Kinross Gold Corporation · TSX:K
Kinross Gold — Q4 2016 Earnings Presentation
34 slides from Kinross Gold's earnings presentation, Feb 16, 2017
Slide 1: Kinross Gold Corporation Q4 & FY 2016 Results Conference Call & Webcast
February 16 KINROSS GOLD CORPORATION 2017 Q4 & FY 2016 Results Conference Call & Webcast 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: 2016 Highlights & Priorities for 2017
2016 Highlights & Priorities for 2017 33 www.kinross.com
Slide 4: Strong Track Record: Consistently Meeting or Outperforming Targets
OPERATIONAL EXCELLENCE STRONG TRACK RECORD 2012 2013 2014 2015 2016 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 Targets 44 w
Slide 5: 2016 Highlights
Delivered Operational Excellence Strengthened Balance Sheet $250M 5 MET Debt repaid or $830M $0.8 $2.3B billion of cash at Dec.31 $1.4 Consecutive EXCEEDED billion Years Guidance 0.8x Net debt to EBITDA Cash Available credit *Totals may not add up due to rounding. Advanced High-Quality Organic Devel
Slide 6: Deliver Operational Excellence
2017 PRIORITIES DELIVER OPERATIONAL EXCELLENCE Continuing our track record of meeting or outperforming our operational targets • Operations delivered solid results in 2016: FIVE consecutive years of meeting guidance RECORD production of 2.8M gold equivalent ounces(2) MET guidance for cost of s
Slide 7: Advance Tasiast Two-Phased Expansion
2017 PRIORITIES ADVANCE TASIAST TWO-PHASED EXPANSION Combined Phase One and Two expansion expected to transform Tasiast into largest producer with costs amongst the lowest in the portfolio Phase One Estimates(i) Phase Two Estimates(i) Average annual production 409,000 ounces 777,000 ounces Productio
Slide 8: Develop Bald Mountain's Potential
2017 PRIORITIES DEVELOP BALD MOUNTAIN’S POTENTIAL Kinross envisions Bald Mountain as a long-life asset with significant upside potential and mineral resource growth 2016: Doubled mineral reserve estimates ahead 2017: Expect to double production and continue of schedule to develop potential for mine
Slide 9: Advance Organic Projects
2017 PRIORITIES ADVANCE ORGANIC PROJECTS Organic projects spanning all 3 of our operating regions offer opportunities to expand production or extend mine life at our operations Q2 2018 Q1 2018 Tasiast Phase 1 Full production Q4 2017 Moroshka Mining expected to commence H1 Q3 2017 La Coipa Phase 7 Va
Slide 10: Building Momentum for the Future
2020E Expected start-up of 2018E potential TASIAST PHASE TWO TASIAST PHASE 2017E ONE expected to ramp up to full 2016 Stronger year production expected at Delivered SOLID BALD MOUNTAIN PRODUCTION of 2.8Moz. Building Momentum for the Future 1010 www.kinross.com
Slide 11: Financial Highlights
Financial Highlights 11 11 www.kinross.com
Slide 12: Solid Financial Position
STRONG BALANCE SHEET SOLID FINANCIAL POSITION Maintaining balance sheet strength & financial flexibility remain priority objectives LIQUIDITY POSITION* MAINTAINING FINANCIAL FLEXIBILITY • Repaid $250M senior notes in September 2016 • Extended maturity dates of the $500M term loan and $1.5B credit fa
Slide 13: Q4 & Full-Year 2016 Financial Results
Q4 & FULL-YEAR 2016 FINANCIAL RESULTS All figures in US$ millions, except ounces, per share and per ounce amounts Q4 2016 Q4 2015 2016 2015 Attributable gold equivalent ounces (oz.)(2) Produced 746,291 623,716 2,789,150 2,594,652 Sold 738,087 632,411 2,758,306 2,608,870 Average realized gold price (
Slide 14: Reduced Overhead
2017 OUTLOOK REDUCED OVERHEAD(i) Continued focus on financial discipline Overhead Expense (US$ millions) • 18% REDUCTION in overhead $208 expense versus 2015 $171 $165 • Trend continues in 2017: Overhead expense expected to be US$165 million(5) 2015 2016 2017E (5) (i) Overhead expense consists of
Slide 15: 2017 Capital Expenditures Outlook
FINANCIAL DISCIPLINE 2017 CAPITAL EXPENDITURES OUTLOOK(5) Leveraging strong financial position to invest in development projects & our future 2017E Capital Expenditures ($ millions) Region Sustaining Non-Sustaining Regional Total Americas $295 $65 $360 West Africa $80 $375 $455 Russia $40 $15 $55 Co
Slide 16: Currency & Oil Benefits
2017 OUTLOOK CURRENCY & OIL BENEFITS Well-positioned to benefit from favourable currency exchange and oil weakness • Benefits of favourable FX and oil prices 2017 Budget Assumptions & Sensitivities(5) partially offsetting lower gold prices Budget Spot(i) 110 Gold US$1,200 $1,232 100 Oil US$60/bbl. 5
Slide 17: Fuel & Currency Hedges
FINANCIAL DISCIPLINE FUEL & CURRENCY HEDGES Managing exposure to fluctuations in foreign currency and input commodity prices • Decided to hedge rouble for first time since 2013 Entered into zero cost option hedge for approximately 20% of exposure at average put of 60, offset by call strike of 72 •
Slide 18: Operating Highlights
Operating Highlights 18 18 www.kinross.com
Slide 19: Diversified Portfolio of Operating Mines
OPERATING HIGHLIGHTS DIVERSIFIED PORTFOLIO OF OPERATING MINES Over RUSSIA 60% of estimated 2017 gold equivalent production from mines located in the Americas AMERICAS Dvoinoye Kupol Fort Knox Bald Mountain Round Mountain 2017E GOLD EQUIVALENT PRODUCTION(2,5) Tasiast 22% Chirano WEST AFRICA 2.5-2.7M
Slide 20: Americas
OPERATING HIGHLIGHTS AMERICAS • Continued strong performance expected at FORT KNOX and ROUND MOUNTAIN • Production expected to double at BALD MOUNTAIN with lower costs • Production expected to be heavily weighted towards H2 2017, due to mining sequence & lag between stacked and recovered ounces from
Slide 21: West Africa
OPERATING HIGHLIGHTS WEST AFRICA • CHIRANO successfully transitioned from Awkaaba to Paboase Hitting tonnage goals Grades and production increased in Q4 2016 • Strong performance at TASIAST in Q4 2016 Increased production a result of improved throughput and higher grade Expect positive trend
Slide 22: Russia
OPERATING HIGHLIGHTS RUSSIA KUPOL-DVOINOYE • Consistent, strong performance from Russian operations in 2016 • Commenced stripping September Northeast; project on time and on budget • Filter cake plant expected to be fully operational in Q1 2017 Provides additional tailings capacity for the current
Slide 23: High-Quality Organic Development Projects
High-Quality Organic Development Projects 23 23 www.kinross.com
Slide 24: Tasiast Two-Phased Expansion
HIGH-QUALITY ORGANIC DEVELOPMENT PROJECTS TASIAST TWO-PHASED EXPANSION Phase One construction ~20% complete; on track for full production in Q2 2018 Phase One progressing well • Engineering and procurement of all equipment packages mostly complete • Poured foundations for SAG mill & primary crusher
Slide 25: Tasiast Phase One Progressing Well
HIGH-QUALITY ORGANIC DEVELOPMENT PROJECTS TASIAST PHASE ONE PROGRESSING WELL Phase One on schedule and on budget with full production expected in Q2 2018 SAG mill New batch plant in operation Unloading SAG mill shell Installation of tailings pond liner 2525 www.kinross.com
Slide 26: Doubled Bald Mountain Gold Reserves
HIGH-QUALITY ORGANIC DEVELOPMENT PROJECTS DOUBLED BALD MOUNTAIN GOLD RESERVES Successfully doubled gold reserve estimates for Bald Mountain ahead of schedule Proven & Probable Mineral Reserve Estimates(1) South area 2,133 +568 North area (thousand ounces) +677 1,117 (229) 2016 depletion Year-end 201
Slide 27: Bald Mountain Vantage Complex
HIGH-QUALITY ORGANIC DEVELOPMENT PROJECTS BALD MOUNTAIN VANTAGE COMPLEX Vantage Complex (South area) Pre-Feasibility Study • Contemplates construction of a new heap leach facility and related infrastructure to develop Vantage Complex Combined 28 million tonnes of ore at average grade of 0.63 g/t
Slide 28: Russia Satellite Deposits
HIGH-QUALITY ORGANIC DEVELOPMENT PROJECTS RUSSIA SATELLITE DEPOSITS Development of satellite deposits located near Kupol and Dvoinoye in advanced stages September Northeast Moroshka • Located approximately 15 km northwest from • Located 4 km east of the Kupol mill Dvoinoye • Decline development and
Slide 29: Round Mountain Phase W
HIGH-QUALITY ORGANIC DEVELOPMENT PROJECTS ROUND MOUNTAIN PHASE W Phase W is an opportunity to potentially extend estimated mine life • Drill program in support of the Phase W feasibility study ongoing during fourth quarter • Additional activities underway: Mine plan optimization Geologic modelli
Slide 30: Kupol Vein System
EXPLORATION KUPOL VEIN SYSTEM Mineralization open in in certain zones, with greatest potential for near-term extensions to the north and south • Comprehensive exploration review generated series of extension targets which were drilled during second half of 2016 • Continued drilling, geological inter
Slide 31: Principles for Building Value
OPERATIONAL EXCELLENCE QUALITY OVER QUANTITY DISCIPLINED CAPITAL ALLOCATION BALANCE SHEET STRENGTH www.kinross.com Principles for Building Value 31 31
Slide 32: Endnotes
ENDNOTES 1) Mineral reserves and mineral resources are estimates. For more information regarding Kinross’ 2016 mineral reserve and mineral resource estimates, please refer to our Annual Mineral Reserve and Mineral Resource Statement as at December 31, 2016 contained in our news release dated Februar
Slide 33: Explanatory Notes - Exploration
EXPLANATORY NOTES - EXPLORATION Kupol Exploration Results A total of 48 diamond drill core holes are reported from Kupol Minex and mine-area exploration activity in 2016. All diamond drill core holes reported are HQ in diameter. The majority of holes presented (18) were drilled at the Kupol Hanging
Slide 34: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 3434 www.kinross.com