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<TEXT>
<PAGE>
KINROSS GOLD CORPORATION
ANNUAL INFORMATION FORM
FOR THE YEAR ENDED DECEMBER 31, 2004
DATED FEBRUARY 10, 2006
<PAGE>
TABLE OF CONTENTS
PAGE
CAUTIONARY STATEMENT...........................................................1
RISK FACTORS...................................................................1
CORPORATE STRUCTURE...........................................................10
GENERAL DEVELOPMENT OF THE BUSINESS...........................................11
DESCRIPTION OF THE BUSINESS...................................................15
Employees..................................................................15
Competitive Conditions.....................................................15
Environmental Protection...................................................16
Operations.................................................................16
Gold Equivalent Production (Ounces)........................................17
Marketing..................................................................18
Mineral Reserves and Mineral Resources.....................................20
Material Properties........................................................25
Fort Knox Mine and Area, Alaska..........................................25
The Porcupine Joint Venture..............................................32
La Coipa Mine............................................................40
Paracatu Mine............................................................45
Refugio Mine.............................................................53
Round Mountain...........................................................59
DIVIDEND POLICY...............................................................65
LEGAL PROCEEDINGS.............................................................65
DESCRIPTION OF CAPITAL STRUCTURE..............................................69
MARKET PRICE FOR KINROSS COMMON SHARES........................................71
DIRECTORS AND OFFICERS........................................................72
CEASE TRADE ORDERS, BANKRUPTCIES, PENALTIES OR SANCTIONS......................77
CONFLICT OF INTEREST..........................................................77
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS....................78
TRANSFER AGENT AND REGISTRAR..................................................78
MATERIAL CONTRACTS............................................................78
INTERESTS OF EXPERTS..........................................................79
AUDIT COMMITTEE...............................................................79
ADDITIONAL INFORMATION........................................................80
GLOSSARY OF TECHNICAL TERMS...................................................81
<PAGE>
UNLESS OTHERWISE STATED, ALL DOLLAR AMOUNTS IN THIS ANNUAL INFORMATION FORM
("ANNUAL INFORMATION FORM") ARE IN UNITED STATES DOLLARS.
--------------------------------------------------------------------------------
CAUTIONARY STATEMENT
--------------------------------------------------------------------------------
This Annual Information Form of Kinross Gold Corporation ("Kinross" or the
"Company") contains "forward-looking statements." Forward-looking statements
include, but are not limited to, statements with respect to the future price of
gold and silver, the estimation of mineral reserves and resources, the
realization of mineral reserve and resource estimates, the timing and amount of
estimated future production, costs of production, expected capital expenditures,
costs and timing of the development of new deposits, success of exploration
activities, permitting time lines, currency fluctuations, requirements for
additional capital, government regulation of mining operations, environmental
risks, unanticipated reclamation expenses, title disputes or claims and
limitations on insurance coverage. In certain cases, forward-looking statements
can be identified by the use of words such as "plans," "expects," or "does not
expect," "is expected," "budget," "scheduled," "estimates," "forecasts,"
"intends," "anticipates," or "does not anticipate," or "believes," or variations
of such words and phrases or statements that certain actions, events or results
"may," "could," "would," "might," or "will be taken," "occur" or "be achieved."
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
Kinross to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking statements. In addition
to the factors Kinross currently believes to be material, which are identified
under "Risk Factors," other factors not currently viewed as material could cause
actual results to differ materially from those described in the forward-looking
statements. In addition, known or unknown risks could have a greater or
different effect than currently expected which could cause actions, events or
results not to be as anticipated, estimated or intended. There can be no
assurance that forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking statements which speak only as of the date of this Annual
Information Form. Kinross does not undertake any obligation to update or revise
these forward-looking statements.
--------------------------------------------------------------------------------
RISK FACTORS
--------------------------------------------------------------------------------
The business and operations of Kinross are subject to risks. In addition
to considering the other information in this Annual Information Form, you should
consider carefully the following factors in deciding whether to invest in
securities of Kinross. If any of these risks occur, or if other risks not
currently anticipated or fully appreciated occur, the business and prospects of
Kinross could be materially adversely affected, which could have an adverse
effect on the trading price for its shares.
KINROSS' MINERAL EXPLORATION AND MINING OPERATIONS INVOLVE SIGNIFICANT RISKS,
INCLUDING THE DIFFICULT NATURE OF ESTABLISHING THE EXISTENCE OF ECONOMIC
MINERALIZATION, SIGNIFICANT UP-FRONT CAPITAL REQUIREMENTS, VARIABILITY IN
DEPOSITS, AND OTHERS THAT MAY RESTRICT KINROSS' ABILITY TO RECEIVE AN ADEQUATE
RETURN ON ITS CAPITAL IN THE FUTURE.
The exploration and development of mineral deposits involves significant
financial and other risks over an extended period of time, which even a
combination of careful evaluation, experience, and knowledge may not eliminate.
Few mining properties that are explored are ultimately developed into producing
mines. Major expenses are required to establish reserves by drilling and to
construct mining and processing facilities. Large amounts of capital are
frequently required to purchase necessary equipment. Delays due to equipment
malfunction or inadequacy may adversely affect Kinross' results of operations.
It is impossible to ensure that the current or proposed exploration programs on
properties in which Kinross has an interest will result in profitable commercial
mining operations.
- 1 -
<PAGE>
Whether a gold deposit will be commercially viable depends on a number
of factors, including the particular attributes of the deposit, such as its size
and grade, costs and efficiencies of the recovery methods that can be employed,
proximity to infrastructure, financing costs and governmental regulations,
including regulations relating to prices, taxes, royalties, infrastructure, land
use, importing and exporting of gold, and environmental protection. The effect
of these factors cannot be accurately predicted, but the combination of these
factors may result in Kinross not receiving an adequate return on its invested
capital.
KINROSS IS SUBJECT TO RISKS CAUSED BY VARIOUS EXTERNAL FACTORS, INCLUDING LEGAL
LIABILITY CREATED BY ITS OPERATIONS.
The operations of Kinross are subject to the hazards and risks normally
incident to exploration, development, and production of gold, any of which could
result in damage to life or property, environmental damage and possible legal
liability for such damage. The activities of Kinross may be subject to prolonged
disruptions due to weather conditions depending on the location of operations in
which Kinross has interests. Hazards, such as unusual or unexpected formations,
faults and other geologic structures, rock bursts, pressures, cave-ins,
flooding, or other conditions may be encountered in the exploration, mining, and
removal of material.
CHANGES TO THE EXTENSIVE REGULATORY AND ENVIRONMENTAL RULES AND REGULATIONS TO
WHICH KINROSS IS SUBJECT COULD HAVE A MATERIAL ADVERSE EFFECT ON KINROSS' FUTURE
OPERATIONS.
Kinross' mining and processing operations and exploration activities in
the Americas, Russia, Africa and other countries and regions are subject to
various laws and regulations governing the protection of the environment,
exploration, development, production, exports, taxes, labor standards,
occupational health, waste disposal, toxic substances, mine safety, and other
matters. The legal and political circumstances outside of North America cause
these risks to be different from, and in many cases, greater than, comparable
risks associated with operations within North America. New laws and regulations,
amendments to existing laws and regulations, or more stringent implementation of
existing laws and regulations could have a material adverse impact on Kinross,
increase costs, cause a reduction in levels of production and/or delay or
prevent the development of new mining properties. Compliance with these laws and
regulations requires significant expenditures and increases the mine development
and operating costs of Kinross. Changes in regulations and laws could adversely
affect Kinross' operations or substantially increase the costs associated with
those operations.
Kinross' exploration programs in North America are subject to federal,
state, and local environmental regulations. Some of Kinross' mining claims are
on United States public lands. The United States Forest Service (the "USFS") and
Bureau of Land Management (the "BLM") extensively regulate mining operations
conducted on public lands. Most operations involving the exploration for
minerals are subject to laws and regulations relating to exploration procedures,
safety precautions, employee health and safety, air quality standards, pollution
of stream and fresh water sources, odor, noise, dust, and other environmental
protection controls adopted by federal, state, and local governmental
authorities as well as the rights of adjoining property owners. In addition, in
order to conduct mining operations, Kinross will be required to obtain
performance bonds related to environmental permit compliance. These bonds may
take the form of cash deposits or, if available, could be provided by outside
insurance policies. Kinross may be required to prepare and present to federal,
state, or local authorities' data pertaining to the effect or impact that any
proposed exploration or mining activity may have upon the environment. All
requirements imposed by any such authorities may be costly and time-consuming
and may delay commencement or continuation of exploration or production
operations.
KINROSS IS SUBJECT TO RISKS AND EXPENSES RELATED TO RECLAMATION COSTS AND
RELATED LIABILITIES. INCREASES IN THESE COSTS OVER CURRENT ESTIMATES COULD HAVE
A MATERIAL ADVERSE EFFECT ON KINROSS.
Kinross is generally required to submit for government approval a
reclamation plan and to pay for the reclamation of its mine sites upon the
completion of mining activities. Kinross estimates the net present value of
future cash outflows for reclamation costs under CICA Handbook Section 3110 at
$131.7 million as at December 31, 2004 based on information available as of that
date. In addition, Kinross spent $17.9 million in 2004 and planned reclamation
spending of approximately $23.6 million in 2005 as part of its plans and to get
as many closure projects as possible to post-closure monitoring by the end of
2006. Any increases over the current estimates of these costs could have a
material adverse effect on Kinross.
- 2 -
<PAGE>
KINROSS IS SUBJECT TO RISKS RELATED TO ENVIRONMENTAL LIABILITY, INCLUDING
LIABILITY FOR ENVIRONMENTAL DAMAGES CAUSED BY MINING ACTIVITIES PRIOR TO
OWNERSHIP BY KINROSS. THE PAYMENT OF SUCH LIABILITIES WOULD REDUCE FUNDS
OTHERWISE AVAILABLE AND COULD HAVE A MATERIAL ADVERSE EFFECT ON KINROSS.
Mining, like many other extractive natural resource industries, is
subject to potential risks and liabilities associated with pollution of the
environment and the disposal of waste products occurring as a result of mineral
exploration and production. Environmental liability may result from mining
activities conducted by others prior to the ownership of a property by Kinross.
The payment of such liabilities would reduce funds otherwise available and could
have a material adverse effect on Kinross. Should Kinross be unable to fund
fully the cost of remedying an environmental problem, Kinross might be required
to suspend operations or enter into interim compliance measures pending
completion of the required remedy, which could have a material adverse effect on
the operations and business of Kinross.
KINROSS' OPERATIONS COULD BE ADVERSELY AFFECTED BY CHANGES IN MINING LAWS
RELATED TO ROYALTIES, NET PROFIT PAYMENTS, LAND AND MINERAL OWNERSHIP AND
SIMILAR MATTERS.
Bills proposing major changes to the mining laws of the United States
have been considered by the U.S. Congress. If these bills, which may include
royalty fees or net profit payments, are enacted in the future, they could have
a significant effect on the ownership, use, operation and profitability of
mining claims in the United States, including claims that Kinross owns or holds.
Any amendment to current laws and regulations governing the rights of
leaseholders or the payment of royalties, net profits interests or similar
amounts, or more stringent implementation thereof in the United States or other
countries where Kinross has operations, could have a material adverse impact on
Kinross' financial condition and results of operation.
THE BUSINESS OF KINROSS IS ADVERSELY AFFECTED BY THE LACK OF INFRASTRUCTURE NEAR
ITS MINESITES.
Mining, processing, development, and exploration activities depend, to
one degree or another, on adequate infrastructure. Reliable roads, bridges,
power sources, and water supply are important determinants which affect capital
and operating costs. Lack of such infrastructure or unusual or infrequent
weather phenomena, sabotage, terrorism, government, or other interference in the
maintenance or provision of such infrastructure could adversely affect Kinross'
operations, financial condition, and results of operations.
THE RESERVE AND RESOURCE FIGURES OF KINROSS ARE ONLY ESTIMATES AND ARE SUBJECT
TO REVISION BASED ON DEVELOPING INFORMATION. A SIGNIFICANT REDUCTION IN THESE
RESERVES AND RESOURCES OR IN THEIR ESTIMATES COULD NEGATIVELY AFFECT THE PRICE
OF KINROSS' STOCK.
The figures for reserves and resources presented herein, including the
anticipated tonnages and grades that will be achieved or the indicated level of
recovery that will be realized, are estimates. Such estimates are materially
dependent on prevailing gold prices and costs of recovering and processing
minerals at the individual mine sites. Market fluctuations in the price of gold
or increases in the costs to recover gold at Kinross' mines may render the
mining of ore reserves uneconomical and materially adversely affect Kinross'
results of operations. Moreover, various short-term operating factors may cause
a mining operation to be unprofitable in any particular accounting period.
Unless otherwise noted, proven and probable reserves at Kinross' mines
and development projects as of December 31, 2004 were calculated based upon a
gold price of $350 per ounce, and measured and indicated resources for Kinross
were calculated based upon a gold price of $400 per ounce. Prolonged declines in
the market price of gold may render reserves containing relatively lower grades
of gold mineralization uneconomic to exploit and could reduce materially
Kinross' reserves and resources. Should such reductions occur, material write
downs of Kinross' investment in mining properties or the discontinuation of
development or production might be required, and there could be material delays
in the development of new projects, increased net losses and reduced cash flow.
The estimates of mineral reserves and resources attributable to a specific
property are based on accepted engineering and evaluation principles. The
estimated amount of contained gold in proven and probable reserves does not
necessarily represent an estimate of a fair market value of the evaluated
properties.
- 3 -
<PAGE>
There are numerous uncertainties inherent in estimating quantities of
mineral reserves and resources. The estimates in this Annual Information Form
are based on various assumptions relating to gold prices and exchange rates
during the expected life of production, mineralization of the area to be mined,
the projected cost of mining, and the results of additional planned development
work. Actual future production rates and amounts, revenues, taxes, operating
expenses, environmental and regulatory compliance expenditures, development
expenditures, and recovery rates may vary substantially from those assumed in
the estimates. Any significant change in these assumptions, including changes
that result from variances between projected and actual results, could result in
material downward revision to current estimates.
THE MINERAL RESOURCES OF KINROSS MAY NOT BE ECONOMICALLY DEVELOPABLE, IN WHICH
CASE KINROSS MAY NEVER RECOVER ITS EXPENDITURES FOR EXPLORATION AND/OR
DEVELOPMENT.
Mineral resources that are not mineral reserves do not have demonstrated
economic viability. Due to the uncertainty of measured, indicated or inferred
mineral resources, these mineral resources may never be upgraded to proven and
probable mineral reserves. Measured, indicated and inferred mineral resources
are not recognized by the U.S. Securities and Exchange Commission and U.S.
investors are cautioned not to assume that any part of mineral deposits in these
categories will ever be converted into reserves or recovered.
IF KINROSS DOES NOT DEVELOP ADDITIONAL MINERAL RESERVES, IT MAY NOT BE ABLE TO
SUSTAIN FUTURE OPERATIONS.
Because mines have limited lives, Kinross must continually replace and
expand its mineral reserves as its mines produce gold in order to continue its
operations. The life-of-mine estimates included in this Annual Information Form
for each of Kinross' material properties are based on a number of factors and
assumptions and may prove incorrect. Kinross' ability to maintain or increase
its annual production of gold will significantly depend on its ability to bring
new mines into production and to expand mineral reserves at existing mines.
THE OPERATIONS OF KINROSS OUTSIDE OF NORTH AMERICA MAY BE ADVERSELY AFFECTED BY
CHANGING POLITICAL, LEGAL, AND ECONOMIC CONDITIONS.
Kinross has mining and exploration operations in Brazil, Chile, Russia
and Africa and such operations are exposed to various levels of political,
economic, and other risks and uncertainties. These risks and uncertainties vary
from country to country and include, but are not limited to, terrorism; hostage
taking; military repression; extreme fluctuations in currency exchange rates;
high rates of inflation; labor unrest; the risks of war or civil unrest;
expropriation and nationalization; renegotiation or nullification of existing
concessions, licenses, permits and contracts; illegal mining; changes in
taxation policies; restrictions on foreign exchange and repatriation; and
changing political conditions, currency controls, and governmental regulations
that favor or require the awarding of contracts to local contractors or require
foreign contractors to employ citizens of, or purchase supplies from, a
particular jurisdiction.
Future political and economic conditions in these countries may result
in these governments adopting different policies respecting foreign development
and ownership of mineral resources. Any changes in policy may result in changes
in laws affecting ownership of assets, foreign investment, taxation, rates of
exchange, gold sales, environmental protection, labor relations, price controls,
repatriation of income, and return of capital, which may affect both the ability
of Kinross to undertake exploration and development activities in respect of
future properties in the manner currently contemplated, as well as its ability
to continue to explore, develop, and operate those properties to which it has
rights relating to exploration, development, and operations. A future government
of these countries may adopt substantially different policies, which might
extend to, as an example, expropriation of assets.
THERE ARE SIGNIFICANT CURRENCY AND TAX RISKS RELATED TO KINROSS' RUSSIAN
OPERATIONS, WHICH COULD ADVERSELY AFFECT KINROSS' RUSSIAN OPERATIONS.
Kinross is subject to the considerations and risks of operating in the
Russian Federation. The Russian economy continues to display characteristics of
an emerging market. These characteristics include, but are not limited to, a
currency that is not freely convertible outside of the country and extensive
currency controls. The prospects for future economic stability in the Russian
Federation are largely dependent upon the effectiveness of economic measures
undertaken by the government, together with legal, regulatory, and political
developments.
- 4 -
<PAGE>
Russian laws, licenses, and permits have been in a state of change and
new laws may be given retroactive effect. It is also not unusual in the context
of dispute resolution in Russia for parties to use the uncertainty in the
Russian legal environment as leverage in business negotiations. In addition,
Russian tax legislation is subject to varying interpretations and constant
change. Further, Kinross' interpretation of tax legislation as applied to its
transactions and activities may not coincide with that of Russian tax
authorities. As a result, transactions may be challenged by tax authorities and
Kinross' Russian operations may be assessed, which could result in significant
additional taxes, penalties and interest. The periods remain open to review by
the tax authorities for three years. See "Business of Kinross--Legal
Proceedings--Russia".
ZIMBABWE SUFFERS FROM SIGNIFICANT ECONOMIC INSTABILITY WHICH COULD ADVERSELY
AFFECT KINROSS' OPERATIONS IN THIS COUNTRY.
Kinross is subject to risks relating to an uncertain or unpredictable
political and economic environment in Zimbabwe. In the short term, significant
economic instability in this region is expected to negatively impact the
business environment and may lead to long-term negative changes in the
approaches taken with respect to ownership of natural resources by foreign
companies. In 2001, Kinross recorded a writedown of $11.8 million relating to
Kinross' inability to manage this operation because of political turmoil
creating inflationary pressure within Zimbabwe, difficulty in accessing foreign
currency to pay for imported goods and services, and civil unrest. Due to
Kinross' continuing inability to control distributions from the operations in
Zimbabwe, Kinross stopped reporting mining production in Zimbabwe in 2003.
KINROSS REQUIRES THE ISSUANCE AND RENEWAL OF LICENSES AND PERMITS IN ORDER TO
CONDUCT ITS OPERATIONS, AND FAILURE TO RECEIVE THESE LICENSES MAY RESULT IN
DELAYS IN DEVELOPMENT OR CESSATION OF CERTAIN OPERATIONS.
The operations of Kinross require licenses and permits from various
governmental authorities to exploit its properties, and the process for
obtaining licenses and permits from governmental authorities often takes an
extended period of time and is subject to numerous delays and uncertainties.
Such licenses and permits are subject to change in various circumstances.
Kinross may be unable to timely obtain or maintain in the future all necessary
licenses and permits that may be required to explore and develop its properties,
commence construction or operation of mining facilities and properties under
exploration or development or to maintain continued operations that economically
justify the cost.
THE SUCCESS OF KINROSS IS DEPENDENT ON GOLD PRICES OVER WHICH IT HAS NO CONTROL.
The profitability of Kinross' operations are significantly affected by
changes in the market price of gold. Gold prices fluctuate on a daily basis and
are affected by numerous factors beyond the control of Kinross. The supply and
demand for gold, the level of interest rates, the rate of inflation, investment
decisions by large holders of gold, including governmental reserves, and changes
in exchange rates can all cause significant fluctuations in gold prices. Such
external economic factors are in turn influenced by changes in international
investment patterns and monetary systems and political developments. The price
of gold has fluctuated widely and future serious price declines could cause
continued commercial production to be impractical. Depending on the price of
gold, cash flow from mining operations may not be sufficient to cover costs of
production and capital expenditures. If, as a result of a decline in gold
prices, revenues from metal sales were to fall below cash operating costs,
production may be discontinued.
KINROSS HAS A HISTORY OF LOSSES, AND FUTURE PROFITABLE OPERATIONS CANNOT BE
ASSURED.
Kinross had net losses attributable to common shareholders of $427.7
million and $63.1 million for 2003 and 2004, respectively. Kinross' ability to
operate profitably in the future will depend on the success of its principal
mines, the ability of Kinross to expend its mineral reserves, the price of gold
and the ability of Kinross to control costs. These can be no assurance Kinross
can obtain profitability or even generate sufficient cash flow to sustain its
operations and development and exploration activities at current levels.
- 5 -
<PAGE>
THE TITLE TO PROPERTIES OF KINROSS MAY BE UNCERTAIN AND SUBJECT TO RISKS.
The validity of mining claims which constitute most of Kinross' property
holdings in the Americas, Russia and Africa may, in certain cases, be uncertain
and is subject to being contested. Kinross' titles, particularly title to
undeveloped properties, may be defective.
Certain of Kinross' United States mineral rights consist of unpatented
mining claims. Unpatented mining claims are unique property interests, and are
generally considered to be subject to greater title risk than other real
property interests because the validity of unpatented mining claims is often
uncertain and is always subject to challenges of third parties or contests by
the United States government. The validity of an unpatented mining claim, in
terms of both its location and its maintenance, is dependent on strict
compliance with a complex body of United States federal and state statutory and
decisional law. In addition, there are few public records that definitively
control the issues of validity and ownership of unpatented mining claims. The
General Mining Law of the United States includes provisions for obtaining a
patent, which is essentially equivalent to fee title, for an unpatented mining
claim upon compliance with certain statutory requirements (including the
discovery of a valuable mineral deposit). However, a Congressional moratorium
against the filing of new applications for a mineral patent is currently in
effect and is expected to remain in effect.
NUMEROUS OTHER COMPANIES COMPETE IN THE MINING INDUSTRY, MANY OF WHICH HAVE
GREATER RESOURCES AND TECHNICAL CAPACITY THAN KINROSS AND, AS A RESULT, KINROSS
MAY BE UNABLE TO EFFECTIVELY COMPETE IN ITS INDUSTRY, WHICH COULD HAVE A
MATERIAL ADVERSE EFFECT ON KINROSS' FUTURE OPERATIONS.
The mineral exploration and mining business is competitive in all of its
phases. Kinross competes with numerous other companies and individuals,
including competitors with greater financial, technical and other resources than
Kinross, in the search for and the acquisition of attractive mineral properties.
The ability of Kinross to operate successfully in the future will depend not
only on its ability to develop its present properties, but also on its ability
to select and acquire suitable producing properties or prospects for mineral
exploration. Kinross may be unable to compete successfully with its competitors
in acquiring such properties or prospects on terms it considers acceptable, if
at all.
KINROSS MAY REQUIRE ADDITIONAL CAPITAL THAT MAY NOT BE AVAILABLE.
The mining, processing, development, and exploration of Kinross'
properties may require substantial additional financing. Failure to obtain
sufficient financing may result in the delay or indefinite postponement of
exploration, development or production on any or all of Kinross' properties, or
even a loss of property interest. Additional capital or other types of financing
may not be available if needed or, if available, the terms of such financing may
be unfavorable to Kinross.
KINROSS' INSURANCE MAY NOT COVER THE RISKS TO WHICH ITS BUSINESS IS EXPOSED.
Kinross' business is subject to a number of risks and hazards generally,
including adverse environmental conditions, industrial accidents, labor
disputes, adverse property ownership claims, unusual or unexpected geological
conditions, ground or slope failures, cave-ins, changes in the regulatory
environment and natural phenomena such as inclement weather conditions, floods
and earthquakes. Such occurrences could result in damage to mineral properties
or production facilities, personal injury or death, environmental damage to
Kinross' properties or the properties of others, delays in mining, monetary
losses and legal liability.
Available insurance does not cover all the potential risks associated
with a mining company's operations. Kinross may also be unable to maintain
insurance to cover insurable risks at economically feasible premiums, and
insurance coverage may not be available in the future or may not be adequate to
cover any resulting loss. Moreover, insurance against risks such as the validity
and ownership of unpatented mining claims and mill sites and environmental
pollution or other hazards as a result of exploration and production is not
generally available to Kinross or to other companies in the mining industry on
acceptable terms. As a result, Kinross might become subject to liability for
pollution or other hazards for which it is uninsured or for which it elects not
to insure because of premium costs or other reasons. Losses from these events
may cause Kinross to incur significant costs that could have a material adverse
effect upon its financial condition and results of operations.
- 6 -
<PAGE>
THE OPERATIONS OF KINROSS IN VARIOUS COUNTRIES ARE SUBJECT TO CURRENCY RISK.
Currency fluctuations may affect the revenues which Kinross will realize
from its operations since gold is sold in the world market in United States
dollars. The costs of Kinross are incurred principally in Canadian dollars,
United States dollars, Russian rubles, Chilean pesos, Brazilian reals, and
Zimbabwean dollars. The appreciation of non-U.S. dollar currencies against the
U.S. dollar increases the cost of gold production in U.S. dollar terms. From
time to time, Kinross transacts currency hedging to reduce the risk associated
with currency fluctuations. Currency hedging involves risks and may require
margin activities. Sudden fluctuations in currencies could result in margin
calls that could have an adverse effect on Kinross' financial position. While
the Russian ruble, Chilean peso, Brazilian real, and the Zimbabwean dollar are
currently convertible into Canadian and United States dollars, they may not
always be convertible in the future.
FLUCTUATIONS IN UNITED STATES AND CANADIAN EXCHANGE RATES MAY NEGATIVELY AFFECT
THE PRICE OF KINROSS' COMMON SHARES IN UNITED STATES DOLLARS.
Fluctuations in the exchange rate between Canadian and United States
dollars may affect the United States dollar value of the Kinross common shares
in ways that are different than changes in the Canadian dollar value of Kinross
common shares.
KINROSS MAY NOT BE ABLE TO CONTROL THE DECISIONS AND STRATEGY OF JOINT VENTURES
TO WHICH IT IS A PARTY.
Some of the mines in which Kinross owns interests are operated through
joint ventures with other mining companies and are subject to the risks normally
associated with the conduct of joint ventures. The existence or occurrence of
one or more of the following circumstances and events could have a material
adverse impact on Kinross' profitability or the viability of its interests held
through joint ventures, which could have a material adverse impact on Kinross'
results of operations and financial condition:
- inability to exert influence over certain strategic decisions
made in respect of joint venture properties;
- disagreement with partners on how to develop and operate mines
efficiently;
- inability of partners to meet their obligations to the joint
venture or third parties; and
- litigation between partners regarding joint venture matters.
THE FAILURE OF KINROSS TO PAY ROYALTIES WOULD ADVERSELY AFFECT ITS BUSINESS AND
OPERATIONS.
Kinross' mining properties are subject to various royalty and land
payment agreements. Failure by Kinross to meet its payment obligations under
these agreements could result in the loss of related property interests.
THE COMMODITY HEDGING ACTIVITIES OF KINROSS MAY HAVE AN ADVERSE EFFECT ON ITS
RESULTS OF OPERATIONS.
Kinross has historically reduced its exposure to gold price fluctuations
by engaging in hedging activities. In 2002, Kinross changed its hedging strategy
and discontinued its hedging activities for gold and as a result is fully
exposed to any future decline in the market price of gold. If Kinross were to
resume its hedging activities, it may be unable to achieve realized prices for
gold produced in excess of average market prices. Hedging may not adequately
protect against declines in the price of gold and may prevent Kinross from
benefiting fully from gold price increases. Hedging may require margin
activities. Sudden fluctuations in the price of gold could result in margin
calls that could have an adverse effect on the financial position of Kinross.
THE BUSINESS OF KINROSS IS DEPENDENT ON GOOD LABOR AND EMPLOYMENT RELATIONS.
Production at Kinross' mines is dependent upon the efforts of employees
of Kinross. Relations between Kinross and its employees may be impacted by
changes in labor relations which may be introduced by, among others, employee
groups, unions, and the relevant governmental authorities in whose jurisdictions
Kinross carries on business. Adverse changes in such legislation or in the
relationship between Kinross with its employees may have a material adverse
effect on Kinross' business, results of operations, and financial condition.
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<PAGE>
LIMITATIONS ON THE RIGHTS OF KINROSS' FOREIGN SUBSIDIARIES COULD ADVERSELY
AFFECT ITS ABILITY TO OPERATE EFFICIENTLY.
Kinross conducts operations through foreign subsidiaries and joint
ventures, and a substantial part of its assets are held in such entities.
Accordingly, any limitation on the transfer of cash or other assets between the
parent corporation and such entities, or among such entities, could restrict
Kinross' ability to fund its operations efficiently. Any such limitations, or
the perception that such limitations may exist now or in the future, could have
a material adverse impact on Kinross' valuation and stock price. For example,
currently Kinross is subject to limitations on the transfer of cash or assets
for its operations in Zimbabwe.
THE RESULTS OF KINROSS' OPERATIONS COULD BE ADVERSELY AFFECTED BY ITS
ACQUISITION STRATEGY.
As part of Kinross' business strategy, it has sought, and will continue
to seek, to acquire new mining and development opportunities in the mining
industry. In pursuit of such opportunities, Kinross may fail to select
appropriate acquisition candidates or to negotiate acceptable arrangements,
including arrangements to finance acquisitions or to integrate the acquired
businesses and their personnel. Kinross may be unable to complete any
acquisition or business arrangement that it pursues on favorable terms. Any
acquisitions or business arrangements completed may not ultimately benefit
Kinross' business.
CHANGES IN THE MARKET PRICE OF KINROSS COMMON SHARES MAY BE UNRELATED TO ITS
RESULTS OF OPERATIONS AND COULD HAVE AN ADVERSE IMPACT ON KINROSS.
The Kinross common shares are listed on the Toronto Stock Exchange
("TSX") and New York Stock Exchange ("NYSE"). The price of the Kinross common
shares is likely to be significantly affected by short-term changes in gold
price or in its financial condition or results of operations as reflected in its
quarterly earnings reports. Other factors unrelated to the performance of
Kinross that may have an effect on the price of the Kinross common shares
include the following: a reduction in analytical coverage of Kinross by
investment banks with research capabilities; a drop in trading volume and
general market interest in the securities of Kinross may adversely affect an
investor's ability to liquidate an investment and consequently an investor's
interest in acquiring a significant stake in Kinross; a failure of Kinross to
meet the reporting and other obligations under Canadian and U.S. securities laws
or imposed by the exchanges could result in a delisting of the Kinross common
shares and a substantial decline in the price of the Kinross common shares that
persists for a significant period of time could cause the Kinross common shares
to be delisted from the NYSE, further reducing market liquidity.
As a result of any of these factors, the market price of the common
shares at any given point in time may not accurately reflect Kinross' long-term
value. Securities class action litigation often has been brought against
companies following periods of volatility in the market price of their
securities. Kinross may in the future be the target of similar litigation.
Securities litigation could result in substantial costs and damages and divert
management's attention and resources.
ANY FUTURE RESTATEMENT OF KINROSS' FINANCIAL STATEMENTS MAY ADVERSELY AFFECT THE
TRADING PRICE OF ITS COMMON SHARES.
Kinross has completed the restatement of its consolidated financial
statements and believes they are presented in accordance with the requirements
of generally accepted accounting principles. However, such restatements do not
prevent future changes or adjustments, including additional restatements. If
there were future restatements of the consolidated financial statements, such
restatements may adversely affect the trading price of Kinross' common shares.
See "General Development of Business - Restatements"
KINROSS HAS NOT PAID DIVIDENDS IN THE PAST AND DOES NOT ANTICIPATE DOING SO IN
THE FUTURE.
No dividends on the common shares have been paid by Kinross to date.
Kinross anticipates that it will retain all future earnings and other cash
resources for the future operation and development of its business. Kinross does
not intend to declare or pay any cash dividends in the foreseeable future.
Payment of any future dividends will be at the discretion of Kinross' board of
directors, after taking into account many factors, including Kinross' operating
results, financial condition, and current and anticipated cash needs.
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THE LOSS OF KEY EXECUTIVES COULD ADVERSELY AFFECT KINROSS.
Kinross has a relatively small executive management team. In the event
that the services of a number of these executives were no longer available,
Kinross and its business could be adversely affected. Kinross does not carry
key-man life insurance with respect to its executives.
SHORTAGE OF SUPPLIES COULD ADVERSELY AFFECT KINROSS' ABILITY TO OPERATE.
Kinross is dependent on various supplies and equipment to carry out its
mining operations. The shortage of such supplies, equipment and parts could have
a material adverse effect on the Company's ability to carry out its operations
and therefore limit or increase the cost of production.
KINROSS IS SUBJECT TO CERTAIN LEGAL PROCEEDINGS AND MAY BE SUBJECT TO ADDITIONAL
LITIGATION IN THE FUTURE.
Kinross is a party to the legal proceedings described under the caption
"Legal Proceedings". If decided adversely to Kinross, these legal proceedings,
or others that could be brought against Kinross in the future which are not now
known, for example, litigation based on its business activities, environmental
laws, volatility in its stock price, failure of its disclosure obligations or as
a result of its financial restatement (see "General Development of the Business
- Restatements"), could have a material adverse effect on Kinross' financial
condition or prospects. In July 2005, Kinross was notified by the enforcement
division of the SEC that Kinross would be requested to provide documentation in
connection with an informal inquiry focused on Kinross' accounting for the
business combination with TVX Gold Inc. ("TVX") and Echo Bay Mines Ltd. ("Echo
Bay"). No further request has been made by the SEC to date. However, a
regulatory investigation could result in significant costs and damages and
divert management's attention and resources.
IT MAY BE DIFFICULT TO ENFORCE A UNITED STATES JUDGMENT AGAINST THE OFFICERS AND
DIRECTORS OF KINROSS OR THE EXPERTS NAMED IN THIS ANNUAL INFORMATION FORM OR TO
ASSERT UNITED STATES SECURITIES LAWS CLAIMS IN CANADA.
Substantially all of the executive officers and directors of Kinross and
its independent accountants are non residents of the United States, and a
substantial portion of Kinross' assets are located outside the United States.
These executives and accountants reside in Canada, making it difficult or
impossible to effect service upon them in the United States. As a result, it may
be difficult for U.S. residents to effect service in the United States or
enforce a judgment obtained in the United States against Kinross or any such
persons. Execution by United States courts of any judgment obtained against
Kinross or its officers or directors in United States courts would be limited to
the assets of Kinross or such persons, as the case may be, located in the United
States. Additionally, it may be difficult for U.S. residents to obtain Canadian
enforcement of U.S. judgment or to assert civil liabilities under United States
securities laws in original actions instituted in Canada.
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CORPORATE STRUCTURE
--------------------------------------------------------------------------------
Kinross Gold Corporation was initially created in May 1993 by
amalgamation of CMP Resources Ltd. ("CMP Resources"), Plexus Resources
Corporation ("Plexus Resources"), and 1021105 Ontario Corp ("1021105"). In
December 2000, Kinross amalgamated with LT Acquisition Inc., in January 2005,
Kinross amalgamated with its wholly-owned subsidiary, TVX and in January 2006 it
amalgamated with its wholly-owned subsidiary, Echo Bay. Kinross is the
continuing entity resulting from these amalgamations. Kinross is governed by the
BUSINESS CORPORATIONS ACT (Ontario) and its' registered and principal offices
are located at Suite 5200, Scotia Plaza, 40 King Street West, Toronto, Ontario,
M5H 3Y2.
Each of Kinross' operations is a separate business unit managed by its
vice president and general manager, who in turn, reports to the Chief Operating
Officer. Exploration activities, corporate financing, tax planning, additional
technical support services, hedging and acquisition strategies are managed
centrally. Kinross' risk management programs are subject to overview by its
Audit Committee and the Board of Directors.
A significant portion of Kinross' business is carried on through
subsidiaries. A chart showing the names of the significant subsidiaries of
Kinross and their respective jurisdictions of incorporation is set out below as
of January 1, 2006. All subsidiaries are 100% owned unless otherwise noted.
Unless otherwise indicated herein, the term "Kinross" includes, collectively,
all of the subsidiaries of Kinross.
[Graphic depicting the organizational structure of Kinross
and its subsidiaries]
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GENERAL DEVELOPMENT OF THE BUSINESS
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OVERVIEW
Kinross is principally engaged in the mining and processing of gold and,
as a by-product, silver ore and the exploration for, and the acquisition of,
gold bearing properties primarily in the Americas and Russia. The principal
products of Kinross are gold and silver produced in the form of dore that is
shipped to refineries for final processing.
Kinross' strategy is to increase shareholder value through increases in
precious metal reserves, production and long-term cash flow and earnings per
share. Kinross' strategy also consists of optimizing the performance and,
therefore, the value of existing operations, investing in quality exploration
and development projects and acquiring new potentially accreditive properties
and projects. Kinross generated revenues of $666.8 million in 2004, $571.9
million in 2003 and $261.0 million in 2002.
Kinross' operations and reserves are impacted by changes in metal
prices. Over the past three years, gold has averaged approximately $361 per
ounce and was $436 per ounce on the last trading day of 2004. Gold traded above
$375 per ounce in 2004 and above $400 per ounce in 2005. Kinross used a gold
price forecast of $350 per ounce at the end of 2004 and $325 at the end of 2003
to estimate reserves.
Kinross' share of proven and probable reserves as at December 31, 2004,
was 19.4 million ounces of gold and 32.8 million ounces of silver. These
estimates have been calculated using industry standard methodology and the
appropriate cut-off grade assuming a gold price of $350 per ounce.
THREE YEAR HISTORY
Kinross completed an equity offering in February 2002, pursuant to which
7.7 million Kinross common shares were issued for net proceeds of $18.5 million.
The majority of funds raised were used for a $16.00 per share cash tender offer
for the preferred shares of Kinam ("Kinam Preferred Shares"), a majority owned
subsidiary, that were held by third parties. 670,722 Kinam Preferred Shares
having a book value of $36.6 million were tendered and purchased by Kinross for
$10.7 million ($11.4 million including costs of the tender offer). The $25.2
million difference in value associated with this transaction was applied against
the carrying value of a portion of Kinam's property, plant and equipment.
On June 10, 2002, Kinross, TVX, and Echo Bay entered into a combination
agreement, for the purpose of combining the ownership of their respective
businesses. The combination was effected by way of a plan of arrangement under
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