Kinross Provides Outlook for 2009

TORONTO, ON - Tye Burt, Kinross President and CEO, said, "Kinross had a truly outstanding year in 2008. We delivered on our commitments with record production, the successful start-up of our three growth projects, and two major acquisitions. Kinross went against industry trends by growing our production and cash flow while our costs decreased over the year.
In 2009, we will continue to execute on our strategic plan to grow cash flow and continually improve our portfolio of assets. Our three new projects at Paracatu, Kupol and Buckhorn are expected to increase production by approximately 32 per cent compared to 2008, while significantly reducing our overall cost of sales per ounce. As a result, we expect strong cash flow from our operations in 2009.
We will continue to pursue opportunities to optimize Kinross mines and new projects. At current operations, we will be driving improvements and organic growth, including our heap leach project at Fort Knox in Alaska, as well as potential expansions at Paracatu in Brazi and Maricunga, in Chile which are under preliminary review. We will also be preparing the foundations for our next round of new projects, including Lobo Marte and Fruta del Norte. In the third quarter, we also expect to update the market on options for Cerro Casale in Chile."As always, we will maintain a disciplined financial approach in order to preserve our liquidity and financial flexibility, while maximizing opportunities for further growth and increased cash flow."
In 2009, Kinross expects to produce approximately 2.4 to 2.5 million gold equivalent ounces, consistent with its previously stated guidance for the year. This is an increase of approximately 32 per cent over 2008 production and reflects the impact of new production from the Paracatu expansion, Kupol, and Buckhorn in Washington, offset somewhat by reduced production due to the sale of Julietta in 2008 and expected lower tonnages at Round Mountain in 2009.
Cost of sales per gold equivalent ounce is expected to average between $390 and $420 for the full year 2009. The forecast reduction in cost of sales per ounce compared to 2008 is primarily due to the expected full-year impact of new lower cost production from the Paracatu expansion, Kupol and Buckhorn.
The ramp-up in production at the Paracatu expansion is advancing with mill throughput reaching approximately 60% of design capacity as of year-end 2008. The project is expected to reach full capacity within the first quarter of 2009.
As part of the expansion project, the Company expects to commence construction of a new tailing impoundment facility at Paracatu in May of 2009, subject to obtaining the requisite construction permit from government authorities. In addition, the Company is negotiating with local parties to acquire those land rights for the facility not presently owned by the Company, and expects to complete these negotiations before the end of the second quarter of 2009.
Construction of the heap leach project at Fort Knox has been concluded for the season and is scheduled to restart in the spring. Construction is complete on approximately 78% of the leach pad area required for initial ore placement and leaching. Start-up of leaching operations is scheduled to commence in the third quarter of 2009.
As previously announced, on December 16, 2008, Kinross acquired a 40% interest in Minera Santa Rosa SCM ("Minera") from certain subsidiaries of Anglo American plc. On January 7, 2009, Kinross' previously announced purchase of the remaining 60% interest in Minera from a subsidiary of Teck Cominco Limited was closed in escrow pending registration of the share transfer by Chilean authorities. The share transfer registration was completed on January 7, 2009 and the Company expects to clear escrow and complete the acquisition at which time Kinross will own 100% of Minera.
Minera owns 100% of the Lobo-Marte gold project located in the Maricunga district of northern Chile, roughly midway between Kinross' Maricunga and La Coipa mines. This acquisition adds approximately 5.9 million ounces of gold resources to the front of Kinross' development pipeline. Kinross has completed due diligence on the project and plans to begin a development program in early 2009. This work will involve drilling, design, engineering, metallurgical testing, with the expectation of upgrading the current resource base to an NI 43-101 compliant reserve.
Kinross has substantially completed the integration of Aurelian Resources Inc., following its recent acquisition of the company, and is actively seeking to advance the Fruta del Norte project. Assuming successful passage of new legislation in support of responsible mining in Ecuador, the Company plans to invest approximately $45 million in 2009 to support re-commencement of the in-fill drilling program, advancement of project evaluation and environmental permitting, and implementation of an expanded community relations and corporate responsibility program.
At Cerro Casale, work is continuing on the update to the project's technical-economic feasibility. Progress is being made with the project team substantially in place and numerous trade-off studies well underway. A feasibility study is expected to be completed in the third quarter of 2009.
The Company continues to evaluate opportunities to increase throughput and extend mine life at existing operations. As part of this process, the Company is presently evaluating expansion possibilities at Paracatu and Maricunga.
The company's address is 40 King Street West, 52nd Floor, Toronto, ON M5H 3Y2, (416) 365-5123, fax: (416) 363-6622, email: [email protected].