Kinross Gold Corporation · TSX:K
Kinross Gold — European Gold Forum 2015
48 slides from Kinross Gold's conference presentation, Apr 14, 2015
Slide 1: Kinross Gold Corporation
April 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: Strong Operating Performance
OPERATIONAL EXCELLENCE STRONG OPERATING PERFORMANCE Continuing track record of consistent and dependable operational performance • RECORD annual production of 2.7M 2.71 million gold equivalent ounces 2.6M gold equivalent production(1) • EXCEEDED revised 2014 guidance of 2.6-2.7 million gold equivale
Slide 6: Focus on Managing Costs
OPERATIONAL EXCELLENCE FOCUS ON MANAGING COSTS Achieved significant year-over-year reductions in production cost of sales $743 • ACHIEVED lower-end of 2014 cost $720 of sales guidance of $720 to $750 per gold equivalent ounce ($ per gold equivalent ounce) production cost of sales(2) 2013 2014 (2) Re
Slide 7: 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(1,3) Tasiast 29% Chirano WEST AFRICA
Slide 8: 2015 Outlook: Production & Cost Guidance
2015 OUTLOOK PRODUCTION & COST GUIDANCE(3) • 2015 all-in sustaining cost expected to be $1,000-$1,100 per gold equivalent ounce(4) Gold Production % of Total Production Cost of Sales(2) Region (000 Au eq. oz.) Production ($/oz. Au eq.) Americas 1,300 – 1,400 54% $790 – $850 West Africa 390 – 440 17%
Slide 9: Americas
• Five mines located in the US, Brazil and Chile AMERICAS • Over 50% of annual production is from the Americas region 9 www.kinross.com
Slide 10: Americas
OPERATIONAL EXCELLENCE AMERICAS(3) 2015E: Expected to produce 1.3 - 1.4 M Au eq. oz. at cost of sales of $790 - $850/oz. 2014 HIGHLIGHTS • Record annual production at Paracatu due to higher grade and recovery resulting from blending strategy • Record annual production at Maricunga, resulting from co
Slide 11: Growth Opportunities - La Coipa Phase 7
GROWTH OPPORTUNITIES - AMERICAS LA COIPA PHASE 7 Pre-feasibility study on-track for completion in Q3 2015 • The pre-feasibility study will focus on: The Pompeya deposit, where drilling has outlined higher average grades than previously processed at La Coipa; Current oxide/transition mineral reso
Slide 12: Exploration Highlights - La Coipa Phase 7
EXPLORATION HIGHLIGHTS - AMERICAS LA COIPA PHASE 7 LA COIPA DISTRICT • Drilling on a number of targets located in the eastern area of the La Coipa district Puren CATALINA • Encouraging results from oxide mineralized zone • Drilling continues to outline the geometry of the mineralization and test ext
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(3) 2015E: Expected to produce 710-760k Au eq. oz. at cost of sales of $495 - $525/oz. 2014 HIGHLIGHTS • Region exceeded its 2014 guidance for production with cost of sales below guidance • Higher grade ore from Dvoinoye contributed to a 21% increase in gold grade in 201
Slide 15: Exploration Highlights - Kupol-Moroshka
EXPLORATION HIGHLIGHTS - RUSSIA KUPOL-MOROSHKA MOROSHKA • Located approximately 4 km East of Kupol • Drilling defined ~198koz. gold and ~2.3Moz. silver of Indicated resource(5) PROVIDENCE DISCOVERY • Discovered a new epithermal vein located 800 m SW of Moroshka • Remains open and untested to the sou
Slide 16: Dvoinoye: September Northeast
EXPLORATION HIGHLIGHTS - RUSSIA DVOINOYE: SEPTEMBER NORTHEAST • Located approximately 15 km NW of Dvoinoye • Drilling defined high-grade gold mineralization over a strike length of 150 m • Work planned in 2015 to define an initial mineral resource estimate For additional information, please see Kinr
Slide 17: West Africa
WEST • Record annual production for Tasiast and Chirano in 2014 AFRICA • Strong focus on optimizing efficiency and performance 17 www.kinross.com
Slide 18: West Africa
OPERATIONAL EXCELLENCE WEST AFRICA(3) 2015E: Expected to produce 390-440k Au eq. oz. at cost of sales of $850 - $920/oz. 2014 HIGHLIGHTS • Achieved record annual production at Tasiast • Cost of sales was 12% lower than 2013 as a result of transition to self-perform mining and other continuous improv
Slide 19: Tasiast Mill Expansion
GROWTH OPPORTUNITIES – WEST AFRICA TASIAST MILL EXPANSION Kinross not proceeding with Tasiast expansion at the present time MAINTAINING BALANCE SHEET STRENGTH AND FINANCIAL FLEXIBILITY OVERRIDING FACTOR • Gold price outlook and impact on cash flow generation during 35-month construction period impor
Slide 20: Exploration Highlights - Tasiast
EXPLORATION HIGHLIGHTS – WEST AFRICA TASIAST • Defined measured & indicated mineral resources totaling approximately 327,000 gold ounces at Fennec, C67 and C68 satellite deposits(5) • Encouraging drill results at the Tamaya targets, with additional drilling planned for 2015 Imkebdene license Piment
Slide 21: Exploration Highlights - Chirano
EXPLORATION HIGHLIGHTS – WEST AFRICA CHIRANO • Drilling from 150 to 600 m below the bottom of the existing pits at Akoti and Suraw AKOTI: Exploration drilling contributed approximately 163,000 gold ounces at an average grade of 3.7 g/t Au to year-end 2014 M&I estimate for Chirano(5) SURAW: Explo
Slide 22: Strong Financial Discipline
STRONG FINANCIAL DISCIPLINE 22 www.kinross.com
Slide 23: Solid Financial Position
STRONG BALANCE SHEET SOLID FINANCIAL POSITION Balance sheet strength continues to be a priority objective STRONG LIQUIDITY POSITION MAINTAINING FINANCIAL FLEXIBILITY • Further strengthened balance sheet in 2014: • Repaid $60M of debt • Ended 2014 with $1.0B in cash, an increase of $1.0 $231M from 20
Slide 24: Reducing Capital Spending
DISCIPLINED CAPITAL ALLOCATION REDUCING CAPITAL SPENDING • Trend of declining capital $1.86B expenditures since 2012 • REDUCED capital expenditures by 50% from 2013 $1.26B $632M 2012 2013 2014 24 www.kinross.com
Slide 25: Financial Strength & Flexibility
STRONG BALANCE SHEET FINANCIAL STRENGTH & FLEXIBILITY CASH AND CASH EQUIVALENTS* • Generated strong adjusted operating $1,025 cash flow of $977 MILLION in 2014 despite weaker gold prices $794 • Increased cash position to approximately $1 BILLION $ millions *includes restricted cash 2013 2014 25 www.
Slide 26: Compelling Valuation
COMPELLING VALUATION 26 www.kinross.com
Slide 27: Production and All-In Sustaining Cost
COMPELLING VALUATION PRODUCTION AND ALL-IN SUSTAINING COST 2014A GOLD PRODUCTION(i) (mm oz.) 2014A ALL-IN SUSTAINING COSTS(ii) ($/oz.) 6.3 $1,002 $965 $954 $949 5.2 $864 $807 $779 2.9 2.7 1.4 1.2 0.8 Barrick Newmont Goldcorp Kinross Agnico Yamana Eldorado Newmont Kinross Agnico Goldcorp Barrick Yama
Slide 28: Net Debt to 2015E EBITDA
COMPELLING VALUATION NET DEBT TO 2015E EBITDA 2.7 2.7 1.6 1.5 1.4 1.1 0.3 Yamana Barrick Goldcorp Newmont Agnico Kinross Eldorado Source: Bloomberg – April 8, 2015 28 www.kinross.com
Slide 29: Enterprise Value versus Production
COMPELLING VALUATION ENTERPRISE VALUE VERSUS PRODUCTION $27.3 Multiple of 2014 A Gold Delta with Kinross Production Kinross Enterprise (Moz.)1 (US$B) Value Barrick 6.3 23.5 7.2x Enterprise value (US$ billions) $18.9 $18.0 Newmont 5.2 14.2 4.7x Goldcorp 2.9 15.1 5.0x Kinross 2.7 - - $7.4 Agnico 1.4 3
Slide 30: 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 12.4 14.4 9.7 8.7 9.1 7.4 8.8 7.0 6.6 5.6 5.5 5.4 3.9 3.1 Eldorado Goldcorp Agnico
Slide 31: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • 10 consecutive quarters of strong results STRONG BALANCE SHEET • $2.5B in liquidity and conservative net debt of $1.0B • No significant debt maturities until 2016 ATTRACTIVE FUTURE GROWTH OPPORTUNITIES • Not proceeding with Tasiast mill
Slide 32: Appendix
APPENDIX 32 www.kinross.com
Slide 33: Fuel & Currency Hedges
FINANCIAL DISCIPLINE FUEL & CURRENCY HEDGES Managing exposure to fluctuations in foreign currency and input commodity prices Summary of foreign currency and energy hedges as at December 31, 2014 % OF 2015 EXPOSURE HEDGED AVERAGE RATE Brazilian real 65% 2.48 Chilean peso 29% 577 Russian rouble 26% 35
Slide 34: Capital Expenditures Guidance
2015 OUTLOOK CAPITAL EXPENDITURES GUIDANCE(3) 2015 capital expenditures are expected to be $725 million, including estimated capitalized interest of $40 million REGION SUSTAINING NON-SUSTAINING REGIONAL TOTAL Americas $350 $10 $360 West Africa $70 $170 $240 Russia $80 $ -- $80 Corporate $5 $ -- $5 T
Slide 35: FY2014 Operating Results
OPERATIONAL EXCELLENCE FY2014 OPERATING RESULTS PRODUCTION PRODUCTION COST OF SALES(2) OPERATION (Au eq. oz.) ($ 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 $804 Ku
Slide 36: Fort Knox, USA (100%)
AMERICAS FORT KNOX, USA (100%) Among the world’s few cold climate heap leach facilities • Impressive track record of operational excellence OPERATING RESULTS(2) FY 2013 FY 2014 Production (Au. Eq. oz.) 421,641 379,453 Production cost of sales ($/oz.) $569 $712 2014 GOLD RESERVE AND RESOURCE ESTIMATE
Slide 37: Round Mountain, USA (50%)
AMERICAS ROUND MOUNTAIN, USA (50%) Round Mountain is a best-practice leader in many areas, including preventative maintenance • Kinross-operated JV with Barrick • Bulk tonnage open-pit operation OPERATING RESULTS(2) FY 2013 FY 2014 Production (Au. Eq. oz.) 162,826 169,839 Production cost of sales ($
Slide 38: 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(2) FY 2013 FY 2014 Production (Au. Eq. oz.) 150,157 123,382 Prod
Slide 39: 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(2) FY 2013 FY 2014 Production (Au. Eq. oz.) 500,380 521,02
Slide 40: 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(2) FY 2013 FY 2014 Production (Au. Eq. oz.) 187,815
Slide 41: 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(2) FY 2013 FY 2014 Production (Au. Eq. oz.)
Slide 42: 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(2) FY 2013 FY 2014 Production (Au. Eq. oz.) 247,818 260
Slide 43: 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(1,2) FY 2013 FY 2014 Production (Au. Eq. oz.) 24
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 sales. 2) Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP
Slide 45: Explanatory Notes: Exploration
EXPLANATORY NOTES: EXPLORATION La Coipa Exploration Results Results are reported for 45 diamond drill core holes completed at Catalina in the La Coipa District. All results for the exploration drill campaign are reported as Au grams per tonne (Au g/t), Ag grams per tonne (Ag g/t) and as Au Equivalen
Slide 46: 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 47: 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 48: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 48 www.kinross.com