Kinross Gold Corporation · TSX:K
Kinross Gold — Investor Presentation (July 2009)
47 slides from Kinross Gold's investor presentation, Jul 13, 2009
Slide 1: Delivering Disciplined Growth
Delivering Disciplined Growth July 2009
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 this presentation, including any information as to the future financial or operating performance of Kinross, constitute “forward-looking information
Slide 3: Why Kinross?
Why Kinross? 1. Growing margins, growing cash flow Kinross today: • Portfolio of 8 operating mines o Production rising, costs declining o Higher margins, CFPS(3): 5 yr CAGR: 20% • Policy of no gold-hedging o Strong balance sheet • Pure gold/silver producer 2. Pipeline of future opportunities • ‘09e:
Slide 4: The Gold Industry
The Gold Industry Total above-ground gold • 163,000 tonnes or 5.2 bn ozs supply • Would fill 2 Olympic swimming pools Aggregate gold • 79 mm ozs or $71 bn in value produced • Physical bullion: bars, coins, wafers Ways to buy and trade • ETFs “gold” • Equities “Pure gold” equity sector • $108 billion
Slide 5: Declining World Supply from Mine Production
Declining World Supply from Mine Production 2001: Peak Production 3000 2500 Other 2000 Big Four* Tonnes 1500 1000 500 0 1969 1974 1979 1984 1989 1994 1999 2004 * South Africa, United States, Australia, Canada KINROSS GOLD CORPORATION Source: GFMS Gold Survey 2009 5 JULY 2009
Slide 6: Major Gold Discoveries: 1997-2007
Major Gold Discoveries: 1997-2007 3,000 90 3 Year Average of Major Au Discoveries (MM oz.) 3 Year Average of Grassroots + Late Stage Spending 80 2,500 70 2,000 60 50 1,500 (US$ MM) 40 1,000 30 20 500 10 - 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 # of Major 10 8 5 6 5 2 3 7 5 2 1 Gold
Slide 7: Increasing Demand for Gold
Increasing Demand for Gold $110 $1,000 Investment / Other $100 Fabrication $900 Gold price (US$/oz) $90 $800 Total Gold Demand (US$ billions) $80 $700 Gold Price (US$/oz) $70 $600 $60 $500 $50 $400 $40 $300 $30 $200 $20 $10 $100 $0 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 KINROSS GOLD CO
Slide 8: World Gold Reserves and Resources
World Gold Reserves and Resources Total Reserves & Resources Top Countries (mm ozs) ( mm ozs) Total Reserves Country % Peru Papua New & Resources Guinea Uzbekistan Brazil 1. South Africa 997 29.7% Ghana South Africa 2. Russia 225 6.7% Mexico 3. Australia 193 5.8% Chile 4. Indonesia 193 5.8% China 5.
Slide 9: Relative Production Growth by Region
Relative Production Growth by Region Assets acquired by Kinross: Brazil – Paracatu Chile – Maricunga, La Coipa, Cerro Casale, Lobo-Marte Latin America Ecuador – Fruta del Norte Russia – Kupol Asia North America - Buckhorn CIS Oceania Africa North America 1999 2000 2001 2002 2003 2004 2005 2006 2007
Slide 10: The Gold World
The Gold World Observation Industry Challenge 1. Global supply / production • Continued production growth shrinking • Cost containment 2. Fundamentals strong for • Provide leverage to rising gold price future price appreciation • Maintain / expand margins 3. New regions displace • Skills / experienc
Slide 11: Growing margins… growing cash flow
Growing margins… growing cash flow • 53% production growth: 2007 to 2009e • Y-o-Y Costs declined 13% in Q1’09 • Margins up 355% since 2002 • CFPS growth – 20% 5-yr CAGR* *Based on full year-end results 2003 - 2008 11
Slide 12: Focused portfolio of 8 operating mines in 4 countries
Focused portfolio of 8 operating mines in 4 countries Operating Mines in Four Key Regions: Chile USA • Maricunga • Fort Knox • La Coipa • Kettle River – Buckhorn • Round Mountain Brazil Russia • Paracatu • Kupol • Crixas KINROSS GOLD CORPORATION 12 JULY 2009
Slide 13: Production guidance for 2009: up 36% over 2008
Production guidance for 2009: up 36% over 2008 Production Cost of Number Estimated Country Ounces (000s) % of 2009e total Sales / oz. of Mines Mine Life Chile 450 – 500 19% $425 – 460 2 16+ Brazil 580 – 650 25% $425 – 470 2 30+ Russia(4) 675 – 725 29% $265 – 290 1 8+ USA 625 – 680 27% $440 - 490 3 7
Slide 14: Growing production & declining costs
Growing production & declining costs Production (mm oz.) Cost of Sales ($/oz.)(2) 2.4 – 2.5 $421 1.8 $390 - $420 1.6 $368 (1) (1) 2007 2008 2009e 2007 2008 2009e (1) Please refer to endnote #1. (2) Please refer to endnote #2. KINROSS GOLD CORPORATION 14 JULY 2009
Slide 15: World Total Cash Costs & Kinross
World Total Cash Costs & Kinross • In 2008, Kinross moved to the bottom quartile of the industry cost curve, against industry trend of increasing costs and declining production 2008 Cash Costs Kinross 2007 Cash Costs 2006 Cash Costs US$/oz. Cumulative production % KINROSS GOLD CORPORATION Source: GF
Slide 16: Kinross margins expanding
Kinross margins expanding • Average realized gold price is up 180% • Kinross’ cost of sales margin(5) up 355% $478 $436 Up 355% Cost of Sales Margin ($/oz) $329 $279 $161 $170 $135 $105 FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08 Q1'09 (5) Please refer to endnote 5. KINROSS GOLD CORPORATION 16 JULY 20
Slide 17: Margin performance
Margin performance (2002 – Q1 2009) • 5-year CAGR: KGC: +355% • Gold price: 19% NEM: +280% • Kinross margin: 26% GG: +155% ABX: +93% FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08 Q1'09 KINROSS GOLD CORPORATION 17 JULY 2009
Slide 18: Strong financial & operating results
Strong financial & operating results • Record production & revenue in 2008 • Q1’09 CFPS: $0.32 (up 100% Y-o-Y) • Growing reserves and resources 18
Slide 19: Q1 2009 Results
Q1 2009 Results Realized COS Margin(5) % (in millions, except ounces and per share Q1’09 Q1’08 Gold Price +5% amounts) change -3% $478/oz $897/oz Gold equivalent production (oz.) 526,888 331,784 59% Gold equivalent sales (oz.) 526,807 356,864 48% Revenue $532.7 $330.2 61% Cost of Sales -11% Cash Flo
Slide 20: Growing cash flow per share
Growing cash flow per share Q1’09 vs. Q1’08: • Gold price down 3% $1.01 • Cash flow per share doubled $0.80 $0.56 $0.51 $0.45 $0.41 $0.32 $0.16 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08 Q1'08 Q1'09 KINROSS GOLD CORPORATION *before changes in working capital 20 JULY 2009
Slide 21: Gold resource growth: 14% 5-yr CAGR
Gold resource growth : 14% 5-yr CAGR 80.0 140 (8) Inferred Resources 21.2 (6,7) Measured & Indicated Resources 70.0 Proven and Probable Reserves (6) 120 (9) Total resource ounce per 1,000 shares Total ounces per 1,000 shares 60.0 7.0 100 19.1 11.1 50.0 80 M oz. 40.0 3.9 60 2.9 8.0 30.0 4.5 6.1 8.2 4
Slide 22: Balanced portfolio
Balanced portfolio • Reserves and resources are well diversified geographically • Expected mine life 20+ years, all in core regions 2P Reserves(6,7) M&I Resources(6,7) Inferred Resources(6,7,8) 45.6 mm oz. 19.1 mm oz. 21.3 mm oz. Russia Russia 7% USA USA 6% USA Brazil Chile 12% 3% 14% 32% Chile 38%
Slide 23: Pipeline of projects for the future
Pipeline of projects for the future • Expansions being completed in ‘09 • Further organic growth at our mines • Advancing next suite of projects • Exploration & JV strategies 23
Slide 24: Lobo-Marte
Lobo-Marte La Coipa (2P: 1.06 g/t) • Located in Chile, near current Kinross operations Lobo-Marte ~110 km (M&I: 1.72 g/t) • Development stage asset with large gold resources Maricunga (2P: 0.72 g/t) • Infrastructure in place Cerro Casale • Opportunity to leverage Kinross’ (2P: 0.61 g/t) experience a
Slide 25: Lobo-Marte
Lobo-Marte • Project parameters under consideration o Phase 1: Truck 2+ g/t ore to La Coipa mill o Phase 2: 40 – 50k tpd heap leach operation o SART plant to reduce costs • Recent milestones: o Scoping study initiated (58,000 m drilling) o Project team in place • Next steps: o Infill drilling progra
Slide 26: Fruta del Norte
Fruta del Norte Quito • Project parameters under consideration: o Underground mining o 3,000 tpd milling capacity • Recent milestones: o Ecuador Mining Law approved (January ‘09) Fruta del Norte o Environmental Management Plan completed and submitted (Q1’09) • Next steps: o 12,000 metre drilling pro
Slide 27: Fruta del Norte / Condor
Fruta del Norte / Condor • 2009 spending: FDN o Fruta del Norte: $25 mm o Condor project exploration: $10 mm • Exploration Plan: o Exploration of FDN basin and Pull-apart Condor trend to identify new FDN- basin type targets o Total 2009 planned drilling: 26,900 m KINROSS GOLD CORPORATION 27 JULY 200
Slide 28: Cerro Casale
Cerro Casale La Coipa (2P: 1.06 g/t) • Project parameters under consideration: o Open-pit mine with 18 yr. mine life Lobo-Marte ~110 km o 220 Mt/a ore processing plant and a 37 Mt/a (M&I: 1.72 g/t) heap leach Maricunga o Avg. annual production (first full 10 yrs.)* (2P: 0.72 g/t) – 430k oz. of gold;
Slide 29: Current mines: expansion projects
Current mines: expansion projects Maricunga, Chile - Expansion o Scoping study completed late 2008 o Expanded throughput could double production o Pre-feasibility expected at end of 2009 La Coipa, Chile o Land package doubled in 2008 to 98,000 ha o Comprehensive district exploration under way Paraca
Slide 30: Project pipeline
Project pipeline A. Near completion 2009 2010 2011 2012 2013 Paracatu Expansion Production Fort Knox Expansion Production B. Expansions Maricunga Engineering Construction Production Paracatu Phase 3 Engineering Construction Production C. New Projects Lobo‐Marte Metallurgical Testing Engineering Cons
Slide 31: Valuation and performance
Valuation and performance 31
Slide 32: Merrill Lynch: P / NAV & P / CFPS
Merrill Lynch: P / NAV & P / CFPS P / NAV P / CFPS (2009e) 32.5 2.4 2.4 2.2 26.1 2.2 1.9 1.7 13.4 11.1 11.1 10.7 AEM GG NEM KGC ABX AUY AEM GG KGC ABX AUY NEM KINROSS GOLD CORPORATION Source: Merrill Lynch research – July 7, 2009 32 JULY 2009
Slide 33: Merrill Lynch: Adj. market cap. / 2009e production
Merrill Lynch: Adj. market cap. / 2009e production $15,669 $11,405 US$ per ounce $5,850 $5,479 $3,876 $3,860 AEM GG KGC AUY ABX NEM KINROSS GOLD CORPORATION Source: Merrill Lynch research – July 7, 2009 33 JULY 2009
Slide 34: Merrill Lynch: Adj. market cap. / reserve ounce
Merrill Lynch: Adj. market cap. / reserve ounce $571 $493 $391 Us$ per reserve ounce $345 $299 $262 GG AEM AUY KGC ABX NEM KINROSS GOLD CORPORATION Source: Merrill Lynch research – July 7, 2009 34 JULY 2009
Slide 35: Kinross Key Objectives for 2009
Kinross Key Objectives for 2009 9 Complete Aurelian integration 9 Close Lobo-Marte acquisition from Teck 9 Lock-in significant share of input costs 9 Strengthen liquidity: close $415 mm equity issue 9 Replace operations’ reserves 9 Declare next dividend 9 Add tax-effective cash flow in C
Slide 36: Why Kinross?
Why Kinross? 1. Growing margins, growing cash flows 2. Pipeline of future opportunities 3. Compelling valuation KINROSS GOLD CORPORATION 36 JULY 2009
Slide 37: Endnotes
Endnotes (1) For more information regarding Kinross’ production outlook for 2009, please refer to the press release dated January 7, 2009 available on our website at www.kinross.com. (2) Cost of sales per ounce is defined as cost of sales as per the financial statements divided by the number of gold
Slide 38: Appendix
Appendix: KINROSS GOLD CORPORATION 38 JULY 2009
Slide 39: Paracatu, Brazil (100%)
Paracatu, Brazil (100%) • Expansion to triple throughput to 60 mtpa • Expected to reach full capacity Q2’09 • Mine life out to 2041 Operating Results Operating Production Cost of Sales Results (Au eq. oz.) ($/oz.) Q1’09 72,745 $666 2008 188,156 $450 Reserves and Resources(6) Tonnes Grade Ounces (x 1
Slide 40: Crixas, Brazil (50%)
Crixas, Brazil (50%) • JV with AngloGold Ashanti • Underground mine located in the Brazil Operating Results Operating Production Cost of Sales Results (Au eq. oz.) ($/oz.) Q1’09 11,595 $428 2008 87,669 $302 Reserves and Resources(6) Tonnes Grade Ounces (x 1,000) (g/t) (x 1,000) 2P Reserves 2,817 4.0
Slide 41: Maricunga, Chile (100%)
Maricunga, Chile (100%) • In the highly prospective Maricunga District • Open pit, heap leach operation • Pre-stripping of Pancho pit begins (March) Operating Results Operating Production Cost of Sales Results (Au eq. oz.) ($/oz.) Q1’09 56,765 $541 2008 223,341 $566 Reserves and Resources(6) Tonnes
Slide 42: La Coipa, Chile (100%)
La Coipa, Chile (100%) • Gold/silver mine in the Maricunga district • Mill facility located 60km from Lobo-Marte deposits Operating Results* Operating Production Cost of Sales Results (Au eq. oz.) ($/oz.) Q1’09 66,240 $391 2008 226,293 $489 Reserves and Resources(6) Tonnes Grade Ounces (x 1,000) (g/
Slide 43: Kupol, Russia (75%)
Kupol, Russia (75%) • 3,000 tpd mill with open-pit and underground operation • 2009 to be first full year of production Operating Results Operating Production Cost of Sales Results (Au eq. oz.) ($/oz.) Q1’09 192,842 $224 2008 469,907 $220 Reserves and Resources(6) Tonnes Grade Ounces (x 1,000) (g/t)
Slide 44: Fort Knox, USA (100%)
Fort Knox, USA(100%) • Located in Alaska • Expansion and new heap leach to extend mine life and lower costs Operating Results Operating Production Cost of Sales Results (Au eq. oz.) ($/oz.) Q1’09 48,626 $672 2008 329,105 $461 Reserves and Resources(6) Tonnes Grade Ounces (x 1,000) (g/t) (x 1,000) 2P
Slide 45: Round Mountain, USA (50%)
Round Mountain, USA (50%) • Kinross-operated JV with Barrick • Located in Nevada, USA • Open pit mine Operating Results Operating Production Cost of Sales Results (Au eq. oz.) ($/oz.) Q1’09 50,176 $510 2008 246,946 $465 Reserves and Resources(6) Tonnes Grade Ounces (x 1,000) (g/t) (x 1,000) 2P Reser
Slide 46: Kettle River, USA (100%)
Kettle River, USA (100%) • Entered production in Q4’08 • Small foot-print, underground mine Operating Results Operating Production Cost of Sales Results (Au eq. oz.) ($/oz.) Q1’09 27,899 $307 2008 27,036 $344 Reserves and Resources(6) Tonnes Grade Ounces (x 1,000) (g/t) (x 1,000) 2P Reserves 2,099 1
Slide 47: Kinross Gold Corporation July 2009
KINROSS GOLD CORPORATION 47 JULY 2009