Kinross Gold Corporation · TSX:K
Kinross Gold — Canada-Russia Business Summit 2007
32 slides from Kinross Gold's conference presentation, Mar 26, 2007
Slide 1: Why Russia for Gold?
Why Russia for Gold? 2007 Canada Russia Business Summit March 26, 2007
Slide 2: Cautionary Statement
Cautionary Statement All statements, other than statements of historical fact, contained or incorporated by reference in this Annual Report, including the Management Discussion & Analysis forming a part hereof, (collectively, this “Annual Report”) including any information as to the future financial
Slide 3: Overview
Overview GOLD KINROSS ENVIRONMENT GOLD WHY RUSSIA KINROSS FOR GOLD? IN RUSSIA 3
Slide 4: Gold Environment
GOLD Environment 4
Slide 5: World Primary Gold Production
World Primary Gold Production (oz. million) 84.3 83.3 83.2 83.4 81.7 81.9 81.1 80.2 80.4 79.4 79.3 76.4 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007E Source: GFMS Gold Survey; RBC CM Estimates 5
Slide 6: Industry Dynamics
Industry Dynamics GROWTH RATE OF 4 TOP PRODUCERS Ounces (ko z) Very Low CAGR 2.72% Growth Rates 30,000 in Forecast 25,000 20,000 Gold Fields 15,000 Barrick Anglo 10,000 Newmont 5,000 0 2006E 2007E 2008E 2009E Source: BMO Nesbitt Burns 6
Slide 7: Top Gold Producing Regions
Top Gold Producing Regions 550 500 450 Tonnes (000s) 400 350 300 250 200 150 100 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Latin America North America South Africa Australia China Russia 7
Slide 8: External Forces in Play – 5 Year View
External Forces in Play – 5 Year View Shrinking primary production: Mine closures increase Few new, large mines Competition to replace reserves Rising production and capital costs Difficulty in permitting new mines and more NGO activity Shortage of skilled mining/geology staff Creation of gold equit
Slide 9: Kinross
KINROSS 9
Slide 10: Kinross: A High Growth Major
Kinross: A High Growth Major 5th largest in global gold reserves US $8.2 billion market cap Highest production growth rate in the majors 1.5 mm oz – 2.6 mm oz. by 2009 Decreasing per ounce costs 2007 estimate Gold production – 1.5 mm oz (Au eq.) (42.5 tonnes) Total Cost of Sales – est. $320 - $330 p
Slide 11: Balanced Portfolio
Balanced Portfolio 2009E PRODUCTION* Brazil 28% North America Russia 45% 17% Chile 10% Kinross - company guidance (see 02/21/07 press release); Bema – street estimates less 100,000 to reflect the sale of Petrex and est. annual production of 413,000 oz Au eq. for Kupol (75%) for the first 6.5 years.
Slide 12: Focused Portfolio
Focused Portfolio Kupol (75%) Magadan, Russia (Open pit, U/G) Fort Knox (100%) Alaska, USA (Open pit) Julietta (90%) Russia (U/G) Musselwhite (32%) Ontario, Canada (U/G) Kettle River (100%) Washington, USA (U/G) Porcupine (49%) Round Mountain (50%) Ontario, Canada (Open pit, U/G) Nevada, USA (Open P
Slide 13: 2006: A Record Year For Kinross
2006: A Record Year For Kinross Year-over-year Revenue $905.6 mm 22% Earnings $165.8 mm Per share $0.47 Cash Flow from Operations $292.0 mm 118% Production (oz Au eq.) 1,476,329 Cost of Sales per oz $319/oz Cash Margin 65% Gold Price 36% 13
Slide 14: Why Russia for Gold?
WHY Russia for Gold? 14
Slide 15: Russian Gold Sector
Russian Gold Sector Regional gold reserves estimated at 300-500 mm ozs Annual Russian production approximately 6 mm ozs (1,700 tonnes) Production growing at approx. 10% per year Production fragmented across 600 entities (many alluvial operations) Few majors active yet (Kinross, Barrick, AngloGold) 1
Slide 16: Russian Primary Gold Output 2005
Russian Primary Gold Output 2005 296 263 262 224 208 184 176 167 Tonnes 119 South Australia U.S. China Peru Russia Russia Indonesia Canada Africa 2008F 2005 * Gold Production from all sources Source: GFMS, Troika Dialog est. 16
Slide 17: Russian Gold Sector
Russian Gold Sector TOTAL GOLD RESOURCES, 2005 Other Countries U.S. 28% 4% Australia 7% Canada Russia TOTAL 4% 9% China 93,660 4% tonnes Indonesia 3% Peru 4% South Africa 37% Source: Troika Dialog estimates, Minesearch 17
Slide 18: Gold Resources
Gold Resources IMPLIED MINE LIFE AT 2005 PRODUCTION RATE Years 122 47 30 26 21 17 19 15 South Russia Canada Australia Peru Indonesia China U.S. Africa Source: USGS, Troika Dialog est., Russian Gold Producers’ Union 18
Slide 19: Top Gold Projects By Region
Top 97 Gold Projects By Region NORTH SOUTH RUSSIA/ ASIA/ RESOURCES UNITS AMERICA AMERICA EUROPE AFRICA CIS OCEANIA TOTAL Over 10.o million oz. (MM oz) 21.9 50.7 0.0 0.0 177.6 21.3 271.5 5.0 to 10.0 million oz. (MM oz) 28.0 11.2 17.2 6.3 45.2 34.2 142.1 2.0 to 5.0 million oz. (MM oz) 63.9 44.9 3.6 0.
Slide 20: Key Risks in Mining
Key Risks in Mining Risks Political Operating Financial Development Commodity Exploration 20
Slide 21: Key Risks in Mining
Key Risks in Mining Risks Mitigants to Political Risk Political Balanced portfolio Operating Good corporate citizenship Financial World standards Development EH&S Commodity Operational Exploration Local partner needed Relationships critical 21
Slide 22: Key Risks in Mining
Key Risks in Mining Risks Mitigants to Political Risk Political Balanced portfolio Operating Good corporate citizenship Financial World standards Development EH&S Commodity Operational Exploration Local partner needed Relationships critical Observations Some controllable risks Relative and absolute
Slide 23: Kinross in Russia
KINROSS in Russia 23
Slide 24: Kinross in Russia
Kinross in Russia Kubaka Mine Opened in early 1997 Biggest gold mining operation in Russia in the late 1990s From 1997 to 2005, Kubaka produced 93 tonnes of gold Mining now completed 24
Slide 25: A Well-regarded Corporate Citizen
Kinross in Russia A Well-regarded Corporate Citizen 25
Slide 26: Progress: Kupol (75%)
Progress: Kupol (75%) Feasibility completed in ‘05, currently under construction Projected to produce 413,000 ozs gold annually (K share) Costs expected to be $130/oz Au eq. Reserves: 3.3 mm ozs gold, 40 mm ozs silver (K share) Total project cost est. $599 mm Project finance: $425 mm Open pit and un
Slide 27: Positive Signals
Positive Signals As gold growth prospects diminish, market appears less sensitive to emerging markets Kinross’ track record is respected, valuable Barrick, Anglo, Goldfields seek Russian entry points Russian government giving green light to further investment Market reaction to rumours cautious Majo
Slide 28: Issues for Consideration
Issues for Consideration Gold not generally a strategic resource, however is some nationalist rhetoric Converting exploration to production licenses now is more certain Fractious regional governments gradually coming into line License/auction process is opaque, lengthy Legal/tax regime more predicta
Slide 29: Benefits to Russia
Benefits to Russia Accelerated discovery and development of new resources Infrastructure development Jobs in remote areas Skills and technology transfer Acceptance by global resource market participants ; exposure to commercial opportunities outside Russia Increased national production and GDP Tax a
Slide 30: Summary View
Summary View Russian economic strength clear; trending higher For gold: Russia and region large, growing and prospective Gold sector there needs capital, expertise, exploration Legal and business framework still evolving Few gold majors active yet, but … competition will increase Fragmented sector w
Slide 31: Call to Action for Canada
Call to Action for Canada Treat Russia appropriately in the context of BRIC Look for synergies given similarities in culture and geography Look at Russia with a long-term view 31
Slide 32: Why Russia for Gold?
Why Russia for GOLD? 2007 Canada Russia Business Summit March 26, 2007