Kinross Gold Corporation · TSX:K
Kinross Gold — Investor Presentation (October 2014)
47 slides from Kinross Gold's investor presentation, Oct 2, 2014
Slide 1: Kinross Gold Corporation 2014 CIBC Sales Desk Presentation
October 2 KINROSS GOLD CORPORATION 2014 CIBC Sales Desk Presentation 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: Kinross Value Proposition
KINROSS VALUE PROPOSITION EXCELLENT OPERATIONAL TRACK RECORD • 8 consecutive quarters of strong results STRONG BALANCE SHEET • $2.3B in liquidity and conservative net debt of $1.3B • No significant debt maturities until 2016 ATTRACTIVE GROWTH OPPORTUNITIES • Potential Tasiast mill expansion expected
Slide 4: Delivering Operational Excellence
DELIVERING OPERATIONAL EXCELLENCE 4 www.kinross.com
Slide 5: Diversified Portfolio of Operating Mines
OPERATIONAL EXCELLENCE DIVERSIFIED PORTFOLIO OF OPERATING MINES Over RUSSIA 50% of estimated 2014 gold equivalent production from mines located in the Americas AMERICAS Dvoinoye Kupol Fort Knox Kettle River-Buckhorn Round Mountain 2014E GOLD EQUIVALENT PRODUCTION(3) Tasiast Chirano 27% WEST AFRICA 2
Slide 6: Strong Operating Performance
OPERATIONAL EXCELLENCE STRONG OPERATING PERFORMANCE Continuing track record of consistent and dependable operational performance • Produced 1.34M gold equivalent 1.34M ounces in H1 2014 1.30M • Tracking high-end of annual Gold equivalent production (ounces) production guidance of 2.5-2.7M gold equiv
Slide 7: Focus on Managing Costs
OPERATIONAL EXCELLENCE FOCUS ON MANAGING COSTS H1 2014 cost metrics at the favourable end of 2014 guidance ranges • 2014 cost of sales guidance: • 2014 all-in sustaining cost guidance: $730-$780/oz $950-$1,050/oz 2014E: $950-$1,050/oz $1,034 All-in sustaining cost per gold equivalent Cost of sales p
Slide 8: Americas
• Five mines located in the US, Brazil and Chile AMERICAS • 2014E regional guidance: 1,330 – 1,430k oz. at $780-840/oz.(3) 8 (3) Refer to endnote #3. www.kinross.com
Slide 9: Maricunga, Chile
OPERATIONAL EXCELLENCE MARICUNGA, CHILE Operational improvements resulting in higher production and lower costs INCREASING PRODUCTION 64,290 Gold equivalent ounces 52,729 45,595 38,126 Q3 2013 Q4 2013 Q1 2014 Q2 2014 DECLINING COST OF SALES PER OUNCE(4) Production cost of sales $1,368 $1,217 $1,049
Slide 10: Russia
• Two high-grade underground mines serviced by one mill RUSSIA • Full benefit of Dvoinoye coming on-stream in 2014 • 2014E regional guidance: 690-730k oz. at $560-590/oz.(3) 10 (3) Refer to endnote #3. www.kinross.com
Slide 11: Russia Operations
OPERATIONAL EXCELLENCE RUSSIA OPERATIONS Combined performance of Kupol & Dvoinoye outperforming expectations • Ore from the high-grade Dvoinoye mine contributing to continued strong results in Russia • Compared with Q2 2013, the combined operation increased gold equivalent production by 60% RUSSIA O
Slide 12: West Africa
WEST • Strong focus on optimizing efficiency and performance AFRICA • 2014E regional guidance: 480 – 540koz. at $810 – $880/oz.(3) 12 (3) Refer to endnote #3. www.kinross.com
Slide 13: West Africa Operations
OPERATIONAL EXCELLENCE WEST AFRICA OPERATIONS Cost of sales per ounce declined 12% compared with Q2 2013 • Cost improvements at both sites • Lower regional cost of sales driven by: Transition to self-perform mining at Chirano Continuous improvement efforts at Tasiast WEST AFRICA OPERATING RESULT
Slide 14: 2014E Production & Cost Guidance
OPERATIONAL EXCELLENCE 2014E PRODUCTION & COST GUIDANCE(3) • 2014 all-in sustaining cost(5) expected to be $950 - $1,050 per gold equivalent ounce WEST AFRICA REGION AMERICAS RUSSIA (attributable) TOTAL Gold equivalent production 1,330 - 1,430 690 - 730 480 - 540 2.5 – 2.7M (000 oz. Au eq.) % of tot
Slide 15: Strong Financial Discipline
STRONG FINANCIAL DISCIPLINE 15 www.kinross.com
Slide 16: Solid Financial Position
STRONG BALANCE SHEET SOLID FINANCIAL POSITION Balance sheet strength continues to be a priority objective STRONG LIQUIDITY POSITION MAINTAINING FINANCIAL FLEXIBILITY • Investment grade credit ratings • Net debt: $1.3B as at June 30, 2014 $0.8 $2.3B • Extended the maturity dates for the $500M term lo
Slide 17: Financial Flexibility
STRONG BALANCE SHEET FINANCIAL FLEXIBILITY No material debt maturities prior to 2016 SCHEDULED DEBT REPAYMENTS $1,250 $ MILLIONS $500 $270 $60 $60 $250 $- 2014 2015 2016 2017 2018 2019 & (i) thereafter Term loan Senior notes Kupol loan (i) Consists of $250 million principle amount of 3.625% senior n
Slide 18: Reducing Capital Spending
DISCIPLINED CAPITAL ALLOCATION REDUCING CAPITAL SPENDING Actual Original budget 2014E guidance • Trend of declining capital $2.2B expenditures since 2012 $1.9B • Expecting another significant $1.6B reduction in 2014 $1.26B $675M (3) 2012 2013 2014E (3) Refer to endnote #3. 18 www.kinross.com
Slide 19: Attractive Growth Opportunities
ATTRACTIVE GROWTH OPPORTUNITIES 19 www.kinross.com
Slide 20: Tasiast, Mauritania
GROWTH OPPORTUNITIES TASIAST, MAURITANIA • Existing mine with an 8,000 tpd mill originally designed to process ore from a series of small open pits • Identified 38,000 tpd as optimal throughput for the larger, 15 million ounce orebody 20 www.kinross.com
Slide 21: Feasibility Study Estimates
GROWTH OPPORTUNITIES – TASIAST, MAURITANIA FEASIBILITY STUDY ESTIMATES Mill expansion has the potential to transform Tasiast into Kinross’ largest mine with costs among the lowest in the portfolio AVERAGE FOR THE FIRST 5 YEARS LIFE OF MINE (2018-2022) (2014-2029) Average annual production 848,000 oz
Slide 22: Reduced Capital Expenditure Estimates
GROWTH OPPORTUNITIES – TASIAST, MAURITANIA REDUCED CAPITAL EXPENDITURE ESTIMATES Initial capital expenditure estimate for Tasiast mill expansion of $1.6 billion significantly lower than original $2.7 billion estimated in the pre-feasibility study 2013 infrastructure spending Deferral of $2.7B $330M
Slide 23: Relatively Low-Risk Brownfields Project
GROWTH PROJECTS – TASIAST, MAURITANIA RELATIVELY LOW-RISK BROWNFIELDS PROJECT • Factors expected to lower execution risk compared with a greenfield project: An existing operation Highly trained local team Most infrastructure already in place Established relationship with the government Mos
Slide 24: Tasiast Mill Expansion - Update
GROWTH OPPORTUNITIES – TASIAST, MAURITANIA TASIAST MILL EXPANSION - UPDATE Do not expect to make a final decision whether to proceed with a potential mill expansion until 2015 EXPLORING PROJECT FINANCING OPTIONS • Considering funding in the range of $700-$750M of the expected $1.6B initial capital e
Slide 25: Tasiast District Exploration
GROWTH OPPORTUNITIES – TASIAST, MAURITANIA TASIAST DISTRICT EXPLORATION* Encouraging exploration results along Tasiast’s prospective 80 km trend Imkebdene license Piment C616 Central Fennec C613 Tmeimichat license C614 C69 C67 Aoueouat C615 C68 C611 C612 El Gaicha license Tamaya Tasiast Sud license
Slide 26: La Coipa Phase 7
GROWTH OPPORTUNITIES - CHILE LA COIPA PHASE 7 Proceeding to a pre-feasibility study at La Coipa Phase 7 in Chile • The pre-feasibility study will focus on: The Pompeya deposit, where drilling has outlined higher average grades than previously processed at La Coipa; Current oxide/transition miner
Slide 27: Kupol – Moroshka, Russia
HIGH-QUALITY EXPLORATION TARGETS KUPOL – MOROSHKA, RUSSIA • Moroshka located 4 km east of the Kupol mine • Drilling confirmed continuity of high grades along a 400 strike metre vein structure Kupol CURRENT PRELIMINARY ESTIMATE mine site • Moroshka contains a minimum total potential mineral resource
Slide 28: Dvoinoye, Russia
HIGH-QUALITY EXPLORATION TARGETS DVOINOYE, RUSSIA Encouraging results from initial exploration work on September trend, located approximately 15 km northwest of Dvoinoye For additional information, please see Kinross’ news release dated February 12, 2014 and Appendices A and B, which are available o
Slide 29: Chirano, Ghana
HIGH-QUALITY EXPLORATION TARGETS CHIRANO, GHANA • Drilling program designed to test underground potential of mineralization beneath Suraw, Akoti and Tano open pits • Results confirmed mineralization extends 100 to 400 metres below bottom of each pit • Remains open at depth at all three deposits 2013
Slide 30: Compelling Valuation
COMPELLING VALUATION 30 www.kinross.com
Slide 31: Production and All-in Sustaining Cost
COMPELLING VALUATION PRODUCTION AND ALL-IN SUSTAINING COST COMPANY GUIDANCE COMPANY GUIDANCE 2014E GOLD PRODUCTION(i) (mm oz.) 2014E ALL-IN SUSTAINING COSTS(ii) ($/oz.) 7.0 $1,200 6.0 $1,000 Average 5.0 $800 4.0 $600 3.0 $400 2.0 1.0 $200 0.0 $0 Barrick Newmont Goldcorp Kinross Yamana Agnico Eldorad
Slide 32: Net Debt to 2015E EBITDA
COMPELLING VALUATION NET DEBT TO 2015E EBITDA 2.3 1.9 1.6 1.2 1.1 0.9 0.1 Barrick Newmont Yamana Kinross Agnico Goldcorp Eldorado Source: Bloomberg – October 1, 2014 32 www.kinross.com
Slide 33: Enterprise Value versus Production
COMPELLING VALUATION ENTERPRISE VALUE VERSUS PRODUCTION Gold Production Multiple $30.6 (Moz.)1 Delta with of Kinross Kinross H1 (US$B) Enterprise 2014E 2014A Value Enterprise Value (US$ billion) Barrick 6.3 3.1 25.3 5.8x $21.3 $19.5 Newmont 4.9 2.6 14.3 3.7x Goldcorp 3.0 1.3 16.0 4.1x Kinross 2.6 1.
Slide 34: 2015E Metrics
COMPELLING VALUATION 2015E METRICS Attractive value opportunity relative to peers, considering Kinross’ annual production, cost structure, track record and growth opportunities EV / 2015E EBITDA P / 2015E OPERATING CF 10.7 12.4 8.7 7.6 7.2 8.7 6.6 6.5 7.9 4.6 5.5 5.5 5.2 3.7 Eldorado Goldcorp Agnico
Slide 35: Appendix
APPENDIX 35 www.kinross.com
Slide 36: Fort Knox, USA (100%)
AMERICAS FORT KNOX, USA (100%) Among the world’s few cold climate heap leach facilities • Achieved record annual production in 2013, Fort Knox’s 16th year in operation • Impressive track record of operational excellence OPERATING RESULTS(4) FY 2012 FY 2013 Production (Au. Eq. oz.) 359,948 421,641 Pr
Slide 37: Round Mountain, USA (50%)
AMERICAS ROUND MOUNTAIN, USA (50%) Round Mountain is a best-practice leader in many areas, including preventative maintenance • Kinross-operated JV with Barrick • Bulk tonnage open-pit operation OPERATING RESULTS(4) FY 2012 FY 2013 Production (Au. Eq. oz.) 192,330 162,826 Production cost of sales ($
Slide 38: 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(4) FY 2012 FY 2013 Production (Au. Eq. oz.) 156,093 150,157 Prod
Slide 39: 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 2013 OPERATING RESULTS(4) FY 2012 FY 2013 Production (Au. Eq. oz.) 466,709 500,38
Slide 40: 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 • Continued performance improvements since Q3/13 OPERATING RESULTS(4) FY 2012 FY 2013 Production (Au. Eq.
Slide 41: 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(4) FY 2012 FY 2013 Production (Au. Eq. oz.)
Slide 42: Tasiast, Mauritania (100%)
WEST AFRICA TASIAST, MAURITANIA (100%) Operating mine with a large gold resource and potential for a mill expansion • Expect to begin realizing benefits of infrastructure improvements • Achieved record quarterly production in Q1/14 OPERATING RESULTS(4) FY 2012 FY 2013 Production (Au. Eq. oz.) 185,33
Slide 43: 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(1,4) FY 2012 FY 2013 Production (Au. Eq. oz.) 26
Slide 44: Endnotes
ENDNOTES 1) Unless otherwise noted, gold equivalent production, gold equivalent ounces sold and production cost of sales figures in this presentation are based on Kinross’ 90% share of Chirano production. 2) For more information regarding the results of the Tasiast feasibility study, please refer to
Slide 45: Explanatory Notes: Exploration
EXPLANATORY NOTES: EXPLORATION Tasiast Exploration Results 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 of the
Slide 46: Explanatory Notes: Exploration
EXPLANATORY NOTES: EXPLORATION Kupol and Dvoinoye Exploration Results All drill holes at Moroshka are diamond drill core holes (HQ or NQ core diameter). The Moroshka vein dips sub-vertically to the east. Drill holes are angled between minus 50° and 75° to the east and west. Results provided for Moro
Slide 47: Kinross Gold Corporation
KINROSS GOLD CORPORATION 25 York Street, 17th Floor │Toronto, ON │ M5J 2V5 www.kinross.com 47 www.kinross.com