Kinross Gold Corporation · TSX:K
Kinross Gold — Investor Presentation (July 2010)
45 slides from Kinross Gold's investor presentation, Jul 26, 2010
Slide 1: Delivering Disciplined Growth
Delivering Disciplined Growth Kinross Gold Corporation July 2010
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? • Growing cash flow – Production P d ti has h risen i while hil margins i h have expanded d d – CFPS(1): 5 yr CAGR : 25% – Strongg balance sheet: ~$1.1 $ bn in cash* • Pipeline of future opportunities Kinross Today – Increasing reserve and resource base Portfolio of 8 operating mines
Slide 4: Kinross' Evolution
Kinross’ Evolution Kinross Tomorrow Next wave of growth through project Kinross Today development 2011 ‐ 2012 • 8 operating mines • 3rd ball mill at Paracatu • Focus in core regions Kinross • $937.2 mm cash flow (‘09) ( 09) • Maricunga Expansion Yesterday • ~$1.1 bn cash on hand* • Dvoinoye** • $11.
Slide 5: Grassroots + Late Stage Spend
Major gold discoveries: 1997‐2008 3,500 90 ding of Major Au Disccoveries (MM oz.) 80 Grassroots + Late Stage Spend 3 000 3,000 70 2,500 60 2 000 2,000 50 (US$ MM) 1,500 40 30 1,000 Year Average o ar Average of G 20 500 10 - 0 3Y 3 Yea 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 # of
Slide 6: World Gold Reserves and Resources
World Gold Reserves and Resources Total Reserves & Resources Total Reserves & Country % (mm ozs) Resources (mm oz.) Brazil Chile 1. South Africa 997 29.7% United States 2. Russia 225 6.7% Russia South Africa 3. Australia 193 5.8% 4. Indonesia 193 5.8% Mexico 5. U.S 177 5.3% 6. Canada 135 4.0% Canada
Slide 7: Growing Margins and Growing Cash Flow
Growing Margins and Growing Cash Flow • 41% production d i growth: h 2007 to 2009 • Margin growth: 27% 5‐yr CAGR • CFPS growth: 25% 5‐yr CAGR 7
Slide 8: Focused Portfolio in Five Countries
Focused Portfolio in Five Countries Portfolio of Mines and Projects Chile United States • Maricunga • Fort Knox • La Coipa • Kettle River‐Buckhorn • Lobo‐Marte • Round Mountain • Cerro Casale Brazil Russia Paracatu • Kupol Crixas • Dvoinoye* y Ecuador Canada • Fruta del Norte White G
Slide 9: 2010 Production Guidance
2010 Production Guidance Production Cost of Number Estimated Country % of 2010e Ounces (000s) Sales / oz. of Mines Mine Life total Chile 460 – 480 21% $500 – 520 2 16+ Brazil 510 – 580 24% $490 – 555 2 30+ Russia 495 – 525 23% $340 – 365 1 8+ USA 690 – 745 32% $480 – 520 3 7+ Total Kinross(2): 2.2 m
Slide 10: Growing Margins and Cash Flow
Growing Margins and Cash Flow Cost of Sales margin Adjusted operating cash flow(1) ($/oz )((4)) ($/oz.) $604 $226.3 $214.9 $478 Q1'09 Q1'10 Q1'09 Q1'10 (1) Refer to endnote #1. (4) Refer to endnote #4. 10
Slide 11: Expanding Margins: +27% 5-yr CAGR
Expanding Margins: +27% 5‐yr CAGR 2004 – 2009: $530 • Average realized gold price: +139% • Kinross’ attributable cost of sales margin(4): +229% $436 +229% Cost of Sales Margin ($/oz..) $329 $279 $161 $170 FY'04 FY'05 FY'06 FY'07 FY'08 FY'09 (4) Refer to endnote #4. 11
Slide 12: Growing Cash Flow per Share
Growing Cash Flow per Share • Record high operating cash flow(1) in 2009 (+35% vs. 2008) $1.36 • 5‐yr CAGR: 25% Adjusted Cash FFlow per Sharre (US$) $1.01 $ $0.80 $0 56 $0.56 $ $0.51 $0.45 FY'04 FY'05 FY'06 FY'07 FY'08 FY'09 (1) Refer to endnote #1. 12
Slide 13: Strong Financial & Operating Performance
Strong Financial & Operating Performance • Record R d production d i in i 2009 • Record cash flow and margins in 2009 • Growing reserves and resources 13
Slide 14: Q1 2010 Results
Q1 2010 Results Realized (in millions, except ounces and Q1 2009 Q1 2010 % Change g (4) COS Margin Gold Price per share h amounts) t ) +26% +19% $604/oz Gold equivalent production $1,065/oz 526,888 544,134 3% (ounces) Gold equivalent sales 526,807 567,097 8% (ounces) Revenue $532.7 $657.6 23% Cost o
Slide 15: Gold Resource Growth
Gold Resource Growth(6) 90.0 140.0 Inferred 80.0 Measured & Indicated Proven & Probable Reserves 120.0 Resource oz per 1,000 shares (7) 21.2 70.0 000 shares 14.9 100.0 Total Resources (mm oz.) 60.0 7.0 urce ounce per 1,0 17.3 16.1 11.1 80.0 50.0 40.0 60.0 3.9 Total Resou 2.9 8.0 30.0 4.5 6.1 40.0 8.
Slide 16: Pipeline of Projects for the Future
Pipeline of Projects for the Future • Further F h organic i growth h at our mines i • Advancing next suite of projects • Exploration & JV strategies 16
Slide 17: Paracatu: At-site expansion
Paracatu: At‐site expansion 3rd Ball Mill • Installing 3rd ball mill to increase throughput • Procurement commitments at 75%; construction at site 23% • On O schedule h d l for f completion l i andd installation i ll i in i H1 2010 Desulphurization Circuit • Installing I t lli a $30 mm desulphurizat
Slide 18: Paracatu: 3rd Ball Mill Update
Paracatu: 3rd Ball Mill Update Pouring concrete foundation for 3rd ball mill Mill shells and heads delivered to Paracatu 18
Slide 19: Maricunga Optimization
Maricunga Optimization Expansion • Scoping study completed late 2008 • Feasibility study completed in June 2010 • Concept: update mining fleet; install new primary crusher, secondary crushers and conveyor; increase capacity of existing tertiary crushing plant • Potential to increase ore processing a
Slide 20: Lobo-Marte, Chile
Lobo‐Marte, Chile • Completed pre‐feasibility study La Coipa • Capital estimate: $575 – $650 million • 47,000 tpd heap leach with SART plant Lobo‐Marte ~110 km • Operating costs expected to be $11.00‐$12.00 per tonne Maricunga • Annual production: 350‐400k oz. per year (first five years of full prod
Slide 21: Exploration Potential at Lobo Marte
Exploration Potential at Lobo Marte N Marte NW • 2010 exploration budget = $ 1.3 mm MARTE Soledad • Prioritizing Valy & Escondido targets o Have completed p baseline ggeology, gy, Pastillitos Norte LOBO geochemistry, and hyper‐spectral survey Pastillitos Sur Valy o 7,000 m exploration drilling progr
Slide 22: Fruta del Norte, Ecuador
Fruta del Norte, Ecuador • 18,000 metre drill campaign completed Quito • Pre‐feasibility expected by year‐end • Land titles approved by government authorities as required under new mining law • Permits received for water use and geotechnical drilling. Allows data collection for exploration decline a
Slide 23: Fruta del Norte/Condor
Fruta del Norte/Condor • Exploration to date has located a number of epithermal and FDN porphyry‐style targets which will be the focus of continued regional exploration l • FDN NI 43‐101 Technical Report*: Describes major exploration targets Pull-apart basin in area of Suarez pull‐apart basin • Esti
Slide 24: Update on Cerro Casale
Update on Cerro Casale La Coipa • Sold down interest from 50% to 25%: o Total transaction value: $474 mm Lobo‐Marte ~110 km • Rebalances Cerro Casale in our overall portfolio, reduces future capital and increases cash Maricunga • Feasibility Study Update Complete (for 25% interest): Cerro Casale o K
Slide 25: White Gold Project, Yukon
White Gold Project, Yukon • High potential exploration asset acquired Alaska Yukon Territory in Q2 2010 Fort Knox • 30,000 m drilling program in 2010 Dawson City o 18,000 m completed to date White Gold o 3 drills active onsite Project o Geophysics in progress • Initiated environmental baseline study
Slide 26: District Exploration Potential
District Exploration Potential White Gold Area • 20,000 m of step‐out drilling at Godlen Saddle and Arc 13,000 13 000 m and 41 holes drilled to date • Additional targets drilled include McKinnon Black Fox McKinnon, Fox, Wedge Ross Project • 5 targets; 30 holes planned • 19 holes completed to date
Slide 27: Portfolio Optimizations
Portfolio Optimizations • Acquiring 100% of the Dvoinoye deposit and Vodorazdelnaya concession(8) o High‐grade deposit located ~100 km from processing facilities at Kupol o Exploration potential at Vodorazdelnaya • Consolidatingg our interest in the Kupol p East and West exploration p licence areas
Slide 28: New Investment in Red Back Mining
New Investment in Red Back Mining • C$600 $ mm for 9.4% of p pro‐forma equity q y ownership p o C$25.00 per share • Right to appoint one member to Red Back’s Board of Directors • Anti‐dilution provisions p • Investment from Kinross’ existing $1.1 bn cash balance 28
Slide 29: Rationale for Red Back Mining Investment
Rationale for Red Back Mining Investment This investment ggives Kinross: • Disciplined entry to West Africa – highly prospective and fast growing region • A high‐quality, proven management team with a great track record • Strategic window into two high‐growth gold mines with excellent potential • In
Slide 30: Valuation
Valuation 30
Slide 31: GMP: P / NPV
GMP: P / NPV 1.60 1.52 1.25 Pricce to NAV 1.14 ABX G YRI K Source: GMP research – July 20, 2010 31
Slide 32: GMP: P / 2011 CFPS
GMP: P / 2011 CFPS 12.8 11.1 PS Price tto 2011 CFP 9.4 9.1 G YRI ABX K Source: GMP research – July 20, 2010 32
Slide 33: Key Objectives for 2010
Key Objectives for 2010 Declare increased reserves Complete Lobo Lobo‐Marte Marte pre‐feasibility pre feasibility study Close sale of 25% of Cerro Casale Complete 18,000 drill program at Fruta del Norte Complete acquisition of Underworld Resources Final feasibility study for Ce
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Slide 35: Endnotes
Endnotes (1) Unless otherwise stated, all cash flow and cash flow per share figures in this presentation are adjusted operating cash flow. Adjusted operating cash flow figures are non‐GAAP financial measures which are meant to provide additional information and should not be used as a substitute for
Slide 36: Appendix
Appendix 36
Slide 37: Fort Knox, USA (100%)
Fort Knox,, USA (100%) ( ) • Located in Alaska • Expansion and new heap leach to extend mine life • Material being stacked on new pads Operating Results Production Cost of Sales (Au eq. oz) ($/oz) Q1 2010 69,640 $524 Q1 2009 48,626 $672 2009 Gold Reserves and Resources(6) Tonnes Grade Ounces (thousa
Slide 38: Round Mountain, USA (50%)
Round Mountain,, USA ((50%)) • Kinross‐operated JV with Barrick • Located in Nevada, USA • Open pit mine Operating Results Production Cost of Sales (Au eq. oz) ($/oz) Q1 2010 45,629 $622 Q1 2009 50,176 $510 2009 Gold Reserves and Resources(6) Tonnes Grade oz (h (thousands) d) ( /) (g/t) (h (thousand
Slide 39: Kettle River, USA (100%)
Kettle River,, USA ((100%)) • Entered production in Q4’08 • Small foot‐print, p , underground g mine • 2009 first full year of production • Near‐mine exploration Operating Results Production Cost of Sales (Au eq. oz) ($/oz) Q1 2010 48,405 $280 Q1 2009 27,899 $307 2009 Gold Reserves and Resources(6)
Slide 40: Kupol, Russia (75%)
Kupol, p , Russia (75%) ( ) • 3,000 tpd mill with open‐pit and underground operation • 2009 first full year of production Operating Results Production Cost of Sales (Au eq. oz) ($/oz) Q1 2010 144,691 $314 Q1 2009 192,842 $228 2009 Reserves and Resources(6) Tonnes Grade Ounces (thousands) (g/t) (thou
Slide 41: Paracatu, Brazil (100%)
Paracatu, Brazil (100%) • Recoveries near target • M j expansion Major i commissioning i i i • Adding 3rd ball mill Operating Results Production Cost of Sales (Au eq. oz) ($/oz) Q1 2010 117,472 $556 Q1 2009 72 745 72,745 $666 2009 Gold Reserves and Resources(6) Tonnes Grade Ounces (thousands) (g/t)
Slide 42: Crixas, Brazil (50%)
Crixas,, Brazil (50%) ( ) • JV with AngloGold Ashanti • Underground mine located in the Brazil Operating Results Production Cost of Sales (Au eq. oz) ($/oz) Q1 2010 18,856 $432 Q1 2009 11,595 , $428 $ Reserves and Resources(6) Tonnes Grade Ounces (thousands) (g/t) (thousands) 2P Reserves 2,923 3.70
Slide 43: La Coipa, Chile (100%)
La Coipa, p , Chile ((100%)) • Gold/silver mine in the Maricunga district • Mill facilityy located 60km from Lobo‐Marte deposits p • Comprehensive exploration program Operating Results Production Cost of Sales (Au eq. oz) ($/oz) Q1 2010 47,664 $511 Q1 2009 66,240 $391 2009 Reserves and Resources(6)
Slide 44: Maricunga, Chile (100%)
Maricunga, g , Chile ((100%)) • Located the highly prospective Maricunga District • Open p pit, p heap p leach operation p • Expansion under review Operating Results Production Cost of Sales (Au eq. oz) ($/oz) Q1 2010 51,777 $568 Q1 2009 56 765 56,765 $541 2009 Gold Reserves and Resources(6) Tonnes
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