N
EWS
R
ELEASE
Kinross reports record 2007 revenue, increased reserves
Significant production growth expected this year
Company declares first-ever dividend
Toronto, Ontario, February 21, 2008
– Kinross Gold Corporation (TSX-K; NYSE-KGC) today
announced its unaudited results for the fourth quarter and year ended December 31, 2007.
(This news release contains forward-looking information that is subject to the risk factors and assumptions set out in our Cautionary Statement on Forward-Looking
Information located on page 16 of this news release. All dollar amounts in this news release are expressed in U.S. dollars, unless otherwise noted.)
2007 Fourth Quarter and Full Year Highlights
•
Gold equivalent production was 384,598 ounces in the fourth quarter of 2007, compared with 362,028
ounces for the same period last year. For the full year 2007, gold equivalent production was in line with
previously-announced guidance at 1,589,321 ounces, an increase of 8 % over full-year 2006.
Revenue was $281.4 million in the fourth quarter, a 22% increase over the same period last year, and the
average realized gold price was $796 per ounce. Full-year revenue was a record $1.1 billion, a 21%
increase over the same period last year, and the average realized gold price was $697 per ounce.
Cost of sales per ounce
1
was $419 in the fourth quarter on sales of 356,329 gold equivalent ounces,
compared with $317 per ounce on sales of 375,684 gold equivalent ounces in the fourth quarter 2006.
Cost of sales per ounce for full-year 2007 was in line with previously-announced guidance at $368 on sales
of 1,575,940 gold equivalent ounces, compared with $319 on sales of 1,510,836 ounces for full-year 2006.
Net earnings for the fourth quarter were $173.1 million, or $0.29 per share, compared with net earnings of
$41.0 million, or $0.11 per share, for the same period last year. Full-year net earnings were $334.0 million,
or $0.60 per share, compared to $165.8 million, or $0.47 per share, for full-year 2006. Earnings for the
fourth quarter included a gain relating to the asset swap transaction with Goldcorp.
The Board of Directors has declared a dividend of $0.04 per share, payable on March 31, 2008 to
shareholders of record on March 24, 2008. The present intention is to pay a dividend semi-annually.
Cash flow from operating activities was $72.8 million in the fourth quarter of 2007, compared to $91.2
million for the corresponding period in 2006, and $341.2 million for the full year 2007 compared with
$292.0 million for the full-year 2006. Cash balances were $551.3 million at December 31, 2007 compared
to $154.1 million at December 31, 2006.
Capital expenditures were $184.9 million in the fourth quarter and $601.1 million for the full year.
Construction at the Paracatu, Kupol and Buckhorn projects continues to progress well and all three
projects are expected to begin commissioning on schedule.
The Board of Directors has approved a $270 million heap leach and pit expansion project at the Fort
Knox mine which is expected to extend the life of the mine by five years and double life-of-mine
production to 2.9 million gold equivalent ounces.
Proven and Probable Gold Reserves increased by 18.7 million ounces or 67%, from 27.9 million
ounces on December 31, 2006 to 46.6 million ounces on December 31, 2007.
In January 2008, the Company completed a $460-million offering of 1.75% convertible senior notes
due March 15, 2028, realizing net proceeds of approximately $449 million.
•
•
•
•
•
•
•
•
•
•
1. Cost of sales per ounce is defined as cost of sales as per the financial statements divided by the number of gold equivalent ounces sold.
KINROSS GOLD CORPORATION
www.kinross.com
40 King Street West, 52nd Floor
Toronto, Ontario, Canada
M5H 3Y2
TEL: 416-365-5123
FAX: 416-363-6622
TOLL FREE: 866-561-3636
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CEO commentary
Tye Burt, Kinross President and CEO, made the following comments in relation to the fourth-
quarter and year-end 2007 results:
“Our employees can take pride in all that Kinross accomplished in 2007. Production from Kinross
operations was strong and our safety performance was excellent. We completed our integration of
the Bema acquisition, and closed a major asset swap with Goldcorp. We successfully advanced
our three development projects towards start-up, while we re-focused Kinross’ global exploration
strategy and continued to add to our growing reserve base.
“We are now entering an exciting period of growth with our three development projects at
Paracatu, Kupol and Buckhorn scheduled to come into production in 2008. These new projects
are expected to increase our 2007 gold equivalent production by 60 per cent in 2009, while
significantly improving our cost profile and margins. By the fourth quarter of 2008, our
average cost of sales is expected to decrease to between $325 and $335 per gold
equivalent ounce.
“We are strengthening our portfolio of current operations. Our new Fort Knox Project adds
reserves and extends the life of the mine by five years, doubling life-of-mine production,
and reducing the average cost of sales per ounce.
“We are also pleased to declare our first-ever common share dividend, a measure of
Kinross’ maturity as a company, our confidence that we will continue to deliver strong
results as we grow, and our commitment to provide superior returns for Kinross
shareholders.”
Summary of financial and operating results
Three months ended
December 31
(dollars in millions, except per share and per ounce
amounts)
Years ended December
31,
2007
1,589,321
1,575,940
$
1,093.0
2006
1,476,329
1,510,836
$
905.6
2007
384,598
356,329
$
281.4
$
2006
362,028
375,684
231.4
Gold equivalent ounces - produced
(a)
Gold equivalent ounces - sold
(a)
Metal sales
Cost of sales (excludes accretion and reclamation
expense, depreciation, depletion and
amortization)
$
Accretion and reclamation expense
Depreciation, depletion and amortization
Operating earnings
Net earnings
Basic earnings per share
Diluted earnings per share
Cash flow from operating activities
Average realized gold price per ounce
Cost of sales per equivalent ounce sold
(a)
149.3
1.8
29.1
59.2
173.1
0.29
0.28
72.8
796
419
$
$
$
$
$
$
$
$
$
$
119.2
1.8
27.1
47.1
41.0
0.11
0.11
91.2
615
317
$
$
$
$
$
$
$
$
$
$
580.3
10.9
129.3
226.9
334.0
0.60
0.59
341.2
697
368
$
$
$
$
$
$
$
$
$
$
481.7
33.5
108.3
164.6
165.8
0.47
0.47
292.0
598
319
$
$
$
$
$
$
$
$
(b)
$
Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent based on the ratio of the average spot market
prices for the commodities for each year. This ratio for the three and twelve months ended December 31, 2007 was 55.33:1 and 51.51:1,
respectively compared with 60.16:1 and 60.79:1 respectively for the three and twelve months ended December 31, 2006.
Cost of sales per ounce is defined as cost of sales as per the financial statements divided by the number of gold equivalent ounces sold.
(b)
KINROSS GOLD CORPORATION
2007 Fourth Quarter and Year End Results
Page 2
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Kinross produced 384,598 gold equivalent ounces in the fourth quarter 2007 and 1,589,321
for the full year, which was in line with previously-stated guidance for the full year.
Production for the full-year 2007 increased by eight per cent over full-year 2006. The
increase can be attributed to additional production from the acquired Bema properties of
Maricunga and Julietta, combined with production increases from Fort Knox and Paracatu.
These increases were partially offset by declines in production at Round Mountain, La Coipa,
Musselwhite, Porcupine Joint Venture and Crixás.
Revenue from metal sales increased 21 per cent in 2007 over 2006, from $905.6 million to
$1,093.0 million, primarily as a result of a 17-per-cent increase in the average realized gold price
and a four-per-cent increase in the number of gold equivalent ounces sold. The average realized
gold price for the fourth quarter and full-year 2007 was $796 and $697 per ounce,
respectively, compared with $615 and $598 per ounce in same periods of 2006. The average
spot price in the fourth quarter and full year of 2007 was $786 and $695 per ounce,
respectively, compared with $614 and $598 per ounce in the same respective periods in 2006.
Cost of sales per gold equivalent ounce was $419 for the fourth quarter of 2007 compared to
$317 for the fourth quarter of 2006. Cost of sales per gold equivalent ounce for the full year 2007
was $368 compared to $319 in 2006. The increase in full-year costs can be attributed primarily to
higher consumable costs at most operations; reduced production due to operating problems at
the Porcupine Joint Venture and weather-related and operating delays at Maricunga; increased
maintenance costs at the Porcupine Joint Venture and Musselwhite; increased price-based
royalties at Round Mountain and Fort Knox; and the impact of strengthening currencies, most
significantly the appreciation of the Canadian dollar and the Brazilian real against the U.S. dollar.
Net earnings for the fourth quarter were $173.1 million or $0.29 per share, compared with
earnings of $41.0 million or $0.11 per share for the same period last year. Net earnings for the
full year were $334.0 million, or $0.60 per share, compared to $165.8 million, or $0.47 per share,
for the same period last year. Fourth quarter 2007 earnings included the following items with a
net benefit of $132.2 million or $0.22 per share: a gain of $138.3 million on the asset swap
transaction with Goldcorp and an expense of $1.8 million relating to the fair value increment on
the acquired La Coipa inventories sold during the last ten days of 2007; a gain of $7.6 million on
the sale of the Bell Creek mill in Timmins; foreign exchange losses of $10.2 million on revaluation
of foreign currency-based future tax liabilities; and a $1.7 million expense relating to the year-end
increase of our asset retirement obligation liability, primarily relating to the Kubaka mine, which
was divested in January 2008. Period-over-period earnings per share were impacted by a 69 per
cent increase in the number of shares outstanding in 2007, primarily as a result of the Bema
acquisition.
General and administrative expenses were $22.2 million in the fourth quarter of 2007,
compared to $13.7 million in the fourth quarter of 2006. General and administrative
expenses for the full year 2007 were $69.6 million compared to $52.1 million in 2006. The
increase is primarily related to higher forecasted performance-based compensation costs,
the appreciation of the Canadian dollar relative to the U.S. dollar, higher personnel costs,
costs related to the Bema acquisition, additional travel and consulting fees and increases in
technology costs.
Cash flow from operating activities for the fourth quarter of 2007 was $72.8 million,
compared with $91.2 million for the fourth quarter of 2006. The cash position was $551.3
million at December 31, 2007 compared to $154.1 million at December 31, 2006 and total
long-term debt was $564.1 million at December 31, 2007 compared to $89.9 million at
December 31, 2006.
KINROSS GOLD CORPORATION
2007 Fourth Quarter and Year End Results
Page 3
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Operations review and update
Three months ended December 31,
Gold equivalent ounces
Produced
(in
US$ millions
)
Fort Knox
Round Mountain
Porcupine JV
Paracatu
La Coipa
Crixas
Musselwhite
Maricunga
Julietta
(d)
(e)
(a)
(c)
(b)
(a)
Sold
2006
72,921
75,580
44,021
43,240
55,801
24,401
18,004
28,060
-
-
-
-
362,028
2007
68,992
62,639
25,415
45,857
43,707
21,167
13,901
60,135
-
14,516
-
-
356,329
2006
78,020
81,498
45,250
39,027
57,551
21,909
17,808
30,196
-
-
4,425
-
375,684
$
Cost of sales
2007
27.8
22.1
15.7
18.0
15.2
6.2
6.5
29.4
-
8.4
-
-
$ 149.3
$
2006
27.6
23.2
15.9
11.2
16.3
4.0
8.6
9.8
-
-
2.6
-
$ 119.2
$
$
Cost of sales/oz
2007
403
353
618
393
348
293
468
489
-
579
-
-
419
$
$
2006
354
285
351
287
283
183
483
325
-
-
588
-
317
2007
76,060
63,068
33,280
47,426
49,611
21,037
17,373
60,266
-
16,477
-
-
384,598
Kettle River
Other operations
Total
Years ended December 31,
Corporate and other
Gold equivalent ounces
(in
US$ millions
)
Produced
2007
Fort Knox
Round Mountain
Porcupine JV
Paracatu
La Coipa
Crixas
Musselwhite
Maricunga
Julietta
(d)
(e)
(a)
(c)
(b)
(a)
Sold
2006
333,383
335,115
156,735
174,254
155,180
97,009
69,834
116,868
3,978
-
33,973
-
2007
330,977
300,222
136,005
175,009
193,731
95,822
67,824
204,922
-
71,428
2006
342,455
349,497
161,196
173,821
154,192
94,986
71,405
115,198
3,978
-
40,372
3,736
1,575,940
1,510,836
Cost of sales
2007
$ 113.9
94.9
66.9
65.2
52.1
24.9
32.6
91.7
-
38.1
-
-
$ 580.3
2006
$ 102.9
99.4
59.9
57.7
47.6
17.7
31.9
39.3
0.8
-
23.9
0.6
$ 481.7
$
$
Cost of sales/oz
2007
344
316
492
373
269
260
481
447
-
533
-
-
368
$
$
2006
300
284
372
332
309
186
447
341
201
-
592
161
319
338,459
302,971
144,062
174,987
197,554
91,305
71,229
205,750
-
63,004
-
-
1,589,321
Kettle River
Other operations
Total
Corporate and other
1,476,329
(a) Production and sales from Musselwhite and the Porcupine Joint Venture for 2007 are from January 1, 2007 through December 21, 2007.
(b) Productions and sales for La Coipa are Kinross' 50% share for 2006 and from January 1, 2007 through December 21, 2007, and 100% from December 22
through December 31, 2007.
(c) Production from the Maricunga mine (formerly known as Refugio) is 100% for March 2007 and beyond. Prior to that Kinross owned 50% of the operation.
(d) Production from the Julietta mine is for March 2007 and beyond.
(e) Other operations include ounces produced and sold from Kubaka, Lupin and New Britannia.
At the
Paracatu
mine in Brazil, gold equivalent production for the full-year 2007 was
consistent with production in 2006. The total tonnes of ore mined increased 13 per cent
year over year as a result of mining softer ore, with a lower recovery and grade. Revenues
increased by 17 per cent to $121.7 million due to a higher average gold price and a one per
cent increase in ounces sold from the prior year. Cost of sales per gold equivalent ounce for
the full year 2007 increased to $373 per from $332 in 2006, due to higher consumable
costs and the appreciation of the Brazilian real against the U.S. dollar.
KINROSS GOLD CORPORATION
2007 Fourth Quarter and Year End Results
Page 4
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The expansion of the pit at
Round Mountain
in Nevada, U.S.A., contributed to a nine-per-
cent increase in tonnes of ore mined in 2007 compared to 2006. Tonnes of ore processed
decreased by 15 per cent in 2007 compared to 2006, which led to a decrease in gold
equivalent sales to 300,222 ounces from 349,497 ounces in 2006. Revenues decreased by
two per cent from the prior year to $208.2 million due to a decrease in ounces sold, which
was partially offset by a higher gold price. Cost of sales per gold equivalent ounce in 2007
was $316 compared to $284 in 2006.
At the
Fort Knox
mine in Alaska, U.S.A., tonnes of ore mined increased 41 per cent from
2006 to 2007 due to increased stockpiling of low grade material. Gold equivalent ounces
produced increased in 2007 due to a grade increase of seven per cent, however, ounces