Kinross Gold Corporation: February 5 EFFECTIVE INVESTMENTS IN RUSSIA’S GOLD MINING INDUSTRY 2013 Moscow, Russia Lou Naumovski, VP and General Director, Moscow Representative Office Kinross Gold Corporation 1 1 February 5, 2013 www.kinross.com www.kinrossgold.ru
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION Kinross Gold Corporation 2 2 February 5, 2013 www.kinross.com www.kinrossgold.ru
AGENDA: • KINROSS PORTFOLIO & 2012 PRELIMINARY RESULTS • KINROSS OPERATIONS IN RUSSIA • FACTORS CONTRIBUTING TO KINROSS’ SUCCESS IN THE RUSSIAN FEDERATION Kinross Gold Corporation 3 3 February 5, 2013 www.kinross.com www.kinrossgold.ru
STAKING DISTRICTS, ADDING RESOURCES, IMPROVING GRADE GOLD RESOURCES (1) 2P GOLD RESERVE EXPLORATION SPEND GRADE (2) ($ mm) (mm oz.) (g/t) Proven & Probable Gold Reserves Measured & Indicated Gold Resources Inferred Gold Resources +221% +43% $220 0.73 +13x 20.1 0.51 25.4 2.9 62.6 6.1 $17 24.7 2012e (3) 2005 2011 2005 2011 2005 (1) Please refer to endnote #4. Kinross Gold Corporation (2) Please refer to endnote #4. 5 5 (3) Please refer to endnote #1. February 5, 2013 www.kinross.com www.kinrossgold.ru
2012 PRODUCTION & COST OUTLOOK (1) • Identified $200 million in cost savings, reducing expected 2012 capital expenditures to $2.0 billion from $2.2 billion • Expect to be toward the high end of both production and cost guidance ranges: Gold Production (2) Production cost of Sales (3) % of Total Region (000 oz. Au eq.) Production ($/oz. Au eq.) 890 – 930 $830 – $870 South America 36% 640 – 660 $620 – $660 North America 25% West Africa (2) 430 – 460 $780 – $820 17% (attributable) 535 – 565 $470 – $495 Russia 22% Gold equivalent: $690 - $725/oz 2.5 – 2.6 million Total Kinross (2) : 100% 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 of 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. Kinross Gold Corporation (2) Please refer to endnote #2. 6 6 February 5, 2013 (3) Please refer to endnote # 3 . www.kinross.com www.kinrossgold.ru
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 Company- Capital & wide cost project The Way reduction optimization Forward initiative process Launched January Launched August Launched September 2012 2012 2012 Kinross Gold Corporation 7 7 February 5, 2013 www.kinross.com www.kinrossgold.ru
RENEWED FOCUS ON OPTIMIZING OUR ASSETS • 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 • Reducing unit consumption • Implement better cost controls 3. COST MANAGEMENT & LABOUR • Right-sizing workforce PRODUCTIVITY • Reevaluating capital requirements • Managing potential deferral risks 4. CAPITAL EFFICIENCY • Identified $200 mm in capex reductions for 2012 • Improving procurement planning processes 5. SUPPLY CHAIN MANAGEMENT • Planning with greater accuracy • Establishing lower cost power purchase agreements 6. ENERGY MANAGEMENT • Reducing energy consumption • Enhancing inventory management 7. WORKING CAPITAL MANAGEMENT • Reducing working capital requirements Kinross Gold Corporation 8 8 February 5, 2013 www.kinross.com www.kinrossgold.ru
MAINTAINING A STRONG BALANCE SHEET 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 Cash and cash equivalents* $2.4 billion *Includes cash and cash equivalents and restricted cash as at June 30, 2012 and the US$1.0 bn term loan completed August 17, 2012 Kinross Gold Corporation 9 9 February 5, 2013 www.kinross.com www.kinrossgold.ru
• KINROSS OPERATIONS IN RUSSIA: • - KUPOL • - DVOINOYE • - VODORAZDELNAYA Kinross Gold Corporation 10 10 February 5, 2013 www.kinross.com www.kinrossgold.ru
KINROSS IN RUSSIA DVO KUP 2007 – Kinross completes the acquisition of Bema Gold Corporation, acquiring a 75% interest (less one share) in Kupol 2010 – Kinross acquires the high-grade Dvoinoye deposit and the Vodorazdelnaya property. 2011 – Kinross increases its ownership in the strategic Kupol deposit and the Kupol East-West exploration licenses to 100%. Kinross Gold Corporation 11 11 February 5, 2013 www.kinross.com www.kinrossgold.ru
KUPOL (100%) • Completed transaction increasing ownership to 100% from 75% on April 27, 2011 • High-grade underground mine with > 3,000 tpd mill • Produced over 3 million gold eq ounces • 1st mine in Russia to obtain Cyanide Code Certificate OPERATING RESULTS PRODUCTION PRODUCTION COST (Au eq. oz.) OF SALES ($/oz.) YTD Q3 2012 431,717 $471 FY 2011 587,048 $378 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. 2011 GOLD RESERVES AND RESOURCES (1) TONNES GRADE OUNCES (thousands) (g/t) (thousands) 2P Reserves 9,561 9.73 2,992 M&I Resources - - - Inferred Resources 425 15.50 212 (1) Please refer to endnote #4. Kinross Gold Corporation 12 12 February 5, 2013 www.kinross.com www.kinrossgold.ru
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 Kinross Gold Corporation 14 14 February 5, 2013 www.kinross.com www.kinrossgold.ru
DVOINOYE AND VODORAZDELNAYA: DRILLING AND EXPLORATION Vodorazdelnaya property YTD 2012: – 110,000m 3 trenching is completed – Over 24,000m drilling completed & continuing – A newly identified occurrence ‘September’ has been preliminarily explored, results are pending “September ” Kinross Gold Corporation 16 16 February 5, 2013 www.kinross.com www.kinrossgold.ru
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 Kinross Gold Corporation 17 17 February 5, 2013 www.kinross.com www.kinrossgold.ru
CONTRIBUTING TO ECONOMIC & SOCIAL DEVELOPMENT IN 2011 Jobs: > 1600 Taxes & Royalties: > 5 billion rubles Wages & Benefits: > 1 billion rubles Local Suppliers in Chukotka: > 50 Purchased Goods & Services: > 4 billion rubles KUPOL FOUNDATION (2009-1H2012): > 30 PROJECTS: > 20 million rubles Kupol Foundation Projects Funding from Kupol Foundation (in Rubles) SMEs SMEs (2) Health > 0,5 mln (> 3 mln) Education (5) Local Traditions of Local Traditions Education Indigenous Peoples of Indigenous (> 4,5 mln) Health (7) (> 12,5 mln) People (18) Kinross Gold Corporation 19 19 February 5, 2013 www.kinross.com www.kinrossgold.ru
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