Kinross Gold Corp (KGC) 2005 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Kinross Gold Corporation fourth-quarter 2005 conference call. Before we begin, we would like to briefly caution everyone about any forward-looking information or predictions that we may present to you today.

These projections are the best estimates that Kinross has at this time, but there are many assumptions and uncertainties involved and actual results may differ materially as the cautionary language in our news release describes. We wish to refer everyone to the media release we issued this morning on the Company's financial results.

We should also mention that the fourth-quarter and year-end financial report is now available on our website.

I would like to move to forward the call over to Tye Burt, President and Chief Executive Officer.

Thanks, Tracy and welcome. On the call with us today are Scott Caldwell, Kinross' Chief Operating Officer; Lars-Eric Johanson, our Chief Financial Officer and Chris Hill, Senior VP and Treasurer. It is an exciting time for Kinross and for the gold industry. When I joined the Company last March, we knew that 2005 would be a year of strengthening and refocusing Kinross for the future.

In the last year, we've seen our share price rise significantly, doubling by the end of February. We believe of course our stock is still undervalued. Our 2005 top-line numbers, including revenues, production, cash costs and cash flow, were all solid and on plan.

In 2005, we also commenced a full review of assets and investments. As a result, our bottom-line numbers have been impacted from onetime non-cash write-downs, as well as increased asset retirement expenses and onetime accretion costs. These are difficult but necessary choices that create a clean slate for our future.

We are now moving forward with the strategic objective of increasing net asset value and cash flow per share by concentrating on our four point plan. Specifically, we're driving growth from core assets; we are expanding our systems and operational capacity; we are attracting and retaining the industry's best people and of course seeking new acquisitions and expiration opportunities.

Now let's turn to a summary of 2005 financial results. These reflect management's activities in both operating the business successfully and in clearing the decks for the future. Revenue in the fourth quarter was $190 million and the total for the year finished at $725 million, a 9% increase year-over-year and the highest in our corporate history.

Kinross' planned production of 1.61 million gold equivalent ounces was achieved at cost of sales of $275 per ounce. Included in that gold equivalent number were 3,185,000 ounces of silver, which equates to approximately 52,000 ounces of gold at recent prices.

Now let's review the charges, which impacted our bottom line. Kinross showed a net loss of $154.3 million or $0.45 a share in the fourth quarter and a net loss for the year of $216 million or $0.63 per share. Contributing to the net loss in the fourth quarter were non-cash impairment charges of $147.2 million and this included a charge of $141.8 million related to the Fort Knox operation in Alaska. That translates to $184.7 million for the year and of course includes a previously announced impairment charge of $36.8 million related to the sale of the Aquarius project.

Kinross also made non-cash accruals for future reclamation obligations of $47 million for the fourth quarter and $56 million for the year.

Turning now to our costs, we are firmly committed to cost control and of course to continuous improvement. Like our peers, Kinross has experienced the same increases in fuel, power, labor and other production expenses. Foreign currency appreciation against the U.S. dollar has also increased the Company's operating costs somewhat at mines outside the United States. However, almost two-thirds of our operating expenses are in U.S. dollars providing Kinross with a strong buffer against foreign exchange fluctuations.

As an unhedged producer, the Company's average realized gold price increased to $445 per ounce in 2005 from $404 per ounce in 2004. As a result, our cash margins on a per ounce basis have been increasing in the last five years. These margins are competitive with the other major gold producers in North America.

Cash flow from operating activities during 2005 decreased by $27.5 million to $133 million as compared to cash flow from operating activities in 2004 of $161 million. The decrease was largely as a result of the previously noted operating cost pressures and changes in working capital.

Included in the 2005 charges against earnings were non-cash accruals for future reclamation obligations of $47 million for the fourth quarter and $56 million for the full year. This accretion expense is comprised of $46 million related to long-term increased estimates for future reclamation costs and approximately $10 million of annual accretion expense.

Moving on to capital expenditures, these were $32.9 million in the fourth quarter and totaled $142.4 million for the full year as we continued investing in our assets to extend mine life and to support further growth.

At the year end, Kinross had a cash position of $97.6 million compared to $47.9 million at the end of 2004. As we announced in February, Kinross increased its total reserve base by 27% to 24.7 million ounces of gold and 24.4 million ounces of silver at year end 2005. This is the fourth consecutive year of reserve growth for Kinross. This is a world-class reserve we believe that positions us for strong future growth from our core assets.

Before Scott Caldwell's operational review, I would like to discuss the Fort Knox mine for a moment. The write-down there is a non-cash change in the historic book value of the assets. As announced in our February reserve update, we reclassified the True North and Gil deposits from reserve to resources. We also did not exercise our option to continue working the Ryan Lode deposit. At year end, we reviewed the mine's plan using the latest higher costs, which were largely energy-related. Our accounting methodology then requires impairment tests using assumptions which included a conservative gold price and inflated costs for the future.

That fair value was lower than book value and led to this non-cash impairment charge. The charge does not impair Fort Knox's ability to generate cash flow, especially at today's $570 per ounce gold price. The charge will reduce 2006 depreciation charges at this project by over $20 million. This does not change our view that Fort Knox is a strong contributor to Kinross' cash flow.

Now I would like to turn the call over to Scott Caldwell, our Chief Operating Officer, for a review of Kinross' operations.

Thank you, John. In general, the overall production for the year was very exciting and we met our expectations for the quarter and the full year. I'm pleased to say that our performance in the health, safety and environmental areas continues to go well. We are particularly proud of the Kettle River underground mine, worked the year without suffering a lost time incident and the Round Mountain mine also completed the year without a lost time incident, working an incredible 1.5 million safe hours.

Operating costs were within guidance as the mines continue to make excellent progress in controlling costs in a rising cost environment. These achievements are the result of the hard-work and dedication of the entire Kinross team. Round Mountain had yet another outstanding year both on production and cost basis. Kubaka performed well with production above plan and costs below plan. Paracatu delivered on production targets and the team at Paracatu has been successful in controlling costs, especially in light of the strengthening Brazilian real. The project and operating teams are working hard on completing the engineering study that will define our expansion project at Paracatu.

Moving on to a bit more detail at some of our operations. Refugio mine located in Chile -- I am more than pleased to report that Refugio continues to run smoothly, maintaining the expected plant throughput of 40,000 metric tons per day in the fourth quarter and exceeding that level of production on a number of days. By the close of the fourth quarter, gold production was meeting expectations. Gold production in the first quarter of 2006 from the Refugio mine should be as per plan. I for one consider this an example of a complete turnaround and this success is a credit to Bema, Kinross and particularly the team working at site.

Fort Knox mine located in Alaska -- you have heard what the accounting rules have required us to do at Fort Knox, but on an operating basis, Fort Knox continues to be an important asset to Kinross and generates strong go-forward cash flows at current commodity prices. Fort Knox performed well over the course of 2005 despite very high electrical power costs, 20% higher than Round Mountain for example. The team at Fort Knox did an outstanding job on managing operating costs, producing gold at a cost of $275 per ounce. The ore body and plant continued to perform well.

Corporate and site personnel are working on a very exciting heap leach project at Fort Knox. If initial indications are correct, this project has the potential to dramatically reduce energy consumption, hence reducing operating costs at Fort Knox and improving future cash flows. Metallurgical test work is in progress. Engineering for the first phase of the leach project is well underway and permitting has begun. The feasibility study for the project should be completed in the second half of 2006.

Tye mentioned our continuous improvement program and I'm going to spend a little bit of time on the program and some of the initiatives. As always, improving productivity and lowering operating costs is a primary focus of the operating team. We utilize a continuous improvement system that is similar to the Lean Six Sigma approach. Our programs are site-driven. I'm going to give you a few examples of successful continuous improvement initiatives in progress and that took place in previous years; pressure automation at Paracatu, carbon handling optimization at Fort Knox, replacement of generators with grid power for water wells at Fort Knox, elimination of peak demand water pumping at Paracatu.

We're testing bio-diesel at the Paracatu mine in the hope that it will reduce costs. Finally the heap leach project that I mentioned about Fort Knox is a concept that was developed by a successful CIA initiative. Basically we have a successful continuous improvement process that has been and will continue to be a fundamental element in the Kinross' operating culture.

I'm going to spend a few minutes talking about our exciting development projects. First, Buckhorn Mountain, located in Washington state. The Washington Department of Ecology is evaluating the overall project and plan of operations through the State Environmental Policy Act or SEPA process. In addition, the U.S. Forest Service is performing an environmental assessment, or EA, addressing the impact of nine miles of road and ancillary facilities that will be located on U.S. Forest Service administered lands.

The permitting team has worked closely with key local, state and federal officials and the community to obtain strong political and public support for the project. The current project has significantly less environmental impact than the previously proposed open pit Crown Jewel project. The Buckhorn Mountain project will bring much-needed jobs and economic activity to this part of the state of Washington. Kinross is looking forward to completing the permitting process and beginning project construction. Construction and mine development will proceed through the second half of 2006 and into 2007. Initial ore production is anticipated in 2007 with the first full year of production planned for 2008.

Paracatu expansion. The project is located at the Paracatu mine in Brazil. As mentioned in the press release, the engineering study for the expansion project will be completed shortly. I and two of the Board members just returned from a visit to the site and the project offices. We are very pleased with the progress being made on the project. The team compiled by Kinross and the EPCM contractor, a joint venture between SNC-Lavalin and Minerconsult, is very, very strong. A high level of basic engineering has been completed and the engineering continues. Cost controls, scheduling and construction implementation plans are in place. We plan to break ground on the project in the second quarter of 2006. Clearly, we are very excited about this project and look forward to updating investors about the details of the project sometime in the second quarter of 2006.

In conclusion, 2005 was a successful year for the operations group and we're looking forward to 2006. We have the experienced construction teams in place and they are ready to begin construction on two very exciting new mines. Back to you, Tye.

Thanks, Scott, and congratulations again. Another cost factor in 2005 was general and administrative expense, which totaled $45.3 million, $8.9 million higher than 2004. This was largely due to the increased professional fees from accountants, lawyers and the evaluators necessary to address the postmerger accounting matters from 2003 and 2004.

Also included were expenses related to organizational changes and the strength of non-U.S. dollar currencies. In 2006, we are forecasting a return to more normal levels in the range of $35 million.

As part of our refocusing and cleanup in 2005, as I mentioned earlier, our management team committed to review reclamation and closure costs at each of the mines. Kinross' long-term asset retirement obligation was $56 million in 2005 and annualized accretion expense was $10 million for 2005. Change year-over-year relates to increases in long-term reclamation of closure costs, estimates primarily at the Porcupine joint venture in Timmins, but also at the La Coipa mine in Chile and the Kettle River and DeLamar sites.

I am pleased to state that our asset retirement obligations now fully reflect current costs. These activities represent our commitment to leave closed sites in an environmentally sound condition in the future. Our commitment to best-in-class environmental stewardship and remediation is a Kinross' cornerstone. In 2005, this is reflected in an exemplary environmental record.

Let's turn now to capital expenditures. As Scott indicated, the Company is pursuing an exciting and low-risk organic growth strategy to expand our core assets. In 2005, we invested $142.4 million in additions to property, plant and equipment. We financed these expenditures with cash from operating activities from existing cash balances and long-term debt. We're looking forward to announcing the results of the engineering study at Paracatu and I'd just like to add to what Scott said that we are very excited about this project.

Looking forward to 2006 and beyond, we're driving our strategic plan to increase net asset value and cash flow. We continue to generate high cash flow from operating activities. We're maintaining low debt levels and remain committed to a no gold hedging policy that allows us to participate fully in the current gold price rally.

Furthermore, we're focused on operating in safe, stable and resource risk countries; Canada, the U.S., Brazil and July. As we've indicated previously in 2006, Kinross plans to produce 1.44 million ounces of gold equivalent at cost of sales of approximately $285 to $295 per ounce.

To comment briefly on the early year of 2006 or early reports, we would indicate the following. Our Paracatu mine is operating right on plan. The Refugio mine in Chile is also on budget. Fort Knox is slightly ahead of plan. The La Coipa mine in Chile is performing as expected. The Placer Barrick Gold Corp. operated Porcupine joint venture in Timmins is a bit behind plan as a result of startup grades at the Pamour pit being lower-than-expected. We look forward to completion of the ownership transition here.

Our overall production in cash cost guidance for the year remains unchanged.

Turning briefly to exploration, we are increasing Kinross' exploration and business development spending in 2006 to $30 million. Exploration will focus on Kinross' core assets and mine exploration for approximately 6% of the budget and district and greenfield's expiration for approximately 40%.

Projects we are particularly excited about 2006 include the deep underground at Round Mountain in Nevada, include expanding the Pancho deposit near Refugio in Chile and the [Pantaneo] deposit between Refugio and La Coipa in Chile, which we are currently testing. We look forward to providing updates on those projects later this year.

To add to what Scott said on Crown Resources, as most of you know, in February, we renewed our agreement to acquire Crown and its 100% owned Buckhorn Mountain gold deposit in Washington. When completed, this acquisition will allow Kinross to restart its Kettle River processing facilities, which will contribute to low-cost gold ounces and contribute to our growing production profile.

Let me speak to that growth profile for a moment. Assuming completion of the Crown deal and the Paracatu expansion, we forecast production numbers for the years 2006 to 2009 as follows. In 2006, we expect to produce 1.44 million gold equivalent ounces, as I have said previously. In 2007, that will grow to 1.55 million ounces to 1.6 million ounces. In 2008, total production is expected to be between 1.65 million ounces and 1.7 million ounces and in 2009, total production expected to grow to between 1.7 million ounces and 1.75 million ounces.

Over the same time period, we're forecasting our cash costs will trend downward due to the previously mentioned continuous cost control programs and the ongoing investment in new low-cost projects like Buckhorn and the expansions at Paracatu.

Turning now to our management team for a moment, you'll have seen the announcement of the retirement of Lars-Eric Johanson, who held the position of Executive Vice President and Chief Financial Officer at the Company. This will be effective April 7, 2006. During Lars-Eric's time with Kinross, he has been instrumental in leading Kinross through the accounting review process, the purchase price reallocation and development of the impairment testing model. I wish to thank Lars and wish him well in the future, but particularly thank him for his commitment and hard work.

This week, we also announced the appointment of Thomas M. Boehlert as the Company's Executive Vice President and Chief Financial Officer; also effective April 7. Tom has more than 20 years experience in finance and banking and most recently, he was Executive Vice President and Chief Financial Officer of Texas Genco of Houston. Tom's appointment reflects our ability to attract the best people and we look forward to having his experience and his abilities at Kinross.

In closing, as we said previously, this is a historic point in the gold market and Kinross Gold is in a great position. We believe we are uniquely position today because we are the third-largest primary gold producer in North America and seventh largest in the world with nine mines in North America and 1.44 million ounces of annual production expected this year.

Size matters in the gold industry and we are the right size to succeed. We have scrubbed down the asset base to clear the decks for future growth. We have tremendous exploration success at Paracatu and reserves at this cornerstone asset alone now exceed 15 million ounces. We have a strong production and cash flow growth profile from 2006 through 2009 and our operations are located in stable and prospective countries.

Finally and most importantly, we have a strong and experienced management team. As we move forward, we're taking advantage of every opportunity for the growth and development in line with our focused strategic plan. I would like now to open up the floor for your questions.

(OPERATOR INSTRUCTIONS) Geoff Stanley, BMO Nesbitt Burns.

A couple of questions. Firstly, the future reclamation costs, I'm just wondering if you could perhaps characterize for us what you would consider as related to cost inflation and how much of that $47 million or to perhaps underestimates under previous management.

I'm going to ask Scott Caldwell to speak to that. Geoff, if we understood the question particularly, can we give a bit of a breakdown on what those asset retirement obligations are and their increase?

Yes, I'm really trying to get a bit of a handle on to what extent that $47 million relates to an inflationary impact and how much of it relates to perhaps an underestimate from previous years.

Sure. This is Scott. I will talk to it a little bit. The largest increase was change in scope I'll call it at the Porcupine joint venture. So estimates -- we reviewed it, watched it, took a good close look at it and the operator decided they had underestimated the cost, so the bulk of it was there and also at DeLamar, we had a change of scope, had a pit slope failure in one of the closed down pits that exposed a bunch of sulfide material that now has to be covered, i.e. a potential ARD issue there. So really a significant portion was change in scope and then the remainder would have been our revised assumptions, fuel price, energy costs.

Okay, very good. A question more on financial detail. Fort Knox, can you give us the exact numbers of what the book value is now and what it was previously?

Just a second. Book value previously, 257.5 million. The write-down, 141.8 million, now on the books at 113 million.

Okay, excellent. Thank you very much. That's all I have.

Mike Jalonen, Merrill Lynch.

Firstly, a couple questions for Scott on the heap leach plan. It sounds pretty interesting at Fort Knox. Just wondering would that bring in some resources to the mine or would it just be reserves?

Actually that's one of the exciting aspect of it until we have the feasibility study done, but, yes, obviously the heap leach should get a little lower recovery, but you also have much lower costs and lowers your cutoff grade, expand your reserve base. But once the study is done, we will obviously have the reserve work done as well. So that's why we're so excited about it and, like I said, the test work is proceeding right now and it is very encouraging.

Thanks. Secondly, just looking at the total capital costs associated with both expansions at Paracatu between 400 and 500 million. I wasn't on the trip to Paracatu. My assistant was and the numbers that he came back with for total capital were 326 million for the two expansions. So I'm just wondering is there a difference there that will come out.

No. The 326 would have just been the phase I expansion and that is out of our scoping level document. Then the total number would have been -- I think it's 422, 425. So, yes, there has been a change, but we're talking the 400 to 500 is for phase I and II.

All right. Also one last question. What's the tax rate you guys are going to have this year given that I'm sure you'll make money? You made operating profits this past year before the write-downs and with the gold price where it is, it's going to be a great year in profits.

Lars, do you want to speak to the tax rate?

Yes, it is still true what we have said in past conference calls. The only place where we account for taxes is in Chile and in Brazil and those tax rates, as you know, is 17% in Chile and 33% in Brazil. And in Crixas and La Coipa, we have cash taxes and in Paracatu, we account for deferred taxes.

Thank you. Good luck.

Steve Butler, Canaccord Adams.

A question for you. Just with respect to some of the resources that were reported a few weeks ago, Tye, or at least a month or so ago, Gurupi and Gold Hill were not reported specifically, but do you have inferred resources on those two projects still? And/or what is the status on Gurupi and Gold Hill?

Really no change, Steve. We haven't broken them down in detail I don't think. Hang on. There we go. We do have it. We do have a resource number at Gurupi, which would be 1.632 million ounces -- making sure we got the right line here. Yes, so that's 47 million ton at a little over a gram grade. So no change in that and we will be doing a bit more drilling in that district this year.

This is a project that you still have on you, perhaps not front burner, but is it on the burner?

It is on the burner. I think we are allocating a little over $0.5 million in drilling expense there. We do have a very large land position and the whole idea that we need to deliver on in this project is to make it a bigger ore body. At one gram, obviously it is not super high grade, so it needs to be larger to get the economics in the right bucket. So we are continuing to drill.

How about Gold Hill, just a brief update on that one?

Really no change at Gold Hill. Because of the Round Mountain pit expansion, the main Round Mountain pit, it simply moved back in the extraction cycle.

How are we doing in the permitting, Scott?

The permitting is preceding both at Gold Hill and we have to add some leach pad expansion and that sort of stuff and it's going fine.

Just a couple accounting questions then. So the other expense in the fourth quarter, could you guys clarify what the $9.2 million of other expense, what does that relate to?

The other expenses are under operating costs or (inaudible) -- other operating cost is basically care and maintenance costs. That's the biggest part of it and [stand] back costs. Other costs not directly related to our production.

Okay, so not so much --

There is a breakdown, Steve, on page 7 of the press release, which --.

It's the other costs.

We're not talking about -- this is not a component is it of reclamation, though?

No, it is not. It is other operating cost and other operating cost is basically care and maintenance costs for just outside and some of the costs for Kubaka and other.

So you guys have an estimate on the go-forward basis. I suppose once you shutdown Kubaka, it's not going to be much to care and maintain, but $9.2 million was a big headline number in the fourth quarter. I just don't know what's the right number for guidance for '06, if you have a guesstimate.

Steve, it's Chris. There is also some litigation settlement in there. What we are trying to do with our accounting now is instead of talking to total cash costs, we're talking to operating cost of sales. What we need to do is get our operating cost line as equivalent as possible to that total cash cost number, but any costs that don't relate to gold production go into that other cost item.

Okay. Your guidance for accretion expense for $12 million for 2006 -- as an expensed accretion number, guys, is there a cash outflow of reclamation expenditure that is close to that number? Or is it a subset --?

Of course there is. The $10 million to $12 million represents -- basically, as you know, you have to calculate your closeout costs, reclamation costs and then you net present value them. If everything is the same, the fact that the year has elapsed brings you closer to it. So it's basically the 6%, 7% interest rate on your total reclamation provision, which is $173 million.

That's got a current value.

That is the ongoing cost. Then we have actual spendings and the actual spendings last year, 2005, was $24 million on exploration or on the reclamation side. And it is expected to be about $30 million, $35 million for 2006.

Thanks very much.

Barry Cooper, CIBC World Markets.

Tye, just wondering with closures, Kubaka and what not, I realize Russia will remain sort of on the burner there in terms of a place where or you want to look and what not, but we have not seen anyone actually exit Russia yet and I'm just wondering are there any issues that we should be aware of or that you are anticipating could cause problems if you were to exit Russia even for a short period of time, i.e. closing down Kubaka?

Let me answer part of it philosophically. We are looking at different drill projects over there. Obviously, we still have staff on site. We still have capital equipment on site. We're looking at a heap leach opportunity in Birkachan. So there are potential revenue sources. Obviously anything we would be drilling would be a long way out, but we continue to be interested. You are quite right; nobody has exited. This is a prospective region and the country as a whole is very prospective for gold and I think the emergence of a very large, strong Russian player in Polyus bodes well for the future development of gold projects there. But in terms of our local relationship with the government, I will ask Scott to speak to that. That is in respect of Magadan.

Sure. Barry, our relationships -- we have been there for quite some time, as you know, and we've got very solid relationships with both the [Oblos] in the region, the Evensk region where the mine's located and I actually see it. If we were to and certainly hope we don't have to do this, but if we were to go to actual closure reclamation and closure, I think our cost estimates are extremely conservative because there is a real opportunity to reduce costs by I will just call it salvage value with the plant equipment, generators, facilities. Right now we're showing total demolition and removal of all of those facilities and obviously the Evensk region doesn't want is to do that. So I think we've got lots of cushion in our cost estimates, but hopefully we will find an avid discovery there or the heap leach will work out and we won't be closing this place.

Bottom line on that, we're seeing more players come into Russia in terms of looking for gold and looking for opportunities there as opposed to going the other direction, so are we interested? Absolutely. We are. Do we have experience there? Yes, we do.

I guess what I was driving out was we've seen problems when [Sunman] tried to close mines in Indonesia and what not and all of a sudden people come out of the woodwork and raise issues that people didn't know were issues all of a sudden and I'm just wondering if there's any chance of that potential coming up and sort of surprising us.

So, Scott again. Barry, in my opinion, no. I think we've got great relationships with the regulators, as well as the elected officials and operating to very, very high environmental standards. Plus Kubaka was such a clean ore body, oxide, no heavy metals, just a sweet, sweet ore deposit and there just aren't any issues there. There's no ARD issues there. It's just a real clean closure.

Right. Okay. Scott, while I've got you there, a couple of clarification questions. You say at Crown you are going to be mining perhaps by the end of 2006. Is that actual production or --?

We can develop (indiscernible) but we call it an ore, so all of our developments or the majority of our development is ore and we think we're going to start sometime in the second half. Hopefully the earlier the better. So we will be collaring ore. So every round we take essentially is going to be mill feed. Obviously we are going to stockpile until we have enough to run the mill. The mill can produce at 2000 plus tons a day, so we won't fire it up until we've got some feed there.

Right. Okay. Then you indicated that everything is on track at Refugio. I guess Bema indicated on their call that there was some lower grade material that right now is going on the heap leaches and probably will affect production in the second quarter. From what you're saying, that was planned?

What Bema was referring to in the Q2 -- I didn't hear their call, but, no, it wasn't necessarily plant. But it appears that some of the material put on the heap was lower-than-expected grade. We are working on working back through the reconciliation just to determine if indeed there is a problem there or not. Traditionally very east and west has performed very, very well, very, very predictable. So it is sort of wait and see right now, but the gold is coming off the pad into the ray as per targeted levels. So that is where that situation is at right now.

Okay, good. Finally then your statement on La Coipa, you said production is now expected to be higher than in 2005. I am a little bit confused in the sense that -- is that La Coipa the mine or is that your share of La Coipa because La Coipa is kind of in a funny mode there today where production is up, but part of it is coming from Puren, which you don't have the same percentage ownership of, so maybe you could just clarify that a little bit.

Sure. When we say La Coipa, we're talking our ownership in the global property including Puren. Puren and is why production is up. But you are correct. We own -- the joint venture owns 80% of Puren. (indiscernible) owns the balance and then of course our share of Brecha Norte and La Coipa Norte, but Puren is the impact on our primarily silver production, but gold equivalent.

Okay, Great. Then any plans to post tons and grade mined at the various operations so we can get a better feel for what's happening there because we haven't seen that for two years now.

We will be putting that out with the full disclosure release, Barry.

It's in the MD&A.

Thank you.

David Christie, TD Newcrest.

Just a couple of quick questions on both exploration and CapEx. On expiration, you say you're going to spend $30.7 million. Where exactly is that getting spent? Where is the biggest hunk of that?

That is exploration and corporate development in aggregate, so the $30 million, so --

All expensed?

Yes.

The $26 million will be in respect of exploration drilling proper and of that, approximately $9 million is district and spending outside of the mine site. The balance will be spent at the mine sites and there may be some of that it is not expensed. So we could have Ron Stewart give a breakdown when we do our investor day in May. We'll give a little more detail on particularly where we're going to be spending that. But as I say, about 60% of it is [NYMEX] and the balance at greenfield and within the greenfield, I would say it's roughly evenly split between Chili and Brazil with a bit in Argentina and a bit in Russia.

Okay, that's good. On the CapEx, what is it, $285 million? I assume that more than half of that is Paracatu. Is that right?

The Paracatu, the estimated spending for the expansion of Paracatu is about $100 million U.S. for this year.

Okay. And Round Mountain?

I think all that detail is going to be posted, but Round Mountain is about $25 million, our share.

Right. That's great. Thanks, guys.

Thank you. That concludes the question-and-answer portion. I would now like to turn you over for Mr. Burt for the closing remarks.

I appreciate your interest in Kinross today, folks. We hope you understand how serious we are about creating a truly great company. At this time, I would like to thank Kinross' 4000 employees for their commitment in the past. I'd also like to thank the Board for their hard work and investors for their continuing support. We look forward to speaking with analysts and media in the future and hope to see you at our annual and special general meeting May 4 at the [Royal Oak] Hotel here in Toronto. Thank you.

Thank you. Ladies and gentlemen, this concludes today's teleconference. At this time, you may now disconnect.