Kinross Gold Corporation · TSX:K
Kinross Gold — 2014 BMO Capital Markets Global Mining & Metals Conference
47 slides from Kinross Gold's conference presentation, Feb 24, 2014
Slide 1: Kinross Gold Corporation
February 23 – 26 KINROSS GOLD CORPORATION 2014 BMO Capital Markets Global Mining & Metals Conference 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, including the on-screen version, and responses to questions, including any information as to the future perform
Slide 3: Operational Excellence
OPERATIONAL EXCELLENCE DELIVERING STRONG OPERATING PERFORMANCE • Production within updated guidance and exceeded original guidance of 2.4 to 2.6 mm oz. • Achieved low-end 2013 of cost of sales guidance range • Full-year all-in sustaining cost below guidance of $1,100 to $1,200 per ounce GOLD EQUIVAL
Slide 4: 2014 Outlook
OPERATIONAL EXCELLENCE 2014 OUTLOOK(4) • Gold equivalent production expected to be 2.5 to 2.7 million ounces • Production cost of sales expected to be $730 to $780/oz. Au eq. • All-in sustaining cost expected to be $950 to $1,050/oz. Au eq. • Total capital expenditures expected to be $675 million (4
Slide 5: Diversified Portfolio of Operating Mines
KINROSS WAY FORWARD DIVERSIFIED PORTFOLIO OF OPERATING MINES • Record annual production in 2013: 2.63 million gold equivalent ounces(1) THE AMERICAS RUSSIA Dvoinoye Kupol Fort Knox Kettle River - Buckhorn Round Mountain Tasiast Chirano KINROSS WAY FORWARD WEST AFRICA Paracatu • Focus on margins and
Slide 6: Continued Focus on Capital Expenditures
DISCIPLINED CAPITAL ALLOCATION CONTINUED FOCUS ON CAPITAL EXPENDITURES 2012 spend Initial 2013 $1.9 bn estimate Identified $340 mm in savings throughout 2013 $1.6 bn $1.40 bn $1.26 bn Expecting another significant reduction in 2014 $675 mm Full-year Original 2013 Revised 2013 (4) Actual 2013 2014E 2
Slide 7: Financial Discipline
FINANCIAL DISCIPLINE ACHIEVING SPENDING REDUCTIONS TOTAL OVERHEAD COSTS(i) EXPLORATION EXPENSE $169 $240 $212 $205 $112 US$ millions US$ millions $85 (4) (4) 2012 2013 2014E 2012 2013 2014E (i) Includes general and administrative and business development costs. 77 (4) Refer to endnote #4. www.kinros
Slide 8: Declining All-In Sustaining Costs
FINANCIAL DISCIPLINE DECLINING ALL-IN SUSTAINING COSTS • Achieved all-in sustaining costs below 2013 guidance range • Forecasting another decline to $950 - $1,050 per ounce in 2014 $1,079 $1,063 $950 - $1,050 ($ per ounce) (4) 2012 2013 2014E (4) Refer to endnote #4. 88 www.kinross.com
Slide 9: 2013 Mineral Reserves and Resources
QUALITY OVER QUANTITY 2013 MINERAL RESERVES AND RESOURCES(5) FULLY-LOADED COSTING METHODOLOGY FOR PROVEN & PROBABLE GOLD RESERVES RESERVE ESTIMATES 59.6 39.7 MM OZ. • Includes costs such as: sustaining capital, mine waste management costs, etc. • Contributed to a 33% reduction in gold reserves 2012
Slide 10: 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 11: 2013 Gold Reserves
QUALITY OVER QUANTITY 2013 GOLD RESERVES(5) • Rigorous mine plan optimization program established at all operating sites to ensure fully- loaded costs incorporated into mine plans • Has not resulted in any sterilization of estimated mineral resources(i) • Estimated potential ounces are still availab
Slide 12: Grade Increases at All Operating Mines
QUALITY OVER QUANTITY GRADE INCREASES AT ALL OPERATING MINES • Net of FDN impact, Kinross overall estimated average gold reserve grade increased 14% year-over-year % CHANGE IN PROVEN & PROBABLE RESERVE GRADE(5) 37% 2012 vs. 2013 13% 9% 4% 4% 5% 2% 1% Kupol / Kettle River Maricunga Fort Knox Paracatu
Slide 13: Maintaining a Solid Balance Sheet
AS AT DECEMBER 31, 2013 MAINTAINING A SOLID BALANCE SHEET • Balance sheet strength continues to be a priority objective • Net debt position of $1,385 million at December 31, 2013 Repaid $523 million in debt in 2013 • No material debt maturities prior to 2016 Only regular principal amortization p
Slide 14: Maintaining a Strong Balance Sheet
MAINTAINING A STRONG BALANCE SHEET FINANCIAL FLEXIBILITY • Net debt position of $1.4 billion at December 31, 2013 • No material debt maturities prior to 2016 SCHEDULED DEBT REPAYMENTS $1,000 $750 $ MILLIONS $270 $60 $60 $250 $– 2014 2015 2016 2017 2018 2019 & Term loan Senior notes Kupol loan therea
Slide 15: 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.(4) 1515 (4) Refer to endnote #4. www.kinross.com
Slide 16: Fort Knox, Alaska
FORT KNOX, ALASKA • Operating since 1997 • Impressive track record of operational excellence • Among the world’s few cold climate heap leach facilities • Record annual production in 2013 1616 www.kinross.com
Slide 17: Paracatu, Brazil
PARACATU, BRAZIL • Operating since 1987 • Steady improvements in throughput and recovery since completion of mill expansion and optimization projects • Achieved record annual production in 2013 1717 www.kinross.com
Slide 18: Paracatu Mine Plan Optimization
QUALITY OVER QUANTITY PARACATU MINE PLAN OPTIMIZATION • Fully-loaded costing methodology contributed to reduction of gold reserve estimates and estimated: Grade increase of 5% to 0.42 g/t Mine life reduction to 2030 LOM capital expenditures reduced by ~60% Greater NPV 2013 GOLD RESERVES AND
Slide 19: Maricunga, Chile
MARICUNGA, CHILE • Operating since 1996 • New team focused on improving operating efficiencies and reducing costs • Performance improvements in December & January 1919 www.kinross.com
Slide 20: 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.(4) 2020 (4) Refer to endnote #4. www.kinross.com
Slide 21: West Africa
WEST • Strong focus on optimizing efficiency and performance in the region AFRICA • 2014E regional guidance: 480 – 540koz. at $810 – $880/oz. 2121 (4) Refer to endnote #4. www.kinross.com
Slide 22: Tasiast, Mauritania
TASIAST, MAURITANIA • Expect to begin realizing benefits of site infrastructure improvements in 2014 • Feasibility study expected to be complete Q1/14 2222 www.kinross.com
Slide 23: 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 rel
Slide 24: Tasiast: Piment Central
HIGH-QUALITY EXPLORATION TARGETS TASIAST: PIMENT CENTRAL • Discovered new zone of high-grade Piment Central mineralization below west sidewall High Grade Footwall Vein Prolongation of the pit • Occurs within existing footprint of the mine Piment • New style of mineralization Section 75011 TA17091DD
Slide 25: La Coipa Phase 7
HIGH-QUALITY EXPLORATION TARGETS LA COIPA PHASE 7 • Drilling on a number of targets stepping out from LA COIPA DISTRICT known mineralization and historic occurrences Puren West CATALINA • Encouraging early results Atenas • Drilling continues to outline the geometry of the mineralization La Coipa Pha
Slide 26: 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 27: 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 45 of this presentat
Slide 28: 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 29: Principles for Building Value
THE WAY FORWARD PRINCIPLES FOR BUILDING VALUE • Record production in 2013 Focus on operational • Achieved all-in sustaining cost below 2013 guidance excellence range • Launched Way Forward in 2012 Quality over quantity • Framework for pursuing quality over quantity across the business Disciplined ca
Slide 30: Relative Valuation
RELATIVE VALUATION 2014E GOLD PRODUCTION(i) 2014E ALL-IN SUSTAINING COSTS(ii) EV / 2014E EBITDA(iii) (mm oz.) ($/oz.) 7.0 14.0 $1,200 12.2 6.0 11.7 $1,000 5.0 9.8 9.4 $800 4.0 8.0 6.9 $600 3.0 $400 2.0 1.0 $200 0.0 $0 ABX NEM GG KGC AUY AEM EGO NEM KGC AEM GG ABX EGO AUY GG EGO AEM AUY NEM ABX KGC (
Slide 31: Appendix
APPENDIX 3131 www.kinross.com
Slide 32: Production & Cost Guidance
2014 OUTLOOK PRODUCTION & COST GUIDANCE(6) • 2014 all-in sustaining cost(3) expected to be $950 - $1,050 per gold equivalent ounce Gold Production % of Total Production Cost of Sales Region (000 oz. Au eq.) Production ($/oz. Au eq.) Americas 1,330 – 1,430 53% $780 – $840 West Africa 480 – 540 20% $8
Slide 33: Further Spending Reductions in 2014
2014 OUTLOOK FURTHER SPENDING REDUCTIONS IN 2014(6) CAPITAL EXPENDITURE OUTLOOK (US$ millions) • 2014 capital expenditures are expected to be approximately $675 million, including an estimated capitalized interest of approximately $70 million Region Sustaining Non-Sustaining Regional Total Americas
Slide 34: Fourth Quarter 2013 Financial Results
FOURTH QUARTER 2013 FINANCIAL RESULTS (in millions, except ounces and per share amounts) Q4 2012 Q4 2013 % Change AVERAGE REALIZED GOLD PRICE Gold equivalent production(1) $1,707 724,510 646,234 -11% (ounces) $ per gold ounce Gold equivalent sales(1) 687,162 683,419 -1% $1,268 (ounces) Revenue $1,18
Slide 35: Full-Year 2013 Financial Results
FULL-YEAR 2013 FINANCIAL RESULTS (in millions, except ounces and per share % amounts) 2012 2013 AVERAGE REALIZED GOLD Change PRICE Gold equivalent production(1) 2,617,813 2,631,092 +1% $1,643 (ounces) $ per gold ounce $1,402 Gold equivalent sales(1) 2,591,478 2,669,276 +3% (ounces) Revenue $4,307.3
Slide 36: Fort Knox, Alaska (100%)
AMERICAS FORT KNOX, ALASKA (100%) • Operating for over 16 years • Achieved record annual production in 2013 OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(3) FY 2013 421,641 $569 FY 2012 359,948 $663 2013 GOLD RESERVES AND RESOURCES(6) TONNES GRADE OUNCES (thousands) (g/t
Slide 37: Round Mountain (50%)
AMERICAS ROUND MOUNTAIN (50%) • Kinross-operated JV with Barrick • Bulk tonnage open-pit operation • Commercial production began in 1977 OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.) (3) FY 2013 162,826 $836 FY 2012 192,330 $717 2013 GOLD RESERVES AND RESOURCES(6) TONNES
Slide 38: Kettle River – Buckhorn (100%)
AMERICAS KETTLE RIVER – BUCKHORN (100%) • Entered production in Q4 2008 • Small foot-print, underground mine • Near-mine exploration targets OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(3) FY 2013 150,157 $548 FY 2012 156,093 $482 2012 GOLD RESERVES AND RESOURCES(6) TON
Slide 39: Paracatu (100%)
AMERICAS PARACATU (100%) • Plant 2 expansions now complete: 3rd ball mill commissioned in Q2 2011 4th ball mill commissioned in Q3 2012 OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(3) FY 2013 500,380 $836 FY 2012 466,709 $881 2012 GOLD RESERVES AND RESOURCES(6) TONN
Slide 40: Maricunga (100%)
AMERICAS MARICUNGA (100%) • Located in the highly prospective Maricunga District • High-altitude heap leach operation OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(3) FY 2013 187,815 $1,170 FY 2012 236,369 $779 2012 GOLD RESERVES AND RESOURCES(6) TONNES GRADE OUNCES (tho
Slide 41: Kupol-Dvoinoye (100%)
RUSSIA KUPOL-DVOINOYE (100%) • Underground mine with 4,500 tpd mill • 2014 first full year of production from Dvoinoye, located 85 km from Kupol’s mill OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(3) FY 2013 550,188 $507 FY 2012 578,252 $472 2013 GOLD RESERVES AND RESOU
Slide 42: Tasiast (100%)
WEST AFRICA TASIAST (100%) • Open-pit mine ~300 km north of the city of Nouakchott • Remote, flat, sparsely populated desert OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(3) YTD Q3 2013 184,855 $1,021 FY 2012 185,334 $889 2012 GOLD RESERVES AND RESOURCES(6) TONNES GRADE
Slide 43: Chirano (90%)
WEST AFRICA CHIRANO (90%) • 90% owned by Kinross; Government of Ghana holds a 10% carried interest • 9 open-pits and 2 recently-discovered underground deposits • Achieved first gold pour in 2005 OPERATING RESULTS(1) PRODUCTION(1) PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(3) YTD Q3 2013 179,716 $
Slide 44: 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 and do not include production from Crixas, due to the sale of Kinross’ 50% ownership completed J
Slide 45: 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 46: 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 47: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 4747 www.kinross.com
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