Toronto, Ontario, June 10, 2013 - Kinross Gold
Corporation (TSX:K; NYSE:KGC) announced today that the Company will
not proceed with further development of the Fruta del Norte (FDN)
project in Ecuador. The Company informed the Government of Ecuador
of this decision, and requested its cooperation in ensuring an
orderly transition that respects the interests of both parties.
After more than two years of negotiations on exploitation and
investment protection agreements for the project, the Government of
Ecuador and Kinross have been unable to agree on certain key
economic and legal terms which balance the interests of all
stakeholders. Therefore, despite pending legislative amendments to
the mining and tax law regime in Ecuador, Kinross has concluded
that it is not in the interests of the Company and its shareholders
to invest further in developing FDN.
"We have said that we will exert strict capital discipline
across our Company, that we will allocate our capital only to
projects which meet our investment criteria, and that we will only
enter into agreements that are in the best interests of the Company
and its shareholders," said CEO J. Paul Rollinson. "After a great
deal of effort to arrive at a mutually agreeable outcome, it is
unfortunate that the parties were unable to reach an agreement on
FDN which would have met those criteria. That said, we respect the
Government of Ecuador's sovereign authority and its right to
determine how its resources are developed," he added.
Although Ecuadorian law permits an extension of the economic
evaluation phase of the project for up to 18 months, or the
suspension of the commencement of the exploitation phase, either of
which would have enabled negotiations to continue beyond the
current August 1, 2013 deadline, the government has indicated that
it will not agree to such an extension or suspension. Any possible
sale of the project is currently subject to the prior approval of
the government, and the government has also indicated it will not
support efforts by Kinross to solicit a potential new partner, or a
buyer. As previously disclosed, when the current economic
evaluation phase of the project expires on August 1, 2013, the La
Zarza concession, which contains the entire FDN mineral resource,
will revert to the government. [1]
The Company intends to focus on assisting its employees and its
local stakeholders during a transition period as it reduces its
level of activities in Ecuador in the coming months. "I want to
acknowledge our outstanding team in Ecuador for their dedicated
efforts in establishing FDN as a model for responsible mining," Mr.
Rollinson said. "I also want to thank our local stakeholders and
the communities of Zamora-Chinchipe, including members of the Shuar
Federation, who have partnered with us on a wide range of training,
business development and community investment initiatives over the
past several years as we worked together to advance this project,"
he added.
Kinross' decision to cease the development of FDN will result in
a charge of approximately $720 million in the second quarter.
Approximately $700 million of the charge is expected to be
non-cash, reflecting the Company's entire net carrying value of the
FDN project [2], and approximately $20 million
represents accrued severance and closure costs.
About Kinross Gold Corporation
Kinross is a Canadian-based gold mining company with mines and
projects in Brazil, Canada, Chile, Ecuador, Ghana, Mauritania,
Russia and the United States, employing approximately 9,000 people
worldwide. Kinross maintains listings on the Toronto Stock Exchange
(symbol:K) and the New York Stock Exchange (symbol:KGC).
Media Contact
Louie Diaz
Manager, External
Communications
phone: 416-369-6469
louie.diaz@kinross.com
Investor Relations Contact
Tom Elliott
Vice-President, Investor
Relations
phone: 416-365-3390
tom.elliott@kinross.com
Cautionary statement on forward looking information
All statements, other than statements of historical fact,
contained or incorporated by reference in this news release
constitute ''forward-looking information'' or ''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 are statements with respect to
possible events and circumstances including, without limitation,
statements with respect to the investment of capital; development
of projects; government action, regulation and relations;
environmental risks and liabilities including but not limited to
reclamation expenses; and title disputes and other legal claims and
actions. The words "indicate", "intend",
"potential", or "transition" or variations of or
similar such words and phrases or statements, denote that certain
actions, events or results ''may'', ''could'', ''would'' or
''should'' 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, political and competitive uncertainties and
contingencies. The estimates and assumptions of Kinross referenced,
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 our full-year 2012 Management's
Discussion and Analysis as well as: (1) the cessation by the
Company of further investment in and development of the Fruta del
Norte deposit and La Zarza mining concession ("FDN") being
consistent with Kinross' current expectations including, without
limitation, as related to the reasonable cooperation of the
Government of Ecuador in ensuring an orderly transition with
respect to FDN that respects the interests of both parties;
continuing recognition of the Company's other remaining mining
concessions and other assets, rights, titles and interests in
Ecuador; the implementation of Ecuador's mining and investment laws
(and prospective amendment to these laws) and related regulations
and policies; and compliance with, and the implementation and
enforcement of, the Canada-Ecuador Agreement for the Promotion and
Reciprocal Protection of Investments; (2) the exchange rate between
the Canadian dollar and the U.S. dollar being approximately
consistent with current levels; (3) certain price assumptions for
gold and silver; (4) prices for diesel, natural gas, fuel oil,
electricity and other key supplies being approximately consistent
with current levels; (5) production and cost of sales forecasts for
the Company, and entities in which it now or hereafter directly or
indirectly holds an investment, meeting expectations; (6) the
accuracy of the current mineral reserve and mineral resource
estimates of the Company (including but not limited to ore
tonnage and ore grade estimates) and any entity in which it now or
hereafter directly or indirectly holds an investment; (7) labour
and materials costs increasing on a basis consistent with Kinross'
current expectations; (8) goodwill and/or asset
impairment potential; and (9) access to capital markets being
consistent with the Company's 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: political or economic
developments in Ecuador; changes in national, state and local
government legislation, taxation (which for purposes hereof shall
include but not be limited to income tax, advance income tax, stamp
tax, withholding tax, capital tax, tariffs, value-added or sales
tax, capital outflow tax, capital gains tax, excise tax,
customs/import or export taxes/duties, asset taxes, asset transfer
tax, property use or other real estate tax, royalty or any other
tax or similar levy, together with any related fine, penalty,
surcharge, or interest imposed in connection with such taxes),
controls, policies and regulations in Ecuador; the safety and
security of Company personnel and assets in Ecuador; employee
relations; environmental and reclamation liabilities; business
opportunities that may be presented to or pursued by us; our
ability to successfully cease further investment in and development
of FDN and, in cooperation with the Government of Ecuador,
successfully complete an orderly transition with respect to FDN
that is respectful the interests of both parties and does not
impose on the Company (and/or any of its directors, officers or
employees) any unreasonable obligations or liabilities, relating to
employees, taxation (as defined above) or the environment
(including, without limitation, with respect to the Company's prior
or continuing activities in Ecuador, or artisanal or illegal mining
activities) or otherwise; litigation commenced, or other claims or
actions brought, against the Company (and/or any of its directors,
officers or employees) in respect of the subject matter of this
news release, any fact, matter or circumstance arising therefrom
and/or in respect of Ecuador, FDN or any other of the Company's
other properties, mining concessions and assets in Ecuador, or any
of the Company's prior or continuing activities on or in respect
thereof or otherwise in Ecuador, including but not limited to any
class action or other litigation commenced against the Company in
Canada, Ecuador and/or the United States, under applicable
securities legislation or any other laws, and/or any other
litigation, claims, proceedings or actions brought against the
Company (or any of its directors, officers or employees) relating
to employee rights, taxation (as defined above), the environment
(including, without limitation, with respect to the Company's prior
or continuing activities in Ecuador, or artisanal or illegal mining
activities), or any rights, title or interest in any properties,
mining concessions or other assets (including but not limited to
FDN and the Company's remaining mining concessions, property rights
and related assets in Ecuador) and any of the Company's prior or
continuing activities on or in respect thereof. Many of these
uncertainties and contingencies can directly or indirectly affect,
and could cause, Kinross' 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. Forward-looking statements are
provided for the purpose of providing information about
management's expectations and plans relating to the future. All of
the forward-looking statements made in this news release are
qualified by these cautionary statements and those made in our
other filings with the securities regulators of Canada and the
United States including but not limited to the cautionary
statements made in the ''Risk Factors'' section of our most
recently filed Annual Information Form and the "Risk Analysis"
section of our full-year 2012 and Q1 2013 Management's Discussion
and Analysis. These factors are not intended to represent a
complete list of the factors that could affect the Company. Kinross
disclaims any intention or obligation to update or revise any
forward-looking statements or to explain any material difference
between subsequent actual events and such forward-looking
statements, except to the extent required by applicable
law.
Other information
Where we say ''we'', ''us'', ''our'', the ''Company'', or
''Kinross'' in this news release, we mean Kinross Gold Corporation
and/or one or more or all of its subsidiaries, as may be
applicable.
[1] See Kinross' First Quarter Report for the quarter
ended March 31, 2013, page 16; and Kinross' Annual Information Form
for the year ended December 31, 2012, page 62, "Risk
Factors".
[2] See Kinross' First Quarter
Report for the quarter ended March 31, 2013, page 16.