Kinross Gold Corporation · TSX:K
Kinross Gold — BMO Nesbitt Burns Global Resources Conference 2007
43 slides from Kinross Gold's conference presentation, Feb 27, 2007
Slide 1: Delivering Disciplined Growth
Delivering Disciplined GROWTH BMO Nesbitt Burns - Global Resources Conference February 27, 2007
Slide 2: Bema Closing – Feb. 27/07
Bema Closing – Feb. 27/07 2
Slide 3: Cautionary Statement
Cautionary Statement All statements, other that statements of historical fact, contained or incorporated by reference in this presentation, including any information as to the future financial or operating performance of Kinross constitute "forward-looking statements" within the meaning of certain s
Slide 4: Kinross - Key Facts
Kinross - Key Facts Market cap of approx. US $8.3B 10 mines, 5 countries Chile, Brazil, United States, Russia, Canada 2007 Est. production 1.5 mm oz Au eq 2007 Est. cost of sales of $320 - $330/oz Gold Silver Kinross (mm ozs) (mm ozs) before Reserves 27.9 Bema 27.8 acquisition Resources 8.0 11.0 5-y
Slide 5: Focused Portfolio
Focused Portfolio Kupol (75%) Magadan, Russia (Open pit, U/G) Fort Knox (100%) Alaska, USA (Open pit) Julietta (90%) Russia (U/G) Musselwhite (32%) Ontario, Canada (U/G) Kettle River (100%) Washington, USA (U/G) Porcupine (49%) Round Mountain (50%) Ontario, Canada (Open pit, U/G) Nevada, USA (Open P
Slide 6: Kinross - Key Facts
Kinross - Key Facts Proven management team Strong balance sheet Significant growth in production & declining costs 3 major construction projects Strong future project pipeline with Bema Gold Silver Copper (mm (mm ozs) ozs) (mm (mm ozs) ozs) (bl (bl lbs) lbs) Reserves 45 70 2.8 Resources 15 53 0.9 Fo
Slide 7: A Unique, High-Growth Major Structure Portfolio
A Unique, High-Growth Major Superior Strong Financial Growth Profile Position pe t itiv e C ost Long-life Reserve s Com & Resources Structure Proven Team ag eme nt d G e og r aphic Man Focuse Portfolio 7
Slide 8: 2006: A Record Year For Kinross
2006: A Record Year For Kinross Year-over- year Revenue $905.6 mm 22% Earnings $165.8 mm Per share $0.47 Cash Flow from Operations $292.0 mm 118% Production (oz Au eq.) 1,476,329 Cost of Sales per oz $319/oz - on gold equivalent sales of: 1,510,836 ozs Cash Margin 65% Gold Price 36% 8
Slide 9: Strong Earnings Power
Strong Earnings Power REVENUE NET EARNINGS (all dollar amounts in US dollars) (all dollar amounts in US dollars) $171.5 M 25% $905.6 M ($216.0 M) $725.5 M 2005 2006 2005 2006 Based on Kinross’ results released on Feb. 21, 2006. 9
Slide 10: 2006 Kinross Financial Results
2006 Kinross Financial Results Cash of $154.1 mm undrawn credit facilities of $307.5mm Debt of $89.9 mm Capital expenditures of $202.9 mm Exploration spending of $39.4 mm 10
Slide 11: 2006 Exploration Results
2006 Exploration Results Replaced Reserves: Reserves increased at 7 mines Competitive discovery cost Advance Project Pipeline: M&I Resources increased by 1.9 mm oz (31%) Inferred Resources increased by 0.9 mm oz (32%) Drive Growth Opportunities: 12 new projects 3 of 6 current exploration projects yi
Slide 12: Kinross Delivers – 4-Point Plan
Kinross Delivers – 4-Point Plan BUILDING GROWTH FROM BEST NEW GROWTH BLOCKS FOR THE THE CORE PEOPLE OPPORTUNITIES FUTURE Paracatu expansion 9 9 9 9 Buckhorn construction 9 9 9 9 Bema acquisition 9 9 9 9 Rnd Mtn optimization 9 9 9 Ft Knox optimization 9 9 9 Excellence in EH&S 9 9 9 Mgmt & Board 9 9 E
Slide 13: Kinross Goals and Objectives - 2007
Kinross Goals and Objectives - 2007 DELIVER ASSET BEST TALENT, BUILDING BLOCKS DRIVE FUTURE PERFORMANCE BEST TEAMS FOR FUTURE VALUE Industry Leader Attract & Retain Enhanced Financial & Optimize In EH & S The Best Management Systems Bema Assets Manage Exploration Achieve Production & Drive Performan
Slide 14: 2007 Kinross Guidance
2007 Kinross Guidance (all dollar amounts in US dollars) 2007E Production (Au eq.) 1.5 mm Cost of Sales (per ounce) $320 - $330 CAPEX $450 mm Exploration $44 mm Production beyond 2007: 2008 1.6 – 1.7 mm oz Au eq 2009 1.8 – 1.9 mm oz Au eq 14
Slide 15: Industry Challenges
Industry Challenges CHALLENGE KINROSS TODAY High Cost Low Cost By 2009, over 40% of production will Production Producer be approx $200 cost of sales per oz Long Paracatu – 33 yrs Refugio – 15 yrs Short Mine Life Mine Life Kupol – 9 yrs PJV – 13 yrs 59% increase in production 07 to 09 High 37% traili
Slide 16: Kinross Undervalued: 2007E P/NAV
Kinross Undervalued Price/Net Asset Value (0% Discount) 118% 2007E P/NAV 103% 100% 95% Senior average 92% 90% 82% 77% 79% 71% HMY GFI KGC NCM NEM ABX AU G BVN Source: BMO Capital Markets research 16
Slide 17: Competitive Cash Margin
Competitive Cash Margin Cash Margin Per Ounce 300% 2006 Cash Margin More Than Kinross (+28%) Doubled Over 2005 250% Newmont (+24%) Gold Price (+18%) Relative Growth AngloGold (+15%) 200% Barrick (+12%) 150% 100% 50% 2002 2003 2004 2005 2006 Based on company disclosure. 17
Slide 18: Competitive Cost Control
Competitive Cost Control 1.6 Kinross Newmont Relative Change 1.4 AngloGold Barrick 1.2 1 2004 2005 2006 2007E Based on company disclosure for 2004-2006; guidance or the mid-point of company guidance where ranges exist for 2007. 18
Slide 19: Balanced Portfolio
Balanced Portfolio 2007 PRO FORMA PRODUCTION(1) 2007 PRO FORMA RESERVES(2) Russia US 4% US Canada 12% 39% 5% Brazil Chile Russia 37% 26% 8% Brazil Canada Chile 16% 15% 38% (1) Kinross - company guidance; Bema – street estimates less 100,000 to reflect the sale of Petrex and est. annual production of
Slide 20: Balanced Portfolio
Balanced Portfolio 2009E PRODUCTION* Brazil 28% North America Russia 45% 17% Chile 10% Kinross - company guidance (see 02/21/07 press release); Bema – street estimates less 100,000 to reflect the sale of Petrex and est. annual production of 413,000 oz Au eq. for Kupol (75%) for the first 6.5 years.
Slide 21: Superior Growth Profile
Superior Growth Profile MINERAL PRODUCTION* (mm oz Au Eq) Growth 59% 2.6 - 2.7 Bema Kinross Range 2.1 - 2.2 Kinross 1.7 40% of production at approx. $200 cost of sales 2007E 2008E 2009E * Kinross production based on Company guidance (see 02/21/07 press release). Bema production based on street estim
Slide 22: Superior Growth Profile
Superior Growth Profile PRODUCTION GROWTH 2007-2009 Post Bema acquisition (before Cerro Casale) 59% 34% 32% 22% 15% 9% 11% -1% Barrick Newmont Polyus AngloGold Gold Fields Harmony Goldcorp Kinross Source: BMO Capital Markets research. 22
Slide 23: Expanded Project Pipeline
Expanded Project Pipeline EXPLORATION PRE-FEASIBILITY FEASIBILITY CONSTRUCTION PRODUCTION Kupol Paracatu Expansion Buckhorn: Kettle River Pancho: Refugio Cerro Casale Fort Knox Heap Leach Gold Hill: Round Mountain Fort Knox Phase 7 Hollinger: PJV Ladera Farellon: La Coipa Round Mountain U/G Gurupi M
Slide 24: Five Year Kinross Reserve History
Five Year Kinross Reserve History (before Bema acquisition) PROVEN & PROBABLE RESERVES Buckhorn Acquisition Proven & Probable Reserves TVX/EBM Acquisitions 51% Paracatu Acquisition Cumulative AuEq Production 30.000 27.9 25.000 5-year 36.7% CAGR Million oz Au 20.000 15.000 10.000 5.000 - (5.000) (10.
Slide 25: Attractively Priced Reserves
Attractively Priced Reserves MARKET CAP PER OUNCE OF RESERVES $491 $221 $229 $186 $198 $177 $130 $10 Harmony Gold Fields Kinross + Polyus AngloGold Barrick Newmont Goldcorp Bema Does not include silver or copper reserves. As at close of business February 23, 2007 25
Slide 26: Progress: Paracatu
Progress: Paracatu $470 mm expansion to increase throughput to 60 mtpa Approximately 15% complete All major equipment ordered Construction support facilities in place On-time and on-budget for completion in 2008 26
Slide 27: Progress: Buckhorn
Progress: Buckhorn Acquisition completed September 2006 All necessary mine construction permits received Construction began on upper portal area and general mine infrastructure in late 2006 Federal permits for haul road construction anticipated mid-2007 Project expected to be completed on-time and b
Slide 28: Progress: Kupol (75%)
Progress: Kupol (75%) Feasibility completed in ‘05, currently under construction Projected to produce 413,000 ozs gold annually (K share) Costs expected to be $130/oz Au eq. Reserves: 3.3 mm ozs gold, 40 mm ozs silver (K share) Total project cost est. $599 mm Project finance: $425 mm Open pit and un
Slide 29: Declining Cash Costs
Declining Cash Costs 2009E COST 2009E PRODUCTION MINE (US$/oz Au eq.) (Ounces) Kupol Approx. $130 Approx. 413,000(1) Paracatu Approx. $230 Approx. 557,000(2) w/Expansion Kettle River Approx. $200 Approx. 200,000 Total Approx. $200 Approx. 1,170,000 (1) Based on the Feasibility Study the Kupol Mine i
Slide 30: Kinross Outperforms
Kinross Outperforms 1.60 +47% Relative Performance 1.40 1.20 +22% 1.00 -4% 0.80 Aug-06 Nov-06 May-06 Feb-06 Feb-07 Dec-06 Sep-06 Oct-06 Mar-06 Apr-06 Jun-06 Jan-07 Jul-06 Major North American Gold Producers (Average) Kinross Gold Price Major North American Gold Producers include: Barrick and Newmont
Slide 31: Delivering Disciplined Growth
Delivering Disciplined GROWTH BMO Nesbitt Burns - Global Resources Conference February 27, 2007
Slide 32: Paracatu, Brazil
Paracatu, Brazil Ownership: 100% Reserves (Dec. 31/06): 16,389,000 gold ozs 1,262,073,000 tonnes @ 0.40 g/t $470 million expansion project approved to triple Highlights: throughput and reduce costs; expansion will contribute 2008 and beyond Q4 2006 Operating Results Production: 43,240 gold eq. ozs C
Slide 33: Round Mountain, USA
Round Mountain, USA Ownership: 50% (Kinross operated) 1,952,000 gold ozs Reserves (Dec. 31/06): 102,549,000 tonnes @ 0.59 g/t Pre-stripping commenced for a pit layback, ore from layback expected to contribute in late 2006 Highlights: Exploration drilling on underground began in Q3/06 Q4 2006 Operati
Slide 34: Refugio, Chile
Refugio, Chile Ownership: 50% (Kinross operated) Reserves (Dec. 31/06): 2,720,000 gold ozs 111,325,000 tonnes @ 0.76 g/t Restart is complete, producing as planned Highlights: Drilling commenced on nearby Pancho deposit Q4 2006 Operating Results Production: 28,060 gold eq. ozs Cost of sales: $ 325 /
Slide 35: Musselwhite, Canada
Musselwhite, Canada Ownership: 32% Reserves (Dec. 31/06): 565,000 gold ozs 2,771,000 tonnes @ 6.34 g/t Q4 2006 Operating Results Production: 18,004 gold eq. ozs Cost of sales: $ 463 / oz 2006 Operating Results Production: 69,834 gold eq. ozs Cost of sales: $ 483 / oz 35
Slide 36: Fort Knox, USA
Fort Knox, USA Ownership: 100% Reserves (Dec. 31/06): 2,705,000 gold ozs 159,673,000 tonnes @0.53 g/t Highlights: Heap leach scenario being evaluated Q4 2006 Operating Results Production: 72,921 gold eq. ozs Cost of sales: $ 354 / oz 2006 Operating Results Production: 333,383 gold eq. ozs Cost of sa
Slide 37: Porcupine JV, Canada
Porcupine JV, Canada Ownership: 49% Reserves (Dec. 31/06): 1,709,000 gold ozs 30,169,000 tonnes @ 1.76 g/t Highlights: Pamour pit now contributing to production Q4 2006 Operating Results Production: 44,021 gold eq. ozs Cost of sales: $ 351 / oz 2006 Operating Results Production: 156,735 gold eq. ozs
Slide 38: La Coipa, Chile
La Coipa, Chile Ownership: 50% 432,000 gold ozs (10,136,000 tonnes @ 1.33 g/t) Reserves (Dec. 31/05): 27,783,000 silver ozs (10,136,000 tonnes @ 1.33 g/t) Highlights: Puren now fully contributing to production Q4 2006 Operating Results Production: 55,801 gold eq. ozs Cost of sales: $ 283 / oz 2006 O
Slide 39: Crixas, Brazil
Crixas, Brazil Ownership: 50% Reserves (Dec. 31/06): 433,000 gold ozs 2,652,000 tonnes @ 5.08 g/t Q4 2006 Operating Results Production: 24,401 gold ozs Cost of sales: $ 183 / oz 2006 Operating Results Production: 97,009 gold ozs Cost of sales: $ 186 / oz 39
Slide 40: Kettle River, USA
Kettle River, USA Ownership: 100% Reserves (Dec. 31/06): 946,000 gold ozs 1,853,000 tonnes @ 15.88 g/t Highlights: Buckhorn Mountain and Crown transaction: - Acquisition completed September 2006 - Permitting received for construction on Buckhorn property - Construction began on upper portal area and
Slide 41: Environmental Responsibility
Environmental Responsibility AWARDS PARACATU DELAMAR MINE HARD ROCK MINES Received the Top The Northwest Mining Received the Idaho Quality Environmental Association Interagency Award 2006 award from the Excellence in for Excellence in Parliamentary Reclamation Award Reclamation Association of Brazil
Slide 42: Health and Safety
Health and Safety AWARDS MARICUNGA PARACATU Achieved Excellent Brazilian Safety distinction from Agency Silver Award Mutual de Seguridad for Health and Safety Competitive Company Management certification KETTLE RIVER ROUND MOUNTAIN ROUND MOUNTAIN Awarded the Sentinel Awarded Best Safety Placed first
Slide 43: Complementary Asset Base
Complementary Asset Base Zaldivar El Salvador Porterillos El Penon Agua de Falda Esperanza La Coipa Cominor JV Siete Hermanas La Isla Soledad INA Escondido La Pepa Volcan Pantanillo Refugio ENT Cacique Santa Cecilia Quebrada ARG Cerro Casale Pascua Lama La Coipa (50%) Chile (Open Pit) Refugio (100%)
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