Kinross Gold Corporation · TSX:K
Kinross Gold — 2015 Denver Gold Forum
36 slides from Kinross Gold's conference presentation, Sep 22, 2015
Slide 1: Kinross Gold Corporation 2015 Denver Gold Forum
September 20-23 KINROSS GOLD CORPORATION 2015 Denver Gold Forum 1 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: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • 12 consecutive quarters of strong results STRONG BALANCE SHEET • $2.6B in liquidity and conservative net debt of ~$960M • Only significant debt maturities prior to 2019 is $250M of senior notes due in 2016 ATTRACTIVE FUTURE GROWTH OPPORT
Slide 4: Strong Track Record
OPERATIONAL EXCELLENCE STRONG TRACK RECORD 2012 2013 2014 H1/15 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 OUR www.kinross.com CO
Slide 5: Guidance Update
2015 OUTLOOK GUIDANCE UPDATE(1) Strong year-to-date operating results and cost reduction initiatives resulting in favourable revisions to 2015 guidance ORIGINAL 2015E UPDATED 2015E GUIDANCE GUIDANCE Gold equivalent production (ounces)(2) 2.4 to 2.6 million 2.5 to 2.6 million Production cost of sales
Slide 6: Solid Financial Position $2.6B
STRONG BALANCE SHEET SOLID FINANCIAL POSITION Maintaining peer-leading balance sheet strength remains a priority objective STRONG LIQUIDITY POSITION MAINTAINING FINANCIAL FLEXIBILITY • Further strengthened the balance sheet in H1 2015: Ended Q2 2015 with ~$1.1B in cash, a $45M increase from year-e
Slide 7: Focus on Managing Costs
FINANCIAL DISCIPLINE FOCUS ON MANAGING COSTS ALL-IN SUSTAINING COST ALL-IN SUSTAINING COST(4) ($ per gold equivalent ounce) • Increased sustaining capital in 2015 as a result of stripping programs at Fort Knox and Maricunga $1,122 Expected to return to normal run-rate $1,082 next year $987 Lower
Slide 8: Fort Knox, Alaska
OPERATIONAL EXCELLENCE FORT KNOX, ALASKA • Q2 production higher compared with Q1 2015 due to improved heap leach performance, higher grades and lower energy costs 8 www.kinross.com
Slide 9: Round Mountain, Nevada
OPERATIONAL EXCELLENCE ROUND MOUNTAIN, NEVADA • Production and costs benefiting from continuous improvement initiatives aimed at improving heap leach operations 9 www.kinross.com
Slide 10: Kupol-Dvoinoye, Russia
OPERATIONAL EXCELLENCE KUPOL-DVOINOYE, RUSSIA • Continued strong performance from the high-grade, low- cost Kupol and Dvoinoye underground mines 10 www.kinross.com
Slide 11: Levers for Reducing Costs
FINANCIAL DISCIPLINE LEVERS FOR REDUCING COSTS Proactively managing our business with a strict focus on the health of our balance sheet Market factors outside of our Levers for reducing costs control Opex Gold price CASH Discretionary spending Oil FLOW Higher cost mines FX 11 www.kinross.com
Slide 12: Principles for Building Value
STRONG TRACK RECORD PRINCIPLES FOR BUILDING VALUE Track record of delivering on our strategic priorities Operational • Achieved RECORD production at a number mines excellence • Improved PERFORMANCE and reduced company-wide costs Quality over • PRIORITIZED margins and cash flow quantity • Suspended h
Slide 13: Growth Opportunities
GROWTH OPPORTUNITIES 13 www.kinross.com
Slide 14: Tasiast Optimization
WEST AFRICA TASIAST OPTIMIZATION Focus on optimizing the operation and reducing costs MILL OPTIMIZATION MANAGING COSTS • Exploring opportunities to enhance the • Headcount reduction comminution circuit to improve throughput • Ongoing continuous • Concepts under analysis include installing improvemen
Slide 15: Tasiast Optimization
WEST AFRICA TASIAST OPTIMIZATION Concepts under study to achieve a more capital efficient pathway to the optimal processing rate of up to 38,000 tonnes per day ORE TYPE MILL THROUGHPUT Past Banded iron formation 8k to 10k tpd ~7k tpd – high cost Greenschist Present New 38k tpd plant – optimal but on
Slide 16: Advancing Organic Opportunities
ADVANCING ORGANIC OPPORTUNITIES High-quality brownfield projects that leverage existing infrastructure and have 16 www.kinross.com relatively low execution risk
Slide 17: New Processing Initiative at Paracatu
ORGANIC PRODUCTION INITIATIVES NEW PROCESSING INITIATIVE AT PARACATU Expected to start-up in Q4, contributing ~11,000 ounces in 2015 • Low-cost, incremental production resulting from: Enriched grades near discharge areas of the facility Utilization of excess capacity in Plant 1 due to ore blendi
Slide 18: Chirano Mine Life Extension
WEST AFRICA CHIRANO MINE LIFE EXTENSION Mine life extension at one of Kinross’ lowest cost operations • Extension of estimated mine life to 2020 with additional mineral resource estimates at two deposits: Paboase (currently in production) Akoti underground • Provides additional time to pursue ex
Slide 19: High-Quality Targets Near Existing Mines
KUPOL & DVOINOYE CHIRANO TASIAST RUSSIA GHANA MAURITANIA HIGH-QUALITY TARGETS NEAR EXISTING MINES www.kinross.com EXPLORATION 19
Slide 20: Production and Free Cash Flow Yield
COMPELLING VALUATION PRODUCTION AND FREE CASH FLOW YIELD 2015E GOLD PRODUCTION(i) (mm oz.) 2015E FREE CASH FLOW YIELD(ii) 7.0 8.7% 6.0 7.7% 5.0 4.0 3.8% 3.1% 2.9% 3.0 2.3% 2.0 1.0 -7.6% 0.0 Barrick Newmont Goldcorp Kinross Agnico Yamana Eldorado Barrick Kinross Newmont Yamana Agnico Goldcorp Eldorad
Slide 21: Net Debt to EBITDA
COMPELLING VALUATION NET DEBT TO EBITDA 2.9 2.7 2.3 1.4 1.2 1.0 0.4 Barrick Yamana Goldcorp Agnico Newmont Kinross Eldorado As at June 30, 2015. Source: Bloomberg, company reports 21 www.kinross.com
Slide 22: Enterprise Value versus Production
COMPELLING VALUATION ENTERPRISE VALUE VERSUS PRODUCTION $21.6 Multiple of 2015E Gold Delta with Kinross Production Kinross Enterprise (Moz.)1 (US$B) Value Barrick 6.3 18.6 7.2x Enterprise value (US$ billions) $15.2 $14.0 Newmont 4.9 12.2 5.1x Goldcorp 3.5 11.0 4.7x Kinross 2.6 - - $6.3 Agnico 1.6 3.
Slide 23: 2015E Metrics
COMPELLING VALUATION 2015E METRICS Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities EV / 2015E EBITDA P / 2015E OPERATING CF 10.0 10.4 7.9 7.9 8.1 7.7 6.0 5.5 5.2 4.2 3.7 3.4 3.1 2.6 Eldorado Agnico Goldcorp
Slide 24: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • 12 consecutive quarters of strong results STRONG BALANCE SHEET • $2.6B in liquidity and conservative net debt of ~$960M • Only significant debt maturities prior to 2019 is $250M of senior notes due in 2016 ATTRACTIVE FUTURE GROWTH OPPORT
Slide 25: Appendix
APPENDIX 25 www.kinross.com
Slide 26: Fort Knox, USA (100%)
AMERICAS FORT KNOX, USA (100%) Among the world’s few cold climate heap leach facilities • Impressive track record of operational excellence OPERATING RESULTS(3) FY 2014 H1 2015 Production (Au. Eq. oz.) 379,453 198,734 Production cost of sales ($/oz.) $712 $634 2014 GOLD RESERVE AND RESOURCE ESTIMATE
Slide 27: Round Mountain, USA (50%)
AMERICAS ROUND MOUNTAIN, USA (50%) Round Mountain is a best-practice leader in many areas, including preventative maintenance • Kinross-operated JV with Barrick • Bulk tonnage open-pit operation OPERATING RESULTS(3) FY 2014 H1 2015 Production (Au. Eq. oz.) 169,839 88,710 Production cost of sales ($/
Slide 28: Kettle River-Buckhorn, USA (100%)
AMERICAS KETTLE RIVER-BUCKHORN, USA (100%) Low-cost, high-grade underground mine located in Washington state • Significant cash flow contributor with costs among the lowest in the portfolio • Small footprint operation OPERATING RESULTS(3) FY 2014 H1 2015 Production (Au. Eq. oz.) 123,382 53,845 Produ
Slide 29: Paracatu, Brazil (100%)
AMERICAS PARACATU, BRAZIL (100%) Large gold mine with a long mine life that extends to 2030 • Paracatu is among the world’s largest gold operations with annual throughput of ~60Mt • Achieved record annual production in 2014 OPERATING RESULTS(3) FY 2014 H1 2015 Production (Au. Eq. oz.) 521,026 235,05
Slide 30: Maricunga, Chile (100%)
AMERICAS MARICUNGA, CHILE (100%) High-altitude heap leach operation located in the highly prospective Maricunga District • New team focused on improving operating efficiencies and reducing costs • Record annual production in 2014 OPERATING RESULTS(3) FY 2014 H1 2015 Production (Au. Eq. oz.) 247,216
Slide 31: Kupol-Dvoinoye (100%)
RUSSIA KUPOL-DVOINOYE (100%) Our Russian operations are a model for successfully operating in a remote location • High-grade, low-cost underground mines • Dvoinoye is the 4th mine Kinross has operated in its 20-year history in the region OPERATING RESULTS(3) FY 2014 H1 2015 Production (Au. Eq. oz.)
Slide 32: Tasiast, Mauritania (100%)
WEST AFRICA TASIAST, MAURITANIA (100%) Operating mine with a large gold resource located in a prospective district • Achieved record annual production in 2014 • Continuing effort to reduce operating costs at existing operation OPERATING RESULTS(3) FY 2014 H1 2015 Production (Au. Eq. oz.) 260,485 111
Slide 33: Chirano, Ghana (90%)
WEST AFRICA CHIRANO, GHANA (90%) Cost reductions achieved at Chirano through transition to self-perform mining • Chirano is now among our lowest cost operations following transition to self-perform mining in open pits and underground OPERATING RESULTS(2,3) FY 2014 H1 2015 Production (Au. Eq. oz.) 25
Slide 34: FY2014 Operating Results
OPERATIONAL EXCELLENCE FY2014 OPERATING RESULTS PRODUCTION PRODUCTION COST OF SALES(3) OPERATION (Au eq. oz.) ($ per Au eq. oz.) Fort Knox 379,453 $712 Round Mountain (50%) 169,839 $855 Kettle River – Buckhorn 123,382 $678 Paracatu 521,026 $816 Maricunga 247,216 $953 AMERICAS TOTAL 1,440,916 $804 Ku
Slide 35: Endnotes
ENDNOTES 1) For more information regarding Kinross’ production, cost and capital expenditures outlook for 2015, please refer to the news releases dated February 10, 2015 and September 17, 2015, available on our website at www.kinross.com. Kinross’ outlook for 2015 represents forward-looking informat
Slide 36: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 36 www.kinross.com