Kinross Gold Corporation · TSX:K
Kinross Gold — Q4 2009 Earnings Presentation
32 slides from Kinross Gold's earnings presentation, Feb 18, 2010
Slide 1: Delivering Disciplined Growth
Delivering Disciplined Growth Q4 & Full-Year 2009 Financial Results Webcast February 18, 2010
Slide 2: Speakers
Speakers Tye Burt Thom Boehlert Tim Baker Ken Thomas President & CEO Executive Vice‐President Executive Vice‐President Senior Vice‐President, & CFO & COO Projects 2
Slide 3: 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 4: Tye Burt
Tye Burt President & CEO 4
Slide 5: Highlights
Highlights Q4 ‘09 Highlights • Production(1) increased to 613,858 Au eq. oz. (up 12% from Q4’08) • Cost of sales(1,2): $437/oz (co‐product); $383/oz (by‐product) • Record cost of sales margin(3) of $657/oz. (up 57% from Q4 Q4’08) 08) FY ‘09 Highlights • Production increased to 2,238,665 Au eq. oz (u
Slide 6: Performance Improvement in Q4
Performance Improvement in Q4 Production up Costs down 6% 14% Gold equivalent production (oz.)(1) Cost of Sales ($/oz.)(1,2) (1) Refer to endnote #1. (2) Refer to endnote #2. 6
Slide 7: Expanding Margins: +27% 5-yr CAGR
Expanding Margins: +27% 5‐yr CAGR 2004 – 2009: $530 • Average realized gold price: +139% • Kinross’ attributable cost of sales margin(3): +229% $436 +229% Cost of Sales Margin ($/oz..) $329 $279 $161 $170 FY'04 FY'05 FY'06 FY'07 FY'08 FY'09 (3) Refer to endnote #3. 7
Slide 8: Growing Cash Flow per Share
Growing Cash Flow per Share • Record high adjusted operating cash flow(4,5) in 2009 (+35% vs. 2008) $1.36 • 5‐yr CAGR: 25% e (US$) $1.01 $ djusted Cash FFlow per Share $0.80 $0 56 $0.56 $0.51 $0.45 Ad FY'04 FY'05 FY'06 FY'07 FY'08 FY'09 (4) Refer to endnote #4. (5) Refer to endnote #5. 8
Slide 9: Kinross to Acquire High Grade Kupol Satellite Deposit
Kinross to Acquire High Grade Kupol Satellite Deposit • Acquiring 100% of the Dvoinoye deposit and Vodorazdelnaya concession o High‐grade deposit ~90 km north of Kupol Dvoinoye deposit & o Estimated potential deposit of ~3.5 – 3.9 mm Vodorazdelnaya tonnes at an average grade of ~17 – 19 g/t Au* conc
Slide 10: Update on Cerro Casale
Update on Cerro Casale • Entered into an agreement to sell down interest in the project to 25% o Total value: $475 million ($455 cash plus the assumption by Barrick of a contingent payment obligation) • Appropriately weights Cerro Casale in our overall portfolio, reduces capital commitment and incre
Slide 11: Update on Corporate and Regional Organization
Update on Corporate and Regional Organization • Newly‐strengthened regional organization and management teams • Four strategic operating groups: Mining Operations Project Development Corporate Development External & Corporate Responsibility • Provides increased focus and integration in the c
Slide 12: Project Development Group
Project Development Group • Led by Dr. Ken Thomas: Senior Vice‐ Dr. Ken Thomas S i Vi Senior Vice‐President, P id t P Projects j t President, Projects 45 years experience in operations, technical services and project • Responsible for delivering major new development: p projects through to successfu
Slide 13: Strengthening our Regional Leadership
Strengthening our Regional Leadership • Under COO Tim Baker, our regional leadership mandate is to: o Extend long‐term strategy for mining operations and continuous improvements o Support achievement of production and cost targets o Deepen relationships with key government agencies and communities o
Slide 14: Highlights
Highlights Q4 ‘09 Highlights • Production(1) increased to 613,858 Au eq. oz. (up 12% from Q4’08) • Cost of sales(1,2): $437/oz (co‐product); $383/oz (by‐product) • Record cost of sales margin(3) of $657/oz. (up 57% from Q4 Q4’08) 08) FY ‘09 Highlights • Production increased to 2,238,665 Au eq. oz (u
Slide 15: Thom Boehlert
Thom Boehlert Executive Vice‐President & CFO 15
Slide 16: Q4'09 Financial Results
Q4’09 Financial Results (in millions of US dollars, except ounces Q4'08 Q4'09 % Change and per share amounts) • Cost C t off sales: l $437/oz. $437/ (1) Gold equivalent production 550,221 613,858 12% (ounces) • Margin: $657/oz. ((1)) Gold G ld equivalent i l t sales l 534,945 586,543 10% • Record qu
Slide 17: Q4 2009 Tax Rate Reconciliation
Q4 2009 Tax Rate Reconciliation • Based on Q4 income mix, the tax rate would have been expected to be ~24% Net earnings - (all figures in US millions) Per GAAP Adjusted adjusted Pre-tax $270.4 ($71.4) $199.0 Tax ($7.0) ($15.6) ($22.6) Other items ($27.8) - ($27.8) Net income* $235.6 ($87.0) $148.6 E
Slide 18: FY'09 Financial Results
FY’09 Financial Results (in millions of US dollars, except FY'08 FY'09 % Change ounces and per share amounts) • Repaid R id $258 $258.7 7 mm iin (1) debt in 2009 Gold equivalent production 1,838,038 2,238,665 22% (ounces) (1) • Cash on hand: Gold G ld equivalent i l t sales l $632.4 mm 1,756,056 2,2
Slide 19: 2010 Guidance
2010 Guidance(7) Production and Costs Production Cost of Sales / Country Ounces (000s) % of 2010e total oz. Chile 460 – 480 21% $500 – 520 Brazil 510 – 580 24% $490 – 555 Russia(6) 495 – 525 23% $340 – 365 USA 690 – 745 32% $480 – 520 Total Kinross: 2.2 mm oz. $460 ‐ 490 Other 2010e (mm) Capital exp
Slide 20: Tim Baker
Tim Baker Executive Vice‐President & COO 20
Slide 21: Operating Results
Operating Results Q4 2009 FY 2009 Production Cost of Sales Production Cost of Sales (oz.) (US$/oz.) (oz.) (US$/oz.) Fort Knox 86,614 $450 263,260 $546 Round Mountain 53,043 $487 213,916 $517 Kettle River 62,363 $266 173,555 $294 Kupol 164,709 $288 694,130 $257 Paracatu 108,421 $ $648 354,396 $ $693
Slide 22: Kupol Update
Kupol Update • Underground issues at Kupol have been addressed through: o Refinement of blasting practices o Rigorous ground control o Shortening stopes to strengthen ground support o Management of air circulation to maintain rock permafrost • Above changes are reflected in our guidance released on
Slide 23: Operating Results
Operating Results Q4 2009 FY 2009 Production Cost of Sales Production Cost of Sales (oz.) (US$/oz.) (oz.) (US$/oz.) Fort Knox 86,614 $450 263,260 $546 Round Mountain 53,043 $487 213,916 $517 Kettle River 62,363 $266 173,555 $294 Kupol 164,709 $288 694,130 $257 Paracatu 108,421 $ $648 354,396 $ $693
Slide 24: 2010 Exploration Spending
2010 Exploration Spending(7) • Exploration spending in 2010 will be focused on mine site and greenfields exploration in our core geographic regions Spending by Region Spending by Category Advanced Projects j 9% (7) Refer to endnote #7. 24
Slide 25: Dr. Ken Thomas
Dr. Ken Thomas Senior Vice‐President, Projects 25
Slide 26: Current mines: Expansion opportunities
Current mines: Expansion opportunities Paracatu, Brazil – 3rd Ball Mill • Increasing grinding capacity by installing a 3rd ball mill • Delivery of 15 MW mill expected mid‐2010 • Installation and commissioning in H1 2011 • Capital costs: ~$97 million ($90 million to be spent in 2010) Maricunga, Chile
Slide 27: Lobo-Marte, Chile
Lobo‐Marte, Chile • Completed pre‐feasibility study La Coipa • Capital C it l estimate: ti t $575 – $650 million illi Lobo‐Marte ~110 km • 47,000 tpd heap leach with SART plant • Operating costs expected to be $11.50 $11.50‐$12.50 $12.50 Maricunga per tonne Cerro Casale • Annual production: 350‐400k
Slide 28: Fruta del Norte, Ecuador
Fruta del Norte, Ecuador • 18,000 metre drill campaign in 2010 • Expected to be completed by Q3 2010 Quito • Pre‐feasibility expected by year‐end • Environmental Impact Statements to be submitted in Q2 2010 for geotechnical drilling permits for Colibri concession • Strengthened leadership and manage
Slide 29: Tye Burt
Tye Burt President & CEO 29
Slide 30: Key Objectives for 2010
Key Objectives for 2010 Declare increased reserves Complete C l LLobo‐Marte b M pre‐feasibility f ibili study d Final feasibility study for Cerro Casale Close sale of 25% of Cerro Casale Complete Maricunga Expansion feasibility study (H1’2010) Close Dvoinoye acquisition Delivery D
Slide 31: Kinross Gold Corporation
Kinross Gold Corporation 25 York Street, 17th Floor Toronto, ON M5H 2V5 Tel: 416 416‐365‐5123 365 5123 Toll‐Free: 1‐866‐561‐3636 www.kinross.com 31
Slide 32: Endnotes
Endnotes 1) Unless otherwise stated, gold equivalent production, gold equivalent ounces sold and cost of sales figures in this presentation are based on Kinross’ share of Kupol production (75%). 2) Cost C off salesl per ounce iis defined d fi d as cost off sales l as per theh financial fi i l statem