Paracatu (100% ownership and operator) - Brazil

The Paracatu mine is a large scale open pit mine located less than three kilometers north of the city of Paracatu, situated in the northwest part of Minas Gerais State, 230 kilometers from Brasília, the capital of Brazil. Kinross acquired its ownership interest in the Paracatu open pit mine upon completion of the combination with TVX on January 31, 2003. On December 31, 2004, Kinross completed the purchase of the remaining 51% of Paracatu from Rio Tinto.

• Paracatu Technical Report (PDF)

Access to the site is provided by paved federal highways or by charter aircraft that can land at a small paved airstrip on the outskirts of Paracatu. The mine is the largest employer in Paracatu, directly employing 750 workers in what is predominantly an agricultural town (dairy and beef cattle and soy bean crops) located in Brazil’s tropical savannah. Gold mining has been associated with the Paracatu area since 1722 with the discovery of placer gold in the creeks and rivers of the Paracatu region.

The mill and mine operates 24 hours per day, 7 days per week. The nominal plant throughput is 1.5 million tonnes per month or 18 million tonnes per year, considering the present ore hardness. An ore stockpile of approximately 10 days’ production is maintained near the processing plant. Its main purpose is to ensure uninterrupted mill feed in the rainy season when some delays may be experienced in the pit as a result of extreme rainfall. During the dry season the stockpile can be used if the pit becomes too dusty. Kinross is committed to controlling dust levels on site and in the city.

The Paracatu mine currently has a nominal capacity of about 18 million tonnes per year with variations depending on the hardness of the ore, as it affects grinding throughput. In general, ore hardness is expected to increase over the remaining mine life as the pit is deepened and hence throughput will diminish over time.

The Paracatu expansion project is on schedule for start-up in mid-2008. Physical construction is approximately 57% complete, with capital committed or spent to date approximately 83% of budget. Steelwork for the crusher and grinding buildings is well advanced with steelwork beginning in the flotation area. All major equipment has been received at site or is on schedule for delivery. Preliminary environmental approval for construction of the 230 kV power line has been received, with final approval expected in the fourth quarter.

Due to the impact of the appreciation of the Brazilian real, actual costs through September 30 have exceeded budget by approximately $16 million. At current exchange rates, costs are expected to increase further by approximately $24 million through project completion. This estimate is net of currency hedges covering approximately 69% of remaining forecast real denominated project costs at an average exchange rate of 2.14 BRL/USD. Kinross reduced its exposure to the Brazilian real during the third quarter of 2007 by entering into additional currency hedges.

Kinross’ Board of Directors has approved an estimated $470 million expansion projected at the Paracatu mine in Brazil, which is expected to start up in 2008. Average annual production at Paracatu for the first five years is expected to be approximately 557,000 ounces of gold per year at an average cost of sales of approximately $230 per ounce. For the first ten years, average annual output at Paracatu is expected to be approximately 490,000 ounces at an average cost of sales of $259 per ounce. The current life of mine plan is expected to be approximately 418,000 at an average cost of sales of approximately $307 per ounce.

“In line with our commitment to ‘growth from core operations’, Kinross’ Board of Directors has approved a substantial investment at Paracatu that is expected to significantly increase production at attractive costs, especially in the early years. We continue to optimize our assets portfolio, with an intense focus on the project at Paracatu,” stated Tim Baker, Executive Vice President and Chief Operation Officer. “Already one of Brazil’s largest gold mines, Paracatu is expected to be one of the western hemisphere’s largest gold mines and a growing contributor to Kinross’ production profile in 2008 and beyond.”

Kinross Gold Corporation’s Share at December 31, 2007