Kinross Gold Corporation · TSX:K
Kinross Gold — 2016 BMO Capital Markets Global Metals & Mining Conference
62 slides from Kinross Gold's conference presentation, Feb 29, 2016
Slide 1: Kinross Gold Corporation – 2016 BMO Capital Markets Global Metals & Mining Conference
February 28 – March 2 KINROSS GOLD CORPORATION 2016 BMO Capital Markets Global Metals & 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: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • Continuing to meet or outperform our operational targets STRONG BALANCE SHEET • $2.2B in liquidity with net debt to EBITDA ratio of 1.25x • Repaid the Kupol loan during Q3, ahead of schedule ATTRACTIVE FUTURE GROWTH OPPORTUNITIES • LA CO
Slide 4: Delivering Operational Excellence
DELIVERING OPERATIONAL EXCELLENCE 4 www.kinross.com
Slide 5: Strong Track Record
OPERATIONAL EXCELLENCE STRONG TRACK RECORD 2012 2013 2014 2015 MET or EXCEEDED annual production guidance MET or came in UNDER annual cost of sales guidance MET or came in UNDER annual capital expenditures guidance CONSISTENTLY MEETING OR OUTPERFORMING www.kinross.com TARGETS
Slide 6: Delivering Strong Performance
2015 HIGHLIGHTS DELIVERING STRONG PERFORMANCE Continued track record of meeting or beating our operational targets • Operations delivered solid results in 2015: HIGH-END of 2015 revised guidance for production LOW-END of 2015 revised guidance for cost of sales and all-in sustaining cost BELOW
Slide 7: 2016 Production & Cost Outlook
OPERATIONAL EXCELLENCE 2016 PRODUCTION & COST OUTLOOK(4) Achieved cost of sales and all-in sustaining cost at the low-end of guidance ranges for 4 consecutive years Gold Equivalent Production(1) Production Cost of Sales(2) All-in Sustaining Cost(3) (millions) ($ per ounce) ($ per ounce) 2.7 – 2.9 $9
Slide 8: 2016 Outlook
OPERATIONAL EXCELLENCE 2016 OUTLOOK(4) 2016 PRODUCTION & COST OF SALES OUTLOOK Gold Production % of Total Production Cost of Sales(2) Region (000 Au eq. oz.) Production ($/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
• Five 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: Americas
OPERATIONAL EXCELLENCE AMERICAS 2016E: Expected to produce 1.67-1.77Moz. Au eq. at cost of sales of $730-$790/oz.(4) 2015 HIGHLIGHTS • Region met 2015 production and cost guidance, despite unforeseen weather challenges in Chile & Brazil • FORT KNOX produced over 400koz., second highest level in its
Slide 12: Bald Mountain, Nevada
OPERATIONAL EXCELLENCE BALD MOUNTAIN, NEVADA Quality producing mine with significant exploration potential EXCELLENT FIT WITHIN KINROSS’ PORTFOLIO • Open-pit run-of-mine heap leach operation Opportunity to leverage Kinross’ expertise as a world-class open-pit and heap leach operator • Large estima
Slide 13: Bald Mountain Exploration
OPERATIONAL EXCELLENCE BALD MOUNTAIN EXPLORATION Bald Mountain to be a priority focus of Kinross’ 2016 exploration program 2016 SPENDING 2016 Priority Exploration Targets ~15km • Allocated $6M of exploration budget to Bald Mountain • Immediate priority is within the footprint of the active Winrock m
Slide 14: Round Mountain CI Benefits
OPERATIONAL EXCELLENCE ROUND MOUNTAIN CI BENEFITS Achieving results from continuous improvement, with additional future opportunities OPPORTUNITY TO UNLOCK VALUE FROM THE HEAP LEACH PADS • Significant amount of ore stacked on the pads since heap leaching commenced in 1993 ~950Mt of ore stacked on
Slide 15: Process Solution Management (PSM)
OPERATIONAL EXCELLENCE PROCESS SOLUTION MANAGEMENT (PSM) Unlocking value through heap leach optimization projects IMPROVING LEACH PERFORMANCE • Re-grading areas of the heap • Enhancing application rate of solution to older ore • Optimizing efficient leaching of the entire pad IMPROVING RECOVERY • Im
Slide 16: Paracatu, Brazil
OPERATIONAL EXCELLENCE PARACATU, BRAZIL Large gold mine with a long mine life that extends to 2030 SIGNIFICANT GOLD PRODUCTION • Paracatu produced 478koz. at a cost of sales of $772/oz. in 2015 • Costs continuing to benefit from weakening local currency ACHIEVING RESULTS THROUGH CONTINUOUS IMPROVEME
Slide 17: 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 18: La Coipa, Chile
EXPLORATION HIGHLIGHTS LA COIPA, CHILE 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 available on our website at 18
Slide 19: Russia
• Continued strong performance from the high-grade, low-cost Kupol and RUSSIA Dvoinoye underground mines 19 www.kinross.com
Slide 20: Russia
OPERATIONAL EXCELLENCE RUSSIA 2016E: Expected to produce 670-710koz. Au eq. at cost of sales of $460-$490/oz.(4) 2015 HIGHLIGHTS • Continued outperformance of the combined KUPOL-DVOINOYE operation • Production increased year-over-year due to an increase of tonnes mined at DVOINOYE • KUPOL mill achie
Slide 21: Kupol-Moroshka
EXPLORATION HIGHLIGHTS KUPOL-MOROSHKA Advancing development of the Moroshka satellite deposit located near Kupol mill HIGH-GRADE DEPOSIT • Located approximately 4km east of Kupol and within the Kupol license • Initial discovery in 2012 • Completed pre-feasibility study in 2015, adding ~180koz. to mi
Slide 22: September North-East
EXPLORATION HIGHLIGHTS SEPTEMBER NORTH-EAST SEPTEMBER NORTH-EAST • Defined near-surface, high-grade M&I mineral resource estimate of 68koz. Au grading 32 g/t(5) • Material being fast-tracked to production, expected in 2017 DVOINOYE ZONE 1 • Located on the current mining lease • Drilling confirmed co
Slide 23: Foreign Investment
RUSSIA FOREIGN INVESTMENT The world’s leading companies are continuing to invest in Russia in 2015 23 www.kinross.com
Slide 24: 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 24 www.kinross.com
Slide 25: West Africa
• Two operating mines located in a region with excellent growth and WEST exploration prospects AFRICA • Strong focus on optimizing efficiency and performance 25 www.kinross.com
Slide 26: West Africa
OPERATIONAL EXCELLENCE WEST AFRICA 2016E: Expected to produce 360-420koz. Au eq. at cost of sales of $850-$920/oz.(4) 2015 HIGHLIGHTS • Production at the high-end and cost of sales at the low-end of 2015 guidance ranges • Cost of sales at TASIAST improved in Q4 as a result of continuous improvement
Slide 27: Tasiast, Mauritania
OPERATIONAL EXCELLENCE TASIAST, MAURITANIA In Q4 2015, Tasiast achieved lowest cost of sales since Q1 2013 COST REDUCTIONS • Reduced oil and labour costs benefitting operation Reduced workforce by 240 employees CONTINUOUS IMPROVEMENT BENEFITS • Comprehensive review of crushing and grinding circuit
Slide 28: 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 29: 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 30: Phase One Estimates
TASIAST EXPANSION PROJECT PHASE ONE ESTIMATES Highlights of the early detailed engineering work completed to date on Phase One Metric Estimates 2015 Results % change Average annual production – first 2 years 368,000 oz. 219,045 oz. +68% Cash cost per ounce – first 2 years $575/oz. Au eq. $1,021 -48%
Slide 31: Two-Phased Expansion Concept
TASIAST EXPANSION PROJECT TWO-PHASED EXPANSION CONCEPT PHASE TWO • Could further increase total throughput with the addition of milling, leaching, thickening and refining capacity CONCEPTUAL FLOW SHEET Gyratory Ore Oversized crusher stockpile SAG mill Additional ball Additional leaching Thickening m
Slide 32: 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 • Expect to provide results of t
Slide 33: Tasiast District
EXPLORATION HIGHLIGHTS TASIAST DISTRICT Increased mineral resource estimates by over 300koz. at Tamaya(5), a prospective oxide target located on the Tasiast Sud license Operating Mine Satellite deposit Imkebdene license New deposit 2015 FENNEC WEST BRANCH C67 Tmeimichat license C68 TAMAYA El Gaicha
Slide 34: Chirano, Ghana
EXPLORATION HIGHLIGHTS CHIRANO, GHANA Exploration focused on 8 km mine trend to target open-pit and underground extensions SURAW • Significant gold mineralization was extended 200 m south of the existing M&I mineral resource estimates and also 300 m down dip • 2015 results demonstrate upside potenti
Slide 35: Strong Financial Discipline
STRONG FINANCIAL DISCIPLINE 35 www.kinross.com
Slide 36: Solid Financial Position
STRONG BALANCE SHEET SOLID FINANCIAL POSITION Maintaining balance sheet strength & financial flexibility remain priority objectives PRO-FORMA LIQUIDITY POSITION(i) MAINTAINING FINANCIAL FLEXIBILITY • Improved balance sheet during 2015: Added $60M to cash position, ending the period with over $1.0B
Slide 37: Levers for Reducing Costs
FINANCIAL DISCIPLINE LEVERS FOR REDUCING COSTS Proactively managing our business with a strict focus on the health of our balance sheet Market factors outside of our Levers for reducing costs control Opex Gold price CASH Discretionary spending Oil FLOW Higher cost mines FX 37 www.kinross.com
Slide 38: Reducing Capital Spending
2016 OUTLOOK REDUCING CAPITAL SPENDING • Trend of DECLINING capital Capital Expenditures expenditures since 2012 (US$ millions) $610M • REDUCED capital expenditure forecast to $595 million in 2016(4) $595M Does not include capital expenditures for potential Tasiast Phase One expansion 2015 2016E (
Slide 39: Reduced Overhead
2016 OUTLOOK REDUCED OVERHEAD • 2016 overhead expense expected to be Overhead Expense US$165 million(4) (US$ millions) $208 • 20% REDUCTION year-over-year reflects savings from corporate headcount reduction $165 • Benefits from lower Canadian dollar reflected in guidance 2015 2016E (4) Overhead expe
Slide 40: Fuel & Currency Hedges
FINANCIAL DISCIPLINE FUEL & CURRENCY HEDGES Managing exposure to fluctuations in foreign currency and input commodity prices • Made strategic decision to reduce tenor and amount of oil and currency hedges: Prefer to be hedged no more than 18 months out No more than 50% of exposure Summary of for
Slide 41: Currency & Oil Benefits
2016 OUTLOOK CURRENCY & OIL BENEFITS Well-positioned to benefit from further currency and oil weakness • Benefits of favourable FX and oil prices 2016 Budget Assumptions & Sensitivities(4) partially offsetting lower gold prices Budget Spot(i) 110 Gold US$1,100 US$1,233 100 Oil US$55/bbl. US$33/bbl.
Slide 42: Growing Production, Reducing Costs
COMPELLING RELATIVE VALUE GROWING PRODUCTION, REDUCING COSTS Expecting record production in 2016, with a lower all-in sustaining cost GOLD PRODUCTION(i) ALL-IN SUSTAINING COST(ii) 2015 vs. 2016E 2015 vs. 2016E 6% 7% 0% 4% -1% % change % change -7% -1% -15% -15% -4% -4% -5% Kinross Newmont Yamana Agn
Slide 43: Net Debt to EBITDA (LTM)
COMPELLING RELATIVE VALUE NET DEBT TO EBITDA (LTM) Net debt to EBTIDA ratio of 1.25x well-within debt covenant of 3.5x 3.13 2.33 1.91 1.34 1.25 1.09 Yamana Barrick Goldcorp Newmont Kinross Agnico Source: Bloomberg, company reports. Kinross net debt to EBTIDA ratio adjusted to reflect Nevada transact
Slide 44: Enterprise Value versus Production
COMPELLING RELATIVE VALUE ENTERPRISE VALUE VERSUS PRODUCTION Market capitalization Enterprise Value Multiple of $25.6 2016E Gold Delta with Kinross Production Kinross Enterprise (Moz.)(ii) (US$B) Value $20.0 Enterprise value (US$ billions)(i) Barrick 5.3 20.8 5.3 $15.8 Newmont 5.1 15.2 4.2 Goldcorp
Slide 45: 2016E Metrics
COMPELLING RELATIVE VALUE 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 12.3 13.0 9.7 8.5 8.9 7.8 8.4 7.5 7.1 5.0 4.5 3.9 Agnico Goldcorp Newmont Bar
Slide 46: Track Record Over the Past Four Years
LOWERED 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 MAINTAINED gold equivalent all-in a strong $700M balance sustaining Debt repaid sheet 10% cost $2.2 BILLION Liquidity position TRACK RECORD OVER THE PAST www.ki
Slide 47: Appendix
APPENDIX 47 www.kinross.com
Slide 48: 2016 Capital Expenditures Outlook
FINANCIAL DISCIPLINE 2016 CAPITAL EXPENDITURES OUTLOOK(4) 2016 capital expenditures are expected to be $595 million, including estimated capitalized interest of $25 million Region Sustaining Non-Sustaining Regional Total Americas $220 $10 $230 West Africa $120 $120 $240 Russia $85 $10 $95 Corporate
Slide 49: FY2015 Operating Results
OPERATIONAL EXCELLENCE FY2015 OPERATING RESULTS PRODUCTION PRODUCTION COST OF SALES(2) OPERATION (Au eq. oz.) ($ per Au eq. oz.) Fort Knox 401,553 $629 Round Mountain (50%) 197,818 $750 Kettle River – Buckhorn 97,368 $836 Paracatu 477,662 $772 Maricunga 212,155 $1,010 AMERICAS TOTAL 1,386,556 $769 K
Slide 50: 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 2nd highest production level in 2015, its 19th year in operation OPERATING RESULTS(2) 2014 2015 Production (Au. Eq. oz.) 379,453 401,553 Production c
Slide 51: 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 owners invested ~$385M over the pas
Slide 52: Round Mountain, USA (100%)
AMERICAS ROUND MOUNTAIN, USA (100%) Round Mountain is a best-practice leader in many areas, including preventative maintenance • Bulk tonnage open-pit operation • Production & cost benefits of an ongoing long-term continuous improvement project focused on enhancing heap leach performance and improve
Slide 53: 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 • Mining expected to end in Q3 2016 per mine plan OPERATING RESULTS(2) 2014 2015 Production (A
Slide 54: 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 OPERATING RESULTS(2) 2014 2015 Production (Au. Eq. oz.) 521,026
Slide 55: Maricunga, Chile (100%)
AMERICAS MARICUNGA, CHILE (100%) High-altitude heap leach operation located in the highly prospective Maricunga District • Focused on improving operating efficiencies and reducing costs • Mining operations temporarily curtailed in 2015 due to unforeseen weather event OPERATING RESULTS(2) 2014 2015 P
Slide 56: La Coipa Project
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 57: La Coipa Project
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 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 • Dvoinoye is the 4th mine Kinross has operated in its 20-year history in the region OPERATING RESULTS(2) 2014 2015 Production (Au. Eq. oz.) 751,10
Slide 59: Tasiast, Mauritania (100%)
WEST AFRICA TASIAST, MAURITANIA (100%) Operating mine with a large gold resource located in a prospective district • Continuing effort to reduce operating costs at existing operation • Completing studies for potential phased expansion expected to improve production and operating costs OPERATING RESU
Slide 60: Chirano, Ghana (90%)
WEST AFRICA CHIRANO, GHANA (90%) Cost reductions achieved at Chirano by transitioning 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) 2014 2015 Production (Au. Eq. oz.) 257,888 23
Slide 61: 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
Slide 62: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 62 www.kinross.com
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