Kinross Gold Corp (KGC) 2010 Q4 法說會逐字稿

Welcome to Kinross Gold Corporation's fourth quarter and full year 2010 results conference call and webcast. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

(Operator Instructions)

At this time, I'd like to turn the conference over to Mr. Erwyn Naidoo, Vice President of Investor Relations. Please go ahead, Mr. Naidoo.

Thank you, and good morning ladies and gentlemen. Welcome to Kinross Gold's conference call to discuss our fourth quarter and year-end 2010 financial results. With us this morning we have Tye Burt, President and CEO, Tom Boehlert, Chief Financial Officer, Brant Hinze, Chief Operating Officer, Ken Thomas, our Senior Vice President of Projects, as well as Glen Masterman, our Vice President of Exploration.

Before we begin, I would like to bring your attention to the fact that we will be making forward-looking statements during this presentation. For a complete discussion of the risks, uncertainties and assumptions which may lead actual results and performance being different from estimates contained in our forward-looking statements, please refer to our news release of February 16, 2011, and our management discussion and analysis for the same period, as well as our most recently filed AIF, available on our website.

With that, I will turn the call over to Tye.

Thanks and good morning.

Overall, 2010 was a transformational year for Kinross. We rationalized our portfolio, adding assets in North America and one of the world's fastest growing gold regions, West Africa. Just four months after closing the acquisition of Tasiast, the exploration and technical work we are conducting on the project continues to confirm the potential we saw during our due diligence.

Gold grades are higher than expected in the early years of production. The deposit continues to be open. Reserves and resources have grown significantly since November, and we've completed now a scoping study that helps define the magnitude of this project. Tasiast will be a cornerstone asset for Kinross as it grows its production to 1.5 million annual ounces, while averaging down our company-wide production costs.

In 2010, we also enhanced our project pipeline with the addition of high-quality projects, while selling non-core investments, and the operations continued to deliver solid, financial results. More specifically, Kinross delivered increases in revenue of 25% to a record $3 billion. We increased margins, which were up 29%, year-over-year, increased adjusted cash flow by 16% to a record $1.1 billion, and increased our adjusted net earnings up 57% over 2009.

Kinross optimized the portfolio of operating assets, advancing the construction of the third and fourth ball mills at Paracatu in Brazil, adding a high-grade Dvoinoye deposit near our Kupol mine in Chukotka, Russia, sold non-core investments, and added the high-potential white gold exploration projects in the Yukon. We made significant steps, advancing our growth projects, preparing pre-feasibility studies at Lobo-Marte in Chile, and Fruta del Norte in Ecuador, as well as scoping studies at Dvoinoye and of course, Tasiast.

Kinross dramatically increased gold reserves and resources from 2009 levels to over 62 million ounces today of proven and probable gold reserves.

We ended the year in a strong financial position, with $1.5 billion in cash on hand and approximately $630 million in long-term investments. And, we completed the combination with Red Back, transforming Kinross into a pure gold growth leader, with production expected to double from 2010 levels by 2013. With strong performance from our mines, gold production reached a new record of 2.3 million gold equivalent ounces.

Speaking briefly to ops, Paracatu performed above our expectations throughout the year, producing over 480,000 ounces in 2010. The addition of the third ball mill remains on schedule for commissioning in the first half of this year with the fourth ball mill to follow in the first half of 2012.

At Fort Knox in Alaska, the first full year of the production from the new heap leach increased gold production by 33%. We do expect lower production in 2011 as we move through lower-grade stockpiles, and will return to milling the higher-grade ore from the mine in 2012.

Operations at La Coipa in Chile improved throughput during the fourth quarter with enhancements to the filter plant. Our Q4 results at Maricunga, also in Chile, were impacted by slower than expected gold release from the leach. But by year-end, the leach pad performance is showing improvement, and this has carried over into January of this year.

And at Kupol, strong mine and mill performance resulted in production for both the fourth quarter and the year that was ahead of guidance.

Turning to our development projects, we made significant progress in advancing each of our major growth prospects throughout the year. At Tasiast in Mauritania, we embarked on an accelerated exploration program since acquiring the project in late September. We increased the number of drills to 25, completed over 60,000 meters of drilling in the fourth quarter, finished a scoping study on the expansion project, and dramatically increased Tasiast's known reserves and resources through fast tracking that drill program. We've already started purchasing equipment for the expansion project, placing orders for a SAG mill, two ball mills and crushers.

At year-end 2010, Tasiast's proven and probable mineral reserves increased to 7.6 million ounces, M&I were 2.1 million ounces, and inferred resources increased to 8.6 million gold ounces. Glenn will speak in more detail about our exploration work there, and our plans for 2011. But I will say that our work on the project continues to conform -- to confirm, its great potential. Tasiast has completely lived up to our expectations, growing faster than anticipated, with indications that there is much more potential to be discovered as we continue our work on-site.

The scoping study just released proposes an expansion of the mine, with production reaching 1.5 million ounces per year over the first eight full years of operation, at an estimated cost of sales of approximately $4.80 to $5.20 per ounce. Tasiast will be one of the world's largest gold mines, and a significant contributor to Kinross' growth, while averaging down our Company-wide cost profile.

At Fruta del Norte in Ecuador, we prepared a feasibility study and technical report on schedule, and received the environmental license to construct the exploration decline at the La Zarza concession in January, earlier than anticipated. We expect to commence construction on that decline in Q2, and further drilling on the project will target an extension of the ore body at depth and along strike.

Targeted to start up in late 2014, we expect life-of-mine production at FDN to average 410,000 ounces of high-quality gold equivalent per year. We're on schedule to complete the full feasibility study in the second half of 2011 and expect to begin formal contract negotiations with the Ecuadorian government regarding an exploitation agreement soon.

A scoping study at the high-grade Dvoinoye project in the far east of Russia, which we acquired in August, was completed in January 2011. As a 900 ton per day underground mining operation, with ore being processed at the nearby Kupol mill, we expect the Dvoinoye feed to facilitate an increase in throughput in Kupol from 3,000 tons to 4,000 tons per day.

We also declared a 43-101-compliant mineral resource estimate at Dvoinoye of 1.1 million tons, grading over 31 grams per ton, for over 1 million ounces of indicated mineral resource. And work is continuing. We expect the project to start commissioning in the second half of 2013.

We completed an updated pre-feas study for Lobo-Marte in Chile, and remain on track to complete a full feasibility study there in the second half of 2011. Estimated to start commissioning in 2014, we expect this project to contribute approximately 350,000 ounces per year, from a 47,000 ton per day heap leach operation; which will incorporate the now-proven SART technology.

We also added ounces in 2010 at existing sites and projects. Kinross' gold reserve and resources increased dramatically, with proven and probable reserves at year-end 2010 of over 62 million ounces, up 23% from 2009. Along with that were increases of over 1 million ounces to M&I, and a 7.1 million ounce addition to inferred resources, which are up 48% since 2009.

We also reported reserves for the first time at FDN, adding 6.8 million ounces of proven and probable reserves upon completion of that pre-feas study.

In closing, our successes in 2010 have Kinross entering this year with 10 operational mines, delivering strong cash flows from pure gold production. Proven and probable reserves over 62 million ounces, plus 18 million ounces of M&I, and an additional 24 million ounces of inferred gold. A suite of organic growth opportunities and three major growth projects, which will drive Kinross' industry-leading growth profile, and are expected to double our production from the 2010 levels to 2015. Our skilled operating projects and teams, and project teams, are dedicated to advancing these projects and delivering the next wave of growth for our company.

I'll turn the call over now to Tom Boehlert for an overview of our financial results.

Thank you Tye.

Kinross had record revenue in the fourth quarter. This was driven by gross sales of 696,000 gold equivalent ounces at an average price of $1,333 per ounce, generating revenue of $920.4 million. That's a 32% increase in revenue compared to the fourth quarter 2009. Fourth-quarter attributable cost of sales per ounce was $551 on a co-product basis, which includes a Redback purchase accounting increase of $13 per ounce. On a byproduct cost basis, our cost of sales was $494 per ounce.

Compared to the same quarter last year, our cost of sales margin increased to $782 per ounce, up 19%, while the average gold price increase 22%. Fourth quarter adjusted earnings were $144.7 million, or $0.13 per share, compared to $148.6 million, or $0.21 per share in the fourth quarter 2009.

Fourth-quarter earnings were reduced by exploration expenditures at Tasiast of $23 million, and by the timing of year-end metal shipments, which deferred gold sales of approximately 30,000 ounces into the first quarter of 2011. Fourth-quarter adjusted operating cash flow increased 14%, quarter-over-quarter, to $332.7 million, or $0.29 per share.

For the full year, gross sales were approximately 2.5 million gold equivalent ounces at $1,191 per ounce. This generated revenue of $3 billion, an increase of 25% over 2009. 2010 attributable cost of sales per ounce on a co-product basis was $508, which included a $5 per ounce purchase accounting increase, compared to $300 -- excuse me -- compared to $437 per ounce in 2009. Byproduct cost of sales were $462 per ounce in 2010, compared to $388 per ounce in 2009.

In 2010, our cost of sales margin increased to $683 per ounce, 29% increase over 2009, while the average gold price for the year increased by 23%. Adjusted net earnings for the full year were $478.8 million or $0.58 a share, compared to $304.9 million, or $0.44 per share in 2009. Adjusted operating cash flow for 2010 was $1.1 billion, a 16% increase from 2009. On a per-share basis, adjusted operating cash flow was $1.32 per share, versus $1.36 per share in 2009.

We reduced our debt by $189.2 million during the year, taking our net debt position to $503 million at year-end. And we expect to make approximately $48.4 million of scheduled debt repayments in 2011.

Looking forward, we expect to produce between 2.5 and 2.6 million gold equivalent ounces at a cost of sales between $565 and $610 per ounce in 2011. On a byproduct basis, Kinross expects to produce 2.3 million to 2.4 million gold ounces at an average cost of sales between $520 and $570 per gold ounce.

On a regional basis, production is expected to be positively impacted in 2011 by a full-year production at Tasiast and Chirano, and higher forecast South American production, offset by lower production in Russia and the US due to planned declining grades. The increase in costs as compared to 2010 North America and Russia are primarily the result of planned lower grades.

The increase in costs in West Africa, once adjusted for the fair value in maturity adjustment, are primarily due to risks inherent in increasing Tasiast mill and dump leach rates, as well as pressure on labor costs, and a 30% increase in the government-controlled fuel price at Chirano. The increasing costs in South America are primarily the result of higher wage rates and stronger foreign exchange rates, partially offset by better recovery rates and higher production at Maricunga.

Consolidated costs are higher year-over-year, primarily as a result of lower grades at several operations, combined with a changing mix of production in the portfolio, as a planned decline in production at Kupol is replaced by increased production at Paracatu and the West African mines.

Capital expenditures are expected to total $1.5 billion, which includes $70 million that was budgeted for 2010, and was carried over into 2011, and $65 million of capitalized exploration expenditures. Approximately $415 million of the $1.5 billion relates to new projects, including $210 million for Tasiast, $110 million for Dvoinoye, $60 million for Fruta del Norte and $35 million for Lobo-Marte. A further breakdown of CapEx spending by category can be found on Page 11 of yesterday's news release.

Sources of funding for our 2011 and longer-term capital programs include cash and short-term investments, cash flow from existing operations, available debt capacity, and possibly the sale of non-core assets. We expect that these capital sources, together with active management of our operations and development activities, will enable Kinross to maintain an appropriate, overall liquidity position into the future.

For 2011, forecast exploration and business development expense is approximately $146 million. Other operating costs are forecast to be $25 million, G&A is expected to be $170 million, which includes $20 million for additional resources related to the newly acquired West African operations, and $35 million of non-cash equity-based compensation expense.

As in prior years, we've entered into forward gold purchases, offsetting our Kupol forward gold sales for 2011. The original forward sales contracts were inherited with the BIMA financing. As a result, we expect our gross revenue to be reduced by approximately $155 million as these purchase and sale contracts settle over the course of the year.

We expect the Company's tax rate to be in the range of 34% to 39% and depreciation depletion and amortization to be approximately $650 million.

With that, I will now turn the call over to Brant for a review of our operations.

Thanks Tom. The final page of our press release contains a review of operations and mine-by-mine summary with key metrics. I'll give a brief review of operational highlights for the fourth quarter.

At Paracatu in Brazil, full-year production of 482,000 ounces was 36% higher than 2009, significantly ahead of our expectations, as improvements that we implemented in Plant 2 resulted in improved recoveries. Production in the fourth quarter was slightly lower relative to Q3, as mining in a section of the ore body during the quarter resulted in lower grades and recoveries. Production in 2011 is expected to benefit from the additional grinding capacity of the third ball mill, which is on schedule to begin commissioning in the first half of the year.

At Kupol, mine and mill performance were strong in the fourth quarter, and a production for both Q4 and full year were ahead of guidance. Attributable production of 554,000 ounces for the year was 20% lower than in 2009, due to expected year-over-year declines in grade.

At Fort Knox, fourth quarter production was slightly lower than Q3, as we stacked less ore on the heap during the winter months. This also results in anticipated lower production in the first quarter of 2011. Looking at the full year, production at the operation increased 33% over 2009, due to the additional production from the heap leach. In 2011, as planned, most of the mining activity will be focused on capitalized stripping. As a result, about 80% of ore processed at both the mill and heap leach will be sourced from low-grade stockpiles, which is expected to result in lower production and higher costs for -- over 2010. In 2012, we expect to return milling direct feed from the mine, with grades similar to 2010.

At our newly acquired Tasiast mine in Mauritania, production in the fourth quarter was 48,000 ounces, as production was impacted by leaks in one of two water supply pipelines. We resolved the situation early in 2011, and full water supply has been restored to the site.

The Chirano mine in Ghana had a strong fourth quarter, with production of 77,000 ounces in the quarter. Operations in Chile saw some improvements in Q4, and full-year cost of sales for the region came in below revised guidance for Chile. Performance at La Coipa improved compared to the third quarter, as enhancements in the filter plant began to produce results.

Fourth-quarter production and costs at Maricunga were negatively impacted by slower than expected gold release in the heap leach, as we transitioned to Ponto ore from the Verde ores. Ore by year-end performance of the heap leach was showing improvement, which has carried into better performance in January 2011.

So overall, we enter 2011 with a strong portfolio of operating mines, expected to produce between 2.5 million and 2.6 million ounces of gold equivalent for the year. We expect higher production from both Paracatu and Maricunga this year, which offset expected declines at other operations. Our operating facilities are in good shape and we continue to look for opportunities to extend mine life through exploration.

And with that, I'd like to turn the call over to Glen Masterman, Our VP of Exploration who will provide a review of our exploration program.

Thank you Brant.

In 2010, Kinross was active on 44 mine sites, near mine and greenfields projects, drilling a total of 375,000 meters. Gold reserves increased by 11.5 million ounces in 2010, of which 9.7 million ounces were added organically.

Turning to Tasiast, we have added 3.9 million ounces to resource inventory at Tasiast since our last update in November, and added 11 drills to the project in the fourth quarter of 2010. Three additional drills were contracted at the beginning of 2011, bringing the total number of active drills at site to 25.

We completed approximately 64,000 meters of drilling in the West Branch area to target deeper extensions of the green-schist zone and to extend green-schist star mineralization close to the surface. We also installed a new sample preparation facility in Nouakchott in order to expedite sample analytical timelines.

As a result of accelerating exploration efforts, we have significantly increased reserves and resources. As of December 31, 2010, proven and probable reserves at Tasiast increase to 7.6 million ounces. Measured indicated resources are 2.1 million ounces and inferred resources increased to 8.6 million ounces. We upgraded 2.6 million ounces of resource to reserves and added 3.5 million ounces to inferred resources since the update in November.

Kinross reports mineral reserves and resources above a set cutoff grade and confined within a defined mining shape. This is different to Red Back Mining's historical disclosure of mineral reserves and resources, whereby their estimates reported all mineralization above a set cutoff grade, but not confined within a defined mining shape.

To compare apples to apples, and to bridge the gap between Red Back's and Kinross' disclosures, the application of Red Back's prior methodology for resource reporting to the current drill resource in mineral resource estimates for Tasiast would result in an additional 64.7 million tons of inferred mineral resource, with a grade of 1.16 grams per ton, for an additional 2.4 million ounces of gold.

The current reserve and resource estimate at Tasiast included drill holes drilled up to December 31, 2010. An additional 196 holes for a total of 68,000 meters were completed between the November and year-end resource updates and are incorporated in the current estimate.

Already this year, we have drilled another 80 holes for 25,000 meters. And between now and the end of the second quarter, our drilling plan will continue to focus on infill and step-out holes at West Branch as part of the 90,000 meter feasibility program. Our target is to complete this phase of work for the feasibility study to be reported in the second half of the year.

In 2011, we will be conducting three parallel exploration programs at Tasiast. Resource expansion and definition drilling, exploration near the mine, and exploration of the Tasiast trend beyond the 8 kilometer mine corridor. This involves 130,000 meters of drilling on West Branch, focusing on infill and resource expansion of the green-schist zone, which remains open down-plunge.

We will also be targeting extensions of mineralization beneath the open pits, with approximately 84,000 meters of drilling planned, along with a large program of district reconnaissance drilling, testing targets along a 70-kilometer greenstone trend beyond the mine corridor.

We are also constructing a high-capacity sample analytical facility at the mine, known as a superlab, and this will further increase our ability to analyze drill samples.

Another highlight of 2010 is the result of infill drilling at Fruta del Norte, which converted 6.8 million ounces to mineral reserves by year-end. Future drilling at FDN will target extensions of the ore body at depth, and along strike, as well as upgrading existing resources.

In 2011, Kinross' exploration efforts will focus -- will continue pursuing our strategy of upgrading our asset portfolio through organic growth. The 2011 total exploration budget is $175 million, of which approximately $110 million will be expensed and $65 million will be capitalized. Of that total, we plan to invest $75 million in West Africa, mostly to continue growing and upgrading resources in support of the feasibility study at Tasiast.

Other major 2011 initiatives include Russia, where 15% of the budget will be spent on exploration at Kupol and Dvoinoye and in North America, where we will be spending [17%] of the budget largely for drilling on Fort Knox, and on the white gold project in the Yukon.

And with that, I will turn the call over to Ken Thomas, for an update on our growth projects.

Thank you Glen.

In 2010 Kinross made significant progress on our projects in Paracatu, Tasiast, Dvoinoye, Lobo-Marte and Fruta del Norte.

Installation of the Paracatu third ball mill will be complete in the first half of 2011, and is 82% complete at this time. This will be followed by the fourth ball mill, which is on schedule to be commissioned in the first half of 2012. The fourth ball mill will sustain throughput of 41 million tons per annum in Plant 2 in future years. As part of the fourth ball mill project, an additional shovel and truck has been purchased.

At year-end, we completed the scoping study for Tasiast, which envisions an expanded open-pit operation, with a milling capacity of 68,000 tons per day, comprised of 8,000 tons per day from the existing operation and 60,000 tons per day from a new processing plant. The new plant is a conventional gold cyanidation plant consisting of primary crushing, grinding, gravity separation, carbon and leach cyanidation and cyanide disruption.

The study is based on a 16-year mine plan for the expanded project, which forecasts 1.5 million gold equivalent ounces of annual production at an average gold rate of approximately 2 grams per ton, and averaging recoveries of approximately 93% in the first eight full years of operation. Over the same period, total cash costs are expected to be in the range of approximately $480 to $520 per ounce. The project team is continuing to optimize its estimates for operating costs, which we included in the project feasibility study scheduled for completion in mid-2011.

The scoping level estimate for initial pre-commissioning capital for the processing plant, mine fleet equipment and associated infrastructure is $1.8 billion, plus contingency of $400 million. Post start-up of the mill, we expect to make additional three purchases of approximately $500 million to sustain the full mining and stripping rate. We have ordered major processing equipment, including three crushers, one SAG ball mill and two ball mills, wraparound motors for the mills, and we are in advanced discussion with suppliers regarding the purchase of trucks for the expanded mining fleet. We have retained an international EPCM joint venture firm for the project feasibility study and basic engineering.

We have also been building our bench strength, appointing a new regional vice president for West Africa, and a seasoned project director for Tasiast. We are excited by the quality of people who have been expressing their interest in working on the project.

Kinross has had initial meetings with key government ministries concerning permitting for the project, and a permitting strategy has been developed to support the project pipeline. Pending receipt of EA approval, construction is expected to start in mid-2012 with operations to commence in the first quarter of 2014.

At Fruta del Norte in Ecuador, we have prepared the pre-feasibility study and a technical report on schedule, incorporating reserve and resource information as of year-end 2010. Proven and probable reserves are estimated at 6.8 million ounces of gold and 9.1 million ounces of silver. The study is based on a mine life of approximately 16 years, with current life-of-mine production of 6.3 million ounces, and silver of 6.7 million ounces. The mine will be an underground operation, using transverse open blasthole stopping with backfill.

Over the life-of-mine, annual production is estimated to average 410,000 gold equivalent ounces, with an average gold grade of approximately 8.010 grams per ton and average silver grade of approximately 10.89 grams per ton. Recoveries are expected to be 93% for gold and 73% for silver. Over the same period, average cost of sales is expected to be approximately $370 per gold equivalent ounce.

We expect the plant to be commissioned in two phases . First, commissioning at a rate of approximately 2,500 tons per day, processing non-refactory ore using conventional milling, and a carbon and leach process. This is expected to ramp up over a period of three years, to 5,000 tons per day. In addition, we will add a pressure oxidation circuit, 18 months after commissioning of Phase 1, to allow processing of refractory ore. Capital is expected to be approximately $700 million for Phase 1, of approximately $400 million for Phase 2.

During 2010, we obtained a number of permits to advance work on the FDN project. We also obtained the environment license to develop the underground exploration decline at La Zarza in early January, substantially ahead of schedule. Construction of the decline is expected to commence in the second quarter of 2011, with surface proprietary work commencing in the first quarter. We are progressing with EIAs to build and operate the mine and processing facilities, and we expect to submit these by mid-2011. The feasibility study is expected to be complete in the second half of 2011, with start up of the project targeted for late 2014.

At Dvoinoye in far-east Russia, a scoping study was completed in January 2011. The scoping study is based on developing the deposit as an underground mine, with a life-of-mine of at least eight years with an average output of approximately 900 tons per day from 2013 to 2020. Dvoinoye feed will be processed at the Kupol mill, and with a few minor modifications to the mill, is expected to facilitate an increase in mill throughput to approximately 4,000 tons per day. The average gold grade of Dvoinoye feed is expected to be approximately 17.5 grams per ton.

Branch processing is proposed, using one week of Dvoinoye feed and three weeks of Kupol feed per month. Initial CapEx for the project is expected to be approximately $300 million. Mining equipment already purchased and shipped to Pevek is currently being delivered to site and we are on schedule to complete the pre-feasibility study in the third quarter 2013.

In 2011, we will be focusing on construction of two mine portals, development of the exploration decline, and constructing additional facilities and infrastructure. Processing of Dvoinoye ore at Kupol is targeted to commence in the second half of 2013.

At Lobo-Marte in Chile, we've completed an updated pre-feasibility study . The updated study is based on a mine life of approximately 10 years, and confirms the viability of a 47,000 ton per day open pit heap leach operation, incorporating known technology SART. The study estimates an average annual production of approximately 350,000 ounces of gold per year, with an average operating cost of $11.00 to $11.50 per ton.

Average grade over the life-of-mine is estimated to be 1.17 grams per ton, with an average recovery of 60% to 70% depending on the ore type. Life-of-mine cost of sales is estimated to be approximately $500 per ounce, or approximately $450 per ounce net of copper credit of $50 per ounce, based on a copper price of $2.50 per pound.

Initial capital expenditures are estimated to be approximately $700 million, versus the earlier pre-feasibility estimate of $575 million to $650 million. This increase is due to enhancements to the site layout and facilities, including installation of an overland conveyor and a conveyor loader system for the leach plant. This will optimize process flow and allow for potential, future expansion.

Kinross received approval for and additional 20,000 meters of drilling at Lobo-Marte late in the fourth quarter of 2010. We are proceeding with further infill and geotechnical drilling in support of the project feasibility study, which is scheduled for completion in 2011. Hydrological, geotechnical and infill drilling associated with previous permit was completed in the fourth quarter, with condemnation drilling expected to be completed in the second quarter of 2011. We also expect to submit the EIA for the Lobo-Marte project in mid 2011.

And with that, I will turn the call back over to Tye, our CEO for some final comments.

Thanks Ken.

Just in closing, our successes in 2010 have clearly laid the foundation for Kinross to enter this year with 10 operational mines, delivering strong cash flow from pure gold production, proven and probable reserves Company-wide of over 60 million ounces of gold, up 23% this year, plus 18 million ounces of M&I, and an additional 24 million ounces of inferred.

A suite of organic growth opportunities, and three major growth products, including the spectacular opportunity at Tasiast, will drive Kinross' industry leading growth profile, and double our production from 2010 through 2015.

I'd like to say a special thank you to our operating and project and support teams operating on four continents and dedicated to advancing our projects, operating our mines and delivering the next wave of growth here a Kinross.

Thanks very much for your attention, folks. We are happy to take some questions.

Expect we will now begin the question-and-answer session.

(Operator Instructions)

John Bridges, JP Morgan.

Thanks Tye, congratulations on all the new ounces at Tasiast.

Thanks.

You've got a lot of boots, or maybe sandals on the ground there now, and there was a comment there about step-out drilling and other opportunities. Could you just give us a taste as to what else you are finding on the property?

Yes, thanks John, I will ask Glen to give us just an overview of what we are expecting for this year and what maybe some of the geochem sampling results have been.

Sure, Tye.

John, the -- I'd draw your attention to the -- I guess to the three-pronged strategy and approach for exploration at Tasiast this year. The first is the infill drilling and expansion of the Greenshire zone in the West Branch area. So there will be a strong focus on that in 2011 going forward. In addition to that, we will be driving exploration around the -- or beneath the pits, along strike. This is within the 8-kilometer mine corridor at Tasiast. We will continue -- so we will be driving a program along that additional 5 kilometers of strike beyond the West Branch.

And a third element of the program, or strategy, is to advance our district exploration of geochem and geophysics targets in the 70-kilometer belt beyond the main mine corridor. And there are a number of these quality targets that we know about already, and we have an aggressive reconnaissance drilling exploration program to move these along in the future.

Yes, maybe to give some more specifics on some of those targets we could look -- I think on the website, John, there's a -- Glen has posted there a list of some of those targets, with some of the geochem sampling results, which are very exciting.

And those corroborate the soil map that Red Back published before, which shows large areas of essentially ore grade material in the soil?

That's correct. And these are mainly, of course, at-surface oxided, but we've got to figure out what's below that, as well as define the surface.

Yes, sure. And then maybe as a follow-up, you mentioned potentially raising some money to help the capital build. I just wondered, given the big projects you've got today, does white energy -- the white project in the Yukon still fit in your portfolio?

Yes, just a summary. White gold is still an exploration project. It's not even -- we haven't convinced -- we haven't finished our drilling on the three current targets, let alone done the exploration on areas around those three targets. So, it's a long way from pre-feas. It's well outside the time envelope of 2015 that we are currently contemplating. So it's on the long-term future horizon. We're excited by what we're seeing. Lots of work to be done yet.

Okay. Finally, Chirano came though with a very good number. Is that something we could expect going forwards, or is that just an anomaly?

I will ask Brant to speak to Chirano.

Yes. If -- looking at our Chirano operations. First off, we feel it's a really good operation, and I think we have, certainly, a lot of future potential at that mine. The performance that we saw in 2010, I think we can expect more of the same and maybe a little bit better throughput through the mill itself. Recoveries relatively similar, with relatively similar grades. So, I think we can expect to continue to see the improved performance there. From the cost side, we are no different than the rest of the industry. We do see cost pressures, and as Thom mentioned in his comments, we did see an up-tick in our fuel costs related to the government taking off the subsidy, so we will see a 30% increase in our fuel costs.

Okay, great. I suppose you've got to take the rough with the smooth. Thanks guys, well done.

Thanks, John.

David Haughton, BMO Capital Markets

Yes, good morning, and thank you for the update, Tye. I've got a few questions on Tasiast -- just thinking, what kind of dimensions are we looking at for the pit that you are proposing here? The strike length, the depth extension and how that matches with the geological potential?

I will ask Glen, and possibly Ken, to speak to the current vision of that pitshell.

Okay, I'll open with the -- call it the geologic dimensions of mineralization at Tasiast. And in the West Branch area, we're seeing -- or we've delineated the mineralized zone to this point in time, per about 1.5 kilometers to 2 kilometers of strike length, down to a depth of around about 720 meters from the surface. And, we're seeing that the ore body is still open down the plunge, it is plunging shallowly to the south. And the pit is modeled around those geometries and dimensions. And for specific geometries of the pit, I will defer to Ken.

So when looking at this point in time, probably a final pit of about 3.5 kilometers by 1.5 kilometers, and probably dropping down to somewhere around 500 meters. And that is a -- what I would call the ultimate pit at this point in time, based on what Glen has given us to model.

Just to be clear, the ounces that we release, the aggregate over 18 million there, you would've seen, David, does not include all the ounces that we are finding around that pit shell. So as Glen said in his comments, apples to apples, we're well -- and another 2.4 million ounces outside that pit, and of course, drilling in progress. That release included drill activity up until December 31, and we'll still have 25 drills working around the clock since then. Our so-called final pit shell, is that economically sourced pit shell that we're working on, and working to engineer, but this thing is still going, still open and work in progress full-speed. So, ultimate opportunity there is still to be defined.

And, if we do have the mineralization going down to 720 meters, the pit only going to 500 meters, what's preventing the pit being pulled down? Is a grade, strip or combination?

We just have more drilling to do, and we have to infill so that we can define exactly what those ounces, outside the pit, look like.

Okay. And what kind of strip ratio are you thinking about? Just with the parameters that you wrapped around the scoping study?

Initially in the scoping study, and you've got to remember this is very preliminary, it's somewhere around 6.5 to 1, and we're anticipating as we are doing more work, that will drop. But, at this point in time, use 6.5 to 1.

That's a life of mine number, Ken.

That's correct, life of mine.

All right, and what about the infrastructure included in your start up? $1.8 bill -- what have you thought about for the water and the power? I know at some stage there'd been a discussion whether it's going to be generated on site, or perhaps a pipeline, or any combination? What kind of things did you include in your scope?

Within the scope we've included a power plant, which is based at site HFO, and installed capacity of about 160 megawatts, and it's drawing about 110, 120. And the reason why we've done that at this point in time is for the security of our debt. We can control the project. As you know, Mauritania, with regards to infrastructure development, is not well advanced, and they have plans at the moment to put transmission lines into the country. There are no transmission lines in the country, and this is why we selected an HFO plant at the site. As we speak, there's a pre-feasibility study being run in parallel with our feasibility study to evaluate core at the major port in Nauadhibou, so at this point in time base case, HFO, with pre-feasibility studies looking at more economical evaluations.

Approximate capital number for the generating plant?

Okay, the generating plant is somewhere around $240 million, and then to add on to your other infrastructure question, we have a water pipeline from the coast, approximately 200 kilometers -- we even use sea water in the plant. We've completed seawater testing at Tasiast with regards to the CIL plant, and that pipeline will be about 200 million.

In addition to the infrastructure, you obviously have warehouses, truck maintenance buildings, offices, laboratories, et cetera. So, all in all, we are looking at somewhere close to $550 million in infrastructure.

All right. Moving now to Chirano, a little bit like John's previous questions, how is Akwaaba going?

As far as production, operations, or --?

Yes, because as we'd left it with the Red Back guys, it was kind of going through the ramp-up phase.

Yes.

Just -- it's an important contributor to the future of that mine. Just wanting to see if there's any update that you can provide us?

So as far as the operations are going, the underground operations there, we -- I think we've turned a point in the ore deposit itself, an inflection point, and below that we are seeing more consistent grades and potentially less dilution. So we see that as a real opportunity there. As far as the operations go, it's going quite well, pretty steady state, and we expect that to be a good producer for us for quite some time.

All right. Last question, I have dominated a bit of the questioning. Thinking about Dvoinoye and going into batch processing, I'm wondering the rationale behind that? Is it the metallurgy or the mix of ownership, or what is the thinking behind going batch?

Basically, two reasons. There is a significant difference between the metallurgical characteristics of the ore at Kupol. It's very high silver, whereas Dvoinoye is a mainly gold ore deposit. At Kupol, we need somewhere around 120 hours for complete dissolution of the high silver, whereas you don't need that for Dvoinoye. In addition, re-agent consumptions are a lot lower for Dvoinoye, so it makes a lot of sense to move forward with a batch treatment.

It also allows us to understand , very accurately, what the performances of Kupol, what the performances of Dvoinoye, is. Mixing them would give us a very, shall we say, hazy understanding of recoveries, and, what the grade is going into the plan. In addition, obviously we have Kupol, which is a 75%-25% ownership, and we have to ensure that we understand what the recoveries and the processing costs are for both companies.

All right, thank you very much.

Thanks David.

Don MacLean, Paradigm.

Good morning, guys. Well done on the additions at Tasiast. Maybe these are, most of them probably directed to Glen. I missed some key data. How many holes were included in this update between September 30 and December 31? And the number of meters?

Don, the number of holes included in the latest estimate since the last, provided in November, was 196. And, the number of meters that incorporates is 68,000 meters.

68,000. Great, okay. And you were saying you still have quite a number still sitting, waiting to be assayed. Can you just review that again?

That's correct. Since the -- since December 31, the cutoff date for the current estimate, we've drilled another 80 holes for 25,000 meters. What I would highlight, is that a portion of that program has been focused on infill drilling to upgrade the inferred resources. And, but also, a portion has continued to step out and grow the resource base.

What has the conversion rate from inferred to M&A been? In your sense at this point? And if you can't actually provide a specific number, would you say very high or --?

Well, right now, we need to do more work and more drilling to really understand the conversion from inferred to indicated, so at this point in time, it's too early to say.

I think what's very clear, Don, is that the momentum on this project continues and has accelerated, which is another reason why we are so excited. Not just the absolute size, but the velocity is tremendous.

Yes. The velocity picked up. Maybe, Glen, when you say it's open, can you give maybe a little bit more color in terms of the grades and the widths that you're seeing there or the grade widths multiplier?

Well, what I can say, Don, is that the plunging character of the Greenshire zone at West Branch is still open, so we're still seeing the deepest holes are finishing the mineralization, and we continue to step out on those. And these are holes drilled outside of constrained resource at this point in time. The other area, or specific area of focus for short-term, opportunity to grow resources is beneath the open pits in the [Pumont] area and we have a program plan to look to extend resources and grow them in that area at Tasiast.

Yes, we will look forward, Don, to doing another update at the first quarter as we move forward here, and we will be able to talk a little bit more then, I'm sure.

Sure, just a couple more things that are related to that, I guess, to John's question. Can you give us a sense of how many high-quality targets you have, sort of regionally, and on trend, to try to pick between at this point, Glen?

Sure. We have at least three to four quality targets along the main band at our [on-formation] trend, and all of which has some preliminary drilling that we are targeting, geochem anomalies, and we will continue to advance our understanding of those targets.

Okay. And this one's a bit of a hypothetical one. You've got this green shift zone. What is the next largest deposit along the trend that you have? You've got one that is sitting, what at, 20 million ounces now. What is the next largest one?

Don, it is too early to say, I guess to be able to characterize the size potential of the next deposit.

I'm not asking for the potential, Glen. I'm just asking for what actually is at this point. Is it like a half a million ounces?

Well, again, it's early days. We still have more drilling to complete before we're able to characterize that.

Okay. Well, maybe I'll just step back. In the existing resource, total, for Tasiast, you have a very large green shift, but then you've got a string of pearls along that 7 or 8 kilometers, the next largest of which, I'm assuming, is probably something like a half a million ounces? Is that a fair characterization of the other pearls along this necklace?

Yes. The Pumont zone to the north, which is the near-surface band at iron-stoped mineralization, which constitutes a portion of the resource. The bulk of it is, clearly or obviously, contained within this West Branch area, and the green shift star mineralization.

Great, okay. I guess the point I'm trying to get at is, when you look at the mineralization, and you look at other camps, typically you'll see a logarithmic function for the various deposit sizes. Sometimes it's a pretty steep log function but there are other deposits in a trend, in the major camp. And I'm just wondering if there's anything that you see that's peculiar about Tasias, that would make you say, -- well, this is going to be another Hemlo situation, where we have basically one --

Don , I guess we'd summarize on the point as saying -- look, we've owned this for four months. We've focused on the main thing, and keeping the main thing our primary target to move that to feasibility, and that is the bulk of our work. There are other pieces of oxide in that string of pearls, as you call it, in the banded iron, but it's very early days. And of course we haven't gone below them in any kind of way that we could explain what else we see or what else is there. So, focus on the main thing is our current job. And Glen, as I say, is stepping out those targets. So, what's beneath the other banded iron? That was the question back in 2008, before Red Back got into the current green shift zone. We just don't know yet. Too early to say.

Okay. Well done for such a few months at it.

Thank you.

Barry Cooper, CIBC.

Good day everyone. Just wondering if you can help me with the math that I'm kind of struggling to understand. So you've indicated 1.5 million ounces as an average over eight years, which by my calculation means that you're going to put through the mill grades around 2.3 grams. You will clearly, then, eat through all of the reserves and, dip into the inferred resources, which is highly possible, but both of those reserves are 1.82, the inferred is down at 1.47. I guess what I look at ,and kind of say -- what gives you the confidence to talk about getting a 2.3 grade for eight years, but the inferred can't kind of even move into an M&I? And given the grade of the inferred, what gives you the confidence that you will be able to keep ahead grade of almost 2.25 grams, 2.3 grams over that period of time?

And then, given that the gold price that you've used is $900, as you start moving the gold price up, which I assume you will over time, assuming the gold price behaves where it is, are you not going to just envelop more and more low-grade material into that source, therefore potentially compounding the problem that I'm having, where you've got way too much high-grade, and not enough low-grade, I guess is the way I would see to get the math working?

In the -- Barry, this is Ken Thomas speaking. We referred to the first eight years at 2 grams per ton with the 93% recovery. Also, in the first couple of years --

Then, I guess, your mill seems to be too small then.

Yes, we have a mill that's 60,000 tons a day. Plus the old mill at 8,000 tons per day.

Okay.

And that's where we get the figures from. Also, in the first few years, we've also got a dump leach that's producing about 100,000 tons , sorry 100,000 ounces per annum. So, the first eight years at the moment, we've got definitive figures for, and then as we move out past eight years, we're still refining it in the feasibility study, so I hope that answers your question.

Okay. So, just so I understand, when you talk 2 grams, that's going to the mill, and then you've got 100,000 ounces of the 1.5 coming from a dump leach, and that's good enough for the whole eight years, is it?

No, that's only for the first few years. When I say 2 grams per ton, you've got to remember that's an average over eight years.

Sure, yes.

And the dump leach goes for about four to five years. And the old mill will keep on going for somewhere around 14 to 15 years as well. So, the 60 plus the eight, 68,000, plus for the early years as we are ramping up the mill, we have the dump leach in operation.

Does it pay to keep the old mill going? I would've thought that you would've been wiser to throw in a few extra bucks and just build the one at 70,000 and abandon the old one, just on efficiency for cost?

The issue in front of us is, at the moment, the size of available equipment. We have a 40-foot SAG mill and we have two 27-foot ball mills. It's at the upper end of the technology. There are 42-foot mills and 44-foot mills on the drawing board, but we felt it prudent, with the size of the mills, which are the biggest that have been successfully operating, especially with the wraparound motors, to stay at 60,000 tons a day. That's why we kept the small mill operating, and in the feasibility study, we will obviously refine this as we go along and try to understand what the work indices are, we've got very provisional work indices, and we've used a higher than what we would normally use work index, so there could be an upside with this particular plant that we are putting in. But at this point in time we have what I would call a safe design.

Okay just refresh my memory, what is that equipment compared to the Paracatu? Is Paracatu 38, or is it also 40?

Okay. So Paracatu has a 26-foot mill. This is one-foot -- ball mill -- sorry, it's one foot bigger in diameter. There are 27-foot mills in operation in Escondida, and Caserones is going to be putting in 27-foot diameter mills. So they'll be operating before us. Paracatu -- SAG mills, 38-foot. But there are 48-foot -- sorry, 40-foot SAG mills operating worldwide.

And you're putting in a 40 in Tasias?

We are putting a 40-foot SAG mill in, with 26 megawatts, yes.

Okay, thanks a lot. That's all my questions.

Thank you.

Thanks.

Greg Barnes, TD Newcrest.

I just wanted to go back to the CapEx number, the $1.8 billion to $2.2 billion. And I believe the preliminary number that was out there was $1 billion to $1.5 billion, and I'm just wondering where you are seeing that bump up in the CapEx?

Just to be clear, there has been a couple things happen. One, we are including infrastructure; two, we've got the contingency number which we mentioned in there; and three, the scope is larger than had previously been discussed. So, with that introductory comment, Ken, maybe you could speak to the overall CapEx?

Yes, Tye is right. When we did the early work we benchmarked against similar size operations with regards to milling and mining. And we realized as we moved along, the infrastructure was rather embryonic in Mauritania. As I said earlier, no transmission lines. So, that put a fairly hefty cost on our infrastructure with regards to a power plant. And the second one was the need for a water pipeline from the coast, due to insufficient water from wells in the area. So, those two added, without even further consideration, $400 million. So, that's really the challenge with this project. It's a very simple operation -- large open pit, very simple processing plant, but there's quite a bit of infrastructure associated with it.

Okay. And those $500 million in fleet adds that's coming after the initial CapEx, when does that come into the CapEx budget?

Early in the mine life, after start-up So, we'll need that, not to get it going initially, but we'll need it rapidly thereafter, to sustain our stripping and mining activities. So early years like 2014, '15, '16.

Okay. And sustaining capital -- any ideas on that at this point?

No, Greg, we're not going to specify a sustaining CapEx number now. I'd use the standard rules of thumb. You've got to adjust for desert conditions, but that will be detailed in the feasibility study at the end of the half.

So, if I use like 5% of the invested capital, that's not going to be too far off, then?

I think that's a reasonable -- as I say, you've got to adjust for sand and desert on the one hand, on the other hand, not at altitude, and not in jungles. So some gives and takes there.

Great. Okay, thanks Tye.

Thanks.

Anita Soni, Credit Suisse.

Hi, I just had a question with regard to the extra 2.4 million ounces that you were talking about outside the pit shell. Is that also -- sorry could you give me the tonnage and grade? I thought I heard you say it was 1.16 grams per ton?

Yes, it's in the press release, Anita. I'll get Glen to maybe speak to that.

Sure. The numbers again, Anita, are $64.7 million tons, at 1.16 grams.

Sure. And that was excluded just because it's outside the pit shell, or was that because it didn't meet the low -- the cut-off grade requirements that you guys are using now?

It's a resource that's outside the pit shell that we modeled on the latest information.

So let's be really clear. To make the numbers that had been put out previously, based on Red Back drilling, we're not constrained by a scoping study and a pit shell. So now that we've got the work done, on the scoping study we can divine an economic pit shell. But what's clear about this deposit is that it's still going, still open, and there are ounces that we know about that are outside the shell. So, obviously that depends on future drilling and future economics. But to compare apples to apples, so that you could look at the velocity with which ounces are being added here, and aggregate them in the way that RBI was doing before and after the acquisition, that's why we added that clarification number.

Sure. And then the grades you're seeing at depth of 720 meters, are they -- I assume that they're at least maintaining what you are seeing further up in the pit? Because you are forecasting a 2 gram per ton versus the reserve grade of slightly lower than that. Is that the case? Or are they thinning out?

The grades down the plunge or at the deep extents of the mineralized zone at West Branch are consistent with grades we are seeing for the overall zone, of green shifts mineralization.

And, I think for anything more than that, we will have to stay tuned for Q1.

All right. I think, that's it for my questions, thanks.

The next question comes from Steven Butler of Canaccord Adams please go ahead.

Okay, Glen, just to beat it to a pulp, the Tasiast -- your exploration budget for this year is a whopping 318 kilometers -- I guess 318,000 meters, which includes the satellite targets. Can you just confirm how many meters were drilled at Tasiast in 2010 in total?

That, I can do. That was upwards of 200,000 meters. I will just get that number for you.

Okay.

It was about 220,000 meters in 2010. Remembering of course, that for the bulk of the year, there were only 8 to 11 drills on the site, and we've added another 14 drills since September. So, we have a strong capacity to get a lot of drilling done this year.

And perhaps even do more than you're budgeting, it seems then, based on count of drills. But anyway, the other thing I wanted to ask was, you mentioned in your discussion about the three-pronged approach to Tasiast. Number two, you said exploration around the pits along strike, 5 kilometers -- I wrote down 5 kilometers strike beyond the West Branch. Is that strike, and therefore down-plunge, if you will? In other words, is there -- I guess drilling will determine how deep this stuff may be, but any comments there? Is it maybe that it has to reach that much deeper, and therefore is an underground context at some point?

The drilling to the north of the main West Branch zone is under the existing pits. And the reality is, I would characterize it as under-explored and we have a lot of work to do to understand the potential and opportunity there. So, it's, again, there's a lot of work in front of us before we get there.

Remembering, Steve, that prong one of the drilling strategy is down plunge and delineating further the existing West Branch ore body.

Okay. Look forward to seeing the asset at the end of March. Thanks.

There is a follow-up question from Anita Soni Credit Suisse. Please go ahead.

Sure. Just a question on the CapEx spread for the $2 billion. I mean, you're not spending so much in this year, so I assume there is a strong capital spend in 2012 and '13 as this starts up 2014?

I think that's a reasonable assumption, because startup is in the first half of '14 and the biggest spending -- Ken, correct me if I'm wrong -- but are going to be '12 and '13, as we're at the full construction rate. Because we go in the ground, mid-2012, Anita,, so 2012, heavy, heavy spending. 2013 the same. Start up '14.

Okay. So pretty much an even split maybe?

Well, I would say, 2014 is going to be the peak year.

Would that start 2013 you mean?

Sorry -- let me just straighten it out, 2013 and '12 are both going to be the heavy years. I would say, I don't think an even split is quite right because we will have a lot of preliminary work to do, so 2012 probably a bigger year, give or take $1 billion.

Okay. Thank you very much.

There is a follow-up question from Don MacLean of Paradigm. Please go ahead.

I was just wondering if you could give us a bit of a political update in terms of discussions with the Mauritanian government? How those have been going and in particular, maybe on Ecuador, toward some kind of fiscal agreement. Any progress in that front?

Yes, on Mauritania, I will say this. The Mauritanian government has been extremely supportive of this project, both when Red Back owned the asset and when we've owned the asset. They are contemplating, of course, royalty and tax revenue, which is going to make a dramatic impact on the Company in the go-forward, and on the country. And, in addition, of course, the 3,000 to 4,000 new jobs, the school endowment we've made there, and of course the infrastructure we will be spending. So I would characterize the Mauritanian attitude towards this project as extremely supportive.

There is a massive mineral endowment in that country, not just in gold, but also in other metals and energy, oil and gas. So, this is a country that has got a very exciting future in the natural resources area. The new mining minister is a -- has been running the state iron ore company called SNIM, which is the eighth-largest iron ore exporter in the world. So they understand the business, and are excited about the prospects, and are actually supportive. And I would note that there are other major mining companies now, not just looking, but moving in actively to Mauritania.

So, we're very pleased with our relationship. It has a very strong foundation, and our team of government relations folks and permitting folks is closely engaged. I would just emphasize that we have the existing convention in place with the Mauritanian government that governs Tasiast and the expansion, as it currently operates, plus the expansion. So, we're strongly confident in our ability to deliver the permits needed to build and operate.

With respect to Ecuador, the second part of your question -- again, very close interaction between our team in Quito, and around site, and with the Ecuadorian government. The permitting velocity has picked up there. You will have seen that in our news releases in the last quarter and now. And, we and they are excited about us going underground there in the first half of 2011.

Of course, the key piece of legal agreement that we need is the development agreement, and the investment protection agreements for FDN. There are a couple companies already in discussion with the government based on the technical reports that have been filed to date. We expect to engage with them in the first half of this year to define those final pieces of that development process. So that, of course, will reflect a number of things, including our permits for the project, and the economics of the final tax program at FDN.

Right. We did see an increase in the royalty rate at Burkina. We've seen them in Ghana. Has there been any thoughts along that, floated at all in any of your discussions to you, Tye?

We would expect, and I think the Mauritanian government has made it clear that in future, the mining industry in Mauritania will include for future developments, a mining royalty in line with Ghana. Tasiast and the expansion is grandfathered under the current regime, where the government gets a 3% off-the-top royalty.

Great. Thanks very much.

There are no more questions at this time. I will turn the call back over to Mr. Burt.

Just briefly in closing, we think 2010 was a transformational year for Kinross, as we delivered record revenue, $3 billion, record adjusted operating cash flow, $1.1 billion, and increased gold reserves by some 23%. Along with our operational and financial success last year, we continue to accelerate in developing our new projects, and in particular, the massive Tasiast expansion. This will give Kinross the best growth profile among senior gold producers, as we look ahead to the first full year of all those projects operating in 2015. Thanks for your attention this morning, folks.

Ladies and gentlemen this concludes today's conference call, you may disconnect your lines. Thank you for participating and have a pleasant day.