Kinross Gold Corporation · TSX:K
Kinross Gold — 2015 Bank of America Merrill Lynch Global Mining, Metals & Steel Conference
44 slides from Kinross Gold's conference presentation, May 13, 2015
Slide 1: Kinross Gold Corporation
May 12-15 KINROSS GOLD CORPORATION 2015 Bank of America Merrill Lynch Global Mining, Metals & Steel Conference 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: The Way Forward: Principles for Building Value
THE WAY FORWARD PRINCIPLES FOR BUILDING VALUE • Focus on operational excellence • Quality over quantity • Disciplined capital allocation • Maintaining a strong balance sheet 3 www.kinross.com
Slide 4: Delivering Operational Excellence
DELIVERING OPERATIONAL EXCELLENCE 4 www.kinross.com
Slide 5: First Quarter Highlights: Delivering Strong Performance
FIRST QUARTER HIGHLIGHTS DELIVERING STRONG PERFORMANCE 11 consecutive quarters of meeting our operational targets • Strong performance from operations delivered solid Q1 2015 results Cost of sales and all-in sustaining costs favourable year-over-year • On track to meet 2015 production, cost of sal
Slide 6: Diversified Portfolio of Operating Mines
OPERATIONAL EXCELLENCE DIVERSIFIED PORTFOLIO OF OPERATING MINES Over RUSSIA 50% of estimated 2015 gold equivalent production from mines located in the Americas AMERICAS Dvoinoye Kupol Fort Knox Kettle River-Buckhorn Round Mountain 2015E GOLD EQUIVALENT PRODUCTION(1,2) Tasiast 29% Chirano WEST AFRICA
Slide 7: 2015 Outlook: Production & Cost Guidance
2015 OUTLOOK PRODUCTION & COST GUIDANCE(1) • 2015 all-in sustaining cost expected to be $1,000-$1,100 per gold equivalent ounce(4) Gold Production % of Total Production Cost of Sales(3) Region (000 Au eq. oz.) Production ($/oz. Au eq.) Americas 1,300 – 1,400 54% $790 – $850 West Africa 390 – 440 17%
Slide 8: Americas
• Five mines located in the US, Brazil and Chile AMERICAS • Over 50% of annual production is from the Americas region 8 www.kinross.com
Slide 9: Americas First Quarter 2015 Highlights
OPERATIONAL EXCELLENCE AMERICAS FIRST QUARTER 2015 HIGHLIGHTS • Successfully recommissioned the mill at ROUND MOUNTAIN, which is now operating at full capacity • FORT KNOX production lower compared with Q4 2014 due to expected seasonal slow down of production from the heap leach • Expected decline i
Slide 10: Maricunga Update
AMERICAS MARICUNGA UPDATE • Severe weather event in northern Chile occurred in late March • Roads and power lines in the area were severely damaged, while Maricunga facilities did not sustain any damage • Mining and crushing temporarily suspended ADR plant continues to operate at 80% capacity • Pl
Slide 11: New Processing Initiative at Paracatu
AMERICAS NEW PROCESSING INITIATIVE AT PARACATU Expected to start-up 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 blending strategy Lower energ
Slide 12: La Coipa Phase 7
AMERICAS LA COIPA PHASE 7 Pre-feasibility study on-track for completion in Q3 2015 • The pre-feasibility study will focus on: The Pompeya deposit, where drilling has outlined higher average grades than previously processed at La Coipa; Current oxide/transition mineral resources at the existing P
Slide 13: Russia
• Continued strong performance from the high-grade, low-cost Kupol and RUSSIA Dvoinoye underground mines 13 www.kinross.com
Slide 14: Russia First Quarter 2015 Highlights
OPERATIONAL EXCELLENCE RUSSIA FIRST QUARTER 2015 HIGHLIGHTS • First quarter production at the combined operation increased compared with Q4 2014 • Production cost of sales decreased to $476 per Au eq. oz. Mainly due to savings associated with favourable foreign exchange movements • Began to increa
Slide 15: Near-Site Exploration Targets
RUSSIA NEAR-SITE EXPLORATION TARGETS MOROSHKA • Located approximately 4 km East of Kupol • Drilling defined ~198koz. gold and ~2.3Moz. silver of Indicated resource(5) SEPTEMBER NORTH-EAST • Located approximately 15 km NW of Dvoinoye • Drilling defined high-grade gold mineralization over a strike len
Slide 16: West Africa
WEST • Record annual production for Tasiast and Chirano in 2014 AFRICA • Strong focus on optimizing efficiency and performance 16 www.kinross.com
Slide 17: West Africa First Quarter 2015 Highlights
OPERATIONAL EXCELLENCE WEST AFRICA FIRST QUARTER 2015 HIGHLIGHTS • Ongoing continuous improvement initiatives focused on improving efficiency and reducing costs at TASIAST • Minimal impact to CHIRANO production as a result of power rationing in Ghana • Prioritized use of power from the national grid
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 ounces at two deposits: Paboase (currently in production) Akoti underground • Provides additional time to pursue exploration potential
Slide 19: Tasiast Mill Expansion
WEST AFRICA TASIAST MILL EXPANSION Attractive project in the right gold price environment KINROSS NOT PROCEEDING WITH THE EXPANSION AT THE PRESENT TIME • Gold price outlook and impact on cash flow generation during 35-month construction period important factors • Continue to believe Tasiast mill exp
Slide 20: Tasiast District Exploration
WEST AFRICA TASIAST DISTRICT EXPLORATION • Defined measured & indicated mineral resources totaling approximately 327,000 gold ounces at Fennec, C67 and C68 satellite deposits(5) • Encouraging drill results at the Tamaya targets, with additional drilling planned for 2015 Imkebdene license Piment C616
Slide 21: Strong Financial Discipline
STRONG FINANCIAL DISCIPLINE 21 www.kinross.com
Slide 22: Solid Financial Position
STRONG BALANCE SHEET SOLID FINANCIAL POSITION Balance sheet strength continues to be a priority objective STRONG LIQUIDITY POSITION MAINTAINING FINANCIAL FLEXIBILITY • Improved balance sheet in Q1 2015: Repaid $30M of debt Ended Q1 2015 with over $1.0B in cash, $1.1 $2.6B a $27M increase from ye
Slide 23: Compelling Valuation
COMPELLING VALUATION 23 www.kinross.com
Slide 24: 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 6.0 6.6% 5.9% 5.0 4.5% 4.4% 4.0 3.2% 3.1% 3.0 2.0 1.0 -6.5% 0.0 Barrick Newmont Goldcorp Kinross Agnico Yamana Eldorado Newmont Kinross Goldcorp Yamana Barrick Agnico Eldorad
Slide 25: Net Debt to 2015E EBITDA
COMPELLING VALUATION NET DEBT TO 2015E EBITDA 2.6 2.5 1.8 1.3 1.3 1.1 0.3 Barrick Yamana Goldcorp Newmont Agnico Kinross Eldorado Source: Bloomberg – May 7, 2015 25 www.kinross.com
Slide 26: Enterprise Value versus Production
COMPELLING VALUATION ENTERPRISE VALUE VERSUS PRODUCTION $28.0 Multiple of 2015E Gold Delta with Kinross Production Kinross Enterprise (Moz.)1 (US$B) Value Barrick 6.4 24.1 7.1x Enterprise value (US$ billions) $19.6 $18.7 Newmont 4.8 15.7 5.0x Goldcorp 3.5 14.8 4.8x Kinross 2.5 - - $7.9 Agnico 1.6 4.
Slide 27: 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 13.0 14.8 9.7 9.5 9.5 9.4 7.3 7.0 6.9 5.9 5.8 5.7 4.0 3.2 Eldorado Goldcorp Agnico
Slide 28: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • 11 consecutive quarters of strong results STRONG BALANCE SHEET • $2.6B in liquidity and conservative net debt under $1.0B • No significant debt maturities until 2016 ATTRACTIVE FUTURE GROWTH OPPORTUNITIES • Advancing organic production i
Slide 29: Appendix
APPENDIX 29 www.kinross.com
Slide 30: Fort Knox, USA (100%)
AMERICAS FORT KNOX, USA (100%) Among the world’s few cold climate heap leach facilities • Impressive track record of operational excellence OPERATING RESULTS(3) FY 2014 Q1 2015 Production (Au. Eq. oz.) 379,453 82,673 Production cost of sales ($/oz.) $712 $672 2014 GOLD RESERVE AND RESOURCE ESTIMATES
Slide 31: Round Mountain, USA (50%)
AMERICAS ROUND MOUNTAIN, USA (50%) Round Mountain is a best-practice leader in many areas, including preventative maintenance • Kinross-operated JV with Barrick • Bulk tonnage open-pit operation OPERATING RESULTS(3) FY 2014 Q1 2015 Production (Au. Eq. oz.) 169,839 40,262 Production cost of sales ($/
Slide 32: 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 Q1 2015 Production (Au. Eq. oz.) 123,382 24,265 Produ
Slide 33: 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 Q1 2015 Production (Au. Eq. oz.) 521,026 124,68
Slide 34: 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 Q1 2015 Production (Au. Eq. oz.) 247,216
Slide 35: 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 Q1 2015 Production (Au. Eq. oz.)
Slide 36: 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 Q1 2015 Production (Au. Eq. oz.) 260,485 54,
Slide 37: 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(1,2) FY 2014 Q1 2015 Production (Au. Eq. oz.) 25
Slide 38: Fuel & Currency Hedges
FINANCIAL DISCIPLINE FUEL & CURRENCY HEDGES Managing exposure to fluctuations in foreign currency and input commodity prices Summary of foreign currency and energy hedges as at March 31, 2015 % OF 2015 EXPOSURE HEDGED AVERAGE RATE Brazilian real 58% 2.52 Chilean peso 43% 605 Russian rouble 31% 36 Ca
Slide 39: Capital Expenditures Guidance
2015 OUTLOOK CAPITAL EXPENDITURES GUIDANCE(1) 2015 capital expenditures are expected to be $725 million, including estimated capitalized interest of $40 million REGION SUSTAINING NON-SUSTAINING REGIONAL TOTAL Americas $350 $10 $360 West Africa $70 $170 $240 Russia $80 $ -- $80 Corporate $5 $ -- $5 T
Slide 40: FY2014 Operating Results
OPERATIONAL EXCELLENCE FY2014 OPERATING RESULTS PRODUCTION PRODUCTION COST OF SALES(2) OPERATION (Au eq. oz.) ($ 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 41: Explanatory Notes: Exploration
EXPLANATORY NOTES: EXPLORATION Kupol & Dvoinoye Exploration Results All 28 drill holes in 2014 at Providence were diamond drill core holes (HQ or NQ core diameter). The Providence vein dips sub-vertically, therefore, drill holes are angled between minus 50° and 75° to the east and west. The composit
Slide 42: Explanatory Notes: Exploration
EXPLANATORY NOTES: EXPLORATION Tasiast Exploration Results Drill hole identifiers ending with suffix DD are diamond drill core holes (HQ diameter) and those ending with suffix RC are reverse circulation (RC) holes. Holes with “A” prefixing DD or RC are diamond core or reverse circulation re-drills o
Slide 43: Endnotes
ENDNOTES 1) For more information regarding Kinross’ production, cost and capital expenditures outlook for 2015, please refer to the news release dated February 10, 2015, available on our website at www.kinross.com. Kinross’ outlook for 2015 represents forward-looking information and users are cautio
Slide 44: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 44 www.kinross.com
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