Kinross Reports 2014 Fourth-Quarter and Full-Year Results

TORONTO, ON--(Marketwired - February 10, 2015) - Kinross Gold Corporation (TSX: K) (NYSE: KGC) today announced its results for the fourth quarter and year-end December 31, 2014.

(This news release contains forward-looking information about expected future events and financial and operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking Information located on page 30 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)

2014 Q4 highlights:

• Production¹: 672,051 gold equivalent ounces (Au eq. oz.), compared with 646,234 ounces in Q4 2013.
• Revenue: $791.3 million, compared with $877.1 million in Q4 2013.
• Production cost of sales²: $714 per Au eq. oz., compared with $765 in Q4 2013.
• All-in sustaining cost²: $1,006 per Au eq. oz. sold, compared with $1,175 in Q4 2013. All-in sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $1,001 in Q4 2014, compared with $1,169 in Q4 2013.
• Adjusted operating cash flow²: $197.6 million, or $0.17 per share, compared with $222.8 million, or $0.19 per share, in Q4 2013.
• Adjusted net loss^2,3: adjusted loss of $6.0 million, or $0.01 per share, compared with an adjusted loss of $25.1 million, or $0.02 per share, in Q4 2013.
• Reported net loss³: $1,473.5 million, or $1.29 per share, compared with a loss of $740.0 million, or $0.65 per share, in Q4 2013. The Q4 reported net loss includes an after-tax, non-cash impairment charge of $932.2 million and an inventory write down of $167.6 million. The impairment charge of $932.2 million relates to property, plant and equipment, and goodwill.

2014 full-year highlights:

• Production¹: a record 2,710,390 Au eq. oz., compared with 2,631,092 ounces for full-year 2013.
• Revenue: $3,466.3 million, compared with $3,779.5 million for full-year 2013.
• Production cost of sales²: $720 per Au eq. oz., compared with $743 for full-year 2013.
• All-in sustaining cost²: $973 per Au eq. oz. sold, compared with $1,082 for full-year 2013. All-in sustaining cost per Au oz. sold on a by-product basis was $965 for full-year 2014, compared with $1,063 per Au oz. sold for full-year 2013.
• Adjusted operating cash flow²: $976.9 million, or $0.85 per share, compared with $1,149.6 million, or $1.01 per share for full-year 2013.
• Adjusted net earnings^2,3: $131.1 million, or $0.11 per share, compared with adjusted net earnings of $321.2 million, or $0.28 per share, for full-year 2013.
• Reported net loss³: $1,400.0 million, or $1.22 per share, compared with a loss of $3,012.6 million, or $2.64 per share, for full-year 2013.
• Capital expenditures: $631.8 million, compared with $1.26 billion for full-year 2013.
• Balance sheet: Cash, cash equivalents and restricted cash of $1,024.8 million at year end, compared with $793.5 million at December 31, 2013.

Outlook, Tasiast expansion and exploration update:

• Outlook: Kinross expects to produce approximately 2.4 - 2.6 million Au eq. oz. at a production cost of sales per Au eq. oz. of $720 - $780 and an all-in sustaining cost per Au eq. oz. of $1,000 - $1,100. Total capital expenditures are forecast to be approximately $725 million in 2015. 
• Tasiast mill expansion update: The Company has decided not to proceed with the Tasiast mill expansion at the present time, primarily as a result of the current gold price environment.
• Exploration: Exploration activities at Kupol, Chirano and Tasiast added 765,191 Au oz. to Kinross' measured and indicated mineral resource estimates and 62,749 Au oz. to its inferred mineral resource estimates.

CEO Commentary
J. Paul Rollinson, CEO, made the following comments in relation to 2014 fourth-quarter and year-end results:

"2014 marked another excellent year for Kinross operationally with record production of 2.71 million ounces, declining costs and strong cash flow generation, despite lower gold prices. With 10 consecutive quarters of having met or exceeded expectations, the Company continues to deliver on its commitment to operational excellence, financial discipline and balance sheet strength.

"These principles underpin Kinross' decision not to proceed with the Tasiast mill expansion at the present time. We continue to believe a mill expansion has the potential to offer a rare combination of large, low cost production; however, preserving balance sheet strength remains our priority, particularly given the current gold price environment. This decision preserves our cash position -- which was approximately $1 billion at year-end -- and our liquidity, while giving us the financial flexibility to capitalize on a possible future Tasiast expansion, or other opportunities, should they arise.

"In 2015, we are forecasting another solid year of operational results, balancing the importance of cost containment with disciplined capital investment in our assets. We have also taken a prudent approach to our cost assumptions, particularly in relation to currency exchange rates and the price of oil. With financial rigour and strong adherence to guidance targets, we will remain focused on delivering on our commitments."

The following operating and financial results are based on fourth-quarter and full-year 2014 production from continuing operations. Production and cost measures are on an attributable basis:

Production: Kinross produced 672,051 attributable Au eq. oz. in the fourth quarter of 2014, an increase over the fourth quarter of 2013, due mainly to increased production at the Kupol segment, offset by the suspension of mining at La Coipa in October 2013. Full-year production exceeded the Company's 2014 guidance and reached a record 2,710,390 Au eq. oz., mainly due to a 37% increase in production at the Kupol segment and a 32% production increase at Maricunga compared with full-year 2013. 

Production cost of sales: Production cost of sales per Au eq. oz.² was $714 for the fourth quarter of 2014, compared with $765 for the fourth quarter of 2013, a $51 decrease largely attributed to lower costs at Paracatu, Maricunga, and Tasiast. Production cost of sales per Au oz. on a by-product basis² was $701 in Q4 2014, compared with $733 in Q4 2013, based on Q4 2014 attributable gold sales of 635,121 ounces and attributable silver sales of 1,191,105 ounces.

Production cost of sales per Au eq. oz. was $720 for full-year 2014, at the low-end of the revised guidance range and a reduction of $23 compared with $743 for full-year 2013. The full-year decrease was due mainly to a $217 per ounce reduction at Maricunga and a $170 per ounce reduction at Chirano. Production cost of sales per Au oz. on a by-product basis was $705 for full-year 2014, compared with $703 for full-year 2013, based on 2014 full-year attributable¹ gold sales of 2,641,308 ounces and attributable silver sales of 4,917,982 ounces.

All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold² decreased 14%, to $1,006 in Q4 2014, compared with $1,175 in Q4 2013, primarily due to reductions in sustaining capital and exploration and business development expenditures. All-in sustaining cost per Au oz. sold on a by-product basis² was $1,001 in Q4 2014, compared with $1,169 in Q4 2013.

All-in sustaining cost per Au eq. oz. sold decreased 10%, to $973 for full-year 2014, compared with $1,082 for full-year 2013, primarily due to reduced sustaining capital expenditures and production cost of sales. All-in sustaining cost per Au oz. sold on a by-product basis was $965 for full-year 2014, compared with $1,063 for full-year 2013.

Revenue: Revenue from metal sales was $791.3 million in the fourth quarter of 2014, compared with $877.1 million during the same period in 2013. Sales were lower due to timing of gold shipments and a lower average realized gold price.

Revenue was $3,466.3 million for full-year 2014, compared with $3,779.5 million for full-year 2013, mainly due to a lower average realized gold price.

Average realized gold price: The average realized gold price in Q4 2014 declined to $1,201 per ounce, compared with $1,268 per ounce in Q4 2013.The average realized gold price per ounce declined to $1,263 for full-year 2014, compared with $1,402 per ounce for full-year 2013.

Margins: Kinross' attributable margin per Au eq. oz. sold⁴ was $487 per Au eq. oz. for the fourth quarter of 2014, compared with the Q4 2013 margin of $503 per Au eq. oz. Full-year margin per Au eq. oz. was $543, compared with $659 for full-year 2013.

Operating cash flow: Adjusted operating cash flow² was $197.6 million for the fourth quarter of 2014, or $0.17 per share, compared with $222.8 million, or $0.19 per share, for Q4 2013. Adjusted operating cash flow for full-year 2014 was $976.9 million, or $0.85 per share, compared with $1,149.6 million, or $1.01 per share, for full-year 2013.

Earnings/loss: Adjusted net loss^2,3 was $6.0 million, or $0.01 per share, for Q4 2014, compared with an adjusted net loss of $25.1 million, or $0.02 per share, for Q4 2013. Full-year 2014 adjusted net earnings were $131.1 million, or $0.11 per share, compared with $321.2 million, or $0.28 per share, for full-year 2013.

Reported net loss³ was $1,473.5 million, or $1.29 per share, for Q4 2014, compared with a loss of $740.0 million, or $0.65 per share, in Q4 2013. Full-year 2014 reported net loss was $1,400.0 million, or $1.22 per share, compared with a loss of $3,012.6 million, or $2.64 per share, for full-year 2013. Reported net loss includes an after-tax, non-cash impairment charge of $932.2 million and an inventory write down of $167.6 million. The non-cash impairment charge of $932.2 million includes charges related to property, plant and equipment of $342.5 million at Tasiast and $213.8 million at Chirano. 

Capital expenditures: Capital expenditures decreased to $189.4 million for Q4 2014, compared with $331.1 million for the same period last year, due mainly to lower spending at Tasiast and Chirano. Capital expenditures for full-year 2014 were $631.8 million, which was at the low end of Q3 revised guidance and 50% less than 2013 full-year capital expenditures, mainly as a result of reduced spending at Tasiast, Chirano and Fort Knox.

Operating results

Mine-by-mine summaries for 2014 fourth-quarter and full-year operating results may be found on pages 15 and 19 of this news release. Highlights include the following:

Americas

The region performed well, exceeding production guidance for 2014, with record full-year production at Paracatu and Maricunga. Maricunga increased production by 32% compared with 2013 as a result of continuous improvement efforts and higher grades. Paracatu increased production to 521,026 Au eq. oz. for the year as a result of a successful ore blending strategy, which combines B1 ore with harder, higher grade B2 ore through both Plant 1 and Plant 2. The higher grades and recoveries at Paracatu were offset by lower grades at Fort Knox.

In the fourth quarter, production was slightly lower compared with the previous quarter due to the October mill fire at Round Mountain, and lower grades at Maricunga, and at Kettle River-Buckhorn, which is nearing the end of its mine life. As previously reported, mill repairs at Round Mountain have commenced and the mill is on track to be re-commissioned in March 2015.

The region ended the year at the lower end of its production cost of sales guidance; nevertheless, 2014 cost of sales was higher compared with full-year 2013. The increase was mainly due to higher costs at Fort Knox, as the operation entered a phase of the mine with more operating waste and lower grades during the first three quarters of the year. Q4 production cost of sales per ounce decreased compared with Q4 2013, primarily due to lower cost of sales at Paracatu, Maricunga and Round Mountain. Improved efficiencies and increased production at Maricunga resulted in a 15% reduction in costs per ounce compared with Q4 2013 and a 19% reduction year-over-year.

Russia

The region exceeded expectations and its upwardly revised production guidance for the year. The combined Kupol and Dvoinoye operation increased production both quarter-over-quarter to 183,750 Au eq. oz. and year-over-year to 751,101 Au eq. oz. The region came in below its cost of sales guidance for the year and was in line with full-year 2013 cost of sales per ounce. Production cost of sales per ounce increased compared with the previous quarter due mainly to higher cost ounces sold from Kupol.  

West Africa

The region met its production guidance for the year, with 2014 full-year production higher compared with full-year 2013. The increase was due mainly to higher mill grades at Chirano, and at Tasiast, which achieved record yearly production. At Chirano, quarterly production was up compared with Q3 2014 due mainly to higher throughput. At Tasiast, production was up slightly compared with Q3 2014 due to improved mill performance related to slightly higher throughput and recoveries.

The region met its production cost of sales guidance for the year, and full-year production cost per ounce was 12% lower compared with full-year 2013. Regional production cost of sales per ounce also decreased 16% compared with Q4 2013. The full-year decrease in cost of sales was mainly a result of the move to self-perform mining at Chirano, and continuous improvement programs.

Outlook

The following section of the news release represents forward-looking information and users are cautioned that actual results may vary. We refer to the risks and assumptions contained in the Cautionary Statement on Forward-Looking Information on page 30 of this news release.

In 2015, Kinross expects to produce approximately 2.4 - 2.6 million Au eq. oz. from its current operations, lower than 2014 production of 2.71 million Au eq. oz. This is mainly a result of anticipated lower grades at Chirano, Kettle River-Buckhorn and Dvoinoye due to mine sequencing, and reduced production from the Tasiast dump leach. Production guidance also takes into consideration power rationing in Ghana, which began in December, and the possibility of power rationing in Brazil, which may affect operations in both countries.

Production in the first quarter of 2015 is expected to be lower year-over-year, before leveling out in Q2, due to mine plan sequencing across various sites and the seasonal impact on the heap leach at Fort Knox. The lower production is expected to have a commensurate impact on production cost of sales.

Production cost of sales per Au eq. oz. is expected to be in the range of $720 - $780 for 2015, slightly higher than 2014 full-year results. This is primarily as a result of higher expected costs in West Africa due to anticipated lower production, offset by a higher proportion of lower cost ounces from the Kupol segment in the production mix. The Company has forecast an all-in sustaining cost for 2015 of $1,000 - $1,100 per Au eq. oz. sold, and per ounce sold on a by-product basis, which is slightly higher than 2014 full-year results mainly due to an increase in forecast sustaining capital expenditure and reduced gold production for 2015.

The table below summarizes the 2015 forecasts for production and average production cost of sales on a gold equivalent and a by-product accounting basis:

The following table provides a summary of the 2015 production and production cost of sales forecast by region:

Material assumptions used to forecast 2015 production cost of sales are as follows:

• a gold price of $1,200 per ounce,
• a silver price of $18 per ounce,
• an oil price of $90 per barrel,
• foreign exchange rates of:
• 2.5 Brazilian reais to the U.S. dollar,
• 1.10 Canadian dollars to the U.S. dollar,
• 40 Russian roubles to the U.S. dollar,
• 575 Chilean pesos to the U.S. dollar,
• 2.75 Ghanaian cedi to the U.S. dollar, 
• 290 Mauritanian ouguiya to the U.S. dollar, and
• 1.30 U.S. dollars to the Euro.

Taking into account existing currency and oil hedges:

• a 10% change in foreign currency exchange rates would be expected to result in an approximate $14 impact on production cost of sales per ounce; 
• specific to the Russian rouble, a 10% change in the exchange rate would be expected to result in an approximate $11 impact on Russian production cost of sales per ounce;
• a $10 per barrel change in the price of oil would be expected to result in an approximate $1 impact on production cost of sales per ounce;
• a $100 change in the price of gold would be expected to result in an approximate $3 impact on production cost of sales per ounce as a result of a change in royalties.

Total capital expenditures for 2015 are forecast to be approximately $725 million (including estimated capitalized interest of approximately $40 million). The $725 million in forecast expenditures is summarized in the table below:

Sustaining capital includes the following forecast spending estimates:

• Mine development: $110 million (Americas), $25 million (Russia) 
• Tailings facilities: $80 million (Americas), $30 million (Russia), $10 million (West Africa) 
• Mobile equipment: $50 million (Americas), $25 million (West Africa), $10 million (Russia) 
• Leach facilities: $40 million (Americas) 
• Mill facilities: $35 million (Americas)   

Non-sustaining capital includes the following forecast spending estimates:

• Tasiast West Branch stripping and project wrap up: $155 million 
• Chirano Paboase deposit (initial   development): $15 million 
• Development projects/studies: $10 million 

The 2015 forecast for exploration is approximately $95 million, none of which is expected to be capitalized. 2015 overhead (general and administrative expenses and business development) is expected to be approximately $205 million. The above forecast expenses include approximately $30 million related to expected equity-based compensation. Other operating costs are forecast to be approximately $50 million, including $11 million for care and maintenance costs at La Coipa.

Income tax expenses are expected to be $55 million based on our assumed gold price plus approximately 24% of any profit resulting from higher gold prices. Depreciation, depletion and amortization is forecast to be approximately $330 per Au eq. oz.

Tasiast mill expansion update

Following a comprehensive review, the Company has decided not to proceed with the 38,000 t/d mill expansion at the present time. The current gold price environment does not provide the Company with sufficient confidence that it will be able to maintain balance sheet strength while financing the expansion during the three-year construction period.

Kinross continues to believe a Tasiast mill expansion has the potential to create significant value over the long term. The Company will continue to assess market conditions with a view to possibly expanding Tasiast, should circumstances change. In addition, Kinross will continue to focus on reducing operating costs at Tasiast, consistent with the Company's standards of operational excellence and drive for continuous improvement.

La Coipa Phase 7 update

A pre-feasibility study (PFS), begun in Q2 2014, to explore potential re-start options at La Coipa, is on track to be completed during the third quarter of 2015. Kinross is also conducting a scoping study that focuses on processing options for known near-surface sulfide mineralization in the district. Exploration continues at La Coipa, with the assessment of some attractive opportunities to extend the mine life beyond what the PFS will contemplate.

Metallurgical test work continues to be a major component of the study. Results to date confirm the complexity of the ore types, with more test work to follow.

Sale of Fruta del Norte

On December 17, 2014, the Company completed the sale of all its interest in Aurelian Resources Inc. and the Fruta del Norte (FDN) project in Ecuador for gross cash proceeds of $150.0 million and $90.0 million of Lundin Gold Inc. (formerly known as "Fortress Minerals Corp.") common shares, resulting in an after-tax recovery of $238.0 million.

Liquidity

As of December 31, 2014, Kinross had cash, cash equivalents and restricted cash of $1,024.8 million, an increase of $231.3 million from December 31, 2013, driven by higher net operating cash flows of $858.1 million and cash proceeds of $150.0 million received from the sale of FDN, less cash flow of $631.8 million used for capital expenditures.

As at December 31, 2014, the Company had utilized $32.1 million of its amended $1.5 billion revolving credit facility for letters of credit.

Non-cash impairment

The Company completed its annual assessment of the carrying value of its cash generating units (CGU) for the year-ended December 31, 2014, and as a result, recorded an after-tax, non-cash impairment charge of $932.2 million. The impairment charge was comprised of property, plant and equipment: $342.5 million at Tasiast, $213.8 million at Chirano, $118.5 million at Lobo-Marte, $79.2 million at White Gold and $32.9 million at Kettle River-Buckhorn. The impairment charge also included goodwill of $124.4 million at La Coipa and $20.9 million at Kettle River-Buckhorn.

The Company also recorded inventory write-downs of $167.6 million as of December 31, 2014, primarily at Tasiast. 

Board update

Mr. Kenneth Irving is resigning from the Kinross Board of Directors effective February 10, 2015, to focus on the continued development and success of his digital business. Kinross senior management and the Board of Directors would like to thank Mr. Irving for his many contributions during his tenure, including those related to his membership on the Corporate Responsibility and Corporate Governance and Nominating Committees.

2014 Mineral Reserves and Mineral Resources update
(See also the Company's detailed Annual Mineral Reserve and Mineral Resource Statement estimated as at December 31, 2014 and explanatory notes starting at page 25.)

In preparing the Company's 2014 year-end mineral reserves and mineral resource estimates as of December 31, 2014, Kinross has continued to focus on estimated higher margin, lower cost ounces, and maintained its fully-loaded costing methodology, which incorporates sustaining capital, mine waste management costs, general and administrative costs and other operating costs. The Company has also maintained the gold price assumptions used at year-end 2013: $1,200 per ounce for mineral reserves and $1,400 per ounce for mineral resources. 

Proven and Probable Mineral Reserves

Kinross' total estimated proven and probable gold reserves were 34.4 million ounces at year-end 2014, compared with 42.8 million ounces at year-end 2013. The net year-over-year decrease was mainly as a result of reclassifying approximately 6.0 million estimated Au oz. at Lobo-Marte to measured and indicated mineral resources, based on a decision not to extend environmental permits for the project at this time.

The reduction was offset by slight additions at Paracatu, due to assumed higher productivity, improved recoveries, lower costs and more favourable foreign exchange rates, and at Kupol, due to extensions of the mine plan. Other changes to the mineral reserve estimates include approximate reductions of 0.51 million Au oz. at Maricunga, 0.49 million Au oz. at Chirano, 0.46 million Au oz. at Fort Knox and 0.45 million Au oz. at Tasiast, mainly due to depletion.

Proven and probable silver reserves at year-end 2014 were estimated at 44.0 million ounces, a net decrease of 0.72 million ounces from year-end 2013, primarily due to production depletion. Silver reserves were estimated using a silver price assumption of $20.00 per ounce.

Proven and probable copper reserves at year-end 2014 were estimated at 1.4 billion pounds, unchanged from year-end 2013. Copper reserves, which are exclusively at Cerro Casale, were estimated using a copper price assumption of $2.00 per pound.

Measured and Indicated Mineral Resources

Kinross' total estimated measured and indicated mineral resources at year-end 2014 increased by approximately 3.5 million Au oz. to 23.1 million Au oz. compared with year-end 2013. The 18% net increase in estimated mineral resources was mainly as a result of approximately 6.0 million gold ounces re-classified from mineral reserves to mineral resources at Lobo-Marte, a 1.3 million Au oz. increase at Maricunga due to pit optimization, and a 0.6 million Au oz. increase at Chirano due to model changes and additional estimated ounces from the Akoti and Suraw deposits. The increase in estimated mineral resources was offset by approximate reductions of 3.2 million Au oz. at Paracatu due to model changes and 1.6 million Au oz. at Tasiast due to pit optimization. 

At Kupol, approximately 0.2 million Au oz. was added to mineral resource estimates as a result of discoveries at Moroshka.

Silver resource estimates increased by 5.9 million ounces to 28.7 million ounces, assuming a $22.00 per ounce silver price. 

Inferred Mineral Resources

Kinross' total estimated inferred gold resources at year-end 2014 were approximately 4.0 million ounces, a net decrease of 2.7 million ounces, primarily due to revised cost assumptions at Lobo-Marte.

Exploration update

In 2014, the Company continued to focus on brownfield projects and exploration within the existing footprint of several of our mines and surrounding districts. During the year, exploration activities at Kupol, Chirano and Tasiast added 765,191 Au oz. to Kinross' estimated measured and indicated mineral resources and 62,749 Au oz. to its estimated inferred mineral resources⁶. Highlights include:

• La Coipa: additional positive results were generated through two phases of diamond core drilling at the Catalina target, located approximately one kilometre southeast of La Coipa Phase 7.
• Kupol: an indicated mineral resource estimate of 198,284 Au oz. at an average grade of 15.97g/t was defined at the Moroshka deposit, four kilometres east of Kupol.
• Dvoinoye: an infill drilling program was completed on the September NE breccia zones, located 15 kilometres west-northwest of Dvoinoye, which defined high-grade gold-silver mineralized breccia over a strike length of approximately 150 metres. An initial mineral resources estimation is planned in 2015.
• Chirano: drilling contributed to an increase of estimated measured and indicated mineral resources of 162,700 Au oz. at 3.70 g/t and 77,593 Au oz. at 5.05 g/t beneath the open pits at Akoti and Suraw, respectively. Drilling in 2015 is expected to focus on extending mineralized zones beneath some of the open pits and testing district targets.
• Tasiast: estimated measured and indicated resources totaling 326,614 Au oz. were defined at satellite deposits on the mine licences at Fennec, C67, C68 and encouraging exploration drill results were reported from the Tamaya target at the Tasiast Sud license.

A summary of 2014 highlights is presented below. Additional detail may be found in the Appendices which provide illustrations, captions, and accompanying explanatory notes (Appendix A), and drilling results and location data (Appendix B) corresponding to the figures below.

Appendix A: http://www.kinross.com/media/260366/q4yearend2014appendixba.pdf
Appendix B: http://www.kinross.com/media/260369/q4yearend2014appendixb.xlsx

La Coipa

Reverse circulation (RC) drilling was performed on a number of early-stage exploration targets located over the eastern part of the La Coipa district. From the six district target areas investigated during 2014, encouraging results were encountered at Pompeya Sur, Atenas-Puren Sur, and RAB005, which warrant further drilling in 2015 (Appendix A: Figure 1).

At Catalina, diamond core drilling was executed with infill and step out drilling from the previous year's positive drill intersections. The target is located one kilometre southeast of La Coipa Phase 7 and occurs beneath 150 to 200 metres of colluvial overburden and young volcanic cover (Appendix A: Figure 2).

Results continue to be encouraging from this oxide mineralized zone and drilling continues to outline the geometry and extent of the mineralization. Mineralization remains open to the north and southeast and is currently estimated to be approximately 425 metres along a northwest - southeast strike, with a vertical extent of 150 metres and a width of 70 metres. The 2015 drill program at Catalina is designed to continue to better define the morphology, extent and controls on mineralization. Drill intersection highlights from the 2014 drill programs include (for full results and explanatory notes see Appendices):

Kupol

At Moroshka, located approximately four kilometres east of Kupol and within the Kupol licence area (Appendix A: Figure 3), step-out and infill drilling completed in 2014 delineated mineralization and led to the definition of the following mineral resource estimates:

Moroshka Mineral Resources(7):

Other exploration targets were drill-tested in the Kupol area and a new epithermal vein, "Providence", was discovered approximately 800 metres southwest of Moroshka. Three holes spaced approximately 100 metres apart have intersected the vein at approximately 200 metres below surface (Appendix A: Figure 4). Further drilling is planned in 2015 to determine size, grade, and continuity of mineralization at Providence. The structure that hosts the vein remains open and untested to the south and at depth. The Moroshka licence covers several other geophysical, geochemical and structural targets, which together with Providence, will be the focus of drilling in 2015. Drill intersection highlights from the 2014 drill programs at Providence include (for full results and explanatory notes see Appendices):

⁷ See also Kinross' Annual Mineral Reserve and Mineral Resource Statement, estimated as at December 31, 2014, and explanatory notes at page 25.

Dvoinoye
Field work consisting of geological mapping, geochemical sampling, trenching and drilling was carried out along the September trend, which hosts the September Northeast mineralized zone. Outside the September Northeast target, multiple new target areas and prospects have been defined on the wider Vodorazdelnaya licence due to the integration of geological mapping and multi-element soil geochemical data. The Dvoinoye North, western September Main, North-Streams nn1 & nn2, and Alyonka, near the Dvoinoye mine targets, will be further investigated through mapping, geochemical sampling and potential drilling in 2015 (Appendix A: Figure 5).

Further infill drilling and close-spaced channel sampling were completed across a stripped pavement (trenching) over the September Northeast target, located approximately 15 kilometres northwest of the Dvoinoye mine (Appendix A: Figure 5). The trench and drill results defined high-grade gold-silver mineralized breccia over a strike length of approximately 150 metres and extend to a depth of approximately 100 metres from surface (Appendix A: Figure 6). Drill intersection highlights from 2014 drill programs include (for full results and explanatory notes see Appendices): 

All available information will be interpreted and an initial mineral resource update is planned for 2015.

Chirano

In 2014, drilling took place from 150 metres to 600 metres below the bottom of the existing pits at Akoti, Suraw and Obra, with successful results.

Exploration drilling contributed 162,700 Au oz. to the Company's 2014 measured and indicated resource estimates of 297,512 Au oz. at an average grade of 3.7 g/t for the Akoti underground, which is part of the total measured and indicated resources for Chirano (see page 27 of this news release).

Similarly, exploration drilling contributed 77,593 Au oz. to the Company's 2014 measured and indicated resource estimates of 186,379 Au oz. at an average grade of 5.05 g/t for the Suraw underground.

Assessment of the potential economic viability of the Akoti and Suraw mineralized zones will continue in 2015 and drilling is expected to focus on extending mineralization at Suraw. 

Reverse circulation and selective diamond core drilling also tested potential near surface targets in proximity to the Chirano mine and within the Chirano district. Seven targets were drilled during 2014 and encouraging results were encountered at four targets, of which the Futa and Apeakrom, located approximately 12 kilometres south of the mine, warrant further drilling in 2015. In addition, other new district targets will be drilled in 2015.

Tasiast

The following mineral resource estimates on the El Gaicha mine licence were also defined for the Fennec, C68 and C67 satellite deposits that were mostly drilled during 2012 to 2013 and located 10 to 15 kilometres north and east of the Tasiast mine. Gold mineralization is defined from surface, or shallow depth less than 25 metres at each deposit. Fennec, C67 and C68 are typical of Archean Greenstone-style mineralized veins, although each deposit varies slightly, with Fennec occurring as vein swarms and networks, C67 mineralization dominated by a shear-hosted quartz vein, and C68 hosted in sets of en-echelon and parallel quartz-carbonate veins within sheared metasedimentary and metavolcanic rock units.

Fennec Mineral Resources⁸:

C67 Mineral Resources⁸:

C68 Mineral Resources⁸:

At the Tasiast Sud licence, drilling continued following up targets identified along the Tasiast Shear Zone, located 10 to 15 kilometres south of the mine area (Appendix A: Figure 7). Drilling was mostly focused over the Tamaya, C6.13 and C6.16 target areas. Encouraging drill intersections were obtained at Tamaya (Appendix A: Figure 8), and further infill and step out drilling is planned for 2015 to better assess the size, continuity and overall potential of the mineralization. Drill intersection highlights from 2014 drill programs include (for full results and explanatory notes see Appendices):

Over the Aouèouat Area (Tmeimichat and Imkebdene exploration licenses) positive early stage results were obtained from surface sampling, trenching and drilling, and several new targets have been defined and will be drilled and further explored in 2015.

⁸ See also Kinross' Annual Mineral Reserve and Mineral Resource Statement, estimated as at December 31, 2014, and explanatory notes at page 25.

Conference call details

In connection with the release, Kinross will hold a conference call and audio webcast on Wednesday, February 11, 2015 at 8 a.m. ET to discuss the results, followed by a question-and-answer session. To access the call, please dial:

Canada & US toll-free - 1-800-319-4610
Outside of Canada & US - 1-604-638-5340

Replay (available up to 14 days after the call):

Canada & US toll-free - 1-800-319-6413; Passcode - 3310 followed by #.
Outside of Canada & US - 1-604-638-9010; Passcode - 3310 followed by #.

You may also access the conference call on a listen-only basis via webcast at our website www.kinross.com. The audio webcast will be archived on our website at www.kinross.com.

This release should be read in conjunction with Kinross' 2014 year-end Financial Statements and Management's Discussion and Analysis report at www.kinross.com. Kinross' 2014 year-end Financial Statements and Management's Discussion and Analysis have been filed with Canadian securities regulators (available at www.sedar.com) and furnished with the U.S. Securities and Exchange Commission (available at www.sec.gov). Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.

About Kinross Gold Corporation

Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania, Chile and Ghana. Kinross maintains listings on the Toronto Stock Exchange (symbol: K) and the New York Stock Exchange (symbol: KGC).

Review of Operations

Consolidated balance sheets

(expressed in millions of United States dollars, except share amounts)

Consolidated statements of operations

(expressed in millions of United States dollars, except per share and share amounts)

Consolidated statements of cash flows

(expressed in millions of United States dollars)

1. Ore processed is to 100%, production and costs are to Kinross' account.

2. Due to the nature of heap leach operations, recovery rates at Maricunga cannot be accurately measured on a quarterly basis. Recovery rates at Fort Knox, Round Mountain and Tasiast represent mill recovery only.

3. The Kupol segment includes the Kupol and Dvoinoye mines.

4. Kupol silver grade and recovery were as follows: Q4 (2014) 92.78 g/t, 85%; Q3 (2014) 83.94 g/t, 88%; Q2 (2014) 88.79 g/t, 84%; Q1 (2014) 106.4 g/t, 84%; Q4 (2013) 131.91 g/t, 92%.

5. Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent based on the ratio of the average spot market prices for the commodities for each period. The ratios for the quarters presented are as follows: Q4 2014: 72.73:1; Q3 2014: 64.89:1, Q2 2014: 65.67:1, Q1 2014: 63.15:1, Q4 2013: 61.18:1.

6. Dvoinoye ore processed and grade were as follows: Q4 (2014) 90,083 tonnes, 26.14 g/t; Q3 (2014) 100,948 tonnes, 25.94 g/t; Q2 (2014) 91,204 tonnes, 28.68 g/t; Q1 (2014) 85,242 tonnes, 30.5 g/t; Q4 (2013) 26,743 tonnes, 28.15 g/t.

7. Capital expenditures are presented on a cash basis, consistent with the statement of cash flows.

8. "nm" means not meaningful

Reconciliation of non-GAAP financial measures

The Company has included certain non-GAAP financial measures in this document. These measures are not defined under IFRS and should not be considered in isolation. The Company believes that these measures, together with measures determined in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other issuers.

Adjusted net earnings attributable to common shareholders and adjusted net earnings per share are non-GAAP measures which determine the performance of the Company, excluding certain impacts which the Company believes are not reflective of the Company's underlying performance for the reporting period, such as the impact of foreign exchange gains and losses, reassessment of prior year taxes and/or taxes otherwise not related to the current period, impairment charges, gains and losses and other one-time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results. Management believes that these measures, which are used internally to assess performance and in planning and forecasting future operating results, provide investors with the ability to better evaluate underlying performance, particularly since the excluded items are typically not included in public guidance. However, adjusted net earnings and adjusted net earnings per share measures are not necessarily indicative of net earnings and earnings per share measures as determined under IFRS.

The following table provides a reconciliation of net earnings from continuing operations to adjusted net earnings from continuing operations for the periods presented:

The Company makes reference to a non-GAAP measure for adjusted operating cash flow and adjusted operating cash flow per share. Adjusted operating cash flow is defined as cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company's regular operating cash flow, and excluding changes in working capital. Working capital can be volatile due to numerous factors, including the timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The Company uses adjusted operating cash flow internally as a measure of the underlying operating cash flow performance and future operating cash flow-generating capability of the Company. However, adjusted operating cash flow and adjusted operating cash flow per share measures are not necessarily indicative of net cash flow from operations as determined under IFRS.

The following table provides a reconciliation of adjusted operating cash flow from continuing operations for the periods presented:

Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of sales as per the consolidated financial statements divided by the total number of gold equivalent ounces sold. This measure converts the Company's non-gold production into gold equivalent ounces and credits it to total production.

Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the Company's non-gold production into gold equivalent ounces and credits it to total production.
Management uses these measures to monitor and evaluate the performance of its operating properties. The following table presents a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for the periods presented:

Management uses these measures to monitor and evaluate the performance of its operating properties. The following table presents a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for the periods presented: 

Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP measure which calculates the Company's non-gold production as a credit against its per ounce production costs, rather than converting its non-gold production into gold equivalent ounces and crediting it to total production, as is the case in co-product accounting. Management believes that this measure provides investors with the ability to better evaluate Kinross' production cost of sales per ounce on a comparable basis with other major gold producers who routinely calculate their cost of sales per ounce using by-product accounting rather than co-product accounting.

The following table provides a reconciliation of attributable production cost of sales per ounce sold on a by-product basis for the periods presented: