Kinross Gold Corporation · TSX:K
Kinross Gold — Investor Presentation (July 2013)
43 slides from Kinross Gold's investor presentation, Jul 9, 2013
Slide 1: Kinross Gold Corporation 2013 Zurich Marketing Presentation
July KINROSS GOLD CORPORATION 2013 Zurich Marketing Presentation 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 this presentation, including any information as to the future performance of Kinross, constitute “forward looking statements” within the meaning of
Slide 3: Kinross Today
KINROSS TODAY • Total gold resource base of 94 million ounces(1) • 9 mines produced 2.6 million ounces in 2012(2) • Solid record of operational performance • Portfolio of development projects with significant potential (1) Refer to endnote #1. (2) Refer to endnote #2 33 www.kinross.com
Slide 4: Principles for Building Value
PRINCIPLES FOR BUILDING VALUE 1. Focus on operational fundamentals 2. Quality versus quantity in mine planning 3. Maintaining a strong balance sheet 4. Disciplined project development and capital allocation 44 www.kinross.com
Slide 5: Operating Mines in 4 Core Regions
OPERATIONAL FUNDAMENTALS OPERATING MINES IN 4 CORE REGIONS • Diversified portfolio of assets located in some of the world’s best gold districts producing RUSSIA Dvoinoye Kupol Fort Knox Kettle River - Buckhorn Round Mountain WEST AFRICA NORTH AMERICA Tasiast Chirano 2013 OUTLOOK(2,3) Paracatu gold e
Slide 6: North America
NORTH • 2013 regional guidance(3): 680 – 720koz. at $635 – 675/oz. AMERICA • Well-run, stable open-pit and underground operations 66 (3) Refer to endnote #3. www.kinross.com
Slide 7: North America
OPERATIONAL FUNDAMENTALS NORTH AMERICA • Region on track to meet both production and production cost of sales guidance for 2013 Fort Knox FIRST QUARTER 2013 OPERATING RESULTS Kettle River - Buckhorn • Slightly harder ore encountered at Fort Knox not expected to Round Mountain continue in Q2 NORTH AM
Slide 8: South America
SOUTH • 2013 regional guidance(3): 800 – 870koz. at $870 – $940/oz. AMERICA • Largest operating region accounting for ~33% of annual production 88 (3) Refer to endnote #3. www.kinross.com
Slide 9: South America
OPERATIONAL FUNDAMENTALS SOUTH AMERICA • Region on track to meet both production and production cost of sales guidance for 2013 Paracatu FIRST QUARTER 2013 OPERATING RESULTS La Coipa Maricunga • Mill recoveries and throughput at Paracatu continued to show improvement SOUTH AMERICA 2013E(3): 800-870k
Slide 10: West Africa
WEST • 2013 regional production(3): 415 – 480koz. at $890 – $950/oz. AFRICA • Strong focus on increasing efficiency and performance in the region 1010 (3) Refer to endnote #3. www.kinross.com
Slide 11: West Africa
OPERATIONAL FUNDAMENTALS WEST AFRICA WEST AFRICA • Region on track to meet both production and production cost of sales 2013E(3): 415-480koz. at $890-950/oz. guidance for 2013 FIRST QUARTER 2013 OPERATING RESULTS Tasiast • Tasiast achieved highest quarterly production level since acquisition Chirano
Slide 12: Russia
• 2013 regional guidance(3): 505 – 535koz. at $550 – $580/oz. RUSSIA • Model for successfully operating in a remote region 1212 www.kinross.com (3) Refer to endnote #3.
Slide 13: Russia
OPERATIONAL FUNDAMENTALS RUSSIA • Region on track to meet both production and production cost of sales Kupol guidance for 2013 FIRST QUARTER 2013 OPERATING RESULTS • As anticipated, Kupol mined an area of lower-grade material RUSSIA 2013E(3): 505-535koz. at $550-580/oz. • Mill throughput and recover
Slide 14: Solid Operating Results
OPERATIONAL FUNDAMENTALS SOLID OPERATING RESULTS • Strong performance from operations delivered solid results in Q1 2013 GOLD EQUIVALENT PRODUCTION COST OF ALL-IN SUSTAINING COST(5) PRODUCTION(2) SALES(4) $738 $1,180 648,897 $729 588,358 $1,038 $ per gold equivalent ounce $ per gold ounce Ounces Q1
Slide 15: Focus on Cost Management: Capital Discipline Continues
FOCUS ON COST MANAGEMENT CAPITAL DISCIPLINE CONTINUES IN 2013 2012 estimate following project resequence Identified $200 million of Actual 2012 $2.2 capital reductions spend Continued focus $2.0 on disciplined $1.9 spending Capital Expenditures (US$ billions) $1.6 February Q2 - Q3 Full-year Expected
Slide 16: 2013 Production & Costs Outlook
PRINCIPLE TWO: QUALITY VERSUS QUANTITY 2013 PRODUCTION & COSTS OUTLOOK(3) • 2013 outlook shaped by continued focus on cost control, margin improvement and free cash flow • 2013 all-in sustaining cost(5) expected to be $1,100 - $1,200 per gold ounce Gold Production % of Total Production Cost of Sales
Slide 17: The Kinross Way Forward
MAXIMIZING MARGINS & CASH FLOW THE KINROSS WAY FORWARD • 7 key areas form the basis of The Kinross Way Forward: • Prioritizing cash flow 1. MINE PLAN OPTIMIZATION • Optimizing pushback widths, mine sequencing • Exploiting zero / low-capex productivity improvements 2. CONTINUOUS IMPROVEMENT • Reducin
Slide 18: Choosing Quality Versus Quantity
CHOOSING QUALITY VERSUS QUANTITY MINERAL RESERVE & RESOURCE ESTIMATES(1) • Strategic decision to maintain gold price assumptions used for 2011: Reserves - $1,200/oz.; resources -$1,400/oz. • Example of Kinross’ commitment to focus on higher quality, higher margin ounces PROVEN & PROBABLE GOLD MEAS
Slide 19: Solid Financial Position
MAINTAINING A STRONG BALANCE SHEET SOLID FINANCIAL POSITION • Preserving balance sheet strength a priority objective • Repurchased convertible senior notes totaling $455 million on March 15, 2013 Redeemed in cash the remaining $5 million on April 30, 2013 Cumulative debt balance: $2.2 billion LI
Slide 20: Portfolio of Development Projects
DISCIPLINED PROJECT DEVELOPMENT PORTFOLIO OF DEVELOPMENT PROJECTS • Optimized project sequencing, with Dvoinoye and Tasiast as key development priorities 2020 www.kinross.com
Slide 21: Tasiast Advances to Feasibility Study
DISCIPLINED PROJECT DEVELOPMENT TASIAST ADVANCES TO FEASIBILITY STUDY • Pre-feasibility study selected optimum mill size for Tasiast expansion Proceeding to a feasibility study on a 38,000 tpd mill Expected to be complete in Q1 2014 2121 www.kinross.com
Slide 22: Tasiast Advances to Feasibility Study
DISCIPLINED PROJECT DEVELOPMENT TASIAST ADVANCES TO FEASIBILITY STUDY • Feasibility study will explore a number of options to improve overall economics PRE-FEASIBILITY STUDY OPPORTUNITY TO ADD VALUE Estimated 10 million recoverable Did not include other known mineral resource ounces ounces Heavy fue
Slide 23: Dvoinoye, Russia
DVOINOYE • Dvoinoye continues to progress on budget and on schedule RUSSIA • Full production is expected to commence in the second half of 2013 2323 www.kinross.com
Slide 24: Dvoinoye Remains on Schedule
DISCIPLINED PROJECT DEVELOPMENT DVOINOYE REMAINS ON SCHEDULE • Full production expected to commence in Surface Infrastructure the second half of 2013 • Underground development progressed ahead of plan • Surface infrastructure continues to progress on schedule Underground Development • Expansion of t
Slide 25: Tasiast District Exploration
ENCOURAGING EXPLORATION RESULTS TASIAST DISTRICT EXPLORATION(6) • Drilling at step-out targets confirm presence of Fennec narrow, high-grade veins at C67, Fennec and C68 C67 C68 WEST C68E C68W • Drilling completed along 600 strike metres, testing the structure to an average depth of 100 metres below
Slide 26: Kupol-West Moroshka
ENCOURAGING EXPLORATION RESULTS KUPOL-WEST MOROSHKA(6) • Additional high-grade mineralization discovered at the Moroshka target Kupol located 5 km southeast of Kupol Moroshka trend (geochemistry) • Presence of high-grade mineralization Moroshka vein over a strike length of 300 metres and a vertical
Slide 27: Maintaining Our Social License to Operate
TAKING RESPONSIBILITY MAINTAINING OUR SOCIAL LICENSE TO OPERATE • Member of the Dow Jones Sustainability World Index • Member of the Jantzi Social Index • Listed among Canada’s top corporate citizens by both Maclean’s and Corporate Knights 2727 www.kinross.com
Slide 28: Action Plan for Building Value
CONSISTENCY & DISCIPLINE ACTION PLAN FOR BUILDING VALUE • Operational fundamentals • Aggressive focus on cost management • Maximizing margin & free cash flow • Disciplined project development • Maintaining a strong balance sheet 2828 www.kinross.com
Slide 29: Appendix
APPENDIX 2929 www.kinross.com
Slide 30: All-In Sustaining Costs – Q1 2013
APPENDIX ALL-IN SUSTAINING COSTS – Q1 2013 $1,135 $1,115 $1,038 $919 $856 $ per ounce Goldcorp Newmont Kinross Barrick Yamana Source: Company reports. For more information regarding Kinross’ all-in sustaining costs, please refer to endnote #5. 3030 www.kinross.com
Slide 31: Relative Valuation
APPENDIX RELATIVE VALUATION ENTERPRISE VALUE / EBITDA PRICE / NAV 2.3 10.6 10.4 2.1 7.1 1.4 1.1 4.4 0.9 4.0 AEM GG NEM KGC ABX NEM ABX KGC AEM GG Source: UBS North America Mining, Metals & Gold Weekly – June 21, 2013. 3131 www.kinross.com
Slide 32: Tasiast 2013E Capital Expenditures
APPENDIX TASIAST 2013E CAPITAL EXPENDITURES(3) ITEM ESTIMATE • Continued expansion of fleet to support a ramp up to 100 Mine fleet & truck shops $139 million million tonne per annum mining rate this year • Establishment of maintenance facilities Pre-stripping $63 million • Required to access the Gre
Slide 33: Fort Knox, Alaska (100%)
UNITED STATES FORT KNOX, ALASKA (100%) • Production commenced in 1997 • Heap leach production commenced in late 2009 OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(4) FY 2012 359,948 $663 FY 2011 289,794 $692 2012 GOLD RESERVES AND RESOURCES(1) TONNES GRADE OUNCES (thousa
Slide 34: Round Mountain (50%)
UNITED STATES ROUND MOUNTAIN (50%) • Kinross-operated JV with Barrick • Bulk tonnage open-pit operation • Commercial production began in 1977 OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.) (4) FY 2012 192,330 $717 FY 2011 187,444 $697 2012 GOLD RESERVES AND RESOURCES(1) T
Slide 35: Kettle River – Buckhorn (100%)
UNITED STATES KETTLE RIVER – BUCKHORN (100%) • Entered production in Q4 2008 • Small foot-print, underground mine • Near-mine exploration targets OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(4) FY 2012 156,093 $482 FY 2011 175,292 $420 2012 GOLD RESERVES AND RESOURCES(1
Slide 36: Kupol (100%)
RUSSIA KUPOL (100%) • Completed transaction increasing ownership to 100% from 75% on April 27, 2011 • High-grade underground mine with 3,500 tpd mill OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(4) FY 2012 578,252 $472 FY 2011 587,048 $378 Kinross increased its ownershi
Slide 37: Paracatu (100%)
BRAZIL PARACATU (100%) • Plant 2 expansions now complete: 3rd ball mill commissioned in Q2 2011 4th ball mill commissioned in Q3 2012 OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(4) FY 2012 466,709 $881 FY 2011 453,396 $720 2012 GOLD RESERVES AND RESOURCES(1) TONNES
Slide 38: La Coipa (100%)
CHILE LA COIPA (100%) • Expect to suspend mining of the existing orebody in the second half of 2013 • Continuing to assess the remaining reserves, resources and exploration potential Including the future potential of La Coipa Phase 7 (Pompeya) OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. o
Slide 39: Maricunga (100%)
CHILE MARICUNGA (100%) • Located in the highly prospective Maricunga District • High-altitude heap leach operation OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(4) FY 2012 236,369 $779 FY 2011 236,249 $457 2012 GOLD RESERVES AND RESOURCES(1) TONNES GRADE OUNCES (thousand
Slide 40: Tasiast (100%)
MAURITANIA TASIAST (100%) • Open-pit mine ~300 km north of the city of Nouakchott • Remote, flat, sparsely populated desert OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(4) FY 2012 185,334 $889 FY 2011 200,619 $702 2012 GOLD RESERVES AND RESOURCES(1) TONNES GRADE OUNCES
Slide 41: Chirano (90%)
GHANA CHIRANO (90%) • 90% owned by Kinross; Government of Ghana holds a 10% carried interest • 9 open-pits and 2 recently-discovered underground deposits • Achieved first gold pour in 2005 OPERATING RESULTS(2) PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.)(4) FY 2012 263,911 $721 FY 2011 2
Slide 42: Endnotes
ENDNOTES 1) For more information regarding Kinross’ mineral reserve and mineral resources estimates please refer to our Annual Mineral Reserve and Mineral Resource Statement as at December 31, 2012 contained in our news release dated February 13, 2013, which is available on our website at www.kinros
Slide 43: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 4343 www.kinross.com