contrast iconcontrast icon search icon

Kinross Gold Success Continues with Strong Third Quarter

November 3, 2006

Earnings increase to $50.3 million

Production ahead of target and operating cash flow up 63 percent

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

(This media release contains forward looking information that is subject to risk factors and assumptions set out in our Cautionary Statement on Forward-Looking Information. All dollar amounts in this media release are expressed in U.S. dollars, unless otherwise noted)

Third Quarter Highlights

• Production was 365,555 gold equivalent ounces in the third quarter of 2006. Gold equivalent production in the first nine months of 1.11 million was above plan. The Company currently expects to exceed previous annual production estimates of 1.44 million ounces by approximately 20,000 ounces.

• Revenue was $223.6 million in the third quarter, representing a 23 percent increase over the same period last year while realizing $621 per ounce of gold sold, an increase of 41 percent over the same period last year.

• Cost of sales per ounce(1) was $321 in the third quarter on sales of 359,827 ounces of gold equivalent. Kinross anticipates that cost of sales per ounce1 will be approximately $320 for the full year 2006.

• Net earnings for the third quarter of 2006 were $50.3 million, or $0.14 per share, compared with a net loss of $44.4 million in the same period last year. Net earnings before non-recurring items would have been $44.8 million or $0.13 per share. The non-recurring items consist of a gain on disposal of assets, non-cash reclamation charges for the DeLamar reclamation property in Idaho and a non-cash write-down of supplies inventory at Kubaka.

• Cash flow from operating activities in the third quarter increased 63 percent to $85.8 million when compared with the $52.5 million generated in the third quarter of 2005. The cash position was $134.8 million as at September 30, 2006 compared with $149 million at June 30, 2006 and debt was reduced by $75 million during the quarter.

• Completed the acquisition of Crown Resources Corporation and the Buckhorn Mountain deposit on August 31, 2006. In late September, Kinross began construction at the Buckhorn mine after receipt of the necessary permitting(2).

• Completed a $300 million three-year revolving credit facility and a five-and-a-half year $200 million term loan to support letters of credit and expansion project at Paracatu in Brazil.

• Entered into definitive purchase agreement to sell the idled New Britannia mine in northern Manitoba.

(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) Please read the disclosure in our cautionary statement as well as the section "Project updates and other third quarter developments - Crown/Buckhorn update" contained in this media release for further information and risks and uncertainties associated with the project

"We are making great strides in creating both a stronger Company and real wealth for our shareholders," said Tye Burt, President and CEO. "We delivered on our production and operating targets, refinanced and reduced our debt, initiated two major construction projects, divested non-core assets and delivered strong cash flow and earnings. Kinross' stock has significantly outperformed both the price of gold and our senior peer group. Thank you to our employees for their hard work."

Pleasedownload the PDF for the full version of this newsrelease.

Click here to download the Q3 2006 report (PDF).

Cautionary Statement on Forward-Looking Information
All statements, other than statements of historical fact, contained or incorporated by reference in this media 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 media 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 media 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 media 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) permitting, development and the expansion project at Paracatu proceeding on a basis consistent with our current expectations; (3) 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 media 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.