Kinross Gold Corporation · TSX:K
Kinross Gold — Denver Gold Forum 2018
56 slides from Kinross Gold's conference presentation, Sep 24, 2018
Slide 1: Delivering Value.
September 2018 Delivering Value. Kinross Gold Corporation
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 Operational Excellence Financial Strength & Flexibility Diverse portfolio of operating mines consistently Maintaining strong balance sheet continues to meeting or outperforming operational targets be a priority objective Repaid over $1.0 billion of debt 6 Met or exceeded ov
Slide 4: Enterprise Value Versus Production
Compelling Relative Value September 2018 Enterprise Value Versus Production Market capitalization does not reflect significant scale of production and history of achieving guidance Enterprise Value(i) Net Debt to Historical Production (Moz)(iii) Consensus Production Estimates (Moz) (US$M) EBITDA(ii)
Slide 5: Operational Excellence
Operational Excellence We remain focused on operational excellence, building a culture of continuous improvement, innovation and disciplined cost management 5
Slide 6: Diversified Portfolio of Assets
Operational Excellence September 2018 Diversified Portfolio of Assets 60% of 2018E gold equivalent production expected from mines located in the Americas Dvoinoye, Russia Kupol, Russia Fort Knox, USA Bald Mountain, USA Round Mountain, USA Tasiast, Mauritania 2018E Gold Equivalent Production(1,2) 20%
Slide 7: Strong Operating Results
Operational Excellence September 2018 Strong Operating Results Continued track record of meeting our operational targets • Second quarter operating results were in-line with expectations • On track to meet 2018 guidance targets 2018 Guidance(1) First Half Results Gold equivalent production 2.5 milli
Slide 8: First Half 2018 Operational Highlights
Operational Excellence September 2018 First Half 2018 Operational Highlights Paracatu, Brazil Bald Mountain, USA Chirano, Ghana • In Q2, achieved highest • Record low cost of sales • Good performance in H1 quarterly throughput of in Q2/18 2018 past 4 years • Continued strong • Improved cost of sales
Slide 9: 2018E Production and Costs
Operational Excellence September 2018 2018E Production and Costs(1) Kinross Total(2) Regional Guidance 2018E Unit Costs ($ per gold equivalent ounce) 2.5 million Americas Cost of sales(3) $730/oz. +/- 5% +/- 5% 1.51 million 2018E Gold Equivalent Production (ounces) All-in sustaining cost(3) $975/oz.
Slide 10: Strong Balance Sheet & Financial Flexibility
Strong Balance Sheet & Financial Flexibility With strong cash flow and no debt maturities until 2021, we have the financial strength and flexibility to fund our pipeline of development projects 10
Slide 11: Solid Financial Position
Strong Balance Sheet & Financial Flexibility September 2018 Solid Financial Position Strong position to finance organic development projects with existing cash and liquidity Maintaining Financial Flexibility Liquidity Position ($ billion) • Cash and cash equivalents of ~$920 million • Available cred
Slide 12: Financial Strength & Discipline
Strong Balance Sheet & Financial Flexibility September 2018 Financial Strength & Discipline Our balance sheet has strengthened over the two-year construction period for Tasiast Phase One • Approved Phase One with view that balance sheet would be sufficient to fund construction • With bulk of Phase O
Slide 13: 2018E Capital Expenditures Outlook
Strong Balance Sheet & Financial Flexibility September 2018 2018E Capital Expenditures Outlook(1) Leveraging strong financial position to invest in development projects and our future Capital Expenditures • Maintaining 2018 capital expenditures Sustaining Non-sustaining guidance of $1,075 million (+
Slide 14: Manageable Debt Profile
Strong Balance Sheet & Financial Flexibility September 2018 Manageable Debt Profile No debt maturities prior to 2021 Debt Schedule Debt Ratings Agency Rating $500 $500 $500 S&P BBB- (Stable) Moody’s Ba1 (Stable) Fitch BBB- (Stable) $ millions Interest Rates $250 Senior Notes due 2021 5.125% Senior N
Slide 15: Development Projects
Development Projects We have a portfolio of development projects that we are progressing, as well as a pipeline of future opportunities that we are focused on advancing 15
Slide 16: Projects & Future Opportunities
Development Projects September 2018 Projects & Future Opportunities Portfolio of development projects and future opportunities progressing well Tasiast Phase One Round Mountain Phase W Fort Knox Gilmore Project approved in June following Construction complete Detailed engineering 95% complete comple
Slide 17: Tasiast Update
Development Projects September 2018 Tasiast Update Kinross has continued to engage with the Government of Mauritania since early May following receipt of a letter stating a desire to enter into discussions with respect to Kinross’ activities in the country • Has been business as usual at the Tasiast
Slide 18: Tasiast Phase One
Development Projects September 2018 Tasiast Phase One Construction of Phase One is complete; commissioning is in the final stages • All major components commissioned using the SAG mill by-pass circuit • Final stages of commissioning the SAG mill Proceeding well Ran first batch of ore through the
Slide 19: Construction of Tasiast Phase One Complete
Development Projects September 2018 Construction of Tasiast Phase One Complete In final stages of commissioning; first ore now through the SAG mill Click here to view completed Tasiast Phase One expansion: https://youtu.be/45eg8TEL-cg 19
Slide 20: Round Mountain Phase W Overview
Development Projects September 2018 Round Mountain Phase W Overview The Phase W project is expected to extend mining by 5 years at one of Kinross’ top performing mines located in one of the world’s best mining jurisdictions 20
Slide 21: Phase W Feasibility Study Results
Development Projects September 2018 Phase W Feasibility Study Results Project expected to generate a 13% IRR at an assumed gold price of $1,200 per ounce Current mine plan + Phase W Estimates Average annual production (2018-2024) 341,000 gold ounces Production cost of sales (2018-2024) $765 per gold
Slide 22: Round Mountain Phase W
Development Projects September 2018 Round Mountain Phase W The Phase W project is progressing well and on budget • Detailed engineering is 95% complete • Pre-stripping is proceeding well • Earthworks to prepare for new infrastructure area and preparation of new heap leach area for construction are l
Slide 23: Fort Knox Gilmore
Development Projects September 2018 Fort Knox Gilmore Gilmore project expected to extend mine life to 2030 and strengthen long-term U.S. production profile 23
Slide 24: Gilmore Feasibility Study Results
Development Projects September 2018 Gilmore Feasibility Study Results Project expected to generate a 17% IRR at an assumed gold price of $1,200 per ounce Current mine plan + Gilmore estimates Average annual production (2018-2027) 245,000 gold ounces Production cost of sales (2018-2027) $735 per gold
Slide 25: Fort Knox Gilmore
Development Projects September 2018 Fort Knox Gilmore Initial production from Gilmore is expected in early 2020 • Project includes: The first two phases of a potential multi-phase layback of the Fort Knox pit; and Construction of a new heap leach pad • Project team has been established, and cont
Slide 26: Realizing Bald Mountain's Potential
Development Projects September 2018 Realizing Bald Mountain’s Potential 2016: Doubled reserve estimates(4) 2017: Doubled production & lowered costs • Added 1.2 million ounces, doubling the reserve estimate before depletion 300000 1200 $1,182 282,715 2.1 250000 1000 Proven and Probable Reserves (Moz.
Slide 27: Bald Mountain Vantage Complex
Development Projects September 2018 Bald Mountain Vantage Complex Vantage Complex project in the South Area of Bald Mountain is proceeding well • Project is advancing on schedule and on budget • Engineering is now 95% complete and construction is well underway • All major equipment and construction
Slide 28: Bald Mountain Exploration Highlights
Development Projects September 2018 Bald Mountain Exploration Highlights Kinross envisions Bald Mountain as a long-life asset with significant upside potential and mineral resource growth North Area • Drilling has mainly been focused on the North Area of the property • Analyzing results from drillin
Slide 29: Russia Satellite Deposits
Development Projects September 2018 Russia Satellite Deposits Moroshka Dvoinoye Zone 1 • Located 4km east of the Kupol mill • Mine development commenced • Development of Moroshka continues to Portal construction is complete advance on plan Mine and surface infrastructure • Stoping of high grade
Slide 30: La Coipa Restart Project
Development Projects September 2018 La Coipa Restart Project We are evaluating the potential for a return to production in Chile La Coipa Restart Project • Initiated a feasibility study on the Phase 7 deposit Expected to be complete in H2 2019 Lobo Marte Project • Located 80km from La Coipa • Meas
Slide 31: Kupol Exploration Highlights
Exploration Highlights September 2018 Kupol Exploration Highlights Initial results for potential mineral resource additions to extend mine life have been promising • We continue to explore the main Kupol vein and mineralization to the north and south along the main trend North Extension – drilling
Slide 32: 1-Year Mine Life Extension in Russia
Exploration Highlights September 2018 1-Year Mine Life Extension in Russia Continuing our track record of adding reserves to offset depletion at Kupol and Dvoinoye (4) Cumulative Production (Au eq.) Proven and Probable Reserves (Au eq.) 6.9 2.3 2017 • Estimated mill production extended to 6.3 2.6 20
Slide 33: Compelling Relative Value
Compelling Relative Value Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities 33
Slide 34: 2018E Production & All-In Sustaining Cost
Compelling Relative Value September 2018 2018E Production & All-In Sustaining Cost 2018E Production 2018E All-In Sustaining Cost (million ounces) ($ per ounce) $1,200 5.0 $1,000 4.0 $800 3.0 $600 2.0 $400 1.0 $200 0.0 $0 Gold Fields Gold Fields Newmont AngloGold Goldcorp AngloGold Newmont Goldcorp B
Slide 35: Industry-Leading Balance Sheet
Compelling Relative Value September 2018 Industry-Leading Balance Sheet Net debt to EBITDA ratio of 0.7x as at June 30, 2018 2.3 2.0 Net Debt to EBITDA (LTM) 1.5 1.3 1.2 1.0 0.7 0.4 -1.1 Yamana Goldcorp AngloGold Barrick Agnico Gold Fields Kinross Newmont IAMGold Source: Company reports; Bloomberg –
Slide 36: 2018E Metrics
Compelling Relative Value September 2018 2018E Metrics Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities EV / 2018E EBTIDA P / 2018E Operating CF 11.3 12.2 7.7 7.7 8.3 7.5 5.6 5.6 5.6 5.2 4.2 3.9 3.7 3.4 3.9
Slide 37: Appendix
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Slide 38: Currency & Oil Sensitivities
Appendix September 2018 Currency & Oil Sensitivities 2018 Budget Assumptions(1) 2018 Sensitivities (net of hedges)(1) Change from Estimated impact 2018 Budget Current Spot(i) Assumptions to cost of sales Gold US$1,200/oz. $1,206/oz. FX 10% US$15/oz. Russian rouble 10% US$16/oz.(ii) Oil US$55/bbl. $7
Slide 39: Fuel & Currency Hedges
Appendix September 2018 Fuel & Currency Hedges Managing exposure to fluctuations in foreign currency and input commodity prices • Overall 2018 FX exposures ~36% hedged at favourable rates compared to current spot prices • Continue to monitor our FX and oil exposures and look for opportunities to est
Slide 40: Fort Knox, USA (100%)
Americas September 2018 Fort Knox, USA (100%) Proceeding with Gilmore project, which is expected to extend mine life to 2030 • Impressive track record of operational Operating Results(3) excellence 2016 2017 • Estimated mine life: mill – 2020; mining – 2027; leaching – 2030 Production 409,844 381,11
Slide 41: Summary of Feasibility Study Results
Fort Knox Gilmore September 2018 Summary of Feasibility Study Results Operating Estimates (current mine plan + Gilmore) Incremental Gilmore Estimates(i) Timeline Operational Metric Estimate Estimate Average annual tonnes mined 60 million Strip ratio 1.2 Strip ratio 1.2 Life of mine ore processed 183
Slide 42: Round Mountain, USA (100%)
Americas September 2018 Round Mountain, USA (100%) Strong cash flow generator with Phase W project extending mine life to 2027 • Phase W is expected to generate solid Operating Results(3) returns and extend mining 2016 2017 • Estimated mine life: 2024 (mining); 2027 (stockpile milling / residual lea
Slide 43: Summary of Feasibility Study Results
Round Mountain Phase W September 2018 Summary of Feasibility Study Results Operating Estimates (current mine plan + Phase W) Standalone Phase W Estimates Timeline Operational Metric Estimate Estimate Strip ratio 2.9 Life of mine production 1.5 million ounces Average grade processed 0.7 grams per ton
Slide 44: Bald Mountain, USA (100%)
Americas September 2018 Bald Mountain, USA (100%) Forecasting strong near-term cash flow with significant upside potential • Large estimated mineral resource base with Operating Results(3) multiple sources of potential mineral reserve 2016 2017 additions • Successfully doubled production & lowered P
Slide 45: Paracatu, Brazil (100%)
Americas September 2018 Paracatu, Brazil (100%) Large gold mine with a long mine life that extends to 2032 • Paracatu is among the world’s largest gold Operating Results(3) operations with annual throughput of ~60Mt 2016 2017 • Cornerstone asset in Kinross’ portfolio Production • Estimated mine life
Slide 46: Acquisition of Power Plants in Brazil
Americas September 2018 Acquisition of Power Plants in Brazil(i) Expected to reduce Paracatu’s cost of sales by ~$80/oz. Transaction Overview over the life of mine • Kinross acquired two • Lowers operating costs by eliminating ~70% of future power hydro power plants in purchases Summary Brazil from
Slide 47: Overview of Acquired Power Plants
Americas September 2018 Overview of Acquired Power Plants Location • Both are located on the Claro River in the State of Goias, approximately 660km west of Paracatu • No additional infrastructure is required to provide power to the mine site • Combined installed capacity of 155 MW • Expected to meet
Slide 48: La Coipa Restart Project PFS Results (2015)
Americas September 2018 La Coipa Restart Project PFS Results (2015) Project expected to generate a 20% IRR at an assumed gold price of $1,200 per ounce • The pre-feasibility study estimates a 5.5 year mine life, following receipt of permits and commencement of stripping Processing expected to comm
Slide 49: Kupol-Dvoinoye (100%)
Russia September 2018 Kupol-Dvoinoye (100%) Our Russian mines are a model for successfully operating in a remote location • High-grade, low-cost underground mines Operating Results(3) supported by 1 mill 2016 2017 • Estimated mine life: 2022 Production 734,143 580,451 (Au. Eq. oz.) Production cost o
Slide 50: Foreign Investment in Russia
Russia Foreign Investment in Russia The world’s leading companies are Foreign Investment Advisory Council invested in Russia • Chaired by the Russian Prime Minister, includes CEOs from over 50 international companies 50
Slide 51: Tasiast, Mauritania (100%)
West Africa September 2018 Tasiast, Mauritania (100%) Operating mine with a large gold resource located in a prospective district • Phase One expected to increase production Operating Results(3) from current levels while significantly 2016 2017 reducing costs Production • Construction complete; comm
Slide 52: Summary of Feasibility Study Results
Tasiast Expansion Project September 2018 Summary of Feasibility Study Results Operating Estimates (Phase One & Two combined) Standalone Phase Two Estimates Timeline Operational Metric Estimate Estimate Total tonnes mined 438 million Initial capital $590 million Strip ratio 6.4 2020-2024 Average CIL
Slide 53: Mauritania Highlights
Appendix September 2018 Mauritania Highlights Kinross has successfully operated in Mauritania since 2010 • Democratic republic that gained independence Country Statistics in 1960 (2017 estimates unless otherwise indicated) • Mining-friendly jurisdiction: Population 3.7M Well-developed, competitive
Slide 54: Chirano, Ghana (90%)
West Africa September 2018 Chirano, Ghana (90%) Cost reduction achieved at Chirano by transitioning to self-perform • Chirano is an underground operation Operating Results(2,3) located in southwestern Ghana 2016 2017 • Estimated mine life: 2020 Production 190,759 221,424 (Au. Eq. oz.) Production cos
Slide 55: Endnotes
Appendix September 2018 Endnotes 1) For more information regarding Kinross’ production, cost, overhead expense and capital expenditures outlook for 2018, please refer to the news releases dated February 14, 2018 and August 1, 2018, both of which are available on our website at www.kinross.com. Kinro
Slide 56: KINROSS
KINROSS 25 YEARS