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The CIS Precious Metals and Stones Summit
The CIS Precious Metals and Stones Summit
Hugh AgroHugh AgroSr. Vice President, Corporate DevelopmentSr. Vice President, Corporate Development
Kinross Gold CorporationKinross Gold CorporationMoscowMoscow
13 February 200613 February 2006
Legal NoticeLegal Notice
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 andother 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.
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OverviewOverview
• Kinross Gold Corporation
• Kinross in Russia
• Why Russia?
• Kinross Strategic Considerations
3
Kinross Gold Corporation
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Kinross: A Major Gold ProducerKinross: A Major Gold Producer
• 4th largest North American-based gold producer• $4.5 billion market value – top performer past 6 months relative to peers • NYSE and TSE listed – recent volume of 6 million shares per day
• 2005 estimate• Gold production – 52 tonnes (1.6 MM oz) • Total Cash Costs – est. $275 per ounce
• A global company• 10 mines located in North America, Brazil, Chile and Russia• 4,000 employees
• Continuing gold reserve growth• 626 tonnes (19.4 MM oz) at Dec. 31/04 ($350/oz Au)
• Additional 155 tonnes (4.8 MM oz) of reserves at Paracatu (Oct. 31/05; $400/oz Au)
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Americas Focus, Global ReachAmericas Focus, Global Reach
Fort Knox (100%)Alaska, USA (Open Pit)
Musselwhite (32%)Ontario, Canada (U/G)
Porcupine (49%)Ontario, Canada (Open Pit, U/G)Kettle River (100%)
Washington, USA (U/G)
Round Mountain (50%)Nevada, USA (Open Pit)
La Coipa (50%)Chile (Open Pit)
Refugio (50%)Chile (Open Pit)
Paracatu (100%)Brazil (Open Pit)
Crixas (50%)Brazil (U/G) Blanket (100%)
Zimbabwe (U/G)
Kubaka (98.1%)Magadan, Russia (Open Pit, U/G)
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Kinross in Russia
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Kinross in RussiaKinross in Russia
Omolon Gold1
• Kinross2 first visited Russia in 1990
• In mid-1993, Omolon won bid for the Kubaka
• Located in the MagadanOblast about 300 km south of the Arctic Circle, 700 km northeast of Magadan
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Notes: (1) 98.1% owned Kinross subsidiary, (2) As predecessor company, Amax Gold
Kinross in RussiaKinross in Russia
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Kubaka Mine
• Opened in early 1997
• Biggest gold mining operation in Russia in the late 1990s
• From 1997 to 2005, Kubaka produced 93 tonnes of gold
• Mining now completed; currently processing low grade stockpiles
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Kinross in RussiaKinross in Russia
• A well regarded corporate citizen
Focus on Exploration
• 416 staff at YE05; 81 in exploration
• 2006 planned activities:Kubaka reclamation Evaluation of Birkachan low grade heap leach potentialExpanded exploration program – 30,500 meters drilling in Magadan Oblast
Kinross in RussiaKinross in Russia
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Why Russia?
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Why do we like Russia?Why do we like Russia?
Source: Metals Economics Group, USGS, Kinross estimates
• Home to 5th largest gold resource in the world
SOUTH AFRICA
CANADA
U.S.
PERU
RUSSIA CHINA
AUSTRALIA
258 t51 yrs
129 t71 yrs
173 t24 yrs 341 t
68 yrs
169 t48 yrs
215 t24 yrs
259 t
79 yrs
Mine Production 2004
Implied Mine Life using 2004 production rates
LEGEND
0
100
200
300
400
500
600
700
800
South Africa
0
100
200
300
400
500
600
700
800
Russia
0
100
200
300
400
500
600
700
800
Australia
0
100
200
300
400
500
600
700
800
US
0
100
200
300
400
500
600
700
800
0
100
200
300
400
500
600
700
800
Canada
0
100
200
300
400
500
600
700
800
Peru
0
100
200
300
400
500
600
700
800
Chile
CHILE
3,200t*
39 t82 yrs
13,200t*
* Total Gold Reserves& Resources (P&P, MI+I)
9,100t*
8,100t* 5,216t*
20,500t*23,400t*
4,200t*
2004 ExplorationBudget (US$ mm)
$280m
$686m$152m N/A
$102m
$203m$203m
$533m
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Top Undeveloped Gold ProjectsTop Undeveloped Gold Projects
• 130 undeveloped primary gold projects over 2.5 MM oz Au, 22% located in CIS
• Excluding those controlled by major gold companies or in high
risk countries, 32% located in CIS
Top 130 Primary Gold Projects*
5
1410
1822
61
0
10
20
30
40
50
60
70
Over 10.0 millionoz. resources
5.0 to 10.0million oz.resources
2.5 million to 5.0million oz.resources
Num
ber o
f Pro
ject
s
All Other Countries CIS
Source: Metals Economics Group, Kinross estimates, *Pre-production and earlier stage projects, primary metal Au
Top 71 Primary Gold Projects*(Excl. Major Gold Co. Holdings & Risky Countries)
2
12
9
31
98
0
5
10
15
20
25
30
35
Over 10.0 million oz.resources
5.0 to 10.0 million oz.resources
2.5 million to 5.0million oz. resources
Num
ber
of P
roje
cts
All Other Countries CIS
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Contrasting RegionsContrasting Regions
Russia• Strong and stable federal government
• Growing economy; relatively high inflation; stable exchange rate
• Powerful domestic competitors – Norilsk/Polyus, PolyMetal, etc.
• Maturing legal framework, not consistently applied outside Moscow
• Competitive environment for specialists and other qualified personnel
• State involvement in M&A; uncertain definition of strategic deposits
• Cost of doing business for a North American company in Russia
• Rigidity of State Balance requirements – not driven by economics
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Contrasting RegionsContrasting Regions
Chile• Progressive political system; new president promises to sustain growth
• Strong, growing economy; modest level of inflation; appreciating Peso
• Many state institutions privatized; Codelco is one significant exception
• Highly competitive; but activity of intermediate and juniors net positive
• Open market; equal treatment of foreigners and nationals
• Importance of mining industry to domestic agenda – +/-40% of exports
• Well developed infrastructure; fully developed banking system
• Familiarity with global companies – commercial, regulatory, language
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Contrasting RegionsContrasting Regions
Brazil• Popular President marred by scandals; elections in October 2006
• Resource dominated export economy boom; high inflation
• High interest rates; appreciating Real – impact on costs, planning
• Kinross presence – produces +/-30% of Brazil’s primary Au production
• Skilled workforce; low turnover; limited mobility
• Crime rates in major Brazilian cities is a concern
• Benefits of significant state investments – power, transport, water
• FTAA initiative – $3.2 billion in annual Brazil-Canada bilateral trade
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Kinross Strategic Considerations
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• Growth from Core Operating assets
• Exit non-core assets
• Focus on quality mines, Kinross as operator
• Enhanced greenfield/district exploration
• Corporate development through acquisitions
Kinross Strategic FocusKinross Strategic Focus
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Corporate Geographic PrioritiesCorporate Geographic Priorities
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High PriorityMedium PriorityLow Priority
• Geographic focus on the Americas and select other regions
Corporate Acquisition CriteriaCorporate Acquisition Criteria
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• Focus on precious metals (gold and silver)
• Cornerstone assets
• High margin projects that offer operating flexibility
• Emphasis on mid-stage or better development assets
• Emphasis on district exploration potential
• Ability to enhance the Corporation’s sustainability
• Kinross competitive advantage
• Metrics: NAVPS and CFPS
Pursuing Opportunities in RussiaPursuing Opportunities in Russia
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• Kinross reinitiated corporate developmentactivities in Russia in 2005
• Proceeding carefully
• Key issues:
Competition
Transparency of process
Ability to complete ‘western style’ due diligence
Kinross shareholders’ desire for balance in the portfolio
Price expectations
Market CommentaryMarket Commentary
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• One year forward P/E’s1:Russian Index – 8.7xBrazil Index – 11.6xN.A. Indices – 17.4x
• Gold Sector P/NAVs2
Companies with CIS exposure – 1.8x NAVN.A. Golds – 2.4x NAV
Notes: (1) Datastream and Bloomberg (January 27, 2006), (2) Street Research Averages by Merrill Lynch
Source: Scotia Capital Emerging Market Research
Russian Discount Market’s Tolerance for Risk
Closing CommentsClosing Comments
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• There are tremendous opportunities in the CIS
• Kinross is experienced in the region
• We manage risks by taking a disciplined approach to corporate development
• With success, the region will be as much a part of our future as it has been a part of our past
Kinross Gold Corporation40 King Street West, 52nd Floor
Scotia PlazaToronto, ON M5H 3Y2
416-365-5123416-363-6622866-561-3636
Shares outstanding: 345.3 millionMarket cap.: US$4.5 billion (at Feb. 1, 2006)
KGC: NYSE (Common shares)K: TSX (Common shares)K.U: TSX (US dollar trading symbol)K.WT: TSX (Warrants expiring 05/12/07)
