Bald Mountain, USA

Operational Excellence. Financial Discipline.
Annual Report 2015

Kinross is a global gold mining company with exceptional and consistent operating results driven by a high performance culture. With ten mines in three core regions, our focus is delivering value based on the core principles of operational excellence, balance sheet strength and responsible mining.

Kupol, Russia

Letter to Shareholders

To Our Shareholders

Kinross delivered on a number of key fronts in 2015, responding strongly to the challenge of weaker gold markets during the year, while building a clear path to future value in 2016 and beyond.

We met our production and cost guidance for the fourth consecutive year, improving performance at our key mines through continuous improvement, minimizing the production impact of weather-related challenges at two sites, and reducing costs and capital expenditures across the Company. Despite lower gold prices, we generated positive cash flow and reduced debt while prioritizing balance sheet strength and financial flexibility. At the same time, we delivered disciplined growth, opportunistically acquiring assets in Nevada – one of the world’s best mining jurisdictions – which are expected to add new production, increase cash flow, and provide significant upside. We also continued to advance our internal high-quality opportunities for growth within a manageable capital framework.

As a result, we entered 2016 forecasting a year of record production and lower costs, with the financial strength to weather an uncertain gold market and pursue additional value-enhancing growth opportunities such as the Phase One Tasiast expansion.

J. Paul Rollinson
President and Chief Executive Officer


of meeting
or outperforming
guidance targets

Record production and lower costs forecast in 2016

We expect to improve on our excellent performance in 2015 with an even stronger year in 2016.

With the addition of new ounces from our Nevada acquisition, we forecast1 record production of 2.7 to 2.9 million gold equivalent ounces, with production from the Americas region increasing by 7% to represent approximately 61% of our total.

Our 2016 AISC is expected to be lower, compared with 2015, at $890 to $990 per Au eq. oz., with production cost of sales also expected to be lower at $675 to $735 per Au eq. oz. Capital expenditures are expected to be $755 million, which includes an estimated $160 million in 2016 capex for Phase One of the Tasiast expansion project.

2015 Highlights

  • Remained among world’s safest mining companies with record safety performance
  • Produced 2.6 million gold equivalent ounces (Au eq. oz.), at the high end of our guidance range, at an all-in sustaining cost (AISC) of $975 per ounce, at the low end of our guidance range
  • Lowest production cost of sales in four years at $696 per ounce
  • Ended year with $1 billion in cash while repaying $80 million in debt
  • Reduced corporate head count with expected savings of 20%, and reduced capital expenditures to $610 million, which was below our guidance
  • Acquired high-quality producing Nevada assets, increasing production and cash flow, and providing clear path to upside
  • Developed two-phased expansion concept to realize full potential of Tasiast orebody at a manageable capital cost in a volatile gold price environment
  • Completed pre-feasibility study at La Coipa showing positive economics, and added significantly to site’s mineral resource estimate
  • Contributed to 553 local community programs and events, reaching an estimated 777,000 beneficiaries

Delivering disciplined growth

Nevada acquisition

In January 2016, we completed the acquisition of 100% of the Bald Mountain gold mine and 50% of the Round Mountain gold mine in Nevada from Barrick Gold Corporation for $610 million in cash. These high-quality assets build on our platform in one of the world’s best mining jurisdictions and are expected to add an average of approximately 430,000 Au eq. oz. per year over the next three years while lowering our forecast overall costs and providing free cash flow.

Bald Mountain also encompasses a 600 sq. km highly prospective land package in Nevada’s Carlin Trend, one of the most prolific gold producing regions in the United States. In 2016, our exploration priority at Bald Mountain is converting a significant amount of existing estimated mineral resources to mineral reserves – just as we did in 2015 at Round Mountain, where we converted an estimated 440,000 ounces of mineral resources to mineral reserves, more than offsetting depletion and adding to estimated mine life at one of our most successful mining operations.

2016E Gold
Equivalent Production1, 2

Tasiast expansion

Our two-phased approach to a mill expansion at Tasiast is designed to lower production costs and generate positive near-term cash flow at a manageable capital cost in Phase One, and then, in a potential Phase Two, to realize Tasiast’s full economic potential by adding additional grinding capacity to further increase production and reduce costs.

On March 30, 2016 we announced our decision to proceed with Phase One, which is expected to increase throughput from its current 8,000 tonnes per day (t/d) to 12,000 t/d, with estimated gold production of 409,000 ounces per year and annual production cost of sales of $535 per ounce. Preparation for construction is expected to begin immediately, with full production expected by the end of Q1 2018.

We also announced details of a pre-feasibility study on a potential Phase Two expansion based on installing additional mill throughput of 18,000 t/d for a total combined capacity of 30,000 t/d. Total capital expenditures have been significantly lowered compared with previous expansion study estimates, while expected benefits remain compelling, with a 30,000 t/d Tasiast expected to be the Company’s largest and lowest cost operation.

Prioritizing balance sheet strength

We ended 2015 on a strong note, adding cash to our balance sheet and repaying debt, despite an average gold price which declined by $106 per ounce over the course of the year.

Following the close of our Nevada acquisition on January 11, 2016, and the close of our bought deal financing on March 4, 2016, Kinross had a robust liquidity position of approximately $2.2 billion, consisting of approximately $700 million in cash and cash equivalents, and $1.5 billion of available undrawn credit facilities.


  • Putting people first
  • Outstanding corporate citizenship
  • High performance culture
  • Rigorous financial discipline

Commitment to responsible mining and corporate governance

Kinross’ long history of co-operative relations with our operating communities is built on a strong commitment to health and safety, environmental responsibility, meaningful stakeholder consultation, and community partnerships. In 2015, we had 168,000 stakeholder interactions, including community members, government representatives, and non-profit organizations at our sites.

In 2015, we were named “Canada’s Most Sustainable Mining Company” by Maclean’s magazine, and received environmental and safety awards at a number of our sites. Kinross was also ranked as the top gold mining company, and second highest among all mining companies, in the Globe and Mail annual corporate governance survey.

Our value proposition

Based on our strong fundamentals of consistent operational performance, large gold production, financial strength, and relatively low-risk growth opportunities, we believe that Kinross presents a compelling value opportunity. Given our attractive trading metrics relative to our peers, we also believe that much of that fundamental value is yet to be realized in our share price.

Looking back at the past four years, we have consistently met or outperformed our production and cost guidance, significantly reduced our capital expenditures while continuing to invest in our operations, prioritized balance sheet strength, operated safely, and maintained strong relations with our host communities – all while producing over 10 million ounces of gold. Looking forward over the next four years, we expect to produce another 10 million ounces of gold, and intend to maintain the same high standards of operational dependability, capital discipline, financial strength, safety, and stakeholder engagement.

In closing, let me once again say “thank you” to our employees for consistently delivering on these commitments – and to our shareholders for your continued support.

J. Paul Rollinson
President and Chief Executive Officer
Kinross Gold Corporation

Paracatu, Brazil

2015 Achievements

Operations – Four years of meeting or outperforming production and cost targets

$975 All-in sustaining cost[3] per Au eq. oz

At the low end of 2015 guidance due to lower capital and operating costs.

2.6 million Gold Equivalent Ounces Produced (Attributable)[2]

At the high end of 2015 guidance due to near record production at Fort Knox and Round Mountain and increased throughput at Kupol-Dvoinoye.

Production Cost of Sales[3] ($ per gold equivalent ounce)

At the low end of guidance and the lowest production cost of sales since 2011 due to favourable exchange rates, low oil prices and continuous improvement initiatives.


Capital Expenditures: 2013 - $1.26b, 2014 - $632m, 2015 - $610m

Continued trend of reduced spending while achieving the right balance between disciplined capital allocation and investing in operations.

paid down $80m

in debt bringing the four-year total of debt repayment to $700 million.

$2.2 Billion in Liquidity. $1.5b Undrawn credit facilities. $700m Cash & Cash Equivalents

Maintained balance sheet strength and financial flexibility, as liquidity position remained strong post-Nevada acquisition and bought deal financing in early 2016.

Strategic initiatives


Acquired quality Nevada assets – 100% of Bald Mountain and remaining 50% ownership of Round Mountain. Provides clear path to upside potential and expected to add production, lower overall costs and enhance credit metrics.


Developed two-phased expansion concept to realize full potential of Tasiast orebody at a manageable cost.

Reduced corporate head count to achieve 20% in expected savings on overhead costs
Chirano, Ghana

Corporate Responsibility Highlights

Health + safety

3 consecutive years

Completed the third consecutive year with zero fatalities among employees and contractors working at our operations and projects.

Achieved best safety performance in Kinross history
Total Reportable Injury Frequency Rate (includes all employees and contractors for 200,000 hours worked): 2011 - 0.93, 2012 - 0.56, 2013 - 0.43, 2014 - 0.38, 2015 - 0.33.

Continued company-wide trend of improved safety performance and remained among the top performers in the industry.

Corporate responsibility

777,000 Beneficiaries

We contributed to 553 local community programs, initiatives and events with approximately 777,000 beneficiaries from our local population base.

97% of workforce from host countries

Creating meaningful livelihoods for our employees is one of the most positive social impacts of our business. Local employment is an important objective and we are committed to using national workers in the countries where we operate.

More than $2 billion spent in-country

The majority of the direct and indirect economic value we generate through metal sales is spent in host countries through local purchasing, taxes and wages.

+168,000 stakeholder interactions

Our goal is to keep our neighbours informed about our activities through active engagement and dialogue. By listening to them, we can understand both their concerns and their vision for the development of their community.

100% of tailings facilities inspected

Independent expert reviews conducted at all Kinross sites over the past two years as part of our tailings management standards. In 2015, we introduced a quarterly tailings scorecard to further strengthen our best-in-class standards.

33% Board diversity target. The board of directors achieved its diversity target with six men and three women on the board in 2015.