2013 Entered into zero cost option hedge for approximately 20% of exposure at average put of 60, offset by call strike of 72 • Also hedged 35% of Br
Slide 39: Fort Knox, USA (100%)
AMERICAS FORT KNOX, USA (100%) Among the world’s few cold climate heap leach facilities • Impressive track record of operational excellence • Achieved its 2nd highest production level in 2015, Fort Knox’s 19th year in operation • Estimated mine life: mill – 2022; mining – 2020* OPERATING RESULTS(4)
Slide 40: Round Mountain, USA (100%)
AMERICAS ROUND MOUNTAIN, USA (100%) Strong cash flow generator with opportunities to extend mine life • Incremental, high-margin ounces from Process Solution ESTIMATED MINE LIFE* Management (PSM) 16 17 18 19 20 21 22 23 - 27 • Opportunity to extend mine life beyond current estimates Mining with Phas
Slide 41: Bald Mountain, USA (100%)
AMERICAS BALD MOUNTAIN, USA (100%) Forecasting strong near-term cash flow with significant upside potential • Acquired in January 2016 • Large estimated mineral resource base with multiple sources of potential mineral reserve additions • Production expected to double in 2017 with reduced costs OPERA
Slide 42: Paracatu, Brazil (100%)
AMERICAS PARACATU, BRAZIL (100%) Large gold mine with a long mine life that extends to 2030 • Paracatu is among the world’s largest gold operations with annual throughput of ~60Mt • Realizing benefits from weakness in the Brazilian real • Estimated mine life: 2030* OPERATING RESULTS(4) 2015 2016 Pro
Slide 43: Kupol-Dvoinoye (100%)
RUSSIA KUPOL-DVOINOYE (100%) Our Russian operations are a model for successfully operating in a remote location • High-grade, low-cost underground mines • Estimated mine life: Kupol – 2020; Dvoinoye – 2018* OPERATING RESULTS(4) 2015 2016 Production (Au. Eq. oz.) 758,563 734,143 Production cost of sa
Slide 44: Foreign Investment in Russia
RUSSIA FOREIGN INVESTMENT IN RUSSIA Foreign Investment Advisory Council The world’s leading companies are invested in Chaired by the Russian Prime Minister, includes Russia CEOs from over 50 international companies 4444 www.kinross.com
Slide 45: Chirano, Ghana (90%)
WEST AFRICA CHIRANO, GHANA (90%) Cost reductions achieved at Chirano by transitioning to self-perform mining • Chirano is an open-pit and underground operation located in southwestern Ghana • Estimated mine life: 2020* OPERATING RESULTS(2,4) 2015 2016 Production (Au. Eq. oz.) 230,488 190,759 Product
Slide 46: Tasiast, Mauritania (100%)
WEST AFRICA TASIAST, MAURITANIA (100%) Operating mine with a large gold resource located in a prospective district • Proceeding with Phase One of the expansion, with Phase Two an option to further add significant production • Estimated mine life: Phase One – 2033; if we proceed with a Phase Two expa
Slide 47: Endnotes
ENDNOTES 1) Mineral reserves and mineral resources are estimates. For more information regarding Kinross’ 2016 mineral reserve and mineral resource estimates, please refer to our Annual Mineral Reserve and Mineral Resource Statement as at December 31, 2016 contained in our news release dated Februar
Slide 48: Explanatory Notes - Exploration
EXPLANATORY NOTES - EXPLORATION Kupol Exploration Results A total of 48 diamond drill core holes are reported from Kupol Minex and mine-area exploration activity in 2016. All diamond drill core holes reported are HQ in diameter. The majority of holes presented (18) were drilled at the Kupol Hanging
Slide 49: Explanatory Notes - Exploration
EXPLANATORY NOTES - EXPLORATION Fort Knox Exploration Results Results are reported for 15 diamond drill core holes completed on the East and South walls of the Fort Knox open pit. All 15 of these diamond drill core holes are of HQ3 core diameter . At Fort Knox, the dip of the drill holes are taken f
Slide 50: Explanatory Notes - Exploration
EXPLANATORY NOTES - EXPLORATION Kettle River (Curlew) Exploration Results All 16 drill holes reported from the Curlew district are diamond drill core holes of HQ core diameter. A number of targets in the area were drilled, with eight holes reported from the Lower Portal, three holes from K5, two hol
Slide 51: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 5151 www.kinross.com