Kinross Gold Corporation · TSX:K
Kinross Gold — Q4 2015 Earnings Presentation
36 slides from Kinross Gold's earnings presentation, Feb 11, 2016
Slide 1: Q4 & FY 2015 Results Conference Call & Webcast
February 11 KINROSS GOLD CORPORATION 2016 Q4 & FY 2015 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: Fourth Quarter & Full-Year 2015 Highlights
FOURTH QUARTER & FULL-YEAR 2015 www.kinross.com HIGHLIGHTS 33
Slide 4: 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 44 www.kinross.com TARG
Slide 5: 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 6: 2015 Production Highlights
Fort Knox, AK Round Mountain, NV Kupol-Dvoinoye, Russia • Produced over 400koz., 2nd • Highest production since • Achieved record mill highest in 19-year history 2009 with costs down 12% throughput in Q4 2015 2015 PRODUCTION HIGHLIGHTS 66 OPERATIONAL EXCELLENCE6 www.kinross.com
Slide 7: Reducing Costs
OPERATIONAL EXCELLENCE REDUCING COSTS Achieved cost of sales at the low-end of revised 2015 guidance FX AND OIL PRICES Production Cost of Sales(2) (US$ per gold equivalent ounce) • Benefiting from foreign exchange, particularly for Brazilian real and Russian rouble $743 Kupol-Dvoinoye achieved LOW
Slide 8: Strong Balance Sheet
STRONG BALANCE SHEET FINANCIAL STRENGTH & FLEXIBILITY CASH AND CASH EQUIVALENTS • Increased cash balance by ~$60 MILLION since year-end 2014, despite lower gold prices $1,044 $984 • REPAID $80 million of debt • Strong financial position following the acquisition of producing mines in Nevada US$ mill
Slide 9: Acquired Quality Producing Mines in Nevada
ACQUIRED QUALITY PRODUCING MINES IN NEVADA • Two quality producing mines in an excellent jurisdiction • Enhances U.S. operating portfolio: adds production, increases estimated mine life and projected free cash flow, and lowers costs • Clear upside potential at Bald Mountain and Round Mountain • Main
Slide 10: Forecasting Record Production
2016 OUTLOOK FORECASTING RECORD PRODUCTION • Expect to produce 2.7 – 2.9 million Gold Equivalent Production gold equivalent ounces in 2016(4) (millions) 2.7 – 2.9 Includes approximately 350koz. of additional production from 2.6 Nevada acquisition • Over 60% of expected production from the Americas
Slide 11: 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 $165 • Benefits from lower Canadian dollar reflected in guidance 2015 2016E (4) Overhead expe
Slide 12: Reducing Capital Spending
2016 OUTLOOK REDUCING CAPITAL SPENDING • Trend of DECLINING capital Capital Expenditures expenditures since 2012 (US$ 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 13: Phased Approach to Tasiast Expansion
ORGANIC GROWTH OPPORTUNITIES PHASED APPROACH TO TASIAST EXPANSION Potential to add incremental capacity in two phases by leveraging existing infrastructure • PHASE ONE would increase throughput to 12,000 tpd with the addition of a gyratory crusher and oversized SAG mill • PHASE TWO would further inc
Slide 14: La Coipa Project
ORGANIC GROWTH OPPORTUNITIES LA COIPA PROJECT • Pre-feasibility study on La Coipa completed during Q3 2015 • Completed additional exploration work to assess opportunities to extend estimated mine life beyond 5.5 years contemplated in the PFS results • Phase 7 and Catalina deposits added 1Moz. Au to
Slide 15: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • Continuing to meet or outperform our operational targets STRONG BALANCE SHEET • $1.9B in liquidity with net debt to EBITDA ratio of 1.5x(i) • Repaid the Kupol loan during Q3, ahead of schedule ATTRACTIVE FUTURE GROWTH OPPORTUNITIES • LA
Slide 16: Financial Highlights
FINANCIAL HIGHLIGHTS 16 16 www.kinross.com
Slide 17: Financial Results Q4 & Full-Year 2015
Q4 & FULL-YEAR 2015 FINANCIAL RESULTS All figures in US$ millions, except ounces, per share and per ounce amounts Q4 2015 Q4 2014 2015 2014 Attributable gold equivalent ounces (oz.)(1) Produced 623,716 672,051 2,594,652 2,710,390 Sold 632,411 651,498 2,608,870 2,715,358 Average realized gold price (
Slide 18: Non-Cash Impairment Charge
Q4 & FULL-YEAR 2015 NON-CASH IMPAIRMENT CHARGE • Recorded after-tax non-cash property, plant & equipment impairment charges of US$430 million Resulted from lower near and long-term gold price assumptions • Also recorded inventory and other asset write-downs of US$260 million Primarily due to a c
Slide 19: 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$1,173 100 Oil US$55/bbl. US$31/bbl.
Slide 20: 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 21: 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 22: Operating Highlights
OPERATING HIGHLIGHTS 22 22 www.kinross.com
Slide 23: 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 24: Paracatu, Brazil
OPERATIONAL EXCELLENCE PARACATU, BRAZIL Large gold mine with a long mine life that extends to 2030 UPDATE ON WATER SITUATION • Milling operations temporarily curtailed for ~15 days due to lack of rain fall in the region Resulted in a loss of approximately 28,000 ounces during Q4 2015 • Resumed San
Slide 25: Tasiast, Mauritania
OPERATIONAL EXCELLENCE TASIAST, MAURITANIA In Q4 2015, 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 to iden
Slide 26: Bald Mountain, Nevada
OPERATIONAL EXCELLENCE BALD MOUNTAIN, NEVADA Quality producing mine with significant exploration potential GOOD 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 estimated m
Slide 27: Bald Mountain, Nevada
OPERATIONAL EXCELLENCE BALD MOUNTAIN, NEVADA 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 mining areas
Slide 28: Reserve & Resource Update
RESERVE & RESOURCE UPDATE 2828 www.kinross.com
Slide 29: 2015 Mineral Reserves and Resources
QUALITY OVER QUANTITY 2015 MINERAL RESERVES AND RESOURCES(6) 2P MINERAL RESERVE ESTIMATES MAINTAINED AT 34Moz. PROVEN & PROBABLE GOLD RESERVES • Additions largely offset depletion 34.4 34.0 • Added 1.8Moz. Au through acquisition of Nevada assets Moz. • Net addition of 0.2Moz. at high-grade Chirano m
Slide 30: La Coipa, Chile
EXPLORATION HIGHLIGHTS LA COIPA, CHILE Encouraging results along a prospective 3 km trend 3030 www.kinross.com
Slide 31: 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 32: September North-East, Russia
EXPLORATION HIGHLIGHTS SEPTEMBER NORTH-EAST, RUSSIA SEPTEMBER NORTH-EAST • Defined near-surface, high-grade M&I mineral resource estimate of 68koz. Au grading 32 g/t(6) • Material being fast-tracked to production, expected in 2017 DVOINOYE ZONE 1 • Located on the current mining lease • Drilling conf
Slide 33: Track Record Over Past 4 Years
TRACK RECORD OVER PAST 4 YEARS $1.9 LOWERED MET $1.3 annual capex by $1.3B guidance $0.6 $0.6 Consecutive targets Produced over years 2012 2013 2014 2015 10Moz. Repaid gold equivalent $700M of DECREASED debt MAINTAINED all-in strong balance Liquidity sheet 10% sustaining position cost $1.9 billion 3
Slide 34: Appendix
APPENDIX 34 34 www.kinross.com
Slide 35: 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 36: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 3636 www.kinross.com