Kinross Gold Corporation · TSX:K
Kinross Gold — Investor Presentation (August 2014)
53 slides from Kinross Gold's investor presentation, Aug 18, 2014
Slide 1: Kinross Gold Corporation August 2014
August 2014 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 At-A-Glance
KINROSS AT-A-GLANCE DELIVERING OPERATIONAL EXCELLENCE • World’s fifth largest gold producer with 9 operating mines Open-pit and underground mines located in the United States, Chile, Brazil, Russia, Ghana and Mauritania • Solid record of strong operating performance Achieved record production of
Slide 4: Principles for Building Value
PRINCIPLES FOR BUILDING VALUE • Focus on operational excellence • Quality over quantity • Disciplined capital allocation • Maintaining a strong balance sheet 44 www.kinross.com
Slide 5: Delivering Operational Excellence
DELIVERING OPERATIONAL EXCELLENCE 55 www.kinross.com
Slide 6: Diversified Portfolio of Operating Mines
KINROSS WAY FORWARD DIVERSIFIED PORTFOLIO OF OPERATING MINES Over 50% of estimatedAMERICAS RUSSIA 2014 gold equivalent production from mines located in the Americas Dvoinoye Kupol Fort Knox Kettle River-Buckhorn Round Mountain 2014E GOLD EQUIVALENT PRODUCTION(3) Tasiast Chirano 27% WEST AFRICA 2.5-2
Slide 7: Americas
• Operating region comprised of 5 mines located in the US, Brazil and Chile AMERICAS • 2014E regional guidance: 1,330 – 1,430k oz. at $780-840/oz.(3) 77 (3) Refer to endnote #3. www.kinross.com
Slide 8: Russia
• Comprised of 2 high-grade operating mines RUSSIA • Full benefit of Dvoinoye coming on-stream in 2014 • 2014E regional guidance: 690-730k oz. at $560-590/oz.(3) 88 (3) Refer to endnote #3. www.kinross.com
Slide 9: West Africa
WEST • Strong focus on optimizing efficiency and performance in the region AFRICA • 2014E regional guidance: 480 – 540koz. at $810 – $880/oz.(3) 99 (3) Refer to endnote #3. www.kinross.com
Slide 10: 2014 Outlook: Production & Cost Guidance
2014 OUTLOOK PRODUCTION & COST GUIDANCE(3) • 2014 all-in sustaining cost(5) expected to be $950 - $1,050 per gold equivalent ounce WEST AFRICA REGION AMERICAS RUSSIA (attributable) TOTAL Gold equivalent production 1,330 - 1,430 690 - 730 480 - 540 2.5 – 2.7M (000 oz. Au eq.) % of total production 53
Slide 11: Second Quarter 2014 Highlights
SECOND QUARTER 2014 HIGHLIGHTS STRONG OPERATING PERFORMANCE Continuing track record of consistent and dependable operational performance • Produced 1.34M gold equivalent 1.34M ounces in H1 2014 1.30M • Tracking high-end of annual gold equivalent production (ounces) production guidance of 2.5-2.7M go
Slide 12: Maricunga, Chile
SECOND QUARTER 2014 HIGHLIGHTS MARICUNGA, CHILE Operational improvements resulting in higher production and improving costs INCREASING PRODUCTION 64,290 Gold equivalent ounces 52,729 45,595 38,126 Q3 2013 Q4 2013 Q1 2014 Q2 2014 DECLINING COST OF SALES PER OUNCE(4) Production cost of sales $1,368 $1
Slide 13: West Africa Operations
SECOND QUARTER 2014 HIGHLIGHTS WEST AFRICA OPERATIONS Cost of sales per ounce declined 12% compared with Q2 2013 • Cost improvements at both sites • Lower regional cost of sales driven by: Transition to self-perform mining at Chirano Continuous improvement efforts at Tasiast WEST AFRICA OPERATIN
Slide 14: Russia Operations
SECOND QUARTER 2014 HIGHLIGHTS RUSSIA OPERATIONS Combined performance of Kupol & Dvoinoye outperforming expectations • Ore from the high-grade Dvoinoye mine contributing to continued strong results in Russia • Compared with Q2 2013, the combined operation increased gold equivalent production by 60%
Slide 15: Strong Financial Discipline
STRONG FINANCIAL DISCIPLINE 1515 www.kinross.com
Slide 16: Production Cost of Sales
OPERATIONAL EXCELLENCE FOCUSING ON COSTS H1 2014 production cost of sales at favourable end of 2014 guidance range of $730 to $780 per gold equivalent ounce $742 $734 $735 $737 PRODUCTION COST OF SALES(4) ($ per gold equivalent ounce) Q2 2013 Q2 2014 H1 2013 H1 2014 (4) Refer to endnote #4. 1616 www
Slide 17: Reducing Capital Spending
DISCIPLINED CAPITAL ALLOCATION REDUCING CAPITAL SPENDING • Trend of declining capital $1.9B expenditures since 2012 • Expecting another significant reduction in 2014 $1.26B $675M (3) 2012 2013 2014E (3) Refer to endnote #3. 1717 www.kinross.com
Slide 18: Declining All-In Sustaining Cost
OPERATIONAL EXCELLENCE DECLINING ALL-IN SUSTAINING COST • Q2 2014 all-in sustaining cost per ounce(5) declined compared to Q2 $1,038 2013 and Q1 2014 $1,001 • On track to meet 2014 guidance of $976 $ per gold equivalent ounce $950-$1,050 per ounce(3) Q2 2013 Q1 2014 Q2 2014 (3) Refer to endnote #3.
Slide 19: Solid Financial Position
STRONG BALANCE SHEET SOLID FINANCIAL POSITION Balance sheet strength continues to be a priority objective STRONG LIQUIDITY POSITION MAINTAINING FINANCIAL FLEXIBILITY • Investment grade credit ratings • Net debt: $1.3B as at June 30, 2014 $0.8 • Extended the maturity dates for the $500M $2.3B term lo
Slide 20: Financial Flexibility
STRONG BALANCE SHEET FINANCIAL FLEXIBILITY No material debt maturities prior to 2016 SCHEDULED DEBT REPAYMENTS $1,250 $ MILLIONS $500 $270 $500 $60 $60 $250 $- 2014 2015 2016 2017 2018 2019 & (i) thereafter Term loan Senior notes Kupol loan (i) Consists of $250 million principle amount of 3.625% sen
Slide 21: Attractive Growth Opportunities
ATTRACTIVE GROWTH OPPORTUNITIES 2121 www.kinross.com
Slide 22: Tasiast, Mauritania: Feasibility Study on Mill Expansion Complete
TASIAST, MAURITANIA FEASIBILITY STUDY ON MILL EXPANSION COMPLETE • Feasibility study based on 38,000 tpd mill produced promising results • A mill expansion has the potential to: Add a major source of new production to Kinross’ portfolio Lower the company’s overall cost structure Generate signi
Slide 23: Mill Expansion Feasibility Study Estimates
TASIAST, MAURITANIA MILL EXPANSION FEASIBILITY STUDY ESTIMATES Improved estimated economics are primarily the result of estimated lower capital expenditures, an optimized mine plan and lower expected operating costs AVERAGE FOR THE FIRST 5 YEARS LIFE OF MINE (2018-2022) (2014-2029) Average annual pr
Slide 24: Reduced Capital Expenditure Estimate
TASIAST FEASIBILITY STUDY RESULTS REDUCED CAPITAL EXPENDITURE ESTIMATE Initial capital expenditure estimate of $1.6 billion significantly lower than original $2.7 billion estimated in the pre-feasibility study 2013 infrastructure spending Deferral of $2.7B $330M seawater pipeline Spending Included t
Slide 25: Tasiast Mill Expansion - Update
GROWTH OPPORTUNITIES TASIAST MILL EXPANSION - UPDATE Do not expect to make a final decision whether to proceed with a potential mill expansion until 2015 ENHANCING THE VIABILITY OF THE EXPANSION • Further optimization work to project execution plan • Solicited commercial terms for preassembly work •
Slide 26: La Coipa Phase 7
GROWTH OPPORTUNITIES LA COIPA PHASE 7 Proceeding to a pre-feasibility study at La Coipa Phase 7 • Proceeding to a pre-feasibility study based on encouraging results from a scoping study • The pre-feasibility study will focus on: The Pompeya deposit, where drilling has outlined higher average grade
Slide 27: Tasiast District Exploration
HIGH-QUALITY EXPLORATION TARGETS TASIAST DISTRICT EXPLORATION* Imkebdene license Piment C616 Central Fennec C613 Tmeimichat license C614 C69 C67 Aoueouat C615 C68 C611 C612 El Gaicha license Tamaya Tasiast Sud license N’Daouas-Est license 80 Km * For additional information, please see Kinross’ news
Slide 28: Kupol – Moroshka
HIGH-QUALITY EXPLORATION TARGETS KUPOL – MOROSHKA • Moroshka located 4 km east of Kupol mine • Drilling confirmed continuity of high grades along 400 strike metre vein CURRENT PRELIMINARY ESTIMATE Kupol mine site • Moroshka contains a minimum total potential mineral resource of 0.4 to 0.6 million to
Slide 29: Moroshka Longitudinal Section
HIGH-QUALITY EXPLORATION TARGETS MOROSHKA LONGITUDINAL SECTION For additional information, please see Kinross’ news release dated February 12, 2014 and Appendices A and B, which are available on our website at www.kinross.com , as well as the Explanatory Notes available on slide 52 of this presentat
Slide 30: Dvoinoye
HIGH-QUALITY EXPLORATION TARGETS DVOINOYE • September Northeast target located approximately 15 km northwest of Dvoinoye For additional information, please see Kinross’ news release dated February 12, 2014 and Appendices A and B, which are available on our website at www.kinross.com , as well as the
Slide 31: September Northeast Long Section
HIGH-QUALITY EXPLORATION TARGETS SEPTEMBER NORTHEAST LONG SECTION Trench T-06 (projected) 3.9 m @ 139 g/t Au SP13-030 SP13-010 2.7 m @ 184.55 g/t Au 1.7 m @ 21.14 g/t Au Including 1 m @ 497.42 g/t SP13-013 2.3 m @ 9.16 g/t Au SP12-023 6.5 m @ 16.28 g/t Au SP13-047 Including 2.5 m @ 36.86 g/t Au 5.4
Slide 32: Chirano, Ghana
HIGH-QUALITY EXPLORATION TARGETS CHIRANO, GHANA • Drilling program designed to test underground potential of mineralization beneath Suraw, Akoti and Tano open pits • Results confirmed mineralization extends 100 to 400 metres below bottom of each pit • Remains open at depth at all three deposits 2013
Slide 33: Compelling Valuation
COMPELLING VALUATION 3333 www.kinross.com
Slide 34: Production and All-In Sustaining Cost
COMPELLING VALUATION PRODUCTION AND ALL-IN SUSTAINING COST 2014E GOLD PRODUCTION(i) 2014E ALL-IN SUSTAINING COSTS(ii) (mm oz.) ($/oz.) 7.0 $1,200 6.0 $1,000 Average 5.0 $800 4.0 $600 3.0 $400 2.0 1.0 $200 0.0 $0 ABX NEM GG KGC AUY AEM EGO NEM KGC GG AEM AUY ABX EGO (i) Source: Company reports. Figur
Slide 35: Enterprise Value versus Production
COMPELLING VALUATION ENTERPRISE VALUE VERSUS PRODUCTION $34.9 Gold Production Enterprise Multiple (Moz.)1 Value of over Kinross H1 Kinross Enterprise 2014E 2014E (US$B) Value Enterprise Value (US$ billion) $25.7 Barrick 6.3 3.1 28.9 5.8x $21.4 Newmont 5.2 2.6 15.4 3.6x Goldcorp 3.0 1.3 19.7 4.3x Kin
Slide 36: 2014E Metrics
COMPELLING VALUATION 2014E METRICS Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities EV / 2014E EBITDA P / 2014E OPERATING CF 18.2 16.1 17.7 15.6 12.9 13.8 12.7 10.6 8.4 8.3 9.0 8.4 5.5 4.7 GG AUY EGO AEM NEM
Slide 37: 2015E Metrics
COMPELLING VALUATION 2015E METRICS Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities EV / 2015E EBITDA P / 2015E OPERATING CF 12.5 14.9 10.4 10.0 11.7 8.4 8.3 10.9 7.7 7.9 5.2 6.6 6.5 4.4 EGO GG AEM ABX AUY N
Slide 38: Diversified Portfolio of Operating Mines
KINROSS WAY FORWARD DIVERSIFIED PORTFOLIO OF OPERATING MINES Over 50% of estimatedAMERICAS RUSSIA 2014 gold equivalent production from mines located in the Americas Dvoinoye Kupol Fort Knox Kettle River-Buckhorn Round Mountain 2014E GOLD EQUIVALENT PRODUCTION(3) Tasiast Chirano 27% WEST AFRICA 2.5-2
Slide 39: Appendix
APPENDIX 3939 www.kinross.com
Slide 40: Fully-Loaded Costing Methodology
QUALITY OVER QUANTITY FULLY-LOADED COSTING METHODOLOGY • Builds upon NI 43-101 standards to include additional costs for estimating mineral reserves • Objectives: Maximize near-term cash flow & NPV Every ounce is cash flow positive on a “fully-loaded” basis KINROSS WAY FORWARD: MINERAL RESERVE E
Slide 41: 2013 Mineral Reserves and Resources
QUALITY OVER QUANTITY 2013 MINERAL RESERVES AND RESOURCES(6) FULLY-LOADED COSTING METHODOLOGY FOR PROVEN & PROBABLE GOLD RESERVES MINERAL RESERVE ESTIMATES 59.6 42.8 MM OZ. • Contributed to a reduction in gold reserves estimates, which is offset by estimated: Higher grades 2012 2013 Reduced capi
Slide 42: Fort Knox, USA (100%)
AMERICAS FORT KNOX, USA (100%) Among the world’s few cold climate heap leach facilities • Achieved record annual production in 2013, Fort Knox’s 16th year in operation • Impressive track record of operational excellence OPERATING RESULTS(5) FY 2012 FY 2013 Production (Au. Eq. oz.) 359,948 421,641 Pr
Slide 43: Round Mountain, USA (50%)
AMERICAS ROUND MOUNTAIN, USA (50%) Round Mountain is a best-practice leader in many areas, including preventative maintenance • Kinross-operated JV with Barrick • Bulk tonnage open-pit operation OPERATING RESULTS(5) FY 2012 FY 2013 Production (Au. Eq. oz.) 192,330 162,826 Production cost of sales ($
Slide 44: Kettle River-Buckhorn, USA (100%)
AMERICAS KETTLE RIVER-BUCKHORN, USA (100%) Low-cost, high-grade underground mine located in Washington state • Small footprint operation • Significant cash flow contributor with costs among the lowest in the portfolio OPERATING RESULTS(5) FY 2012 FY 2013 Production (Au. Eq. oz.) 156,093 150,157 Prod
Slide 45: 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 ~60Mtpa • Achieved record annual production in 2013 OPERATING RESULTS(5) FY 2012 FY 2013 Production (Au. Eq. oz.) 466,709 500,
Slide 46: Maricunga, Chile (100%)
AMERICAS MARICUNGA, CHILE (100%) High-altitude heap leach operation located in the highly prospective Maricunga District • New team focused on improving operating efficiencies and reducing costs • Continued performance improvements since Q3/13 OPERATING RESULTS(5) FY 2012 FY 2013 Production (Au. Eq.
Slide 47: 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 • Dvoinoye is the 4th mine Kinross has operated in its 20-year history in the region OPERATING RESULTS(5) FY 2012 FY 2013 Production (Au. Eq. oz.)
Slide 48: Tasiast, Mauritania (100%)
WEST AFRICA TASIAST, MAURITANIA (100%) Operating mine with a large gold resource and potential for a mill expansion • Expect to begin realizing benefits of infrastructure improvements • Achieved record quarterly production in Q1/14 OPERATING RESULTS(5) FY 2012 FY 2013 Production (Au. Eq. oz.) 185,33
Slide 49: Chirano, Ghana (90%)
WEST AFRICA CHIRANO, GHANA (90%) Cost reductions achieved at Chirano through transition to self-perform mining • Chirano is now among our lowest cost operations following transition to self-perform mining in open pits and underground OPERATING RESULTS(1,5) FY 2012 FY 2013 Production (Au. Eq. oz.) 26
Slide 50: Endnotes
ENDNOTES 1) Unless otherwise noted, gold equivalent production, gold equivalent ounces sold and production cost of sales figures in this presentation are based on Kinross’ 90% share of Chirano production. 2) For more information regarding the results of the Tasiast feasibility study, please refer to
Slide 51: Explanatory Notes: Exploration
EXPLANATORY NOTES: EXPLORATION Tasiast Exploration Results Hole identifiers ending with suffix DD are diamond drill core holes (HQ diameter) and those ending with suffix RC are reverse circulation (RC) holes. Holes with “A” prefixing DD or RC are diamond core or reverse circulation re-drills of the
Slide 52: Explanatory Notes: Exploration
EXPLANATORY NOTES: EXPLORATION Kupol and Dvoinoye Exploration Results All drill holes at Moroshka are diamond drill core holes (HQ or NQ core diameter). The Moroshka vein dips sub-vertically to the east. Drill holes are angled between minus 50° and 75° to the east and west. Results provided for Moro
Slide 53: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 5353 www.kinross.com