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Kinross reports 2013 second-quarter results

July 31, 2013

Toronto, Ontario - July 31, 2013 - Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its results for the second quarter ended June 30, 2013.

(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page eight of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted. The comparative figures have been recast to exclude the results of Fruta del Norte and Crixás.)

Financial and operating highlights:

  • Production(1): 655,381 gold equivalent ounces (Au eq. oz.), compared with 632,772 ounces in Q2 2012.
  • Revenue: $968.0 million, compared with $1,005.6 million in Q2 2012.
  • Production cost of sales(2): $737 per Au eq. oz., compared with $724 in Q2 2012.
  • All-in sustaining cost(2): $1,072 per Au oz. sold, compared with $970 in Q2 2012.
  • Attributable margin(3): $657 per Au eq. oz. sold, compared with $844 in Q2 2012.
  • Adjusted operating cash flow(2): $256.7 million, or $0.22 per share, compared with $268.0 million, or $0.24 per share, in Q2 2012.
  • Adjusted net earnings(2),(4): $119.5 million, or $0.10 per share, compared with $156.8 million, or $0.14 per share, in Q2 2012.
  • Reported net loss (4): $2,481.9 million, or $2.17 per share, compared with net earnings of $113.9 million, or $0.10 per share, in Q2 2012.
  • Non-cash impairment charge: The reported net loss for the quarter included an after-tax non-cash impairment charge of $2,289.3 million, largely as a result of lower short-term and long-term gold price assumptions. In addition, Kinross recorded a charge of $720 million relating to the previously announced decision to cease development of its Fruta del Norte (FDN) project in Ecuador, which has been classified as a discontinued operation.
  • Outlook: Kinross expects to be within its 2013 forecast guidance for production (2.4-2.6 million attributable Au eq. oz.), production cost of sales ($740-$790 per Au eq. oz.), and all-in sustaining cost ($1,100-$1,200 per Au oz. sold). The Company has reduced its 2013 capital expenditure forecast to approximately $1.45 billion from $1.6 billion.

Cost review and reduction:

  • In response to the recent drop in the gold price, the Company has undertaken a number of additional initiatives to reduce operating costs and capital expenditures, and maximize cash flow. Kinross has identified additional expected savings of approximately $180 million for the balance of 2013 and expects further savings this year as ongoing cost reviews are completed. The Company is also targeting significant capital spending reductions in 2014.

Development projects:

  • First ore from development activities at Dvoinoye was delivered to Kupol in Q2 2013 and the Kupol plant upgrade has been successfully completed. The project remains on schedule to reach targeted production in Q4 2013.
  • Due to the Company's focus on capital reduction in the current lower gold price environment, Kinross does not now expect to make a decision on whether to proceed with a potential Tasiast mill expansion until 2015 at the earliest, regardless of the project feasibility study (FS) outcome. The FS remains on schedule for expected completion in Q1 2014.
  • On June 10, 2013, the Company announced that it ceased further development at its Fruta del Norte project.

Dividend:

  • To help ensure the Company maintains its strong balance sheet and liquidity position in current uncertain gold price environment, the Board of Directors has suspended the upcoming semi-annual dividend. Future decisions regarding the dividend will be based on a number of factors, including market conditions, balance sheet strength and liquidity, operational performance, and the impact of cost reduction measures.

CEO Commentary

J. Paul Rollinson, CEO, made the following comments in relation to second-quarter 2013 results:

"In the current challenging environment, Kinross continues to deliver strong operating results. Our operations had another excellent quarter, and we remain on guidance for production, cost of sales, and all-in sustaining costs. We also recorded a key milestone in Russia with the delivery of first ore from Dvoinoye to Kupol, and are on schedule to reach targeted production in the fourth quarter.

"We have intensified our strategic focus on margins, cost reduction and cash flow in response to the recent drop in gold price, and have taken additional measures to reduce overall spending and increase cash generation. We have identified new reductions in capital and exploration spending for 2013, which are expected to total approximately $180 million. Further significant reductions are targeted in 2014. In light of these planned reductions, and continued uncertainty regarding gold prices, we do not expect to make a decision on whether to proceed with a Tasiast mill expansion until 2015 at the earliest, regardless of the results of the feasibility study expected in Q1 2014.

"Balance sheet strength and liquidity remain key priorities. Given the current lower gold price environment, and its impact on cash flow, the Board has suspended our upcoming semi-annual dividend, which we will continue to re-evaluate based on market conditions and operational performance. This was a difficult decision, but we believe it is the right decision in today's challenging and uncertain gold price environment."


(1)Unless otherwise stated, production figures in this news release are based on Kinross' 90% share of Chirano production. Prior year production figures have been adjusted to exclude Crixás due to its sale in Q2 2012.

(2)These figures are non-GAAP financial measures and are defined and reconciled on pages 10 to 12 of this news release.

(3)Attributable margin per ounce sold is a non-GAAP measure defined as "average realized gold price per ounce" less "attributable production cost of sales per gold equivalent ounce sold".

(4)Net earnings (loss) figures in this release represent "net earnings (loss) from continuing operations attributable to common shareholders".

Please click here to download a PDF of the full version of this release.

Cautionary Statement on Forward-Looking Information
All statements, other than statements of historical fact, contained or incorporated by reference in this news release including, but not limited to, any information as to the future financial or operating performance of Kinross, 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 contained in this news release include those under the headings Financial and operating highlights”, “CEO Commentary”, “Cost review and reduction”, Project update and new developments” and “Outlook” and include, without limitation, statements with respect to: our guidance for production, production costs of sales, all-in sustaining cost and capital expenditures, expected savings pursuant to our cost review and reduction initiatives, including the continuation of the Way Forward, modifications to projects and operations and our exploration budget, including the Tasiast expansion project and our expectations regarding timelines for continued development, as well as references to other possible events, the future price of gold and silver, the estimation of mineral reserves and mineral resources, the realization of mineral reserve and mineral resource estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, success of exploration, development and mining activities, permitting timelines, 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 “aims”, “anticipates”, ‘‘plans’’, ‘‘expects’’, “indicator”, “intend”, ‘‘scheduled’’, ‘‘estimates’’, ‘‘forecasts”, “focus”, “priority”, “goal”, “guidance”, “initiative”, “objective”, “on track”, “opportunity”, “outlook”, “potential”, “projected”, “pursue”, “strategy”, “study”, “targets”, or ‘‘believes’’, or variations of or similar such words and phrases or statements that certain actions, events or results ‘‘may’’, ‘‘could’’, ‘‘would’’, or ‘‘should’’, ‘‘might’’, or “way forward”, ‘‘will be taken’’, ‘‘will occur’’ or ‘‘will 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, models 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) there being no significant disruptions affecting the operations of the Company or any entity in which it now or hereafter directly or indirectly holds an investment, whether due to labour disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; (2) permitting, development, operations and expansion at Paracatu (including, without limitation, land acquisitions and permitting for the construction and operation of the new tailings facility) being consistent with our current expectations; (3) the cessation by the Company of further investment and development of the Fruta del Norte deposit and La Zarza mining concession (“FDN”) being consistent with Kinross’ current expectations including, without limitation, as to the reasonable cooperation of the Government of Ecuador in ensuring an orderly transition with respect to FDN (including, without limitation, any related transactions) 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; (4) political and legal developments in any jurisdiction in which the Company, or any entity in which it now or hereafter directly or indirectly holds an investment, operates being consistent with its current expectations including, without limitation, the transition period as we reduce our level of activity in Ecuador and any potential amendments to the Brazilian Mining Code being consistent with Kinross’ current expectations; (5) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso, Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately consistent with current levels; (6) certain price assumptions for gold and silver; (7) prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; (8) 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; (9) 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; (10) labour and materials costs increasing on a basis consistent with Kinross’ current expectations; (11) the development of, operations at and production from the Dvoinoye deposit being consistent with Kinross’ expectations including but not limited to commencement of full production in the second half of 2013 and processing of Dvoinoye ore at the Kupol mill; (12) the viability of the Tasiast and Chirano mines (including but not limited to, at Tasiast, the impact of ore tonnage and grade variability reconciliation analysis) as well as permitting, development and expansion (including but not limited to, at Tasiast, expansion optimization initiatives leading to changes in processing approach and maintenance, the timing of completion and results of the Tasiast feasibility study and, as required, conversion of adjacent exploration licences to mining licences) of the Tasiast and Chirano mines being consistent with Kinross’ current expectations; (13) the terms and conditions of the legal and fiscal stability agreements for the Tasiast and Chirano operations being interpreted and applied in a manner consistent with their intent and Kinross’ expectations; (14) goodwill and/or asset impairment potential; and (15) access to capital markets, including but not limited to maintaining an investment grade debt rating and, as required, securing partial project financing for the Dvoinoye and the Tasiast expansion projects, 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: 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 of 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; litigation commenced, or other claims or actions brought, against the Company (and/or any of its directors, officers or employees) in respect of the cessation by the Company of further investment in and development of FDN, or any of the Company’s prior or continuing activities on or in respect thereof or otherwise in Ecuador; 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 the discount rates applied to calculate the present value of net future cash flows based on country-specific real weighted average cost of capital; changes in the market valuations of peer group gold producers and the Company, and the resulting impact on market price to net asset value multiples; 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 (including but not 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, windfall or windfall profits tax, royalty, excise tax, customs/import or export taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with any related fine, penalty, surcharge, or interest imposed in connection with such taxes), controls, policies and regulations; the security of personnel and assets; political or economic developments in Canada, the United States, Chile, Brazil, Russia, Ecuador, Mauritania, Ghana, or other countries in which Kinross, or entities in which it now or hereafter directly or indirectly holds an interest, do business or may carry on business; business opportunities that may be presented to, or pursued by, us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical difficulties in connection with mining or development activities; employee relations; litigation against the Company including, but not limited to, securities class actions in Canada and/or the United States; the speculative nature of gold exploration and development including, but not limited to, 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 the inability to obtain insurance, to cover these risks). 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, including but not limited to resulting in an impairment charge on goodwill and/or assets. 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 full-year 2012 and Q1 2013 Management Discussion and Analysis. 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 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 60%-70% of the Company's costs are denominated in US dollars. A 10% change in foreign exchange could result in an approximate $9 impact in production cost of sales per ounce . A $10 per barrel change in the price of oil could result in an approximate $2 impact on production cost of sales per ounce. The impact on royalties of a $100 change in the gold price could result in an approximate $3 impact on cost of sales per ounce.
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. The technical information about the Company’s material mineral properties (other than exploration activities) contained in this news release has been prepared under the supervision of and verified by Mr. John Sims, an officer of the Company who is a “qualified person” within the meaning of National Instrument 43-101 (“NI-43-101”). The technical information about the Company’s exploration activities contained in this news release has been prepared under the supervision of and verified by Dr. Glenton Masterman, an officer of the Company who is a “qualified person” within the meaning of NI 43‐101.

About Kinross

Kinross is a Canadian-based gold mining company with mines and projects in Brazil, Canada, Chile, 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

Steve Mitchell
Vice-President, Corporate Communications
phone: 416-365-2726
steve.mitchell@kinross.com

Investor Relations Contact

Tom Elliott
Vice President, Investor Relations
phone: 416-365-3390
tom.elliott@kinross.com

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