BMO Nesbitt Burns Gold ConferenceLooking Ahead - 2004 GoalsLooking Ahead - 2004 Goals 2. Deploy...
Transcript of BMO Nesbitt Burns Gold ConferenceLooking Ahead - 2004 GoalsLooking Ahead - 2004 Goals 2. Deploy...
BMO Nesbitt Burns Gold ConferenceBMO Nesbitt Burns Gold ConferenceMarch 3, 2004March 3, 2004
ASPIRING TO BE WORLD CLASSASPIRING TO BE WORLD CLASS
Kinross is now a major gold producer, focused Kinross is now a major gold producer, focused in the Americasin the Americas
Concerns addressed:
Financial leverage – strong balance sheet
Cash costs – comparable to other North American seniors
Reserve life – increasing year over year
Execution risk – None
Deliver on the deliverables
Kinross TodayKinross Today
0
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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004E
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Formation Nerco FalconbridgeMacassa AMAX Echo Bay / TVX
Each transaction is a stepping stone…
Kinross Has GrownKinross Has Grown
Production Profile and MarginProduction Profile and Margin
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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004E-
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Gold Equivalent Production Average Realized Gold Price Total Cash Costs
Shrinking margins
Expanding margins
2003 Results…Returning to Profitability
2003 Results…Returning to Profitability
Produced 1.62 million gold equivalent ounces at total cash costs of $222 per ounce
Cash flow from operations of $106.4 million in 2003
Increased reserves by;
7.5% to 14.1 million ounces of gold
19% to 38.6 million ounces of silver
Year end cash balance ~$250 million
Gold hedges are <2% of reserves and to be eliminated by Q1/05
EPS of $0.09 in Q4/03; EPS of $0.06 in 2003
K.TO, Last Trade [O/H/L/C Bar] Monthly26Jan89 - 21Jul04
Jul89 Jan90 Jul Jan91 Jul Jan92 Jul Jan93 Jul Jan94 Jul Jan95 Jul Jan96 Jul Jan97 Jul Jan98 Jul Jan99 Jul Jan00 Jul Jan01 Jul Jan02 Jul Jan03 Jul Jan04 Jul
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TOR KINROSS GOLD , Last Trade, O/H/L/C Bar29Feb04 9.20 10.10 8.92 9.37
K.TO, Last Trade [O/H/L/C Bar] .XAU, Close(Last Trade) [Line] Monthly16Nov 89 - 15Jul04
Jul89 Jan90 Jul Jan91 Jul Jan92 Jul Jan93 Jul Jan94 Jul Jan95 Jul Jan96 Jul Jan97 Jul Jan98 Jul Jan99 Jul Jan00 Jul Jan01 Jul Jan02 Jul Jan03 Jul Jan04 Jul
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PrUSD
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TOR KINROSS GOLD , Last Trade, O/H/L/C Bar29Feb04 9.20 10.10 8.92 9.33
XPH GOLD/SILVER INDX , Close(Last Trade), Line29Feb04 100.05
Kinross Share Performance Kinross Share Performance Poised…
Kinross share price ($CDN) Philadelphia Gold Index - XAU
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1998 1999 2000 2001 2002 2003
$ m
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~$380M
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Year end net cash
expectation at Q3
Actual net cash
at year end 2003
~$460M
Fort Knox, USA (100% Kinross)Fort Knox, USA (100% Kinross)
• Large, efficient mill fed by two open pit mines
• ~350,000 ounces of gold produced annually
• Reserves increased 10% in 2003
20%
80%
USA
2004 Estimated Production(% of total production)
Round Mountain, USA (50% Kinross, operator)Round Mountain, USA (50% Kinross, operator)
• World’s largest and most efficient heap leach mine
• 360,000 ounces of gold produced annually to Kinross’ account
• Renewed exploration focus almost replaced reserves in 2003
20%
80%
USA42%
58%
USA 48%52%
USA
2004 Estimated Production(% of total production)
Porcupine, Canada (49% Kinross)Porcupine, Canada (49% Kinross)
• Largest historic gold district in North America having produced over 65 million ounces
• 200,000 ounces of gold production per year for Kinross
• Replaced reserves consumed in 2003
48%52%
USA 48%
12%
40%
USA
Canada
48%
23%
29%
USA
Canada2004 Estimated Production
(% of total production)
Paracatu, Brazil (49% Kinross)Paracatu, Brazil (49% Kinross)
• Large and efficient open pit mine and mill to be expanded
• Kinross’ production to grow from 100,000 to 150,000 per year
• Reserves increased by almost 5% in 2003 with a further increase expected when the expansion is approved
48%
23%
29%
USA
Canada
48%
23%
6%
23%
USA
Canada
Brazil48%
23%
21%
8%
USA
Canada
South America
Other
2004 Estimated Production(% of total production)
Geographic Distribution of Reserves at $325 Gold
South America
36%
North America
59%
Other5%
14.4% increase
Rest of WorldKubaka
CrixasRefugioLa CoipaParacatu
OtherPorcupineRound MountainFort Knox
North America
South America
Other - Global
12/31/03 @ $400
16.2
14.1
12/31/03 @ $325
Geographic Distribution of Reserves at $400 Gold
South America
40%
North America
56%
Other4%
Reserve ComparisonReserve Comparison
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12/31/02 @ $300
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Millions of ounces of gold
Reserves up 7.5% year over year
Exploration Pre-feasibility Feasibility Construction Production
New Discovery
Proven & Probable ReservesMeasured & Indicated Resources
Progress January to December 2003
New Acquisition
Current Project PipelineCurrent Project Pipeline
Round Mountain UG Aquarius
Emanuel CreekRefugio
Pamour
Paracatu Expansion
Emanuel North
Tsokol
PQ Deeps
Birkachan
Puren
Gil
Gurupi
Forquila Sul
Gold Hill
BuckhornWind River
Capital ExpendituresCapital Expenditures
• Kinross’ current asset base requires sustaining capital of $50 - $75 million per year
• Have added managerial and technical personnel to oversee development of the project pipeline
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OtherPorcupineParacatuRefugioSustaining
$ millions
Renewed life…
Restarting Refugio (50% Kinross, operator)Restarting Refugio (50% Kinross, operator)
Proven and probable reserves at $325/oz and $400/oz of 1.4 and 2.7 million ounces, respectively (50% basis)
Capital cost ~ $100 million (100% basis)
Initial production Q4/04
Annual life of mine production (100% basis) ranging from 230,000 – 260,000 ounces over 10 years
Average total cash costs of ~ $225/oz
Restarting Refugio (50% Kinross, operator)Restarting Refugio (50% Kinross, operator)
Renewed life…
Paracatu Expansion (49% Kinross)Paracatu Expansion (49% Kinross)
Optimizing…
Paracatu Expansion (49% Kinross)Paracatu Expansion (49% Kinross)
Increase milling capacity and improve efficiency resulting in:• Increased gold recoveries
• Lower costs
• Increased resources due to lower cutoff grade
Increase production to 250,000 oz/yr (100%) thru 2025• Average yearly production in first 5 years of +300,000 ozs (100%)
Reviewing feasibility• Decision Q2/04; construction 2004/05; and production late 2005
• Preliminary cost estimated at $70 M (100%)
Estimated 36% IRR @ $350 / oz gold (base case scenario)
Optimizing…
PROPOSED PITOUTLINE
PROPOSED PITOUTLINE
WEST PITWEST PIT
#3 PIT#3 PIT
CENTRALZONE
2002 EXPLORATION DRILLING
2003 North Zone Discovery
Porcupine (49% Kinross)Porcupine (49% Kinross)
Extending life…
Pamour open pit to extend mine life beyond 2012 Mill expansion to 15,000 tpd in 2004
First ore from new pit in 2005
+200,000 ozs per year (100%) at total cash costs of ~ $215 - $235 / oz
Open pit feasibility study complete, permitting in progress
Total Porcupine production of ~400,000 ozs per year (100%)
Porcupine (49% Kinross)Porcupine (49% Kinross)
Extending life…
Kettle River (100% Kinross)Kettle River (100% Kinross)
Rebirth…
Kettle River (100% Kinross)Kettle River (100% Kinross)
Emanuel Creek orebodies are fully permitted
Production has commenced
~100,000 ozs per year
Emanuel North zone appears to be comparable grade to the Emanuel Creek and Emanuel West zones, but larger
Developing an access strategy to further delineate and ultimately develop Emanuel North
Rebirth…
Drilling at Kubaka (98.1%) in Russia extends mine life– Production at Birkachan to commence in 2004– U/G development at Tsokol to commence in 2004
Other Projects Other Projects
Gold Hill at Round Mountain (50%) advancing to feasibility in 2004
Definition drilling on the newly discoveredForquilha Sul ore body at the Crixas (50%)mine in Brazil will continue in 2004
Puren Norte adds to La Coipa (50%) mine life
• Deploy capital strategically
• Closely monitor operations
• Maintain quality management teams
• Continuous improvements initiatives at existing sites
Operational Strategic Initiatives Operational Strategic Initiatives
Continue expanding the reserve base
Go back to the drill bit
Find and retain quality employees
Meet or exceed Corporate Governance standards
Corporate Mission…StrategyCorporate Mission…Strategy
“ASPIRING TO BE WORLD CLASS”
Work the current portfolio to its potential
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Audit Committee
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Independent
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Nominating Committee
Compensation Committee
Board of Directors
Corporate Governance Corporate Governance
Board Composition
John E. Oliver – Chairman, Kinross Robert M. Buchan – President & CEO
John A. Brough Scott A. Caldwell – Executive VP and COOJohn M.H. Huxley Arthur H. Ditto – retired mining exec.
John A. KeyesCam A. MingayGeorge F. MichalsRichard S. Hallisey
Independent Directors Other
• Split the role of Chairman and CEO in 2003
• Stock options and other compensation schemes not excessive
• Independent internal auditor reporting directly to the audit committee will be in place this year
• Added independent Board members with backgrounds in mining operations and mining investment banking
Corporate GovernanceCorporate GovernanceOngoing Initiatives
Growth from within
Attention to assets
Bench Strength
Proven transactionalcapabilities
Paracatu expansion, Gurupi
Optimize cash starved assets -Round Mountain, Kettle River
Strengthen management team by attracting and retaining quality employees
Corporate transactions where synergies can be realized
StrategyStrategy
Permitting process has begun at Buckhorn
Acquisition of Crown anticipated to be complete in Q2/04
Initial results indicate: • Yearly production of ~150,000 – 160,000 ozs Au• Total cash costs of < $150 / oz• Initial capital costs of ~ $10 – $15 million
Accretive transaction on all relevant metrics
Payback, including acquisition costs, in less than 3 years (at $350 Au)
Business DevelopmentBusiness Development
Crown Acquisition
2003 Goals / Achievements2003 Goals / Achievements
1. Turn three operating styles into one…Kinross’
2. Generate cash flow, operating costs and production expected of a senior producer
3. Achieve and maintain 2 million ounce production profile
4. Layout a growth strategy
Looking Ahead - 2004 GoalsLooking Ahead - 2004 Goals
2. Deploy surplus capital appropriately
3. Deliver on the deliverables
4. Achieve and maintain 2 million ounce production profile
1. Grow reserves
• Paracatu expansion; Buckhorn
• Increase average mine life from 7 to 8 years in 2004
Certain statements set forth in this presentation constitute"forward looking statements" within the meaning of the
United States Private Securities Litigation Reform Act of 1995. Such statements involve risks, uncertainties and
other factors that may cause the actual results, performance or achievements to differ from those expressed or implied by such forward
looking statements. Such risks and uncertainties are described in periodic filings made by Kinross Gold Corporation with the U.S. Securities and Exchange Commission and Canadian provincial
securities regulatory authorities.
All dollar amounts used throughout this presentation are expressed in US dollars, unless otherwise noted.
Forward Looking StatementForward Looking Statement
Kinross Gold Corporation Kinross Gold Corporation
Shares outstanding: 345.6 millionKGC: NYSE K: TSXK.U: TSX (US dollar trading symbol)K.WT: TSX
Kinross Gold Corporation40 King Street West, 52nd Floor
Scotia PlazaToronto, ON M5H 3Y2
416-365-5123416-363-6622866-561-3636
Aspiring to be World ClassAspiring to be World Class