Fort Know Operation Delivers Increased Production

TORONTO - Kinross Gold Corporation, President and CEO, J. Paul Rollinson, said, “The Company delivered another strong quarter, generating robust free cash flow and a significant increase in earnings. Our mines continued to perform well as our global teams have effectively managed the operational challenges caused by the COVID-19 pandemic. As a result, we are well on track to meet our annual guidance for production and costs for the ninth consecutive year.

Year-over-year, our margins grew by 60% to $1,171 per gold ounce sold, which substantially outpaced the 30% increase in the average realized gold price. We also continued to strengthen our investment grade balance sheet and ended the quarter with approximately $935 million in cash and total liquidity of $2.5 billion.

In September, we were pleased to announce an expected 20% increase in production over the next three years to 2.9 million gold equivalent ounces, along with plans for a quarterly dividend to return capital to our shareholders. We also provided a long-term production outlook which forecasts Kinross producing an average of 2.5 million gold equivalent ounces annually through to 2029.

Our robust financial position, diverse operating portfolio, attractive project pipeline and successful track record of exploration and project development provides a strong foundation from which to continue building value well into the future.”

Kinross remains on track to meet its original 2020 guidance for production, cost of sales per ounce, all-in sustaining cost per ounce and capital expenditures for the ninth consecutive year, despite impacts from the COVID-19 pandemic. Previously announced the Company released a growing three-year production profile, with production expected to increase 20% to 2.9 million Au eq. oz. in 2023. In September, Kinross acquired 70% of the Peak project in Alaska. As the project operator, the Company expects to process Peak ore at its Fort Knox mill, benefitting both the project and mine. In addition, Kinross provided a long-term production outlook, with expected average annual production of 2.5 million Au eq. oz. out to 2029. The Company produced 603,312 attributable Au eq. oz. in Q3 2020, compared with 608,033 Au eq. oz. in Q3 2019. The slight decrease was largely due to lower production at Paracatu, Maricunga and Kupol, largely offset by increases at Fort Knox and Bald Mountain

Fort Knox performed well during the quarter, with higher production and lower cost of sales per ounce sold compared with Q2 2020 mainly due to strong mill performance. The operation delivered higher production compared with Q3 2019 as a result of higher mill grades and mill throughput. Cost of sales per ounce sold decreased year-over-year due to increased production and mill throughput, partially offset by higher operating waste mined.

Round Mountain’s production was largely in line with Q2 2020, with cost of sales per ounce sold decreasing mainly as a result of lower contractor costs. Year-over-year production decreased primarily as a result of lower mill grades, partially offset by higher ounces recovered from the heap leach pads. Cost of sales per ounce sold was lower compared with Q3 2019 mainly due to a decrease in operating waste mined and lower fuel costs. The Fort Knox Gilmore project, work on infrastructure and processing facilities is now substantially complete. First ore was placed on the new Barnes Creek heap leach pad in early October, as construction of the pad was completed on time and under budget during the quarter. Stripping is progressing well, and the Company expects to accelerate production at the Gilmore project to bring ounces forward as part of Kinross’ growing three-year production profile.

On September 30, 2020, the Company acquired a 70% interest in the open pit Peak project in Alaska for total cash consideration of $93.7 million. As the project operator, Kinross expects to process Peak ore at its Fort Knox mill. Processing ore at Fort Knox avoids mill construction at Peak and is expected to decrease execution risk, lower capital expenditures, drive attractive returns, and reduce the project’s environmental footprint and permitting requirements. Blending the higher grade ore from Peak with Fort Knox ore is expected to extend mill operation at Fort Knox, reduce overall costs and increase cash flow. The project is expected to benefit the state and local communities, in particular, the Upper Tanana Athabascan Village of Tetlin.

Kinross expects to commence production at Peak in 2024, with total production of approximately 1 million Au eq. oz. over 4.5 years at average mining grades of approximately 6 g/t. Kinross plans to commence a drilling program before year end to further develop the project’s resource base, and expects to complete permitting and a feasibility study by the end of 2022

At Bald Mountain, both production and cost of sales per ounce sold were largely consistent with Q2 2020. Production increased compared with Q3 2019 as more ounces were recovered from the Vantage Complex heap leach pad due to higher grades. Cost of sales per ounce sold increased year-over-year mainly due to higher royalty expenses driven by higher gold prices.

At Paracatu, production was lower quarter-over-quarter mainly due to a decrease in mill throughput as a result of planned maintenance and lower grades. The lower throughput, and a decrease in recoveries, contributed to the lower production year-over-year. Production is expected to improve in the fourth quarter as mining is expected to transition to higher grade ore. Cost of sales per ounce sold increased compared with Q2 2020 and Q3 2019 mainly as a result of lower ounces produced, higher contractor costs and maintenance supplies, partially offset by favorable foreign exchange movements. At Kupol and Dvoinoye, in Russia, production was largely in line with the previous quarter and was lower year-over-year mainly due to anticipated lower grades at Kupol. Cost of sales per ounce sold was lower compared with Q2 2020 and Q3 2019, primarily due to reduced mining activity at Dvoinoye. Favorable foreign exchange rates also contributed to the year-over-year decrease in cost of sales per ounce sold, which was partially offset by higher royalties associated with the increase in the average realized gold price.

In West Africa, Tasiast performed well, with higher production quarter-over-quarter and year-over-year. While production in the second quarter was negatively impacted by a strike, Q3 2020 production improved as a result of record mill grades and higher mill throughput, with Tasiast achieving a record production month in August. Cost of sales per ounce sold increased compared with Q2 2020 mainly due to higher royalty expenses and increased milling supplies. Compared with Q3 2019, production increased due to higher mill grades, which was partially offset by lower mill throughput and recoveries, while cost of sales per ounce sold was largely consistent.

During the quarter, Tasiast’s mining rate continued to ramp up and is now operating at near full capacity after rates were affected by the strike in Q2 2020 and COVID-19 impacts earlier in the year. As a result of lower mining rates, approximately 100k Au eq. oz. of production is expected to be deferred from 2021 to 2022. Kinross does not expect any impacts to Tasiast’s life of mine production.

At Chirano, production increased compared with the previous quarter primarily due to higher mill throughput, and cost of sales per ounce sold increased due to higher milling costs. Year-over-year production was lower as a result of lower grades, and cost of sales per ounce sold increased due to higher milling costs and maintenance supplies, partially offset by lower operating waste mined.

The Tasiast 24k project is advancing well and remains on schedule to increase throughput capacity to 21,000 t/d by the end of 2021, and then to 24,000 t/d by mid-2023. The project is now approximately 45% complete, with civil and mechanical works progressing well in the processing plant, including the gravity circuit, thickener and screens. Work on power plant construction, which was previously delayed by COVID-19 impacts, is now ramping up.

At the Udinsk development project – the first project the Company expects to develop on the larger Chulbatkan license – study work is advancing well. The 2020 drill program has ramped back up after challenges related to COVID-19 earlier in the year, and as of the end of Q3 2020, approximately 50,000 meters of drilling have been completed. All of the current estimated mineral resources at Chulbatkan are located at Udinsk, which has a footprint that represents less than 1% of the approximately 450 sq. kilometer Chulbatkan license area.

On the Chulbatkan license, a geochemistry and geophysics exploration program completed outside of Udinsk has returned positive results, with new anomalies identified. The large, prospective Chulbatkan license area provides exploration potential that is incremental to the Udinsk project.

The La Coipa Restart project is progressing well and is on schedule to begin pre-stripping in early 2021, with first production expected in mid-2022. An access road to the Phase 7 pit has been established and refurbishments of the fleet that was successfully transferred from Maricunga in April 2020 are progressing well. Early work on refurbishing the plant and existing infrastructure is also advancing well as the team continues to work to offset challenges to project timing caused by COVID-19 impacts. The Company continues to study opportunities to incorporate adjacent deposits with existing mineral reserves and resources into the La Coipa mine plan and potentially extend mine life.

At the Lobo-Marte project, work on permitting and the feasibility study (FS) is advancing, with the FS on schedule to be completed in Q4 2021. The Company is targeting production at Lobo-Marte to commence in 2027 after the completion of mining at La Coipa. Kinross continues to believe that Lobo-Marte offers the potential of a long-life, cornerstone asset with attractive costs.