Expected to increase throughput by over 50% at initial capital cost of $150 million
Kinross proceeding with value-enhancing Tasiast 24k project
Expected to increase throughput by over 50% at initial capital cost of $150 million
(This news release contains forward-looking information about expected future events and performance of the Company. We
refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located of this
release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
TORONTO, Sept. 15, 2019 -- Kinross Gold Corporation (TSX:K; NYSE: KGC) (“Kinross”) today announced that it is proceeding
with a project to incrementally increase throughput capacity at its Tasiast mine to 24,000 tonnes per day (t/d). Based on the
results of the completed “Tasiast 24k” feasibility study, the project is expected to increase production, reduce costs, and
generate significant cash flow and attractive returns at an initial capital cost estimate of $150 million.
Tasiast 24k project feasibility study highlights
(Based on a $1,200/oz. gold price and $55/bbl oil price)
Throughput capacity (t/d) 24,000
Average annual production (Au oz.) (2022 – 2028) 563,000
All-in sustaining cost (per oz.)1 (2022– 2028) $560
Production cost of sales (per oz.)1 (2022 – 2028) $485
Net present value (NPV)2 ($ billions) $1.7
Initial capital expenditures ($ millions) (incremental) $150
Internal rate of return (IRR)2, 3 (incremental) 60%
CEO commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to the Tasiast 24k project:
“We are excited to be moving ahead with the value-enhancing Tasiast 24k project. The project allows us to further unlock
Tasiast’s substantial value through a capital efficient, low-risk investment which maximizes the mine’s potential through
continuous improvement and leverages the knowledge we have gained from running the successful Tasiast Phase One
expansion. The 24k project is expected to increase production and lower costs while generating attractive returns and
significant free cash flow.
“We are well positioned to successfully execute the Tasiast 24k project. We have strong liquidity, the $300 million project
financing is proceeding as planned, the expanded Tasiast operation continues to consistently outperform initial expectations,
and permits for the project are in place. The Tasiast 24k project further strengthens our development pipeline, adding to our
high-quality projects in the U.S., Chile and Russia.”
Tasiast 24k project overview
The Tasiast 24k project takes a continuous improvement approach to increasing throughput, which is expected to ramp up to
21,000 t/d by the end of 2021, and then to 24,000 t/d by mid-2023. The project is expected to extend life of mine by four years
to 2033.
Throughput increases are expected to be achieved through minor upgrades and de-bottlenecking initiatives in the plant. The
project includes modifications to the existing grinding circuit, adding new leaching and thickening capacity, as well as
incremental additions to onsite power generation and water supply.
Tasiast 24k project flyover video animation: https://youtu.be/6zOzvltZgP4
Tasiast 24k project*
Timeline Operational metric Estimate
2022 – 2028
Average annual production (Au oz.) 563,000
Production cost of sales (per Au oz.)1 $485
All-in sustaining costs (per Au oz.)1 $560
Average CIL grade processed (g/t) 2.2
Strip ratio 5.9
Average processing cost (per tonne) $14.20
Average mining cost (per tonne)** $2.40
Total material mined (tonnes) 375,900,000
Average annual production (Au oz.) 281,000
2029 – 2033
Production cost of sales (per Au oz.)1 $860
All-in sustaining costs (per Au oz.)1 $940
Average CIL grade processed (g/t) 1.1
Strip ratio 5.1
Average processing cost (per tonne) $14.20
Average mining cost (per tonne)** $2.65
Total material mined (tonnes) 94,300,000
2020 – 2033
(Life of mine)
Average annual production (Au oz.) 445,000
Production cost of sales (per Au oz.)1 $585
All-in sustaining costs (per Au oz.)1 $6654
Average CIL grade processed (g/t) 1.8
Average recovery rate 93%
Strip ratio 6.1
Average processing cost (per tonne) $14.60
Average mining cost (per tonne)** $2.45
Total material mined (tonnes) 628,800,000
Total ounces recovered 6,200,000
*Based on a $1,200 per ounce gold price assumption and $55/bbl oil price assumption, and current operation plus 24k
project.
**Includes re-handle costs.
With the go-ahead decision for Tasiast 24k, the project team has been established and work packages and initial contracts
are expected to be awarded shortly. The Company has permits in place for the 24k project and detailed engineering is now
more than 50% complete.
The Company expects to file an updated Tasiast Technical Report at the end of October 2019 that incorporates the 24k
project.
Lower capital costs and relative execution risk
The initial project capital costs are expected to be approximately $150 million, which is significantly less than the capital
estimate for the original 30,000 t/d Phase Two expansion plan. The 24k project has reduced execution risk, requires less
additional infrastructure, and leverages greater utilization of the existing facilities.
The design and engineering of the project benefitted significantly from the knowledge acquired operating the Phase One
expansion, which helped identify many of the opportunities included in the 24k plan. For example, the project leverages the
upside flexibility of the SAG mill, instead of requiring the addition of a new ball mill, resulting in substantial capital savings.
The project also incorporates operational efficiencies in maintenance, mining, supply chain and processing, which have
contributed to Tasiast’s record operating performance over the past three quarters since the completion of the Phase One
expansion.
Forecast Tasiast 24k project initial capital costs ($ millions)
Support infrastructure 47
Process plant 32
Indirect, owner’s cost and taxes 47
Contingency 24
Total 150
The 24k plan includes non-sustaining capitalized stripping from 2020 – 2029, which is expected to average approximately $95
million per year.
Project financing
The Company is on schedule to complete the $300 million in project financing for Tasiast from the International Finance
Corporation (IFC), Export Development Canada (EDC), and two commercial banks later this year. The Company has strong
liquidity and is well positioned to fund the Tasiast 24k project.
Mauritania update and new labour agreement
Kinross has been actively engaged with the Government of Mauritania since the presidential inauguration in August 2019. On
September 11, 2019, the Company’s President and CEO, Paul Rollinson, held a productive meeting with the country’s newly-
elected President, His Excellency Mohamed Ould Cheikh El Ghazouani. Mr. Rollinson also held meetings with key members
of the newly-appointed cabinet, including the Prime Minister and the Minister of Petroleum, Energy and Mines. During the
meetings, both parties reaffirmed their shared commitment to working towards a positive future for Tasiast, which is a
significant contributor to the Mauritanian economy.
The Company recently signed an agreement in principle on the main terms and conditions of a new three-year collective labour
agreement with unionized employees at Tasiast, which is expected to be finalized in the coming weeks. The previous labour
agreement was set to expire in November 2019.
Tasiast 24k project gold price sensitivity estimates
Average gold price
$1,100/oz. $1,200/oz. $1,300/oz. $1,400/oz. $1,500/oz. $1,600/oz.
IRR2, 3
(incremental) 53% 60% 66% 72% 75% 75%
NPV2
($ billions) (current operation plus 24k project) $1.3 $1.7 $2.1 $2.5 $2.8 $3.2
Tasiast 24k project oil price sensitivity estimates
Oil price
$45/bbl $55/bbl $65/bbl
IRR2, 3
(incremental) 61% 60% 59%
NPV2
($ billions) (current operation plus 24k project) $1.8 $1.7 $1.6
Mineral Reserves and Mineral Resource estimates 5
As a result of the Tasiast 24k feasibility study, estimated proven and probable mineral reserves at December 31, 2018 at
Tasiast are approximately 7.2 million Au oz., compared with the previously disclosed 7.4 million Au oz., with grades remaining
unchanged at 1.9 g/t. The estimated measured and indicated mineral resources are 2.7 million Au oz. compared with the
previously disclosed 2.9 million Au oz.
Tasiast Proven and Probable Mineral Reserves
(As of December 31, 2018)
Tonnes
(kt)
Grade
(Au g/t)
Ounces
(Au koz)
Proven 26,258 2.0 1,653
Probable 69,891 2.1 4,705
Stockpiles 24,689 1.1 850
Total 120,838 1.9 7,207
Tasiast Measured and Indicated Mineral Resources
(As of December 31, 2018)
Tonnes
(kt)
Grade
(Au g/t)
Ounces
(Au koz)
Measured 5,593 0.7 126
Indicated 65,086 1.2 2,576
Total 70,678 1.2 2,702
Tasiast Inferred Mineral Resources
(As of December 31, 2018)
Tonnes Grade Ounces
(kt) (Au g/t) (Au koz)
Inferred 6,322 1.9 378
Denver Gold Forum presentation
Kinross Gold President and CEO J. Paul Rollinson is scheduled to present at the Denver Gold Forum on September 17, 2019
at 9 a.m. MT. A copy of the presentation will be available at: https://www.kinross.com/news-and-investors/presentations/
An archived recording of the presentation will be available from September 19, 2019 at 3:30 p.m. MT:
http://www.denvergold.org/company-webcast/dgf19/75/
About Kinross Gold Corporation
Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia,
Mauritania, Chile and Ghana. Kinross’ focus is on delivering value based on the core principles of operational excellence,
balance sheet strength, disciplined growth and responsible mining. Kinross maintains listings on the Toronto Stock Exchange
(symbol:K) and the New York Stock Exchange (symbol:KGC).
Media Contact
Louie Diaz
Senior Director, Corporate Communications
phone: 416-369-6469
Investor Relations Contact
Tom Elliott
Senior Vice-President, Investor Relations and Corporate Development
phone: 416-365-3390
Cautionary statement on forward-looking information
All statements, other than statements of historical fact, contained or incorporated by reference in this news release including,
but not limited to, any information as to the future financial or operating performance of Kinross, constitute ''forward-looking
information'' or ''forward-looking statements'' within the meaning of certain securities laws, including the provisions of the
Securities Act (Ontario) and the provisions for ''safe harbor'' under the United States Private Securities Litigation Reform Act
of 1995 and are based on expectations, estimates and projections as of the date of this news release. Forward-looking
statements contained in this news release include those under the headings “CEO commentary”, “Tasiast 24k project
overview”, “Lower capital costs and relative execution risk”, “Project financing”, “Mauritania update and new labour agreement”,
“Mineral Reserve and Mineral Resource estimates” and include, without limitation, statements with respect to: our estimates,
expectations, forecasts and guidance for production, production costs of sales, all-in sustaining cost and capital expenditures,
cost savings, project economics (including net present value and internal rates of return) and other information contained in
the feasibility study; as well as references to other possible events, the future price of gold and silver, the estimation of
mineral reserves and mineral resources, the realization of mineral reserve and mineral resource estimates, the timing and
amount of estimated future production, costs of production, capital expenditures, costs and timing of development and mining
activities, permitting timelines, currency fluctuations, requirements for additional capital, government regulation of mining
operations, and environmental risks. The words "anticipates", "contemplate", ''estimate'', ''expect'', "explore", "feasibility",
"focus", ''forecast", "future", "guidance", "indicate", "intent", "liquidity", "model", "optimize", "phased", "planned", "potential",
"proceeding", "projected", "realized", "schedule", "study", or "timeline", or variations of or similar such words and phrases or
statements that certain actions, events or results ''may'', ''could'', "will" or ''would'' occur, and similar expressions identify
forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions
that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant
business, economic and competitive uncertainties and contingencies. The estimates, models and assumptions of Kinross
referenced, contained or incorporated by reference in this news release, which may prove to be incorrect, include, but are not
limited to, the various assumptions set forth herein and in our Annual Information Form dated March 31, 2019 and our full-year
2018 and second quarter 2019 Management's Discussion and Analysis as well as: (1) there being no significant disruptions
affecting the operations of the Company whether due to extreme weather events and other or related natural disasters, labour
disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; (2) permitting, development, operations
and production from the Company's operations being consistent with Kinross' current expectations including, without limitation,
the maintenance of existing permits and approvals and the timely receipt of all permits and authorizations necessary for the
development and operation of the Tasiast 24k project including, without limitation, work permits, necessary import
authorizations for goods and equipment and exploration license conversions at Tasiast; (3) that the Tasiast 24k project will
proceed in a manner and on the timeline currently contemplated by the Company; (4) political and legal developments in any
jurisdiction in which the Company operates being consistent with its current expectations including, without limitation, potential
amendments to customs and mining laws (including but not limited amendments to the VAT) and the pending implementation
of revisions to the tax code in Mauritania, and resolution of the discussions with the Mauritanian government regarding the
Company’s activities in Mauritania, being consistent with Kinross' current expectations; (5) that the Tasiast project financing
will be completed in a manner consistent with our current expectations; (6) the exchange rate between the currencies in which
the Company does business including but not limited to Canadian dollar, Mauritanian ouguiya, and the U.S. dollar being
approximately consistent with current levels; (7) certain price assumptions for gold and silver; (8) prices for diesel, natural gas,
fuel oil, electricity and other key supplies being approximately consistent with current levels; (9) production and cost of sales
forecasts for the Company meeting expectations; (10) the accuracy of the current mineral reserve and mineral resource
estimates of the Company (including but not limited to ore tonnage and ore grade estimates); (11) labour and materials costs
increasing on a basis consistent with Kinross' current expectations; (12) the terms and conditions of the legal and fiscal
stability agreement for Tasiast being interpreted and applied in a manner consistent with its intent and Kinross' expectations;
(13) goodwill and/or asset impairment potential; and (14) access to capital markets, including but not limited to Kinross' credit
rating, being consistent with the Company's current expectations. Known and unknown factors could cause actual results to
differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to:
fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as
fuel and electricity); changes in the discount rates applied to calculate the present value of net future cash flows based on
country-specific real weighted average cost of capital; changes in various market variables, such as interest rates, foreign
exchange rates, gold or silver prices and lease rates, or global fuel prices, that could impact the mark-to-market value of
outstanding derivative instruments and ongoing payments/receipts under any financial obligations; changes in national and
local government legislation, taxation (including but not limited to income tax, advance income tax, stamp tax, withholding tax,
capital tax, tariffs, value-added or sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, royalty, excise
tax, customs/import or export taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with
any related fine, penalty, surcharge, or interest imposed in connection with such taxes), controls, policies and regulations; the
security of personnel and assets; political or economic developments in countries in which Kinross does business or may
carry on business including but not limited to Mauritania; operating or technical difficulties in connection with mining or
development activities including the Tasiast 24k project; employee relations; litigation or other claims against, or regulatory
investigations and/or any enforcement actions or sanctions in respect of the Company (and/or its directors, officers, or
employees) including, but not limited to, securities class action litigation in Canada and/or the United States, or any
investigations, enforcement actions, cease and desist orders and/or sanctions under any applicable anti-corruption,
international sanctions and/or anti-money laundering laws and regulations in Canada, the United States or any other applicable
jurisdiction; the speculative nature of gold exploration and development including, but not limited to, the risks of obtaining
necessary licenses and permits; diminishing quantities or grades of reserves; adverse changes in our credit rating; and
contests over title to properties, particularly title to undeveloped properties. In addition, there are risks and hazards associated
with the business of gold exploration, development and mining, including environmental hazards, industrial accidents, unusual
or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance, or the
inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can directly or indirectly
affect, and could cause, Kinross' actual results to differ materially from those expressed or implied in any forward-looking
statements made by, or on behalf of, Kinross, including but not limited to resulting in an impairment charge on goodwill and/or
assets. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such statements. Forward-looking statements are provided for the
purpose of providing information about management's expectations and plans relating to the future. All of the forward-looking
statements made in this news release are qualified by these cautionary statements and those made in our other filings with
the securities regulators of Canada and the United States including, but not limited to, the cautionary statements made in the
"Risk Factors" section of our Annual Information Form dated March 31, 2019 and the "Risk Analysis" section of our full year
2018 Management's Discussion& Analysis. These factors are not intended to represent a complete list of the factors that
could affect Kinross. Kinross disclaims any intention or obligation to update or revise any forward-looking statements or to
explain any material difference between subsequent actual events and such forward looking statements, except to the extent
required by applicable law.
Other information
Where we say "we", "us", "our", the "Company", or "Kinross" in this news release, we mean Kinross Gold Corporation and/or
one or more or all of its subsidiaries, as may be applicable. The technical information about Tasiast contained in this news
release has been prepared under the supervision of and verified by Mr. John Sims, an officer of the Company who is a
"qualified person" within the meaning of National Instrument 43-101.
1 Throughout this news release, forecast site-level all-in sustaining cost (per oz.) excludes corporate overhead costs. This
metric, and production cost of sales (per oz.), are non-GAAP measures and are not defined under IFRS. Refer to
“Reconciliation of non-GAAP financial measures” section in the Company’s Q2 2019 MD&A.
2 Throughout this news release, based on a $55/bbl oil price assumption, 5% discount rate from January 1, 2020 and after
tax.
3 Throughout this news release, incremental to current forecasted operational estimates based on 15,500 t/d throughput.
4 All-in sustaining costs per ounce for the life of mine includes sustaining capital costs of approximately $30 million per year.
5 These updated estimates are different from those reported in the 2018 fourth-quarter and year-end results news release
dated February 13, 2019 and the Company’s Annual Information Form dated March 31, 2019, and reflect changes resulting
from the feasibility study work completed in connection with the Tasiast 24k expansion. For further information (including other
assumptions (which remain unchanged), see the Company’s Annual Information Form dated March 31, 2019, available at
www.kinross.com and under the Company’s profile on SEDAR (www.sedar.com).
Source: Kinross Gold Corporation