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Kinross Gold Corporation February 5, 2013 www.kinrossgold.ru February 5 2013
Moscow, Russia
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EFFECTIVE INVESTMENTS IN RUSSIAS GOLD MINING INDUSTRY 2013 Moscow, - - PowerPoint PPT Presentation
EFFECTIVE INVESTMENTS IN RUSSIAS GOLD MINING INDUSTRY 2013 Moscow, - - PowerPoint PPT Presentation
Kinross Gold Corporation: February 5 EFFECTIVE INVESTMENTS IN RUSSIAS GOLD MINING INDUSTRY 2013 Moscow, Russia Lou Naumovski, VP and General Director, Moscow Representative Office Kinross Gold Corporation 1 1 February 5, 2013
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AGENDA:
- KINROSS PORTFOLIO & 2012 PRELIMINARY RESULTS
- KINROSS OPERATIONS IN RUSSIA
- FACTORS CONTRIBUTING TO KINROSS’ SUCCESS IN THE
RUSSIAN FEDERATION
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STAKING DISTRICTS, ADDING RESOURCES, IMPROVING GRADE
GOLD RESOURCES(1) (mm oz.) 2P GOLD RESERVE GRADE(2) (g/t) EXPLORATION SPEND
($ mm)
2005 2011 2005 2012e(3) $220 $17 0.51 0.73
+221% +43% +13x
2005 2011
24.7 6.1 2.9
62.6 25.4 20.1
Proven & Probable Gold Reserves Measured & Indicated Gold Resources Inferred Gold Resources
(1) Please refer to endnote #4. (2) Please refer to endnote #4. (3) Please refer to endnote #1.
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2012 PRODUCTION & COST OUTLOOK(1)
- Identified $200 million in cost savings, reducing expected 2012 capital expenditures to
$2.0 billion from $2.2 billion
- Expect to be toward the high end of both production and cost guidance ranges:
Region Gold Production(2) (000 oz. Au eq.) % of Total Production Production cost of Sales(3) ($/oz. Au eq.)
South America 890 – 930 36% $830– $870 North America 640 – 660 25% $620 – $660 West Africa(2) (attributable) 430 – 460 17% $780 – $820 Russia 535 – 565 22% $470 – $495
Total Kinross(2): 2.5 – 2.6 million 100% Gold equivalent: $690 - $725/oz By-product: $605- $655/oz
Key Sensitivities: Taking into account existing currency and oil hedges, 10% change in foreign exchange could result in an approximate $5 impact on production cost of sales per ounce. A $10 change in the price of oil could result in an approximate $2 impact on production cost of sales per ounce. The impact on royalties
- f a $100 change in the gold price could result in an approximate $4 impact on production cost of sales per ounce.
(1) Please refer to endnote #1. (2) Please refer to endnote #2. (3) Please refer to endnote # 3.
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THE WAY FORWARD
- Process to ensure we are applying disciplined and rigorous analysis to all
aspects of our business decisions in today’s global industry environment
The Way Forward
Company- wide cost reduction initiative
Launched August 2012
Capital & project
- ptimization
process
Launched January 2012 Launched September 2012
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- Prioritizing cash flow
- Optimizing pushback widths, mine sequencing
- Exploiting zero / low-capex productivity improvements
- Reducing unit consumption
- Implement better cost controls
- Right-sizing workforce
- Reevaluating capital requirements
- Managing potential deferral risks
- Identified $200 mm in capex reductions for 2012
- Improving procurement planning processes
- Planning with greater accuracy
- Establishing lower cost power purchase agreements
- Reducing energy consumption
- Enhancing inventory management
- Reducing working capital requirements
RENEWED FOCUS ON OPTIMIZING OUR ASSETS
- 7 key areas form the basis of The Kinross Way Forward:
- 1. MINE PLAN OPTIMIZATION
- 2. CONTINUOUS IMPROVEMENT
- 3. COST MANAGEMENT & LABOUR
PRODUCTIVITY
- 4. CAPITAL EFFICIENCY
- 6. ENERGY MANAGEMENT
- 7. WORKING CAPITAL MANAGEMENT
- 5. SUPPLY CHAIN MANAGEMENT
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MAINTAINING A STRONG BALANCE SHEET
Cash and cash equivalents* $2.4 billion
*Includes cash and cash equivalents and restricted cash as at June 30, 2012 and the US$1.0 bn term loan completed August 17, 2012
STRONG LIQUIDITY POSITION
- Investment grade credit ratings from all three major rating agencies
- Recently arranged a new US$1.0 billion 3-year term loan
- Increased existing US$1.2 billion credit facility to US$1.5 billion
DISCIPLINED APPROACH TO CAPITAL ALLOCATION
- Limit for total annual capital spending will be based on a conservative estimate of
existing liquidity, cash flow availability and gold price
- Based on current forecasts, expected annual growth capital would be $1.0 - $1.5 billion
annually for the next 2 – 3 years
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- KINROSS OPERATIONS IN RUSSIA:
- KUPOL
- DVOINOYE
- VODORAZDELNAYA
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KINROSS IN RUSSIA
2007 – Kinross completes the acquisition of Bema Gold Corporation, acquiring a 75% interest (less one share) in Kupol 2010 – Kinross acquires the high-grade Dvoinoye deposit and the Vodorazdelnaya property. 2011 – Kinross increases its ownership in the strategic Kupol deposit and the Kupol East-West exploration licenses to 100%.
KUP DVO
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KUPOL (100%)
- Completed transaction increasing ownership to 100%
from 75% on April 27, 2011
- High-grade underground mine with > 3,000 tpd mill
- Produced over 3 million gold eq ounces
OPERATING RESULTS PRODUCTION (Au eq. oz.) PRODUCTION COST OF SALES ($/oz.) YTD Q3 2012 431,717 $471 FY 2011 587,048 $378 2011 GOLD RESERVES AND RESOURCES(1) TONNES (thousands) GRADE (g/t) OUNCES (thousands) 2P Reserves 9,561 9.73 2,992 M&I Resources
- Inferred Resources
425 15.50 212
Kinross increased its ownership in the Kupol mine to 100% on April 27, 2011. As a result, the results up to April 27, 2011 reflect 75% ownership, and results thereafter reflect 100% ownership.
(1) Please refer to endnote #4.
- 1st mine in Russia to obtain Cyanide Code Certificate
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DVOINOYE CONTINUES ON SCHEDULE
- Underground development continues ahead of plan: > 50% complete
- > 3,700 m completed since development began
- Surface infrastructure construction: > 45% complete
- Permanent camp near completion / All-season road progressing well
- All necessary permits for current scope of underground development and construction
activities are in place
- On schedule for expected delivery of first ore to the Kupol mill in H2 2013
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DVOINOYE AND VODORAZDELNAYA: DRILLING AND EXPLORATION
Vodorazdelnaya property YTD 2012: – 110,000m3 trenching is completed – Over 24,000m drilling completed & continuing – A newly identified occurrence ‘September’ has been preliminarily explored, results are pending
“September”
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Factors Contributing to Kinross’ Success in Russia
- Durability and persistence
- Shareholder and management alignment
- Good partnerships in-country
- Stakeholder engagement
- Effective project management and operational excellence
- Corporate responsibility and economic and social benefits
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KUPOL FOUNDATION (2009-1H2012): > 30 PROJECTS: > 20 million rubles
CONTRIBUTING TO ECONOMIC & SOCIAL DEVELOPMENT IN 2011
Jobs: Taxes & Royalties: Wages & Benefits: Local Suppliers in Chukotka: Purchased Goods & Services: > 1600 > 5 billion rubles > 1 billion rubles > 50 > 4 billion rubles
Kupol Foundation Projects Funding from Kupol Foundation
(in Rubles) SMEs (2) Local Traditions
- f Indigenous
People (18) Education (5) Health (7) SMEs > 0,5 mln Local Traditions of Indigenous Peoples (> 12,5 mln) Education (> 4,5 mln) Health (> 3 mln)
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ENDNOTES
1) For more information regarding Kinross’ production and cost outlook for 2012, please refer to the news release dated August 8, 2012, available on our website at www.kinross.com. 2) 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, and do not include production from Crixas, due to the sale of Kinross’ 50% ownership completed June 28, 2012. 3) Production cost of sales per gold equivalent ounce from continuing operations and is a non-GAAP measure defined as attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. Production cost of sales is equivalent to total production cost of sales per the financial statements less depreciation, depletion and amortization and impairment charges. For more information about this non-GAAP measure, and a reconciliation of this non-GAAP financial measure for the three months and six months ended June 30, 2012 and June 30, 2011, please refer to the news release dated August, 2012, under the heading “Reconciliation of non-GAAP financial measures”, available on our website at www.kinross.com. 4) For more information regarding Kinross’ mineral reserves and mineral resources, please refer to Kinross’ Annual Mineral Reserve and Mineral Resource Statement as of December 31, 2011, contained in the press release dated February 15, 2012 available on our website at www.kinross.com.
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KINROSS GOLD CORPORATION
www.kinrossgold.ru │ www.kinross.com │ www.кинросс.рф