Kinross Gold Corporation · TSX:K
Kinross Gold — TD Securities 2017 Mining Conference
66 slides from Kinross Gold's conference presentation, Jan 18, 2017
Slide 1: Kinross Gold Corporation 2017 TD Securities Mining Conference
January 18 KINROSS GOLD CORPORATION 2017 TD Securities Mining Conference 1 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: Principles for Building Value
OPERATIONAL EXCELLENCE QUALITY OVER QUANTITY DISCIPLINED CAPITAL ALLOCATION BALANCE SHEET STRENGTH Principles for Building Value www.kinross.com 3
Slide 4: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • Continuing to meet or outperform our operational targets STRONG BALANCE SHEET • $2.2B in liquidity with net debt to EBITDA ratio of 0.86x ATTRACTIVE FUTURE GROWTH OPPORTUNITIES • Proceeding with TASIAST PHASE ONE; expected to reach full
Slide 5: Delivering Operational Excellence
Delivering Operational Excellence 5 www.kinross.com
Slide 6: Strong Track Record
OPERATIONAL EXCELLENCE STRONG TRACK RECORD 2012 2013 2014 2015 MET or EXCEEDED annual production guidance MET or came in UNDER annual cost of sales guidance MET or came in UNDER annual capital expenditures guidance Consistently Meeting or Outperforming Targets 6 www.kinross.c
Slide 7: 2016 Production & Cost Outlook
OPERATIONAL EXCELLENCE 2016 PRODUCTION & COST OUTLOOK(4) Forecasting increased production in 2016 of over 2.7M oz. Au eq. Gold Equivalent Production(1) Production Cost of Sales(2) All-in Sustaining Cost(3) (millions) ($ per ounce) ($ per ounce) 2.7 – 2.9 $975 $890 to $990 2.6 $675 to $735 $696 2015
Slide 8: 2016 Outlook
OPERATIONAL EXCELLENCE 2016 OUTLOOK(4) 2016 PRODUCTION & COST OF SALES OUTLOOK Gold Production % of Total Production Cost of Sales(2) Region (000 Au eq. oz.) Production ($/oz. Au eq.) Americas 1,670 – 1,770 61% $730 - $790 West Africa 360 - 420 14% $850 - $920 (attributable) Russia 670 – 710 25% $46
Slide 9: Diversified Portfolio of Operating Mines
OPERATIONAL EXCELLENCE DIVERSIFIED PORTFOLIO OF OPERATING MINES Over RUSSIA 60% of estimated 2016 gold equivalent production from mines located in the Americas AMERICAS Dvoinoye Kupol Fort Knox Kettle River-Buckhorn Bald Mountain Round Mountain 2016E GOLD EQUIVALENT PRODUCTION(1,4) Tasiast 25% Chira
Slide 10: Americas
• Six mines located in the US, Brazil and Chile AMERICAS • Over 60% of annual production is from the Americas in 2016 10 www.kinross.com
Slide 11: Third Quarter 2016 Highlights: Americas
THIRD QUARTER 2016 HIGHLIGHTS AMERICAS • Strong performance at FORT KNOX and • MARICUNGA production lower as mine ROUND MOUNTAIN placed into suspension in August • KETTLE-RIVER BUCKHORN production now • PARACATU production impacted by a expected to extend into Q1 2017 16-day curtailment due to lack
Slide 12: Russia
• Continued strong performance from the high-grade, low-cost Kupol and RUSSIA Dvoinoye underground mines 12 www.kinross.com
Slide 13: Third Quarter 2016 Highlights: Russia
THIRD QUARTER 2016 HIGHLIGHTS RUSSIA KUPOL-DVOINOYE • Consistent, strong performance from Russian operations continued in Q3 2016 • Processed approximately 71,000 gold equivalent ounces from Dvoinoye ore • Grades were slightly lower due to planned mine sequencing • Construction of a filter cake plan
Slide 14: Foreign Investment
RUSSIA FOREIGN INVESTMENT The world’s leading companies continued to invest in Russia in 2016 14 www.kinross.com
Slide 15: Foreign Investment Advisory Council
RUSSIA FOREIGN INVESTMENT ADVISORY COUNCIL FIAC is chaired by the Russian Prime Minister and includes CEOs from over 50 international companies 15 www.kinross.com
Slide 16: West Africa
• Two operating mines located in a region with excellent growth and WEST exploration prospects AFRICA • Strong focus on optimizing efficiency and performance 16 www.kinross.com
Slide 17: Third Quarter 2016 Highlights: West Africa
THIRD QUARTER 2016 HIGHLIGHTS WEST AFRICA • TASIAST resumed normal mining and processing operations in August Averaging strong mill throughput of 8,000 t/d New 3-year collective labour agreement signed in early October • Strong performance at CHIRANO as production and costs improved significantl
Slide 18: Strong Financial Discipline
Strong Financial Discipline 18 www.kinross.com
Slide 19: Robust Financial Results
THIRD QUARTER 2016 HIGHLIGHTS ROBUST FINANCIAL RESULTS Generated strong cash flow and earnings during the third quarter Operating Cash Flow Free Cash Flow* Net Earnings $ millions $ millions $ millions Net operating cash flow Net earnings Adjusted operating cash flow (6) $112 Adjusted net earnings (
Slide 20: 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 • Extended maturity dates of the $500M term loan and $1.5B credit facility
Slide 21: Currency & Oil Benefits
2016 OUTLOOK CURRENCY & OIL BENEFITS Well-positioned to benefit from currency and oil weakness • Benefits of favourable FX and oil prices 2016 Budget Assumptions & Sensitivities(4) partially offsetting lower gold prices 2016 Average Budget 110 Spot(i) 100 Gold US$1,100 US$1,2204 Oil US$55/bbl. US$46
Slide 22: Fuel & Currency Hedges
FINANCIAL DISCIPLINE FUEL & CURRENCY HEDGES Managing exposure to fluctuations in foreign currency and input commodity prices • Strategic decision to hedge 50% of the Tasiast Phase One project’s fuel oil requirements at $46/bbl for next 36 months Will look for additional opportunities to hedge an a
Slide 23: Attractive Growth Opportunities
Attractive Growth Opportunities 23 www.kinross.com
Slide 24: Advancing Our Projects
ATTRACTIVE GROWTH OPPORTUNITIES ADVANCING OUR 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 Production expected to commence H1 Q3 2017 L
Slide 25: Results of the Tasiast Two-Phased Expansion Studies
TASIAST EXPANSION PROJECT RESULTS OF THE TASIAST TWO-PHASED EXPANSION STUDIES • 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 25 www.kinross
Slide 26: Tasiast, Mauritania
ATTRACTIVE GROWTH OPPORTUNITIES TASIAST, MAURITANIA • Existing mine with an 8,000 t/d mill originally designed to process ore from a series of small open pits 26 www.kinross.com
Slide 27: 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 28: Phased Approach to a Tasiast Mill Expansion
DISCIPLINED PROJECT DEVELOPMENT PHASED APPROACH TO A TASIAST MILL EXPANSION • Phase One expansion offers a number of expected attractive attributes: Leverages existing infrastructure Relatively low execution risk Manageable capital expenditure Robust economics on a stand-alone basis Offers
Slide 29: Two-Phased Expansion Concept: Phase One
TASIAST EXPANSION PROJECT TWO-PHASED EXPANSION CONCEPT PHASE ONE: EXPANSION TO 12,000 t/d • Leverages existing mill infrastructure to increase throughput to 12,000 t/d from 8,000 t/d • Includes installation of an oversized 40’ SAG mill and gyratory crusher • Enhances processing of the harder, higher
Slide 30: Phase One Feasibility Study Results
TASIAST EXPANSION PROJECT PHASE ONE FEASIBILITY STUDY RESULTS Phase One expected to reduce cost per ounce by ~50% and to increase annual production by ~90% Metric Estimates Average annual production (2018-2027) 409,000 ounces Production cost of sales (2018-2027) $535 per ounce All-in sustaining cost
Slide 31: Two-Phased Expansion Concept: Phase Two
TASIAST EXPANSION PROJECT TWO-PHASED EXPANSION CONCEPT PHASE TWO: EXPANSION TO 30,000 t/d • Contemplates installation of an additional 18,000 t/d of throughput capacity for a total combined capacity of 30,000 t/d • Project would consist of: • Replacing the two current ball mills with a larger, new b
Slide 32: Phase Two Pre-Feasibility Study Results
TASIAST EXPANSION PROJECT PHASE TWO PRE-FEASIBILITY STUDY RESULTS Combined Phase One and Two expansion expected to transform Tasiast into Kinross’ largest mine with estimated costs amongst the lowest in our portfolio Metric Estimates for Phase One and Two combined Average annual production (2020-202
Slide 33: Two-Phased Approach: Capital Discipline
TASIAST EXPANSION PROJECT TWO-PHASED APPROACH: CAPITAL DISCIPLINE Objective was to achieve similar production and cost output as the 38k t/d case with significantly lower initial and sustaining capital Estimates for Phase One & Estimates for Previous Metric Two Combined 30k t/d 38k t/d Scenario Aver
Slide 34: Reduced Capex Estimate
TASIAST EXPANSION PROJECT REDUCED CAPEX ESTIMATE Phase One and Phase Two combined initial capital estimated to be $920 million(i) FACTORS DRIVING THE LOWER ESTIMATED INITIAL CAPITAL COST • Most of the equipment is smaller (e.g. crusher) Smaller Smaller scalescale • Fewer units required (e.g. few lea
Slide 35: Reduced Sustaining Capital
TASIAST EXPANSION PROJECT REDUCED SUSTAINING CAPITAL Expecting significant sustaining capital savings FACTORS DRIVING THE LOWER ESTIMATED SUSTAINING CAPITAL • Highly confident seawater pipeline no longer required Results of hydrological and hydrogeological studies increased confidence that an expa
Slide 36: Tasiast Expansion Project Site Layout
Airstrip Camp New SAG mill New stockpile Phase One and Two expansions New crusher West Branch Pit Truck shop Piment pits Dump leach Power Plant ADR plant Current tailings facility Phase One tailings facility Tasiast Expansion Project Site Layout 36 www.kinross.com
Slide 37: Sensitivities Table
TASIAST EXPANSION PROJECT SENSITIVITIES TABLE PHASE ONE GOLD PRICE SENSITIVITY ESTIMATES $1,100 $1,200 $1,300 $1,400 $1,500 IRR 13% 20% 26% 33% 40% NPV $345M $635M $910M $1.2B $1.5B PHASE ONE AND PHASE TWO COMBINED GOLD PRICE SENSITIVITY ESTIMATES $1,100 $1,200 $1,300 $1,400 $1,500 IRR 12% 17% 22% 2
Slide 38: Illustrative Mine Plan Schedule (30k t/d)
TASIAST EXPANSION PROJECT ILLUSTRATIVE MINE PLAN SCHEDULE (30k t/d) 2017 2019 2020 2016 2018 2021 2019 2019 2022 2016 2017 2020 2017 2020 2018 2023 2019 2021 2024 2022 2023 2025 2026 For additional information, please refer to the Tasiast Technical Report dated March 30, 2016, available on our websi
Slide 39: Tasiast Two-Phased Expansion Q3/16 Update
ATTRACTIVE GROWTH OPPORTUNITIES TASIAST TWO-PHASED EXPANSION Q3/16 UPDATE Phase One on track to reach full production in Q2 2018; Phase Two feasibility study expected to be complete in Q3 2017 Phase One progressing well • Engineering ~80% complete • Procurement for long-lead packages largely conclud
Slide 40: Bald Mountain, Nevada
ATTRACTIVE GROWTH OPPORTUNITIES BALD MOUNTAIN, NEVADA Bald Mountain has the potential to be a long-life mine in Kinross’ portfolio Multiple opportunities to add to proven and probable mineral reserve estimates and extend estimated mine life • Near-Term: potential to double current proven and probabl
Slide 41: Bald Mountain, Nevada
ATTRACTIVE GROWTH OPPORTUNITIES BALD MOUNTAIN, NEVADA Developing near-term opportunities which are expected to double mineral reserve estimates by end of Q1 2017 • Record of Decision in August a major milestone for 2016 Priority Exploration Targets future growth and expansion at Bald Mountain NORTH
Slide 42: Round Mountain Phase W
ATTRACTIVE GROWTH OPPORTUNITIES ROUND MOUNTAIN PHASE W Phase W is an opportunity to potentially extend estimated mine life • Phase W is a large zone of known mineralization at depth and to the west of the open-pit Geological extension of the same deposit that has been mined for past 38 years • Dec
Slide 43: Phase 1 Scoping Study Results
ROUND MOUNTAIN PHASE W PHASE 1 SCOPING STUDY RESULTS • Focused on a 1.3Moz portion of the new resource estimate (Phase 1)(7,8) 51Mt with an average grade of 0.8 g/t Initial results of Phase 1 looks encouraging • Initiated post-scoping study optimization work, including: Infill, geotechnical an
Slide 44: La Coipa Phase 7
ATTRACTIVE GROWTH OPPORTUNITIES LA COIPA PHASE 7 Advancing permitting and exploration activities at the La Coipa Phase 7 project • Pre-feasibility study on La Coipa completed during Q3 2015 • Project offers a number of expected attractive attributes: Leverages existing infrastructure Relatively
Slide 45: La Coipa Phase 7 Exploration
ATTRACTIVE GROWTH OPPORTUNITITES LA COIPA PHASE 7 EXPLORATION Encouraging results along a prospective 3 km trend The Pompeya deposit is also referred to as La Coipa Phase 7. For additional information, please see Kinross’ news release dated February 10, 2016 and Appendices A and B, which are availab
Slide 46: Russia Satellite Deposits
ATTRACTIVE GROWTH OPPORTUNITIES RUSSIA SATELLITE DEPOSITS Advancing development of satellite deposits located near Kupol and Dvoinoye September North East Moroshka • Located approximately 15 km from Dvoinoye • Located 4 km from the Kupol mill • Near-surface, high-grade M&I mineral resource • Complet
Slide 47: Compelling Valuation
Compelling Valuation 47 www.kinross.com
Slide 48: Track Record Over the Past Four Years
LOWERED 4 annual capex by MET $1.9 $1.3B guidance $1.3 Consecutive targets $0.6 $0.6 years Produced over 2012 2013 2014 2015 10Moz. DECREASED STRENGTHENED gold equivalent all-in balance $950M sheet sustaining Debt repaid 10% cost $2.2 BILLION Liquidity position Track Record Over the Past Four Years
Slide 49: Free Cash Flow Yield & Net Debt to EBITDA
COMPELLING VALUATION FREE CASH FLOW YIELD & NET DEBT TO EBITDA 2017E Free Cash Flow Yield(i) Net Debt to EBITDA (LTM)(ii) 2.1 6.9% 6.6% 1.9 5.9% 1.6 1.2 3.7% 2.8% 0.9 2.6% 0.7 Barrick Kinross Newmont Goldcorp Agnico Yamana Yamana Goldcorp Barrick Newmont Kinross Agnico (i) Source: Bloomberg analyst
Slide 50: Compelling Relative Value
COMPELLING RELATIVE VALUE ENTERPRISE VALUE VERSUS PRODUCTION $27.9 Market capitalization Enterprise value Multiple of 2016E Gold Delta with Kinross Production Kinross $24.3 Enterprise (Moz.)(ii) (US$B) Value Enterprise value (US$ billions)(i) Barrick 5.3 22.7 5.4 $15.0 Newmont 5.1 19.1 4.7 Goldcorp
Slide 51: 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 11.1 13.0 9.2 8.9 9.2 8.8 7.0 6.3 7.3 4.3 5.2 4.3 Agnico Newmont Goldcorp Bar
Slide 52: Building Momentum for the Future
2020E Start-up of potential 2018E TASIAST PHASE TWO TASIAST PHASE 2017E ONE expected to ramp up to full 2016E Stronger year production expected at Expecting to BALD MOUNTAIN deliver HIGHER production Building Momentum for the Future 52 www.kinross.com
Slide 53: Appendix
Appendix 53 www.kinross.com
Slide 54: Manageable Debt Profile
FINANCIAL DISCIPLINE MANAGEABLE DEBT PROFILE No significant debt maturities prior to 2020 Debt Schedule Debt Ratings Senior notes Term Loan 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 55: 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 – 2018; mining – 2020* OPERATING RESULTS(2)
Slide 56: Bald Mountain, USA (100%)
AMERICAS BALD MOUNTAIN, USA (100%) Forecasting strong near-term cash flow with significant upside potential • Acquired in January 2016 from Barrick • ~600 km2 under-explored land package among the largest in the United States • Well-capitalized operation: previous owner invested ~$385M over the past
Slide 57: Round Mountain, USA (100%)
AMERICAS ROUND MOUNTAIN, USA (100%) Strong cash flow generator with opportunities to extend mine life • Incremental, high-margin ounces from Process Solution ESTIMATED MINE LIFE* Management (PSM) 16 17 18 19 20 21 22 23 - 27 • Opportunity to extend mine life beyond current estimates Mining with Phas
Slide 58: Kettle River-Buckhorn, USA (100%)
AMERICAS KETTLE RIVER-BUCKHORN, USA (100%) Low-cost, high-grade underground mine located in Washington state • Historically, a significant cash flow contributor with costs among the lowest in the portfolio • Estimated mine life: late 2016* OPERATING RESULTS(2) 2014 2015 Production (Au. Eq. oz.) 123,
Slide 59: Paracatu, Brazil (100%)
AMERICAS PARACATU, BRAZIL (100%) Large gold mine with a long mine life that extends to 2030 • Paracatu is among the world’s largest gold operations with annual throughput of ~60Mt • Realizing benefits from weakness in the Brazilian real • Estimated mine life: 2030* OPERATING RESULTS(2) 2014 2015 Pro
Slide 60: Maricunga, Chile (100%)
AMERICAS MARICUNGA, CHILE (100%) High-altitude heap leach operation located in the highly prospective Maricunga District • Operations suspended Q3 2016 OPERATING RESULTS(2) 2014 2015 Production (Au. Eq. oz.) 247,216 212,155 Production cost of sales ($/oz.) $953 $1,010 2015 GOLD RESERVE AND RESOURCE
Slide 61: La Coipa Project Pre-Feasibility Study Results
PRE-FEASIBILTY STUDY RESULTS LA COIPA PROJECT Project expected to generate a 20% IRR at an assumed gold price of $1,200 per ounce • PFS based on using existing infrastructure to blend and process higher grade material from the recently delineated Phase 7 deposit with oxide/transition material from t
Slide 62: La Coipa Project Pre-Feasibility Study Results
PRE-FEASIBILTY STUDY RESULTS LA COIPA PROJECT • The pre-feasibility study estimates a 5.5 year mine life, following receipt of permits and commencement of stripping Processing expected to commence 1.5 years after pre-stripping has been initiated and continue for 4 years ADDITIONAL OPERATING METRIC
Slide 63: 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(2) 2014 2015 Production (Au. Eq. oz.) 751,101 758,563 Production cost of sa
Slide 64: Chirano, Ghana (90%)
WEST AFRICA CHIRANO, GHANA (90%) Cost reductions achieved at Chirano by transitioning to self-perform mining • Expecting higher production and lower costs in the second half of the year • Exploration focused on 8 km mine trend to target open-pit and underground extensions • Estimated mine life: 2021
Slide 65: 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 66: 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 sales. 2) Attributable production cost of sales per gold equivalent ounce sold and per gold