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Kinross Gold Announces 45 Percent Revenue Growth and Record Earnings of $65.6 Million in Second Quarter

August 04, 2006

Production on target and operating cash flow up 210 percent

$470 million Paracatu expansion enhances future gold production

Toronto, Ontario - Kinross Gold Corporation (TSX-K; NYSE-KGC) ("Kinross", "Kinross Gold" or the "Company"), today announced its unaudited results for the three and six months ended June 30, 2006.

(All dollar amounts in this press release are expressed in U.S. dollars, unless otherwise noted)

Second Quarter Highlights

• Kinross produced 385,514 gold equivalent ounces in the second quarter of 2006. The Company remains on track to produce approximately 1.44 million gold equivalent ounces for the year.

• The Company's revenue was $252.3 million in the second quarter, a 45 percent increase over the same period last year while realizing $625 per ounce of gold sold, an increase of 48 percent over the same period last year. The cost of sales(1) of $311 per ounce on sales of 403,507 gold equivalent ounces remains on track to meet the forecast of $305 - $315 per ounce for the full year.

• Kinross achieved net earnings of $65.6 million, or $0.19 per share, compared with a net loss of $16.4 million in the same period last year. These results include a $2.9 million pre-tax gain on disposal of assets in the second quarter of 2006, contributing less than $0.01 per share.

• Kinross' cash flow from operating activities in the second quarter was $94.9 million, a 210 percent increase compared to the $30.6 million generated in the second quarter of 2005. The cash position rose to $149.0 million as at June 30, 2006 compared with $84.1 million at March 31, 2006.

• Kinross has further strengthened its management team with the addition of James Toccacelli as Senior Vice President, Communications.


• Kinross' Board of Directors has approved an investment estimated at $470 million in its wholly owned Brazilian subsidiary's Paracatu expansion project in Brazil, which is expected to start up in 2008. Average annual production at Paracatu is expected to be approximately 557,000 ounces of gold per year from 2009 through 2013 at an average cost of sales of approximately $230 per ounce. Proven and Probable Mineral Reserves as at December 31, 2005 were 15.2 million gold ounces.(2)

• As previously disclosed, the Company's registration statement in respect of the Crown transaction was declared effective as of July 28, 2006 and a proxy statement/prospectus has been mailed to Crown shareholders. Crown will hold a shareholders meeting on August 31, 2006, where its shareholders will vote on the transaction.

• As previously disclosed, Kinross undertook various divestitures of non-core assets consistent with our four-point plan including the George/Goose Lake property, the Aquarius project, the Lupin site and the Blanket mine.

(1) Cost of sales per ounce is calculated by dividing cost of sales as per the financial statements by the number of gold equivalent ounces sold.

(2) This news release contains forward looking information that is subject to risk factors and assumptions set out in the project summary on pages 10 & 11 and the cautionary note on page 12 of this news release.

"Our quarterly earnings are a record for Kinross and highlight the Company's ability to generate operating cash flow, earnings and ultimately value for shareholders," said Tye Burt, Kinross' President and Chief Executive Officer. "The Company's cash flow from operating activities increased more than 200 percent in the quarter compared to 2005, while the average realized gold price increased 48 percent compared to the same period."

"Paracatu's expansion is a key element in our commitment to 'growth from core operations', a pillar of Kinross' four-point strategic plan. We continue to drive forward with other initiatives in that plan," said Burt.

"Outstanding performance such as this is never the result of one single variable. Our policy against gold hedging allowed us to enjoy the full benefit of a robust gold price. Our cash balances are growing, giving us a strong balance sheet in support of our capital program. Our teams hard work, cost control and achievement in meeting production and operating targets have all combined to give these results," added Burt. "I'd like to thank our employees for their ongoing dedication and commitment to building a great company."

Paracatu expansion

On August 3, 2006, Kinross' Board of Directors approved an investment of approximately $470 million in Rio Paracatu Mineraçao, Kinross' Brazilian operating subsidiary, for the expansion of the Paracatu mine in Brazil. The project is anticipated to begin production in 2008. During the period from 2009 to 2013 the project is expected to have average annual throughput of 58 million tonnes with an average annual output of approximately 557,000 ounces of gold at an average cost of sales of approximately $230 per ounce. As a result, total Kinross production for 2009 is expected to aggregate 1.8 - 1.9 million ounces of gold equivalent. For the years 2009 through 2019, 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 mine plan indicates a mine life of approximately 30 years, based on 15.2 million ounces of current Proven and Probable Mineral Reserves. Over the life of the mine from 2009 onwards, average annual production is expected to be approximately 418,000 ounces at an average cost of sales of approximately $307 per ounce. For further technical information regarding the Paracatu expansion, please refer to the technical report to be filed with SEDAR shortly, which, once filed, will be accessible at or on our website at Please refer to pages 10 & 11 of this news release for a summary of the Paracatu expansion as well as material assumptions and risk factors associated with the project.

To support this expansion, a five-and-a-half-year term loan in a principal amount of up to $250 million is being negotiated to provide funding for the project. Also, the existing $295 million revolving credit facility is being increased to $300 million and the maturity date is being extended from April 2008 to August 2009.

Permits have been received for the installation of the 30 million tonnes per annum ("mtpa") plant and further permits are being obtained to accommodate additional throughput. The Company is submitting an Environmental Impact Study to the Brazilian authorities for the construction of an additional tailings pond. Large capital components have been ordered and site construction preparation is underway. SNC-Lavalin, in conjunction with Minerconsult, has been engaged as the engineering and procurement construction management group for the Paracatu expansion project.

"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 Operating 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."

Pleasedownload the PDF for the full version of this newsrelease.

Click here to download the Q2 2006 report (PDF).

Cautionary Statement on Forward-Looking Information
All statements, other than statements of historical fact, contained or incorporated by reference in this press release, including any information as to our future financial or operating performance, constitute “forward-looking statements” within the meaning of certain securities laws, including the “safe harbour” provisions of the Securities Act (Ontario) and the United States Private Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this press release. The words "believe", "expect", "anticipate", "plan", "intend", "continue", "budget", "estimate", "may", "will", "schedule" 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 us as of the date of this press release, are inherently subject to significant business, economic and competitive uncertainties and contingencies which give rise to the possibility that the predictions or projections expressed in such statements will not be achieved. We caution readers to not place undue reliance upon these statements as a number of 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 any material deviation from the material assumptions identified below, as well as: fluctuations in the currency markets; fluctuations in the spot and forward price of gold or certain other commodities (such as silver, diesel fuel and electricity); changes in national and local government legislation, taxation, controls, regulations and political or economic developments in Canada, the United States, Chile, Brazil, Russia or other countries in which we do or may carry on business in the future; business opportunities that may be presented to, or pursued by, us; operating or technical difficulties in connection with mining or development activities; the speculative nature of gold exploration and development, including the risks of obtaining necessary licenses and permits; and diminishing quantities or grades of mineral reserves. 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 inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect our actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, us. Readers are cautioned that forward-looking statements are not guarantees of future performance. All of the forward-looking statements made in this press release are qualified by these cautionary statements. We refer the readers to our most recent annual information form, management discussion and analysis and other filings with the securities regulators of Canada and the United States for more details of the risks affecting Kinross. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable laws.

Material assumptions
These forward-looking statements are based on a number of assumptions which may prove to be incorrect, including but not limited to the various assumptions set forth in our most recent annual information form and annual report as well as: (1) there being no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, damage to equipment or otherwise during the balance of 2006; (2) development at Paracatu proceeding on a basis consistent with our current expectations; (3) the Crown transaction closing successfully, permitting and development at Buckhorn proceeding on a basis consistent with our current expectations; (4) that the exchange rate between the Canadian dollar, Brazilian real, Chilean peso and the U.S. dollar will be approximately consistent with current levels; (5) certain price assumptions for gold and silver; (6) prices for natural gas, fuel oil, electricity and other key supplies remaining consistent with current levels; (7) production forecasts meet expectations for the balance of 2006; and (8) the accuracy of our current mineral reserve and mineral resource estimates. Some of the material assumptions made by Kinross involve confidential or particularly sensitive information and, accordingly, Kinross does not believe it is appropriate to disclose such assumptions for competitive or other business reasons.
The technical information about the Company’s material mineral properties contained in this press release has been prepared under the supervision of Mr. Rob Henderson an officer of the Company who is a “qualified person” within the meaning of National Instrument 43-101.

Key sensitivities
Approximately 55%-60% of our costs are denominated in U.S. dollars.
A 10% change in foreign exchange could result in an approximate $13 impact in cost of sales per ounce.
A $10 change in the price of oil could result in an approximate $4 impact on cost of sales per ounce.