Kinross Gold Corporation · TSX:K
Kinross Gold — 2017 Scotiabank Mining Conference
57 slides from Kinross Gold's conference presentation, Dec 5, 2017
Slide 1: Kinross Gold Corporation – 2017 Scotiabank Mining Conference
December 5 KINROSS GOLD CORPORATION 2017 Scotiabank Mining Conference 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: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • Diverse portfolio of operating mines consistently meeting or outperforming our operational targets STRONG BALANCE SHEET & FINANCIAL FLEXIBILITY • $2.5B in liquidity with net debt to EBITDA ratio of 0.7x(i) • No debt maturities prior to 2
Slide 4: Kinross Highlights
Delivered Operational Excellence Strengthened Balance Sheet Repaid $1B of debt 5 MET over past 5 years or $1.0B $1.0 $2.5B billion of cash $1.5 Consecutive EXCEEDED billion 0.7x Years Guidance Net debt to EBITDA Cash Available credit *Figures are as at September 30, 2017. Advanced High-Quality Organ
Slide 5: TSX Sub-Indices Performance
COMPELLING RELATIVE VALUE TSX SUB-INDICES PERFORMANCE S&P/TSX 2016 Performance S&P/TSX YTD 2017 Performance(i) Kinross 71% Kinross 32% Base Metals 52% Consumer Discr. 21% Precious Metals 50% Telecom 16% Materials 39% Industrials 16% Energy 36% Technology 16% Industrials 23% Base Metals 14% Financial
Slide 6: Enterprise Value versus Production
COMPELLING RELATIVE VALUE ENTERPRISE VALUE VERSUS PRODUCTION Market capitalization does not reflect significant scale of production and history of achieving guidance Enterprise Value(i) Net Debt to Historical Gold Production (Moz)(iii) Consensus Gold Production Estimates (Moz)(iii) (US$M) EBITDA(ii)
Slide 7: Operational Excellence
Operational Excellence 77 www.kinross.com
Slide 8: Diversified Portfolio of Operating Mines
OPERATIONAL EXCELLENCE DIVERSIFIED PORTFOLIO OF OPERATING MINES Over RUSSIA 60% of estimated 2017 gold equivalent production from mines located in the Americas AMERICAS Dvoinoye Kupol Fort Knox Kettle River-Buckhorn Bald Mountain Round Mountain 2017E GOLD EQUIVALENT PRODUCTION(2,3) Tasiast 22% Chira
Slide 9: Strong Operating Track Record
OPERATIONAL EXCELLENCE STRONG OPERATING TRACK RECORD Continued track record of meeting or outperforming our operational targets • On track to meet guidance targets for sixth consecutive year • Tracking the high-end of production and low-end of cost forecasts • Strong performance continued in Q3 2017
Slide 10: 2017 Outlook
OPERATIONAL EXCELLENCE 2017 OUTLOOK(3) Forecasting another solid year from operations, with production and costs in-line with 2016 Kinross Total(2) Regional Forecast 2017E Unit Costs ($ per gold equivalent ounce) 2.5 to 2.7 Americas Cost of sales(4) $660 to $720 million 1.5 to 1.6Moz. 2017E Gold Equ
Slide 11: Balance Sheet Strength
Balance Sheet Strength 11 11 www.kinross.com
Slide 12: Solid Financial Position
FINANCIAL HIGHLIGHTS SOLID FINANCIAL POSITION Strong financial position to finance Tasiast Phase 2 and Round Mountain Phase W projects with existing liquidity LIQUIDITY POSITION MAINTAINING FINANCIAL FLEXIBILITY • Cash and cash equivalents of ~$1.0 billion as at September 30, 2017 • Net debt to EBIT
Slide 13: 2017 Capital Expenditures Outlook
BALANCE SHEET STRENGTH 2017 CAPITAL EXPENDITURES OUTLOOK(3) Leveraging strong financial position to invest in development projects & our future • Expecting additional expenditures related to the Tasiast Phase Two, Round Mountain Phase W and Bald Mountain Vantage Complex projects in Q4 2017 • Notwith
Slide 14: Manageable Debt Profile
BALANCE SHEET STRENGTH MANAGEABLE DEBT PROFILE No debt maturities prior to 2021 • $500 million debt offering completed in July Debt Ratings Used net proceeds and available cash on Agency Rating hand to repay $500 million term loan due S&P BB+ (Positive) 2020 Moody’s Ba1 (Stable) • As a result, no
Slide 15: Attractive Organic Development Projects
Attractive Organic Development Projects 15 15 www.kinross.com
Slide 16: Advancing Organic Projects
ATTRACTIVE DEVELOPMENT PROJECTS ADVANCING ORGANIC PROJECTS Organic projects spanning all 3 of our regions offer opportunities to expand production or extend mine life at our operations Project Location Q2 2018 Americas West Africa Q1 2018 Tasiast Phase 1 Expected to Russia reach full Q4 2017 Tasiast
Slide 17: Tasiast Two-Phased Mill Expansion
ATTRACTIVE DEVELOPMENT PROJECTS TASIAST TWO-PHASED MILL EXPANSION • Two-phased approach offers an attractive path to Tasiast’s significant growth potential at a significantly lower forecast capital cost than previously estimated(i) • Phase Two expected to transform Tasiast into a world-class mine wi
Slide 18: Large Orebody with Low Execution Risk
ATTRACTIVE DEVELOPMENT PROJECTS LARGE OREBODY WITH LOW EXECUTION RISK Focus has been to right-size the processing capacity to capture the full value and potential of Tasiast’s large mineral resource estimate RELATIVELY LOW-RISK BROWNFIELDS EXPANSION PROJECT • Have owned and operated the mine for app
Slide 19: Two-Phased Expansion Concept
ATTRACTIVE DEVELOPMENT PROJECTS TWO-PHASED EXPANSION CONCEPT PHASE ONE: EXPANSION TO 12,000 t/d Existing ball mills Gyratory Ore Oversized Leaching Refining crusher stockpile SAG mill PHASE TWO: EXPANSION TO 30,000 t/d Gyratory Ore SAG mill New, larger ball Additional leaching Thickening crusher sto
Slide 20: Phase Two Feasibility Study Results
ATTRACTIVE DEVELOPMENT PROJECTS PHASE TWO FEASIBILITY STUDY RESULTS Phase Two expansion expected to transform Tasiast into a world-class mine with low costs and a long estimated mine life Combined Phase One and Phase Two Average annual production (2020-2024) 812,000 ounces Production cost of sales (
Slide 21: Operating Efficiencies Enhancing Project
ATTRACTIVE DEVELOPMENT PROJECTS OPERATING EFFICIENCIES ENHANCING PROJECT Recent operating and processing enhancements have positively benefitted both Phase One and Phase Two expansion projects • Recent performance outperforming study • Further reduction in processing costs expected as estimates Phas
Slide 22: Tasiast Two-Phased Expansion
ATTRACTIVE DEVELOPMENT PROJECTS TASIAST TWO-PHASED EXPANSION Phase One advancing well, with plant construction 77% complete • Installation of the crusher and conveyors for the Primary Crusher stockpile and SAG feed are all progressing well • SAG mill well-advanced: SAG mill shell fully in place; gea
Slide 23: Phase One Progressing Well
ATTRACTIVE DEVELOPMENT PROJECTS PHASE ONE PROGRESSING WELL Phase One on schedule & on budget with full commercial production expected towards the end of Q2 2018 SAG mill Cyclone towers Leach tanks New tailings facility 2323 www.kinross.com
Slide 24: Advancing Phase Two
ATTRACTIVE DEVELOPMENT PROJECTS ADVANCING PHASE TWO Phase Two expansion expected to reach commercial production in Q3 2020 • Project owner’s team established • Started procurement for long-lead items, including the power plant • Finalized commercial terms for EPCM package • Initial construction expe
Slide 25: Round Mountain Phase W Overview
ATTRACTIVE DEVELOPMENT PROJECTS ROUND MOUNTAIN PHASE W OVERVIEW Phase W is a large zone of mineralization at depth and to west of the open-pit • With completion of the feasibility study, 2.0 million ounces upgraded to proven and probable gold reserves(i) Gold resource estimates in-line with 2016 y
Slide 26: Phase W Feasibility Study Results
ATTRACTIVE DEVELOPMENT PROJECTS 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 Average annual production (2018-2024) 341,000 gold ounces Production cost of sales (2018-2024) $765 per gold equivalent ou
Slide 27: Advancing Phase W
ATTRACTIVE DEVELOPMENT PROJECTS ADVANCING PHASE W Phase W construction expected to be complete in Q2 2019 • Received Decision Record from the U.S. Bureau of Land Management in October; state permitting proceeding as planned • Advancing detailed engineering • Procurement commencing for long lead item
Slide 28: Developing Bald Mountain's Potential
ATTRACTIVE DEVELOPMENT PROJECTS DEVELOPING BALD MOUNTAIN’S POTENTIAL Kinross envisions Bald Mountain as a long-life asset with significant upside potential and mineral resource growth 2016: Doubled mineral reserve estimates ahead of schedule • Added 1.2 million ounces to proven and probable mineral
Slide 29: Bald Mountain Vantage Complex
ATTRACTIVE DEVELOPMENT PROJECTS BALD MOUNTAIN VANTAGE COMPLEX Vantage Complex (South area) • Overall engineering approximately 70% complete • Permitting proceeding as planned • Contemplates construction of a new heap leach facility and related infrastructure Design includes additional 68M tonnes o
Slide 30: Russia Satellite Deposits
ATTRACTIVE DEVELOPMENT PROJECTS RUSSIA SATELLITE DEPOSITS High-grade satellite deposits located near Kupol and Dvoinoye September Northeast Moroshka • High-grade deposit located approximately • Located approximately 4 km east of Kupol 15 km from Dvoinoye • Development of the twin declines is well- •
Slide 31: Kupol Vein System
EXPLORATION KUPOL VEIN SYSTEM Mineralization open in certain zones, with greatest potential for near-term extensions to the north and south • Completed 44,000 meters of core drilling at North and South extensions in H1 2017 with encouraging results • Commencing geological modelling & evaluation to d
Slide 32: Tasiast Sud
ATTRACTIVE DEVELOPMENT PROJECTS TASIAST SUD Encouraging results from C6.13 and C6.15 in the Tasiast Sud Area • Tamaya: approximately 335k oz. of measured & indicated gold resources(i) defined in 2015 • Recent drilling in the Tasiast Sud area has focused on the C6.13 and C6.15 deposits C6.13 Locate
Slide 33: Fort Knox East & South Wall
EXPLORATION FORT KNOX EAST & SOUTH WALL Positive intercepts during 2016 in the East and South Wall of the existing pit; additions to Fort Knox’s inferred resource estimate expected in 2017 East & South Wall significant drill intercepts Interval Au Hole ID From To (m) (g/t) FFC16-1483 36.6 65.5 29 0.
Slide 34: Kettle River: Curlew District
EXPLORATION KETTLE RIVER: CURLEW DISTRICT Promising opportunities in the Curlew District; infill drilling program testing extensions of mineralized zones Plan Map of the Curlew District Cross Section Looking West N Historic K2 mine Workings Looking West K2 Mine Buckhorn K2 Mine Portal Elevation 628
Slide 35: Compelling Relative Value
Compelling Relative Value 35 35 www.kinross.com
Slide 36: 2017E Production & All-In Sustaining Cost
COMPELLING RELATIVE VALUE 2017E PRODUCTION & ALL-IN SUSTAINING COST 2017E Gold Production 2017E All-In Sustaining Cost (million ounces) ($ per ounce) 6.0 $1,200 5.0 $1,000 4.0 $800 3.0 $600 2.0 $400 1.0 $200 0.0 $0 Goldcorp Goldcorp AngloGold IAMGold AngloGold IAMGold Newmont Newmont Gold Fields Gol
Slide 37: Industry-Leading Balance Sheet
COMPELLING RELATIVE VALUE INDUSTRY-LEADING BALANCE SHEET Net debt to EBITDA ratio of 0.7x as of September 30, 2017 Net Debt to EBITDA (LTM) 2.3 1.8 1.4 1.3 0.9 0.8 0.8 0.7 -0.6 Yamana Goldcorp AngloGold Barrick Gold Fields Newmont Agnico Kinross IAMGold Source: Company reports; Bloomberg – net debt
Slide 38: 2017E Metrics
COMPELLING RELATIVE VALUE 2017E METRICS Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities EV / 2017E EBITDA P / 2017E OPERATING CF 12.7 11.4 9.3 9.6 9.0 8.7 8.3 6.8 6.6 6.5 5.4 5.6 5.5 5.3 5.0 4.5 4.1 4.0 New
Slide 39: Building Momentum for the Future
2020 2019 Expected 2018 start-up of PHASE W TASIAST 2017 construction PHASE TWO TASIAST expected to 2016 PHASE ONE be complete Expecting expected to stronger year be complete Delivered at BALD RECORD MOUNTAIN production Building Momentum for the Future 3939 www.kinross.com
Slide 40: Appendix
Appendix 4040 www.kinross.com
Slide 41: Currency & Oil Benefits
2017 OUTLOOK CURRENCY & OIL BENEFITS Well-positioned to benefit from favourable currency exchange and oil weakness 2017 Budget Assumptions(3) 2017 Sensitives (net of hedges)(3) Change Estimated impact 2017 Budget Current Spot(i) from to cost of sales Assumptions Gold US$1,200/oz. $1,273/oz. FX 10% U
Slide 42: Fuel & Currency Hedges
FINANCIAL DISCIPLINE FUEL & CURRENCY HEDGES Managing exposure to fluctuations in foreign currency and input commodity prices • Overall 2017 exposure ~37% hedged at favourable rates compared to spot • Continue to monitor our FX and oil exposure and look for opportunities to establish additional input
Slide 43: 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 • Achieved its 2nd highest production level in 2015, Fort Knox’s 19th year in operation • Estimated mine life: mill – 2019; mining – 2020 OPERATING RESULTS(4) 2
Slide 44: Round Mountain, USA (100%)
AMERICAS ROUND MOUNTAIN, USA (100%) Strong cash flow generator with opportunities to extend mine life • Incremental, high-margin ounces from Process Solution ESTIMATED MINE LIFE Management (PSM) 16 17 18 19 20 21 22 23 24 25 26 27 • Pending permitting approval, Phase W is expected to Mining generate
Slide 45: Summary of Feasibility Study Results – Round Mountain Phase W
ROUND MOUNTAIN PHASE W 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 tonne Life of mine
Slide 46: Bald Mountain, USA (100%)
AMERICAS BALD MOUNTAIN, USA (100%) Forecasting strong near-term cash flow with significant upside potential • Acquired in January 2016 • Large estimated mineral resource base with multiple sources of potential mineral reserve additions • Production expected to double in 2017 with reduced costs OPERA
Slide 47: 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 • Estimated mine life: 2030 OPERATING RESULTS(4) 2015 2016 Production (Au. Eq. oz.) 477,662 483,014 Production cost of s
Slide 48: 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 • Estimated mine life: 2021 OPERATING RESULTS(4) 2015 2016 Production (Au. Eq. oz.) 758,563 734,143 Production cost of sales ($/oz.) $474 $441 2016
Slide 49: Foreign Investment in Russia
RUSSIA FOREIGN INVESTMENT IN RUSSIA Foreign Investment Advisory Council The world’s leading companies are invested in Chaired by the Russian Prime Minister, includes Russia CEOs from over 50 international companies 4949 www.kinross.com
Slide 50: Chirano, Ghana (90%)
WEST AFRICA CHIRANO, GHANA (90%) Cost reductions achieved at Chirano by transitioning to self-perform mining • Chirano is an underground operation located in southwestern Ghana • Estimated mine life: 2020 OPERATING RESULTS(2,4) 2015 2016 Production (Au. Eq. oz.) 230,488 190,759 Production cost of sa
Slide 51: Tasiast, Mauritania (100%)
WEST AFRICA TASIAST, MAURITANIA (100%) Operating mine with a large gold resource located in a prospective district • Phase Two of mill expansion expected to transform Tasiast into a world-class operation; forecast to reach commercial production in Q3 2020 • Estimated mine life: 2029 OPERATING RESULT
Slide 52: Summary of Feasibility Study Results – Tasiast Expansion Project
TASIAST EXPANSION PROJECT 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 grade processed
Slide 53: Endnotes
ENDNOTES 1) Mineral reserves and mineral resources are estimates. For more information regarding Kinross’ 2016 mineral reserve and mineral resource estimates, please refer to our Annual Mineral Reserve and Mineral Resource Statement as at December 31, 2016 contained in our news release dated Februar
Slide 54: Explanatory Notes - Exploration
EXPLANATORY NOTES - EXPLORATION Kupol Exploration Results A total of 48 diamond drill core holes are reported from Kupol Minex and mine-area exploration activity in 2016. All diamond drill core holes reported are HQ in diameter. The majority of holes presented (18) were drilled at the Kupol Hanging
Slide 55: Explanatory Notes - Exploration
EXPLANATORY NOTES - EXPLORATION Fort Knox Exploration Results Results are reported for 15 diamond drill core holes completed on the East and South walls of the Fort Knox open pit. All 15 of these diamond drill core holes are of HQ3 core diameter . At Fort Knox, the dip of the drill holes are taken f
Slide 56: Explanatory Notes - Exploration
EXPLANATORY NOTES - EXPLORATION Kettle River (Curlew) Exploration Results All 16 drill holes reported from the Curlew district are diamond drill core holes of HQ core diameter. A number of targets in the area were drilled, with eight holes reported from the Lower Portal, three holes from K5, two hol
Slide 57: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 5757 www.kinross.com