Kinross Gold Corporation · TSX:K
Kinross Gold — 2018 BMO Capital Markets Global Metals & Mining Conference
63 slides from Kinross Gold's conference presentation, Feb 26, 2018
Slide 1: Kinross Gold Corporation – 2018 BMO Global Metals & Mining Conference
February 26-28 KINROSS GOLD CORPORATION 2018 BMO Capital Markets Global Metals & Mining 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 and responses to questions, including but not limited to any information as to the future performance of Kinross
Slide 3: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • Diverse portfolio of operating mines consistently meeting or outperforming our operational targets STRONG BALANCE SHEET & FINANCIAL FLEXIBILITY • $2.6B in liquidity with net debt to EBITDA ratio of 0.6x(i) • No debt maturities prior to 2
Slide 4: 2017 Results Highlights
2017 Results Highlights 4 4 www.kinross.com
Slide 5: Strong Track Record: Consistently Meeting or Outperforming Targets
STRONG TRACK RECORD 2012 2013 2014 2015 2016 2017 MET or EXCEEDED annual production guidance MET or came in UNDER annual cost guidance MET or came in UNDER annual capital expenditures guidance Consistently Meeting or Outperforming Targets 55 www.kinross.com
Slide 6: 2017 Highlights: Financial Strength & Flexibility
2017 HIGHLIGHTS FINANCIAL STRENGTH & FLEXIBILITY Maintaining balance sheet strength & financial flexibility remain priority objectives Strong Liquidity Position • Increased cash balance by Available credit Cash and cash equivalents ~$200 MILLION since year-end 2016, a result of excellent operating r
Slide 7: 2017 Highlights: Advanced Development Projects
2017 HIGHLIGHTS ADVANCED DEVELOPMENT PROJECTS • Advanced construction of Phase One Tasiast Phase One • On budget and on schedule for Q2 2018 • Completed feasibility study and approved Phase Two project Tasiast Phase Two • Advanced engineering and procurement • Completed feasibility study and approve
Slide 8: TSX Sub-Indices Performance
COMPELLING RELATIVE VALUE TSX SUB-INDICES PERFORMANCE S&P/TSX 2016 Performance S&P/TSX 2017 Performance Kinross 71% Kinross 39% Base Metals 52% Health Care 38% Precious Metals 50% Base Metals 30% Materials 39% Consumer Discr. 20% Energy 36% Industrials 19% Industrials 23% Technology 17% Financials 1
Slide 9: Enterprise Value versus Production
COMPELLING RELATIVE VALUE ENTERPRISE VALUE VERSUS PRODUCTION Market capitalization does not reflect significant scale of production and history of achieving guidance Enterprise Value(i) Net Debt to Historical Production (Moz)(iii) Consensus Production Estimates (Moz) (US$M) EBITDA(ii) Past 6 Years (
Slide 10: Operational Excellence
Operational Excellence 10 10 www.kinross.com
Slide 11: Diversified Portfolio of Operating Mines
OPERATONAL EXCELLENCE DIVERSIFIED PORTFOLIO OF OPERATING MINES 60% of estimated 2018 RUSSIA gold equivalent production from mines located in the Americas AMERICAS Dvoinoye Kupol Fort Knox Bald Mountain Round Mountain 2018E GOLD EQUIVALENT PRODUCTION(2,3) Tasiast 20% Chirano WEST AFRICA 2.5M ounces 2
Slide 12: Strong Operating Track Record
OPERATIONAL EXCELLENCE STRONG OPERATING TRACK RECORD Continued track record of meeting or outperforming our operational targets • Met guidance targets for sixth consecutive year • Achieved the high-end of production and low-end of cost forecasts Particularly impressive results at Tasiast and the N
Slide 13: 2018E Production and Costs
OPERATIONAL EXCELLENCE 2018E PRODUCTION AND COSTS(2) Forecasting another solid year from operations, with guidance for production and all-in sustaining costs in-line with 2017 Kinross Total(3) Regional Forecast 2018E Unit Costs ($ per gold equivalent ounce) 2018E Gold Equivalent Production (ounces)
Slide 14: Acquisition of Power Plants in Brazil
ENHANCING A CORNERSTONE ASSET ACQUISITION OF POWER PLANTS IN BRAZIL(i) STRATEGIC RATIONALE TRANSACTION OVERVIEW Expected to reduce Paracatu’s cost of sales by ~$80/oz. over the life of mine • Kinross to acquire two hydro SUMMARY power plants in Brazil from a • Lowers operating costs by eliminating ~
Slide 15: Strong Balance Sheet & Financial Flexibility
Strong Balance Sheet & Financial Flexibility 15 15 www.kinross.com
Slide 16: Solid Financial Position
STRONG BALANCE SHEET & FINANCIAL FLEXIBILITY SOLID FINANCIAL POSITION Strong position to finance organic development projects with existing cash and liquidity LIQUIDITY POSITION MAINTAINING FINANCIAL FLEXIBILITY • Cash and cash equivalents of ~$1.0 billion • Available credit: $1.6 billion As at Dec.
Slide 17: 2018E Capital Expenditures Outlook
STRONG BALANCE SHEET & FINANCIAL FLEXIBILITY 2018E CAPITAL EXPENDITURES OUTLOOK(2) Leveraging strong financial position to invest in development projects & our future 2018E Capital Expenditures ($ millions) Region Sustaining Non-Sustaining Regional Total Americas $280 $285 $565 West Africa $40 $375
Slide 18: 2018E Non-Sustaining Capital Guidance
STRONG BALANCE SHEET & FINANCIAL FLEXIBILITY 2018E NON-SUSTAINING CAPITAL GUIDANCE(2) Expecting to invest $680 million of non-sustaining capital as we execute on five projects and advance 3 development opportunities • Leveraging financial strength we’ve 2018E Non-Sustaining Capital built over past s
Slide 19: Manageable Debt Profile
STRONG BALANCE SHEET & FINANCIAL FLEXIBILITY MANAGEABLE DEBT PROFILE No debt maturities prior to 2021 Debt Schedule Debt Ratings Agency Rating S&P BB+ (Positive) $500 $500 $500 Moody’s Ba1 (Stable) Fitch BBB- (Stable) $ millions Interest Rates $250 Senior Notes due 2021 5.125% Senior Notes due 2024
Slide 20: Attractive Organic Development Projects
Attractive Organic Development Projects 20 20 www.kinross.com
Slide 21: Advancing Organic Projects
ATTRACTIVE DEVELOPMENT PROJECTS ADVANCING ORGANIC PROJECTS All of our organic development projects are advancing according to plan, with key milestones planned for 2018 and beyond 2020 2019 Tasiast Phase 2 Q4 2018 Bald Mountain Expected to begin commercial Q3 2018 Expected production in commissionin
Slide 22: Tasiast Two-Phased Mill Expansion
ATTRACTIVE DEVELOPMENT PROJECTS TASIAST TWO-PHASED MILL EXPANSION • Phase Two expected to transform Tasiast into a world-class mine with sizeable production, low costs and a long estimated mine life 2222 www.kinross.com
Slide 23: Large Orebody with Low Execution Risk
ATTRACTIVE DEVELOPMENT PROJECTS LARGE OREBODY WITH LOW EXECUTION RISK Focus has been 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 app
Slide 24: Two-Phased Expansion Concept
ATTRACTIVE DEVELOPMENT PROJECTS TWO-PHASED EXPANSION CONCEPT PHASE ONE: EXPANSION TO 12,000 t/d Existing ball mills Gyratory Ore Oversized Leaching Refining crusher stockpile SAG mill PHASE TWO: EXPANSION TO 30,000 t/d Gyratory Ore SAG mill New, larger ball Additional leaching Thickening crusher sto
Slide 25: Phase Two Feasibility Study Results
ATTRACTIVE DEVELOPMENT PROJECTS PHASE TWO FEASIBILITY STUDY RESULTS Phase Two expansion expected to transform Tasiast into a world-class mine with low costs and a long estimated mine life Combined Phase One and Phase Two Estimates Average annual production (2020-2024) 812,000 ounces Production cost
Slide 26: Operating Efficiencies Enhancing Project
ATTRACTIVE DEVELOPMENT PROJECTS OPERATING EFFICIENCIES ENHANCING PROJECT Recent operating and processing enhancements have positively benefitted both Phase One and Phase Two expansion projects • Recent performance outperforming study • Further reduction in processing costs expected as estimates Phas
Slide 27: Tasiast Phase One
ATTRACTIVE DEVELOPMENT PROJECTS TASIAST PHASE ONE On track for full commercial production by end of June 2018 Phase One progressing well • Plant construction is approximately 93% complete Remaining work focused primarily on electrical, instrumentation and controls installations • Tailings storage
Slide 28: Tasiast Phase One Progressing Well
ATTRACTIVE DEVELOPMENT PROJECTS TASIAST PHASE ONE PROGRESSING WELL On track for full commercial production by end of June 2018 SAG mill Primary crusher Conveyor CIL plant 2828 www.kinross.com
Slide 29: Tasiast Phase Two
ATTRACTIVE DEVELOPMENT PROJECTS TASIAST PHASE TWO Phase Two is expected to transform Tasiast into a large, world-class operation with low costs and a long mine life • Preparing to start development work with Phase One nearing completion • Early works for ball mill and power plant expected to begin d
Slide 30: Round Mountain Phase W Overview
ATTRACTIVE DEVELOPMENT PROJECTS ROUND MOUNTAIN PHASE W OVERVIEW Phase W project is expected to extend mining by 5 years at one of Kinross’ top performing mines located in one of the world’s best mining jurisdictions 3030 www.kinross.com
Slide 31: Phase W Feasibility Study Results
ATTRACTIVE DEVELOPMENT PROJECTS PHASE W FEASIBILITY STUDY RESULTS Project expected to generate a 13% IRR at an assumed gold price of $1,200 per ounce Current mine plan + Phase W Estimates Average annual production (2018-2024) 341,000 gold ounces Production cost of sales (2018-2024) $765 per gold equ
Slide 32: Advancing Round Mountain Phase W
ATTRACTIVE DEVELOPMENT PROJECTS ADVANCING ROUND MOUNTAIN PHASE W Phase W construction expected to be complete in Q2 2019 • Received Decision Record from the U.S. Bureau of Land Management and other necessary approvals in Q4 2017 • Stripping of Phase W was initiated in late 2017, ahead of schedule
Slide 33: Round Mountain Resource Update
ATTRACTIVE DEVELOPMENT PROJECTS ROUND MOUNTAIN RESOURCE UPDATE(1) Added ounces to resource estimates since feasibility study published in September • Since the updated mineral reserve and resource estimate for Round Mountain published in September, we have added: 433,000 ounces to measured and ind
Slide 34: Realizing Bald Mountain's Potential
ATTRACTIVE DEVELOPMENT PROJECTS REALIZING BALD MOUNTAIN’S POTENTIAL 2016: Doubled reserve estimates 2017: Doubled production & lowered costs • Added 1.2 million ounces, doubling the reserve estimate before depletion $1,182 282,715 300000 1200 2.1 250000 1000 Proven and Probable Reserves (Moz.) Cost
Slide 35: Bald Mountain Vantage Complex
ATTRACTIVE DEVELOPMENT PROJECTS BALD MOUNTAIN VANTAGE COMPLEX Construction of a new heap leach facility and related infrastructure to develop Vantage Complex in the South Area of Bald Mountain Vantage Complex Project • Contemplates construction of a new heap leach facility and related infrastructure
Slide 36: Bald Mountain Exploration Highlights
ATTRACTIVE DEVELOPMENT PROJECTS BALD MOUNTAIN EXPLORATION HIGHLIGHTS Kinross envisions Bald Mountain as a long-life asset with significant upside potential and mineral resource growth 2017 program largely focused on target identification • Targeted extensions at existing pits in order to support ope
Slide 37: Tasiast Sud
ATTRACTIVE DEVELOPMENT PROJECTS TASIAST SUD Pre-feasibility on track for completion in H2 2018 • Tasiast Sud pre-feasibility study progressing well Study evaluating potential for dump leach operation that combines material from Tamaya, C6.13 and C6.15 Higher grade material expected to be transpo
Slide 38: Fort Knox Gilmore
ATTRACTIVE DEVELOPMENT PROJECTS FORT KNOX GILMORE Commenced feasibility study analyzing potential layback to the west; expect to provide an update in mid-2018 3838 www.kinross.com
Slide 39: Fort Knox Gilmore
ATTRACTIVE DEVELOPMENT PROJECTS FORT KNOX GILMORE(1) More than doubled Fort Knox’s measured and indicated resource estimates • Drilling program initiated in 2014, completing 73,000 metres of core and reverse circulation drilling in 205 holes • Results of the drilling program, engineering work and ga
Slide 40: Kupol Exploration Highlights
EXPLORATION HIGHLIGHTS KUPOL Increasing 2018 exploration budget for Kupol to continue exploration of high-potential targets • Primary objective of 2017 drilling in the North Extension was to determine extent of mineralization We continue to intersect high grade narrow vein mineralization extending
Slide 41: 1-Year Mine Life Extension in Russia
EXPLORATION HIGHLIGHTS 1-YEAR MINE LIFE EXTENSION IN RUSSIA Continuing our track record of adding reserves to offset depletion at Kupol and Dvoinoye Cumulative Production (Au eq.) Proven and Probable Reserves (Au eq.) (1) • Estimated mill production extended 6.9 2.3 2017 to 2022, another 1-year addi
Slide 42: Curlew District
EXPLORATION HIGHLIGHTS CURLEW DISTRICT Promising underground opportunities in the Curlew District; drilling to define gaps and extend mineralization along strike • In 2018, we plan to dewater and rehabilitate the historic K2 mine in order to conduct exploration drilling from underground to better ta
Slide 43: Compelling Relative Value
Compelling Relative Value 43 43 www.kinross.com
Slide 44: 2018E Production & All-In Sustaining Cost
COMPELLING RELATIVE VALUE 2018E PRODUCTION & ALL-IN SUSTAINING COST 2018E Gold Production 2018E All-In Sustaining Cost (million ounces) ($ per ounce) $1,200 5.0 $1,000 4.0 $800 3.0 $600 2.0 $400 1.0 $200 0.0 $0 Goldcorp Yamana Goldcorp Yamana AngloGold AngloGold Newmont Barrick Newmont Gold Fields K
Slide 45: Industry-Leading Balance Sheet
COMPELLING RELATIVE VALUE INDUSTRY-LEADING BALANCE SHEET Net debt to EBITDA ratio of 0.6x as of December 31, 2017 Net Debt to EBITDA (LTM) 2.5 1.7 1.5 1.0 0.9 0.8 0.6 0.4 -1.2 Yamana Goldcorp AngloGold Barrick Gold Fields Agnico Kinross Newmont IAMGold Source: Company reports; Bloomberg – net debt t
Slide 46: 2018E Metrics
COMPELLING RELATIVE VALUE 2018E METRICS Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities EV / 2018E EBITDA P / 2018E OPERATING CF 12.6 10.7 8.6 9.3 7.9 7.7 7.5 5.8 5.4 5.4 5.2 4.3 4.1 4.5 3.9 4.3 3.5 3.5 Gol
Slide 47: Appendix
Appendix 4747 www.kinross.com
Slide 48: Currency & Oil Sensitivities
APPENDIX CURRENCY & OIL SENSITIVITIES 2018 Budget Assumptions(2) 2018 Sensitivities (net of hedges)(2) Change Estimated impact 2018 Budget Current Spot(i) from to cost of sales Assumptions Gold US$1,200/oz. $1,330/oz. FX 10% US$17/oz. Russian rouble 10% US$19/oz.(ii) Oil US$55/bbl. $63/bbl Brazilian
Slide 49: Fuel & Currency Hedges
APPENDIX FUEL & CURRENCY HEDGES Managing exposure to fluctuations in foreign currency and input commodity prices • Overall 2018 FX exposures ~30% hedged at favourable rates compared to current spot prices • Continue to monitor our FX and oil exposure and look for opportunities to establish additiona
Slide 50: Fort Knox, USA (100%)
AMERICAS FORT KNOX, USA (100%) Commenced Gilmore feasibility study to analyze potential future layback • Impressive track record of operational excellence • Estimated mine life: mill – 2020; mining – 2021 OPERATING RESULTS(4) 2016 2017 Production (Au. Eq. oz.) 409,844 381,115 Production cost of sale
Slide 51: 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 24 25 26 27 • Phase W is expected to generate solid returns and Mining extend min
Slide 52: Summary of Feasibility Study Results
ROUND MOUNTAIN PHASE W SUMMARY OF FEASIBILITY STUDY RESULTS Operating Estimates (current mine plan + Phase W) Standalone Phase W Estimates Timeline Operational Metric Estimate Estimate Strip ratio 2.9 Life of mine production 1.5 million ounces Average grade processed 0.7 grams per tonne Life of mine
Slide 53: Bald Mountain, USA (100%)
AMERICAS BALD MOUNTAIN, USA (100%) Forecasting strong near-term cash flow with significant upside potential • Acquired in January 2016 • Large estimated mineral resource base with multiple sources of potential mineral reserve additions • Successfully doubled production in 2017 OPERATING RESULTS(4) 2
Slide 54: Paracatu, Brazil (100%)
AMERICAS PARACATU, BRAZIL (100%) Large gold mine with a long mine life that extends to 2032 • Paracatu is among the world’s largest gold operations with annual throughput of ~60Mt • Cornerstone asset in Kinross’ portfolio • Estimated mine life: 2032 OPERATING RESULTS(4) 2016 2017 Production (Au. Eq.
Slide 55: Overview of Acquired Power Plants
AMERICAS OVERVIEW OF ACQUIRED POWER PLANTS Agreement to acquire the Barra dos Coquieros and Cacu hydro power plants • Both are located on the Claro River in the State of Goias, approximately 660km west of Location Paracatu • No additional infrastructure is required to provide power to the mine site
Slide 56: La Coipa Restart Project: PFS Results
APPENDIX LA COIPA RESTART PROJECT: PFS RESULTS Project expected to generate a 20% IRR at an assumed gold price of $1,200 per ounce • PFS based on using existing infrastructure to blend and process higher grade material from the recently delineated Phase 7 deposit with oxide/transition material from
Slide 57: La Coipa Restart Project: PFS Results
APPENDIX LA COIPA RESTART PROJECT: PFS RESULTS • The pre-feasibility study estimates a 5.5 year mine life, following receipt of permits and commencement of stripping Processing expected to commence 1.5 years after pre-stripping has been initiated and continue for 4 years ADDITIONAL OPERATING METRI
Slide 58: Kupol-Dvoinoye (100%)
RUSSIA KUPOL-DVOINOYE (100%) Our Russian operations are a model for successfully operating in a remote location • High-grade, low-cost underground mines • Estimated mine life: 2022 OPERATING RESULTS(4) 2016 2017 Production (Au. Eq. oz.) 734,143 580,451 Production cost of sales ($/oz.) $441 $521 2017
Slide 59: Chirano, Ghana (90%)
WEST AFRICA CHIRANO, GHANA (90%) Cost reductions achieved at Chirano by transitioning to self-perform mining • Chirano is an underground operation located in southwestern Ghana • Estimated mine life: 2020 OPERATING RESULTS(3,4) 2016 2017 Production (Au. Eq. oz.) 190,759 221,424 Production cost of sa
Slide 60: Tasiast, Mauritania (100%)
WEST AFRICA TASIAST, MAURITANIA (100%) Operating mine with a large gold resource located in a prospective district • Phase Two of mill expansion expected to transform Tasiast into a world-class operation; forecast to reach commercial production in Q3 2020 • Estimated mine life: 2029 OPERATING RESULT
Slide 61: Summary of Feasibility Study Results
TASIAST EXPANSION PROJECT SUMMARY OF FEASIBILITY STUDY RESULTS Operating Estimates (Phase One & Two combined) Standalone Phase Two Estimates Timeline Operational Metric Estimate Estimate Total tonnes mined 438 million Initial capital $590 million Strip ratio 6.4 2020-2024 Average CIL grade processed
Slide 62: Endnotes
ENDNOTES 1) Mineral reserves and mineral resources are estimates. For more information regarding Kinross’ 2017 mineral reserve and mineral resource estimates, please refer to our Annual Mineral Reserve and Mineral Resource Statement as at December 31, 2017 contained in our news release dated Februar
Slide 63: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 6363 www.kinross.com
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