Kinross Gold Corporation · TSX:K
Kinross Gold — RBC Capital Markets London Senior Gold Conference 2015
73 slides from Kinross Gold's conference presentation, Nov 17, 2015
Slide 1: Kinross Gold Corporation
November 2015 KINROSS GOLD CORPORATION 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: The Way Forward: Principles for Building Value
THE WAY FORWARD PRINCIPLES FOR BUILDING VALUE • Focus on operational excellence • Quality over quantity • Disciplined capital allocation • Maintaining a strong balance sheet 3 www.kinross.com
Slide 4: Delivering Operational Excellence
DELIVERING OPERATIONAL EXCELLENCE 4 www.kinross.com
Slide 5: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS DELIVERING STRONG PERFORMANCE Continuing track record of meeting or beating our operational targets • Strong performance from operations delivered solid Q3 2015 results • On track to meet 2015 REVISED guidance for production, cost of sales and all-in sustaining cost • Expect
Slide 6: Diversified Portfolio of Operating Mines
OPERATIONAL EXCELLENCE DIVERSIFIED PORTFOLIO OF OPERATING MINES Over RUSSIA 50% of estimated 2015 gold equivalent production from mines located in the Americas AMERICAS Dvoinoye Kupol Fort Knox Kettle River-Buckhorn Round Mountain 2015E GOLD EQUIVALENT PRODUCTION(1,2) Tasiast 29% Chirano WEST AFRICA
Slide 7: Americas
• Five mines located in the US, Brazil and Chile AMERICAS • Over 50% of annual production is from the Americas region 7 www.kinross.com
Slide 8: Americas
OPERATIONAL EXCELLENCE AMERICAS • ROUND MOUNTAIN benefiting from • PARACATU production increased due to continuous improvement initiatives aimed higher mill grades and increased recovery, at improving heap leach operations which improved cost of sales Temporarily suspended Plant 1 and • FORT KNOX
Slide 9: New Processing Initiative at Paracatu
AMERICAS NEW PROCESSING INITIATIVE AT PARACATU Modest capital investment to add low-cost, incremental production • Low-cost, incremental production resulting from: Enriched grades near discharge areas of the facility Utilization of excess capacity in Plant 1 due to ore blending strategy Lower
Slide 10: La Coipa Project
ORGANIC GROWTH OPPORTUNITIES LA COIPA PROJECT • Pre-feasibility study on La Coipa completed during Q3 2015 • Project offers a number of expected attractive attributes: Leverages existing infrastructure Relatively low execution risk Modest capital investment Exploration upside Located in an
Slide 11: La Coipa 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 12: La Coipa Project Next Steps
PRE-FEASIBILTY STUDY RESULTS LA COIPA PROJECT Based on positive results, Kinross intends to complete further optimization studies and continue to assess additional exploration opportunities at La Coipa PERMITTING • Submitted a DIA earlier this year • Preparing a response to the relevant agencies’ re
Slide 13: Russia
• Continued strong performance from the high-grade, low-cost Kupol and RUSSIA Dvoinoye underground mines 13 www.kinross.com
Slide 14: Russia
OPERATIONAL EXCELLENCE RUSSIA • Continued strong performance from the combined KUPOL-DVOINOYE operation • Q3 production cost of sales decreased year-over- year to $469 per Au eq. oz. • Lowest level since Dvoinoye operations commenced in 2013 • Benefiting from higher mill grades resulting from proces
Slide 15: Near-Site Exploration Targets
RUSSIA NEAR-SITE EXPLORATION TARGETS MOROSHKA • Located approximately 4 km East of Kupol • Drilling defined ~198koz. gold and ~2.3Moz. silver of estimated Indicated Mineral Resources(5) SEPTEMBER NORTH-EAST • Located approximately 15 km NW of Dvoinoye • Drilling defined high-grade gold mineralizatio
Slide 16: Foreign Investment
RUSSIA FOREIGN INVESTMENT The world’s leading companies are continuing to invest in Russia in 2015 16 www.kinross.com
Slide 17: 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 17 www.kinross.com
Slide 18: West Africa
WEST • Record annual production for Tasiast and Chirano in 2014 AFRICA • Strong focus on optimizing efficiency and performance 18 www.kinross.com
Slide 19: West Africa
OPERATIONAL EXCELLENCE WEST AFRICA • TASIAST production decreased compared with Q2 2015 due mainly to the wind-down of dump leach production • CHIRANO production decreased as a result of expected lower grades due to declining contribution from the Akwaaba underground deposit • Development of the Ako
Slide 20: Chirano Mine Life Extension
WEST AFRICA CHIRANO MINE LIFE EXTENSION Mine life extension at one of Kinross’ lowest cost operations • Extension of estimated mine life to 2020 with additional mineral resource estimates at two deposits: Paboase (currently in production) Akoti underground (production expected to begin mid-2016)
Slide 21: Phased Approach to a Tasiast Mill Expansion
ORGANIC GROWTH OPPORTUNITIES PHASED APPROACH TO A TASIAST MILL EXPANSION • Concept under study would add incremental capacity to increase mill throughput in two phases by leveraging existing infrastructure PHASE ONE would increase throughput to 12,000 tpd with the addition of a gyratory crusher an
Slide 22: Two-Phased Expansion Concept
TASIAST EXPANSION PROJECT TWO-PHASED EXPANSION CONCEPT PHASE ONE • Leverages existing mill infrastructure to increase throughput to 12,000 tpd from 8,000 tpd • Includes installation of an oversized SAG mill and gyratory crusher • Expected to enhance processing of the harder, higher grade West Branch
Slide 23: Phase One Estimates
TASIAST EXPANSION PROJECT PHASE ONE ESTIMATES Highlights of the early detailed engineering work completed to date on Phase One Metric Estimates Average annual production – first 2 years 368,000 gold ounces Cash cost per ounce – first 2 years $575 per gold equivalent ounce All-in cost per ounce – fir
Slide 24: Two-Phased Expansion Concept: Phase Two
TASIAST EXPANSION PROJECT TWO-PHASED EXPANSION CONCEPT PHASE TWO • Could further increase total throughput to as much as 38,000 tpd with the addition of milling, leaching, thickening and refining capacity CONCEPUTAL FLOW SHEET Gyratory Ore Oversized crusher stockpile SAG mill Additional ball Additio
Slide 25: A Phased Approach to a Mill Expansion
TASIAST EXPANSION PROJECT A PHASED APPROACH TO A MILL EXPANSION A phased approach would optimize the current operation in the near-term while reducing overall capital cost of a larger expansion A FINANCIALLY PRUDENT ALTERNATIVE TO REALIZING TASIAST’S GROWTH POTENTIAL • A feasibility study on the ini
Slide 26: Strong Financial Discipline
STRONG FINANCIAL DISCIPLINE 26 www.kinross.com
Slide 27: Solid Financial Position
STRONG BALANCE SHEET SOLID FINANCIAL POSITION(i) Maintaining balance sheet strength & financial flexibility remain priority objectives STRONG LIQUIDITY POSITION MAINTAINING FINANCIAL FLEXIBILITY • Improved balance sheet during the first 9 months of 2015: Added $41M to cash position, ending the per
Slide 28: Focus on Managing Costs
FINANCIAL DISCIPLINE FOCUS ON MANAGING COSTS REVIEW OF DISCRETIONARY SPENDING ALL-IN SUSTAINING COST(4) ($ per gold equivalent ounce) • Completed company-wide review of overhead spending and organizational structure $1,122 $1,082 • Reduced corporate labour costs by 23%, with expected annualized savi
Slide 29: Levers for Reducing Costs
FINANCIAL DISCIPLINE LEVERS FOR REDUCING COSTS Proactively managing our business with a strict focus on the health of our balance sheet Market factors outside of our Levers for reducing costs control Opex Gold price CASH Discretionary spending Oil FLOW Higher cost mines FX 29 www.kinross.com
Slide 30: Compelling Valuation
COMPELLING VALUATION 30 www.kinross.com
Slide 31: Production and Free Cash Flow Yield
COMPELLING VALUATION PRODUCTION AND FREE CASH FLOW YIELD 2016E GOLD PRODUCTION(i) (Moz.) 2016E FREE CASH FLOW YIELD(ii) 10.2% 9.9% 5.0 9.1% 4.0 5.7% 4.9% 3.0 3.7% 2.0 1.0 -8.8% 0.0 Barrick Newmont Goldcorp Kinross Agnico Yamana Eldorado Kinross Yamana Barrick Newmont Goldcorp Agnico Eldorado (i) Sou
Slide 32: Net Debt to EBITDA (LTM)
COMPELLING VALUATION NET DEBT TO EBITDA (LTM) 2.9 2.6 1.9 1.3 1.2 1.1 0.6 Barrick Yamana Goldcorp Agnico Newmont Kinross Eldorado Source: Bloomberg, company reports Information on this slide is as at September 30, 2015 and does not take into account the Nevada asset purchase announced November 12, 2
Slide 33: Enterprise Value versus Production
COMPELLING VALUATION ENTERPRISE VALUE VERSUS PRODUCTION $20.6 Multiple of 2016E Gold Delta with Kinross Production Kinross Enterprise (Moz.)1 (US$B) Value $15.6 Barrick 5.2 17.5 6.6x Enterprise value (US$ billions) Newmont 5.1 12.5 5.0x $12.6 Goldcorp 3.5 9.5 4.0x Kinross 2.5 - - $6.7 Agnico 1.6 3.6
Slide 34: 2016E Metrics
COMPELLING VALUATION 2016E METRICS Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities EV / 2016E EBITDA P / 2016E OPERATING CF 8.7 8.7 10.4 7.0 8.3 6.2 6.1 7.2 5.2 3.8 4.0 3.9 3.7 2.8 Eldorado Agnico Goldcorp
Slide 35: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • Continuing to meet or outperform our operational targets STRONG BALANCE SHEET • $2.5B in liquidity(i) and conservative net debt of ~$950M • Repaid the Kupol loan during Q3, ahead of schedule ATTRACTIVE FUTURE GROWTH OPPORTUNITIES • La Co
Slide 36: Appendix
APPENDIX 36 www.kinross.com
Slide 37: Fort Knox, USA (100%)
AMERICAS FORT KNOX, USA (100%) Among the world’s few cold climate heap leach facilities • Impressive track record of operational excellence OPERATING RESULTS(3) YTD Q3 FY 2014 2015 Production (Au. Eq. oz.) 379,453 313,992 Production cost of sales ($/oz.) $712 $604 2014 GOLD RESERVE AND RESOURCE ESTI
Slide 38: Round Mountain, USA (50%)
AMERICAS ROUND MOUNTAIN, USA (50%)* Round Mountain is a best-practice leader in many areas, including preventative maintenance • On November 12, 2015, Kinross announced an agreement to purchase the other 50% of Round Mountain from Barrick Gold Corporation OPERATING RESULTS(3) YTD Q3 FY 2014 2015 Pro
Slide 39: Kettle River-Buckhorn, USA (100%)
AMERICAS KETTLE RIVER-BUCKHORN, USA (100%) Low-cost, high-grade underground mine located in Washington state • Significant cash flow contributor with costs among the lowest in the portfolio • Small footprint operation OPERATING RESULTS(3) YTD Q3 FY 2014 2015 Production (Au. Eq. oz.) 123,382 78,067 P
Slide 40: 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 • Achieved record annual production in 2014 OPERATING RESULTS(3) YTD Q3 FY 2014 2015 Production (Au. Eq. oz.) 521,026 36
Slide 41: 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 • Record annual production in 2014 OPERATING RESULTS(3) YTD Q3 FY 2014 2015 Production (Au. Eq. oz.) 247,
Slide 42: 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(3) FY 2014 YTD Q3 2015 Production (Au. Eq. o
Slide 43: Tasiast, Mauritania (100%)
WEST AFRICA TASIAST, MAURITANIA (100%) Operating mine with a large gold resource located in a prospective district • Achieved record annual production in 2014 • Continuing effort to reduce operating costs at existing operation OPERATING RESULTS(3) YTD Q3 FY 2014 2015 Production (Au. Eq. oz.) 260,485
Slide 44: 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(2,3) YTD Q3 FY 2014 2015 Production (Au. Eq. oz.
Slide 45: FY2014 Operating Results
OPERATIONAL EXCELLENCE FY2014 OPERATING RESULTS PRODUCTION PRODUCTION COST OF SALES(3) OPERATION (Au eq. oz.) ($ per Au eq. oz.) Fort Knox 379,453 $712 Round Mountain (50%) 169,839 $855 Kettle River – Buckhorn 123,382 $678 Paracatu 521,026 $816 Maricunga 247,216 $953 AMERICAS TOTAL 1,440,916 $804 Ku
Slide 46: La Coipa 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 47: Explanatory Notes: Exploration
EXPLANATORY NOTES: EXPLORATION Kupol & Dvoinoye Exploration Results All 28 drill holes in 2014 at Providence were diamond drill core holes (HQ or NQ core diameter). The Providence vein dips sub-vertically, therefore, drill holes are angled between minus 50° and 75° to the east and west. The composit
Slide 48: Explanatory Notes: Exploration
EXPLANATORY NOTES: EXPLORATION Tasiast Exploration Results Drill 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 o
Slide 49: Endnotes
ENDNOTES 1) For more information regarding Kinross’ production, cost and capital expenditures outlook for 2015, please refer to the news releases dated February 10, 2015 and September 17, 2015, available on our website at www.kinross.com. Kinross’ outlook for 2015 represents forward-looking informat
Slide 50: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 50 www.kinross.com
Slide 51: Acquisition of Two Quality Mines in Nevada
November 12 ACQUISITON OF TWO QUALITY MINES 2015 IN NEVADA 11 www.kinross.com
Slide 52: 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 but not limited to the “Supplemental Information” slides and responses to questions, including but no
Slide 53: Acquisition of Quality Producing Mines in Nevada
ACQUISITION OF QUALITY PRODUCING MINES IN NEVADA • Two quality producing mines in an excellent jurisdiction • Enhances U.S. operating portfolio: adds production, mine life and projected free cash flow, and lowers costs • Clear upside potential at Bald Mountain and Round Mountain • Maintains balance
Slide 54: Transaction Overview
TRANSACTION OVERVIEW • Kinross has agreed to acquire from Barrick: 100% of Bald Mountain TRANSACTION 50% of Round Mountain DETAILS • Formation of a new 50/50 exploration joint venture at Bald Mountain (outside of the Kinross 100%-owned mining areas which contain all of currently reported mineral
Slide 55: Compelling Opportunity
ACQUISITION OF QUALITY PRODUCING MINES IN NEVADA COMPELLING OPPORTUNITY Accretive on a number of key per share metrics, including production, cash flow, mineral reserve and mineral resources • Adds production, forecasted near-term cash flow and increases average mine life in TWO QUALITY Nevada, one
Slide 56: Increases U.S. Operating Presence
ENHANCES OUR PORTFOLIO INCREASES U.S. OPERATING PRESENCE Increased production and cash flow generation in Nevada Existing U.S. Footprint Acquired Nevada Portfolio LTM PRODUCTION(i) LTM CASH COST(ii) (koz. Au Eq.) ($/oz.) Rabbit Creek Carlin Trend 1,092 $697 +56% $692 Trend Fort Knox Independence Bat
Slide 57: Bald Mountain
QUALITY PRODUCING MINE IN NEVADA BALD MOUNTAIN Forecasting strong near-term cash flow with significant upside potential GOOD FIT WITH KINROSS • Open-pit run-of-mine heap leach operation Opportunity to leverage Kinross’ expertise as a world-class open-pit and heap leach operator • Large estimated m
Slide 58: Well-Capitalized Operation
BALD MOUNTAIN WELL-CAPITALIZED OPERATION Prior capital investments position mine to be a low-cost producer • Significant capital of approximately $385 million invested over the past 5 years New mobile equipment (electric shovels, haul trucks and other heavy equipment) Capitalized stripping and d
Slide 59: Clear Sources of Upside Potential
BALD MOUNTAIN CLEAR SOURCES OF UPSIDE POTENTIAL Multiple opportunities to increase mineral resource and mineral reserve estimates(3) ~15km • Large, under-explored 600km2 land package • NORTH ZONE: encompasses all of current mineral reserve estimates and a portion of the mineral North Zone resource e
Slide 60: Clear Sources of Upside Potential: North Zone
BALD MOUNTAIN CLEAR SOURCES OF UPSIDE POTENTIAL Multiple opportunities to increase mineral resource and mineral reserve estimates(3) ~15km NORTH ZONE (100% Kinross) • 40% of land package North Zone • Estimated mineral resources over the active Kinross 100% mining areas remain open in multiple direct
Slide 61: Clear Sources of Upside Potential: South Zone
BALD MOUNTAIN CLEAR SOURCES OF UPSIDE POTENTIAL Multiple opportunities to increase mineral resource and mineral reserve estimates(3) ~15km SOUTH ZONE (100% Kinross) • 20% of land package • Estimated resources currently in the late stages North Zone of permitting Kinross 100% • Additional potential f
Slide 62: Clear Sources of Upside Potential
BALD MOUNTAIN CLEAR SOURCES OF UPSIDE POTENTIAL Multiple opportunities to increase mineral resource and mineral reserve estimates(3) ~15km • High percentage of estimated measured and indicated mineral resources used in mine plan EXAMPLES North Zone Kinross 100% • Mine plan conservatively assumes 20%
Slide 63: Significant Exploration Opportunities
BALD MOUNTAIN SIGNIFICANT EXPLORATION OPPORTUNITIES Large, under-explored land package located on highly-prospective Carlin trend ~15km • 600 km2 land package under-explored due to competing capital requirements One of the largest mine sites by area Winrock in the U.S. Deep Top Numerous brownfie
Slide 64: Round Mountain
QUALITY PRODUCING MINE IN NEVADA ROUND MOUNTAIN Consolidating ownership of one of Kinross’ best-run operations • Consistent annual outperformance driven by best-in-class operating practices • Continuous improvement programs benefiting production and costs, with additional future opportunities UPSIDE
Slide 65: Continuous Improvement Benefits
ROUND MOUNTAIN CONTINUOUS IMPROVEMENT BENEFITS Achieving results from continuous improvement, with additional future opportunities PROCESS SOLUTION MANAGEMENT STRONG OPERATING RESULTS (100%) Production Cost of Sales • Ongoing, long-term continuous 116 $890 improvement project $760 Koz. Au Eq. 97 $/o
Slide 66: Delivering Operational Excellence
STRONG TRACK RECORD DELIVERING OPERATIONAL EXCELLENCE Technical expertise & experience successfully operating open-pit, heap leach mines SUCCESSFULLY OPERATING IN A VARIETY OF CLIMATES AND GEOGRAPHIES • Round Mountain, Nevada: operated by Kinross since 2003 • Fort Knox, Alaska: one of the world’s fe
Slide 67: Maintains Strong Financial Position
FINANCIAL DISCIPLINE MAINTAINS STRONG FINANCIAL POSITION Maintaining balance sheet strength & financial flexibility remain priority objectives MAINTAINING FINANCIAL FLEXIBILITY NET DEBT / EBITDA (LTM) 2.9 • Significant proforma liquidity position of 2.6 $1.9B supports ongoing operations and capital
Slide 68: Acquisition of Quality Producing Mines in Nevada
ACQUISITION OF QUALITY PRODUCING MINES IN NEVADA • Two quality producing mines in an excellent jurisdiction • Enhances U.S. operating portfolio: adds production, mine life and projected free cash flow, and lowers costs • Clear upside potential at Bald Mountain and Round Mountain • Maintains balance
Slide 69: Supplemental Information
SUPPLEMENTAL INFORMATION 19 19 www.kinross.com
Slide 70: Bald Mountain (100%)
SUPPLEMENTAL INFORMATION BALD MOUNTAIN (100%) OPERATING ESTIMATES 2016-2018 Remaining Range LOM Range Tonnes processed (Mt) 13-19 10-13 Production (koz. Au. Eq.) 175-300 150-180 Cash cost ($/oz.) 450-1,000 560-700 AISC ($/oz.)(ii) 700-1,130 700-900 Sustaining capex ($M/yr) 20-60 10-20 Development ca
Slide 71: Round Mountain (100%)
SUPPLEMENTAL INFORMATION ROUND MOUNTAIN (100%) OPERATING ESTIMATES 2016-2018 Range Tonnes processed (Mt) 19-24 Production (koz. Au. Eq.) 340-430 Cash cost ($/oz.) 820-900 AISC ($/oz.)(ii) 850-1,000 Sustaining capex ($M/yr) 25-50 Development capex ($M/yr) 0-7 2014 GOLD RESERVE AND RESOURCE(2) OTHER N
Slide 72: Endnotes
ENDNOTES 1) From Bald Mountain, the increase would be 1.4Moz. in estimated proven and probable mineral reserves, 4.1Moz. in measured and indicated resources and 0.5Moz. in estimated inferred mineral resources. At Round Mountain, the increase would be 0.7Moz. in estimated proven and probable mineral
Slide 73: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 2323 www.kinross.com
Kinross Gold — RBC Capital Markets London Senior Gold Conference 2015 on 6ix