Kinross Gold Corporation · TSX:K
Kinross Gold — Bank of America Merrill Lynch 16th Annual Canada Mining Conference 2010
48 slides from Kinross Gold's conference presentation, Sep 9, 2010
Slide 1: Delivering Disciplined Growth
Delivering Disciplined Growth Bank of America Merrill Lynch 16th Annual Canada Mining Conference Toronto, ON September 9-10, 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: 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 • ~$695 mm cash on hand* • Dvoinoye • $12.0
Slide 4: Q2 2010 Results
Q2 2010 Results Realized g (2) COS Margin (in millions, except ounces and per Q2'09 Q2'10 % Change Gold Price +38% share amounts) +26% $662/oz (1) Gold equivalent production 560,479 538,270 -4% $1,158/oz (ounces) (1) Gold equivalent sales 583,607 551,958 -5% (ounces) Revenue $598.1 $696.6 16% Cost o
Slide 5: Growing Cash Flow per Share
Growing Cash Flow per Share • Record high operating cash flow(5) in 2009 (+35% vs. 2008) • 5‐yr CAGR: 25% $1.36 H1’09 vs. H1’10 ow per Share ((US$) $ $1.01 $0.80 $0.71 $0.64 usted Cash Flo $0.56 $0.51 $0.45 Adju FY'04 FY'05 FY'06 FY'07 FY'08 FY'09 H1'09 H1'10 (4) Please refer to endnote #5. 5
Slide 6: Paracatu Continues to Perform Ahead of Plan
Paracatu Continues to Perform Ahead of Plan 117,472 118,101 $900 108,421 ounces) 85 772 85,772 $750 Golld equivalent production (o Cost of SSales ($/oz) $600 $450 $300 Q3'09 Q4'09 Q1'10 Q2'10 6
Slide 7: Completed Acquisition of Dvoinoye, Russia
Completed Acquisition of Dvoinoye, Russia • Acquiring 100% of the Dvoinoye deposit and Vodorazdelnaya concession o Transaction closed August 2010 Dvoinoye deposit & • Initiated construction of an all‐weather road Vodorazdelnayay concession • Constructed a temporary camp • Selected engineering firm t
Slide 8: Combination with Red Back
Combination with Red Back A new high‐growth high growth, pure‐gold pure gold senior producer 8
Slide 9: Major Gold Discoveries: 1997-2008
Major Gold Discoveries: 1997‐2008 3,500 90 ding of Major Au Disccoveries (MM oz.) 80 Grassroots + Late Stage Spend 3 000 3,000 70 2,500 60 2 000 2,000 50 (US$ 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 10: High-Growth, Pure-Gold Senior Producer
High‐Growth, Pure‐Gold Senior Producer Kinross + Red Back = A new high‐growth, pure‐gold senior producer 10
Slide 11: High-Growth, Pure-Gold Senior Producer
High‐Growth, Pure‐Gold Senior Producer Kinross Tasiast & Chirano Top quality assets in expanding districts Top‐quality + • 8 gold mining operations • • 4 high‐quality growth projects • Operating mines with significant upside • Financial capacity to build new mines potential through further explorati
Slide 12: Summary Transaction Terms
Summary Transaction Terms • Implied value of C$30.50 per Red Back common share at the time of announcement Consideration • 21% premium based on 20‐day volume‐weighted average price Offered US$7 1 billion((i)) • Transaction values Red Back at US$7.1 • Plan of arrangement unanimously supported by both
Slide 13: Kinross and Red Back: A Winning Combination
Kinross and Red Back: A Winning Combination • Red Back’s unique assets complement Kinross’ skill set and portfolio o Tasiast is a world‐class growth asset in a new fast‐growing gold district o Kinross has the experience and financial strength to optimize Red Back’s assets • Enhanced growth profile a
Slide 14: Focused in the Best Gold Districts
Focused in the Best Gold Districts Strong North American Fort Knox asset base in the Tintina High grade epithermal district High‐grade Dvoinoye gold belt, Nevada and with exploration upside Kupol White Gold Washington Kettle River‐ Buckhorn Round Mountain Tasiast Cornerstone assets in a highly prosp
Slide 15: Strongly Enhances Existing Growth Profile
Strongly Enhances Existing Growth Profile Total Consensus of Equity Analysts’ Production Estimates(8) Red Back Kinross 3.9 3.7 3.2 30 3.0 1.0 09 0.9 2.9 2.6 – 2.7 Production (mm oz) 0.8 0.7 0.5 0.6 2.8 2.9 2.2 2.3 2.3 2.4 2010e 2011e 2012e 2013e 2014e 2015e (8) Based on equity analyst consensus. Ple
Slide 16: Kinross Project Portfolio
Kinross Project Portfolio 2010 2011 2012 2013 2014 Paracatu 3rdd Ball Mill Paracatu Desulphurization Maricunga g SART Plant Paracatu 4th Ball Mill Maricunga Optimization Dvoinoye Tasiast L b M t Lobo‐Marte Fruta del Norte Cerro Casale 16
Slide 17: Extensive Due Diligence by Kinross
Extensive Due Diligence by Kinross • Multiple site visits to Tasiast and Chirano by Kinross geologists, engineers, members of the executive team and Board of Directors • Independent analysis conducted by Kinross includes: o Metallurgical testing o Modeling of options for optimal mining and processin
Slide 18: What Red Back Adds to Kinross
What Red Back Adds to Kinross Tasiast • Two well‐established gold mines in West Africa Chirano o 2010e gold production of 445k oz to 465k oz(7) o Growth potential to 1 mm oz of annual production by 2015 based on analyst consensus estimates(8) • Significant exploration upside: o Only 8 km out of 70 k
Slide 19: Continued resource growth at Tasiast
Continued resource growth at Tasiast • Red Back’s updated mineral resource estimate i confirms fi Kinross’ view of Tasiast’s potential • Since December 2009(10): o M&I gold resources have increased by 2.74 mm oz to 9.25 mm oz – up 42% o Inferred resources have increased by 0.63 mm oz to 1.93 mm oz –
Slide 20: Increasing Grades and Widths at Depth
Increasing Grades and Widths at Depth Source: Red Back Mining July 2010 corporate presentation, website and news releases dated April 12, 2010 and July 21, 2010 20
Slide 21: Tasiast: District Potential
Tasiast: District Potential • First mine in a highly prospective C23 + gold ld b belt l o Continuity of geology Tasiast o Simple stratigraphy Trend • Only O l 8 kkm off 70 kkm strike t ik llength th iin Tasiast unexplored Archean greenstone West Trend belt tested to date 70 km o Multiple untested ge
Slide 22: Tasiast: District Upside
Tasiast: District Upside • Kinross’ preliminary estimate, based on 6 months of extensive geological and technical due diligence: o 350 – 425 million tonnes grading 1.5 – 1.8 g/t Au(11) • The Greenschist Zone is characterized by consistently thick intervals average ~60 60 to 100 m wide, grading 1.5 –
Slide 23: District Potential - 82 x 25 km Achaean Greenstone Belt
District Potential – 82 x 25 km Achaean Greenstone Belt Tasiast Geology(i) Timmins Geology with Major Au Mines & Au Occurrences(ii) Tasiast Entire district Fractured ownership with controlled by >30 public companies and Red Back >100 prospectors holding 25 km 25 km significant property claims (i) So
Slide 24: No Geographic Constraints to Expansion
No Geographic Constraints to Expansion C B A 24
Slide 25: Kinross' Expansion Plans for Tasiast
Kinross’ Expansion Plans for Tasiast • Kinross development program for Tasiast currently envisions: o C Construction t ti off a new mill, ill increasing i i capacityit from f 10k tpd t d currently tl to t 60k tpd t d o Larger mining fleet, tailored to scale of the expanded operation o Expected to be
Slide 26: Illustrative Tasiast Expansion Timeline
Illustrative Tasiast Expansion Timeline Infill and Step‐Out Drilling Exploration Regional Exploration Scoping Study Feasibility Engineering & EIA Procurement Long Lead Time Items Detailed Engineering Site Preparation & Construction Construction & Commissioning Commissioning Production Expanded Produ
Slide 27: Immediate Benefit to Red Back Shareholders
Immediate Benefit to Red Back Shareholders • Premium of 21% to the pre‐announcement market price ‐ based on 20‐day VWAP Value Creation • Continued participation in asset potential through Kinross share ownership • Superior leverage to gold through a pure‐play producer • Exposure to Kinross’ Kinross
Slide 28: Immediate Benefit to Kinross Shareholders
Immediate Benefit to Kinross Shareholders • Investment in world‐class assets in fast‐growing gold region Enhanced • Accelerates Kinross’ growth profile Growth • Immediate production contribution with superior longer‐term growth potential • Combined gold production of ~3.9 million ounces by 2015 (ana
Slide 29: Kinross and Red Back: A Winning Combination
Kinross and Red Back: A Winning Combination Transformational combination driven byy world‐class p producingg assets,, expansion p opportunities and development projects Accelerates Kinross’ growth as a pure‐play senior gold producer Creates stronger technical and financial platform to real
Slide 30: Valuation
Valuation 30
Slide 31: Bank of America Merrill Lynch: P / NAV
Bank of America Merrill Lynch: P / NAV 2.5 2.0 2.0 1.7 16 1.6 1.5 AEM GG NEM ABX KGC AUY Source: Bank of America Merrill Lynch research – September 4, 2010 31
Slide 32: Bank of America Merrill Lynch: P / 2010e CFPS
Bank of America Merrill Lynch: P / 2010e CFPS 13.8 10.9 9.6 89 8.9 89 8.9 7.4 GG AEM NEM ABX KGC AUY Source: Bank of America Merrill Lynch research – September 4, 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 investment in Red Back Mining Complete acquisition of Underworld R
Slide 34: Appendix
Appendix 34
Slide 35: Kinross Overview
Kinross Overview Market Snapshot* Company Overview Share Price (C$) $17 62 $17.62 • Pure play senior gold producer Share Price (US$) $17.00 • 8 gold mining operations, 4 high‐quality growth projects Shares Outstanding (mm) 704 • Financial capacity to build new mines Market Capitalization (US$mm) $11
Slide 36: Red Back Overview
Red Back Overview Market Snapshot* Company Overview Share h Price (C$) $ $30.65 • E Emerging i gold ld producer d with i hWWest Af African i operating i expertise i Share Price (US$) $29.59 • Two operating mines with significant upside potential through Shares Outstanding (mm) 257 further exploratio
Slide 37: Red Back: A History of Delivering Resource Growth
Red Back: A History of Delivering Resource Growth • West African intermediate producer with two producing assets • Continued near‐term resource increases anticipated at Tasiast • Large, underexplored land package in highly prospective, emerging gold district Hi History off Delivering D li i Mineral
Slide 38: Mining-Friendly Jurisdictions
Mining‐Friendly Jurisdictions Ghana Mauritania • Constitutional democratic republic • Gained independence from Britain in 1957 • Democratic government Political • Seen as a model for political and economic reform in • Gained independence from France in 1960 Africa • Arabic and French spoken Social •
Slide 39: Red Back - West African Growth Platform
Red Back – West African Growth Platform # Producing Mine # Exploration / Development Project 1) Tasiast (Red Back) ‐ –AuAu (Robinson) 2) Guelb Moghrein (First Quantum) – Cu/Co/Au 3) Askaf (Sphere Minerals) – Iron Ore 4) Guelb el Aouj (Sphere Minerals) – Iron Ore 6 5) Lebtheinia (Sphere Minerals) – I
Slide 40: Tasiast - A World-Class Gold Deposit
Tasiast ‐ A World‐Class Gold Deposit • Open‐pit mine located in Mauritania, ~300 km north of the capital city of Nouakchott • Commercial production commenced in January 2008 • 2.5 Mtpa CIL mill and 4.5 Mtpa dump leach operation • 2010e production(7): ~205‐215k oz at ~$375‐400/oz • Road access to min
Slide 41: District Potential at Tasiast
District Potential at Tasiast • Property is 70 km x 15 km • High‐potential from the newly discovered Greenschist zone Newly discovered Greenschist zone o Lies immediately below the currently defined resource o Greenschist zone traced over +1.5 1.5 km strike, open to north and south and down dip 41
Slide 42: Chirano - Expanding Gold Mine in Ghana
Chirano ‐ Expanding Gold Mine in Ghana • Established open‐pit and underground mining operation Tasiast located in Ghana’s Western region Chirano • 90% owned by Red Back; Government of Ghana holds a 10% carried interest • Nine open open‐pits pits and two recently recently‐discovered discovered underg
Slide 43: Chirano - Expansion Potential
Chirano ‐ Expansion Potential • Akwaaba decline continuing ‐ ramping up to 1.2 Mtpa in 2010 • Paboase initial reserve 920 k oz Au ‐ development commenced May 2010 • Exploration upside at depth and along strike ‐ >30km of contiguous strike • High grade intercepts encountered under all open‐pits • Str
Slide 44: Pro Forma Kinross - Overview
Pro Forma Kinross ‐ Overview Market Snapshot* Company Overview • Pro forma gold equivalent production of ~2 2.6 6 – 2.7 2 7 mm oz Share Price (C$) $17.62 Au in 2010 (6,7) Share Price (US$) $17.00 • Production growth of ~47% to ~3.9 mm oz by 2015 based (mm) on consensus of analyst estimates(8) Existi
Slide 45: Pro Forma Kinross - Production Metrics
Pro Forma Kinross – Production Metrics 2010 Production (8) (Moz) 2014 Production (Moz) 7.8 80 8.0 5.5 5.6 5.4 4.6 3.4 4.0 3.7 3.7 3.4 3.2 2.7 2.6 2.5 2.8 2.2 1.5 1.5 11 1.1 10 1.0 0.6 ABX NEM AU GFI Pro Forma NCM G K PLZL AEM ELD ABX NEM AU GFI G Pro Forma NCM PLZL K AEM ELD Kinross Kinross 2010 201
Slide 46: World's Largest Gold Deposits
World’s Largest Gold Deposits(1) Kerr- (3) Pascua (4) Mine / Project Natalka Lihir Island Donlin Creek Nevada Ops. Obuasi Pueblo Viejo Boddington Penasquito Detour Lake Nevada Ops. Cortez Kibali Sulphurets Lama (5) Randgold Barrick (50%), Barrick (60%), Polyus Seabridge Newcrest Newmont AngloGold Ne
Slide 47: Endnotes
Endnotes 1) Unless otherwise stated, gold equivalent production, gold equivalent ounces sold and cost of sales figures in this presentation are on an attributable basis, based on Kinross’ share of Kupol production (75%). 2) Cost of sales margin is defined as the average realized price of gold less a
Slide 48: Cautionary Note to Shareholders in the United States
Cautionary Note to Shareholders in the United States Information in this presentation, including the documents incorporated by reference herein, has been prepared in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of United States securitie
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