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Kupol begins processing ore

May 06, 2008

Margins increase despite cost pressures

Projects on schedule; Buckhorn appeals dismissed

Toronto, Ontario, May 6, 2008 - Kinross Gold Corporation (TSX-K; NYSE-KGC) today announced its unaudited results for the three months ended March 31, 2008.

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

2008 First Quarter Highlights

• Gold equivalent production was 331,784 gold equivalent ounces in the first quarter of 2008, compared with 389,394 ounces for the same period last year. Consistent with previously disclosed quidance, the Company remains on track to produce approximately 1.9 - 2.0 million gold equivalent ounces in 2008.

• Revenue was $330.2 million in the first quarter, a 34% increase over the same period last year, and the average realized gold price was $929 per ounce sold, compared with an average realized gold price of $650 per ounce in the first quarter of 2007.

• Cost of sales per gold equivalent ounce(1) was $455 in the first quarter, before an incremental fair value inventory charge of $6.1 million relating to the La Coipa acquisition, on sales of 356,864 gold equivalent ounces. Reported cost of sales per ounce including the inventory charge ($17 per ounce) totaled $472. This compares with a cost of sales of $328 per ounce on sales of 378,167 gold equivalent ounces in the first quarter of 2007. A further $20 of the increase over previously disclosed cost of sales per ounce guidance relates to changes in currency exchange rates, oil prices, and higher royalty payments resulting from higher gold prices. This variance is consistent with sensitivity information previously disclosed. The remaining variance relates primarily to mine operating factors and higher consumable costs.

• Based on reported cost of sales per gold equivalent ounce of $472, Kinross' margin per ounce sold was $457 in the first quarter, compared with $322 for the first quarter 2007, an increase of 42%.

• Incorporating first quarter actual results and based on the price assumptions outlined in our previous guidance for the remainder of the year, the Company expects its average 2008 cost of sales will be $385-395 per gold equivalent ounce versus the previously announced forecast of $365-375. Approximately 65% of this increase relates to first quarter actual results and the remainder to an expected increase in maintenance and repair costs at Maricunga, and pit wall repair costs at La Coipa. The Company expects that the cost of sales per ounce will be impacted positively over the course of the year as the Paracatu, Kupol and Buckhorn projects are commissioned and total production increases.

• Net earnings for the first quarter were $70.9 million, or $0.12 per share, compared with net earnings of $68.5 million, or $0.16 per share, for the same period last year. Earnings for the first quarter included a gain of $11.5 million, or $0.02 per share, related to the sale of Kubaka. The year-over-year decrease in earnings per share is largely due to a 39% increase in the average number of shares outstanding.

• Cash flow from operating activities was $76.3 million in the first quarter of 2008, compared with $90.2 million for the corresponding period in 2007. Cash and short-term investment balances were $889.5 million at March 31, 2008 compared with $561.2 million at December 31, 2007.

• Capital expenditures totaled $190.5 million in the first quarter. The Company expects 2008 capital expenditures to increase to approximately $752 million versus the previous forecast of $685 million. This increase relates to several investment initiatives including moving $35 million in capital forward from 2009 to accelerate the Fort Knox project, $12 million for Cerro Casale feasibility work, and $20 million to advance the purchase of mobile equipment at Paracatu and to purchase a fuel transport fleet at Kupol.

• The Kupol mill is now processing ore and first gold and silver production is expected during May. Paracatu is on schedule to begin commissioning in July. Buckhorn is on schedule to begin commissioning in October. All permit appeals at Buckhorn have been settled and dismissed.

(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.

CEO commentary

Tye Burt, Kinross President and CEO, made the following comments in relation to the first quarter 2008 results:

"The significant growth we expect in 2008 is becoming a reality at our three projects. We have reached a major milestone at Kupol, as mining continues and milling is now underway. Initial production is expected on schedule during May. Paracatu and Buckhorn remain on schedule to begin commissioning in July and October, respectively. We recently settled Buckhorn's outstanding permit and authorization appeals, reaching an agreement with a group which opposed development of the mine for many years.

"At current operations, production was slightly below our plan in the first quarter due to operational issues at Fort Knox, Round Mountain and La Coipa, which deferred some production and negatively impacted costs. These issues were short-term and were somewhat offset by solid production from Paracatu and Maricunga. We remain on track to produce 1.9 - 2.0 million gold equivalent ounces in 2008.

"We are subject to the same cost pressures as other producers, including rising costs of consumables, unfavourable currency exchange rates, and higher royalties resulting from a higher gold price. We also experienced higher than expected costs at certain key mines, but we have taken steps to manage and mitigate these costs through the remainder of the year.

"Due to a higher gold price, our margins increased in the quarter. Through the course of 2008, we expect our cost of sales per ounce to be impacted positively in each subsequent quarter as the new projects proceed through commissioning and reach full production."

Please download the PDF for the full version of this news release.

Click here to download the Q1 2008 report (PDF).

Cautionary Statement on Forward-Looking Information
All statements, other than statements of historical fact, contained or incorporated by reference in this news release, including any information as to the future financial or operating performance of Kinross, constitute “forward looking statements” within the meaning of certain securities laws, including the provisions of the Securities Act (Ontario) and the provisions for “safe harbour” 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 include, without limitation, possible events, statements with respect to possible events, the future price of gold and silver, the estimation of mineral reserves and resources, the realization of mineral reserve and resource estimates, the timing and amount of estimated future production, costs of production, expected capital expenditures, costs and timing of the development of new deposits, success of exploration, development and mining activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage. The words “plans,” “expects,” or “does not expect,” “is expected,” “budget,” “scheduled,” “estimates,” “forecasts,” “intends,” “anticipates,” or “does not anticipate,” or “believes,” or variations of such words and phrases or statements that certain actions, events or results “may,” “could,” “would,” “might,” or “will be taken,” “occur” or “be achieved” 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 and assumptions of Kinross 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 most recently filed Annual Information Form and Management’s Discussion and Analysis or as otherwise incorporated by reference in this news release as well as: (1) there being no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; (2) permitting, development, expansion and power supply at Paracatu proceeding on a basis consistent with our current expectations; (3) permitting and development at the Kettle River - Buckhorn project proceeding on a basis consistent with Kinross’ current expectations; (4) development of the Phase 7 pit expansion and the heap leach project at Fort Knox proceeding on a basis consistent with Kinross’ current expectations; (5) permitting and development at the Kupol gold and silver project proceeding on a basis consistent with Kinross’ current expectations; (6) the new feasibility study to be prepared by the joint venture for Cerro Casale, incorporating updated geological, mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors, being consistent with the Company’s current expectations; (7) that the exchange rate between the Canadian dollar, Brazilian real, Chilean peso, Russian ruble and the U.S. dollar will be approximately consistent with current levels or as set out in this news release; (8) certain price assumptions for gold and silver; (9) prices for natural gas, fuel oil, electricity and other key supplies remaining consistent with current levels; (10) production forecasts meet expectations; (11) the accuracy of our current mineral reserve and mineral resource estimates; and (12) labour and materials costs increasing on a basis consistent with Kinross’ 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 diesel fuel and electricity); changes in interest rates or gold or silver lease rates that could impact the mark-to-market value of outstanding derivative instruments and ongoing payments/receipts under any interest rate swaps and variable rate debt obligations; risks arising from holding derivative instruments (such as credit risk, market liquidity risk and mark-to-market risk); 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; our ability to successfully integrate acquisitions; operating or technical difficulties in connection with mining or development activities; employee relations; the speculative nature of gold exploration and development, including 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 inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect Kinross’ 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, Kinross. 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. All of the forward looking statements made in this news release are qualified by these cautionary statements, those made in the “Risk Analysis” section of our most recently filed Management’s Discussion and Analysis, and those made in the “Risk Factors” section of our most recently filed Annual Information Form and our other filings with the securities regulators of Canada and the U.S. 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 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 law.

Key sensitivities
Approximately 55%-60% of the Company’s 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.
The impact on royalties of a $100 change in the gold price could result in an approximate $6 impact on cost of sales per ounce.
Where we say “we”, “us”, “our”, the “Company”, or “Kinross” in this news release, we mean Kinross Gold Corporation and/or its subsidiaries, as may be applicable.

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