Kinross Gold Corporation (KGC) Q3 2010 Earnings Report, Transcript and Summary

Hello. This is the Chorus Call conference operator. Welcome to Kinross Gold Corporation’s Third Quarter 2010 Results Conference Call and webcast. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions) At this time, I’ll turn the conference over to Mr. Erwyn Naidoo, Vice President, Investor Relations. Please go ahead, Mr. Naidoo.

Thank you and good morning, ladies and gentlemen. Welcome to Kinross Gold conference call to discuss our third quarter 2010 financial results. With us today, we have Tye Burt, President and Chief Executive Officer; Tom Boehlert, our Chief Financial Officer; Brant Hinze, our Chief Operating Officer; as well as Ken Thomas, Senior Vice President of Projects. Before we begin, I’d like to bring to your attention the fact that we will be making forward-looking statements during the presentation today. For a complete discussion of the risks, uncertainties, and assumptions which may lead actual results being different from estimates contained in our forward-looking information, please refer to the news release of November 3rd, 2010 and the management discussion and analysis for the same period (throughout) our most recently filed AIF which is available on our website. With that, I’ll turn the call over to Tye.

Thanks for joining us this morning. I’d like to welcome Brant Hinze, our new COO to the call today. Brant joined us October 1st, and has been visiting the Kinross mines to meet our team and become familiar with the operations. We look forward to your contribution based on your many years of experience operating gold mines around the world. Overall, Kinross had an active and productive third quarter. We continued to deliver strong financial results with a 26% in revenue, a 28% increase in adjusted operating cash flow, a very significant increase in adjusted net earnings, and a 37% increase in our margin, which grew to a record $673 per ounce. Third quarter attributable production of 575,065 ounces included 20,238 ounces from the former Red Back assets based on the closing date of September 17th through the end of the quarter. Some highlights from our portfolio of operations included Paracatu, which continues to exceed our budget and expectations. The site produced over 129,000 ounces this quarter, which is a 51% increase from Q3 of 2009. Cost of sales decreased to $505 per ounce, a 34% improvement from the same period last year and a 4% improvement from Q2. Year-to-date, Paracatu has produced approximately 365,000 ounces, above our budget and guidance expectations. The addition of a third ball mill at Paracatu expansion plan remains on budget and on schedule for commissioning in the first half of 2011. Our Board of Directors yesterday approved the addition of a fourth ball mill to the Paracatu expansion plan, which provides the grinding capacity necessary for the expansion plan to sustain planned throughput of approximately 41 million tonnes per year, even as the work index increases in future years. We expect the additional mill to be operational in the first half of 2012. At…

Thank you Tye. Kinross closed the acquisition of Red Back on September 17th. So the results for the Tasiast and Chirano operations have been consolidated with Kinross for the sub-period from September 17th, the acquisition date, through the end of the quarter. Gross sales for the quarter were approximately 619,000 gold equivalent ounces at an average price of $1190 an ounce. This generated revenue of $735.5 million, an increase of 26% over the same period in 2009. Third quarter attributable cost of sales per ounce was $517. On a bi-product basis, cost of sales was $477 per ounce. Cost of sales for the West African assets includes a $4.3 million fair value purchase accounting adjustment. Without this adjustment, overall cost of sales would have been $510 per ounce. Compared to the same quarter last year, our cost of sales margin in the third quarter grew to $673 per ounce, a 37% increase, while the average realized price of gold increased by 24%. Included in our results is a $242 million gain on the sale of our indirect interest in Diavik Diamond mine and the direct interest in Harry Winston Diamond Corporation, which we acquired in 2009. We will not pay tax on this gain, as it will be absorbed by our loss carry-forwards. For Kinross operations, excluding the impact of Red Back, our third quarter adjusted net earnings were $121.6 million or $0.17 per share. Third quarter adjusted net earnings including the impact of the acquisition were $123.6 million or $0.16 a share compared to a $1.7 million or $0.00 a share in third quarter of 2009, prior year. Excluding the impact of the Red Back acquisition, our third quarter adjusted cash flow was $258.7 million or $0.37 a share. Adjusted operating cash flow including the impact of the acquisition…

Thanks, Tom. The final page of our press release contains a review of operations and mine-by-mine summary with key metrics. I’ll give a brief review of the operational highlights for quarter. At Paracatu in Brazil, operations at the new plant continued to perform ahead of plan through the third quarter producing 129,000 ounces at a cost of sales of $505 per ounce. This is the operation’s highest quarterly production and lowest cost in 2010. Production at the operation averaged 43,000 ounces per month over the quarter, a 23% increase over market guidance earlier this year. At Kupol, measures implemented to improve ground control management in the underground mine during the warmer summer months proved to be effective and attributable production of 119,000 ounces was ahead of forecast for the quarter. At Fort Knox, production increased 26% from Quarter 2, 2010 with cost improving by 22%. Increased mill throughout, higher grades, and lower reagent costs helped Fort Knox’s improved performance. The heap leach at Fort Knox is performing well and has had a positive impact on the operation by both increasing production and reducing overall cost per ounce. We placed 4.4 million tonnes of ore with an average grade of 0.27 grams per tonne on the heap leach pad this quarter, while the mill processed 3.2 million tonnes at an average grade of 0.96 grams per tonne with an 82% recovery rate. The heap leach produced gold at roughly $227 an ounce, while the mill produced at roughly $639 an ounce. When combined Fort Knox production was 108,680 ounces at a cost of sales of $501 an ounce for the quarter. In summary the heap leach facility has made a very positive impact at the operation and providing us with the flexibility to process lower grade ore that would not ordinarily…

Thank you Brant. First I will review our at-site growth projects. Paracatu in Brazil, installation of the third ball mill is proceeding on schedule and on budget and is expected to be commissioned in the first half of 2011. Procurement is 90% complete. Total project is 60% complete. And physical construction is 40% complete at-site. The mill concrete foundation was completed in September and the ball mill is now in the process of being set on the foundation. Structural steel and the electrical installation has also commenced. The feasibility study has been completed for a further expansion of Paracatu. As a result, the Board of Directors has approved the installation of the fourth ball mill for an estimated cost of approximately $120 million and the purchase of an additional electric shovel and mine truck for $25 million. The addition of a fourth ball mill will give the expansion plan the necessary grinding capacity to maintain the plant’s throughput level of approximately 41 million tons per annum, as the ore work index increases in the future years. This additional ball mill was originally envisioned when the expansion at Paracatu was approved back in 2006. The added shovel will improve blending of the ore delivery to the plant. The mill is expected to commence operations in the first half of 2012. At Dvoinoye, exploration has progressed ahead of plan with over 10,000 linear meters of drilling now completed. Exploration work will continue for the remainder of the year and will include further geo-technical, condemnation and confirmation drilling. The road connection between the Dvoinoye and the northern road paved highway to Pevek has been completed. Work on the all-weather road between Dvoinoye and Kupol is finished for the season, and will recommence in the summer of 2011. Clearing of the old mine infrastructure…

Thanks, Ken. A few comments I’d like to make in closing. We had strong performance from current operations. Particular standouts included Fort Knox, and at Paracatu which continues to perform above our expectations. We look forward to increases in throughput there with the addition of the third ball mill in ‘11 and the newly approved fourth ball mill, which we expect to be in operation in the first half of ‘12. We did have operational challenges at our Chilean operations during the first half of the year and these continued into this quarter. We are exploring ways of consolidating operational and business services to improve efficiency and reduce costs across our Chilean assets. Looking forward, we are making progress on many fronts. Our exploration and development program at Tasiast is progressing right on schedule. We expect to have a total of 23 rigs on-site and operational later this month. The post-merger integration process has proceeded smoothly and quickly. Our work at the project continues to confirm our view of Tasiast’s tremendous potential. We continue to optimize our asset portfolio closing the Dvoinoye and Red Back acquisitions and the completing the sale of the Diavik and Harry Winston interest. When we look at the larger picture, over the last few years, Kinross has transformed itself and grown into the 2 plus million ounce producer that we are today with a suite of projects in our pipeline, advancing through engineering permitting and construction to bring on Kinross’ next phase of growth. Looking forward, we will be continuing that transformation as we grow our production by 75% to an expected 4.5 million ounces to 4.9 million ounces over the next five years. Thank you for your attention this morning. I would like to open up the line for questions, please, operator.

Thank you Mr. Burt. We will now begin the question-and-answer session. (Operator Instructions). First question comes from John Bridges of JP Morgan. Please go ahead. John Bridges – JP Morgan: Good morning Tye, everybody. Thanks for the call. Just wanted to dig into Paracatu, this fourth ball mill; was this envisaged in the original plan? And with bringing it on earlier, what sort of tonnage profile can we look forward to prior to you getting into the harder ore?

It was envisaged earlier on. We’re building it about three years early, given, you know, our continued efforts to move up NPV from 35-year mine life. I would say that there is a potential, as we are still in the soft ore to increase tonnage a little higher than we’ve had in the past in the next couple of years. But look, what we are trying to do here is extend our capacity to process at $41 million tons annually in that plateau right through the transition to hard ore. So, we are being conservative in our outlook, but there are some upside in that forecast, John. John Bridges – JP Morgan: Yes, I wanted to just recognize the need for conservatism. I just wonder what sort of range we could expect, you know, given whether it is hard or soft, as you go forward.

I would say, you know, we are still working on our budget right now for 2011. Best suggestion is that we stay tuned, as you know we put out our budget for ‘11 in January. And we will be updating our outlook for beyond January in normal course. So, I would say best to stay tuned. The first full year with third ball mill and fourth ball mill is obviously going to be 2013, given that we expect to startup the fourth ball mill early ‘12. So, it would be 13 which we would expect that we would still have some soft ore to run through the, you know, what will then be one SAG and four ball mills. John Bridges – JP Morgan: Okay, great. And just a mining question, that I am just stunned by the low cost at the heap leach at Fort Knox when you are just mining 0.27 grams per tonne. Is there anything special about that situation?

Brant, do you want to take a crack?

I would say, at this point, right now, it’s a new heap leach operation. And certainly we are learning more about that operation, but it’s performing quite well, and better than expected. John Bridges – JP Morgan: Okay. Well, I’ll definitely be watching that one. Thanks a lot guys. Good luck.

Thanks John.

The next question comes from David Haughton of BMO. Please go ahead. David Haughton – BMO Capital Markets: Yes, good morning, and thank you. Just following on from John’s questions. Having a look at the Fort Knox stacking rate, it seems to be quite a bit better than what we would have anticipated. The original guidance had been about 14 million tonnes per annum, but you seem to be able to get beyond that. What is the outlook going forward?

Well, you know, as far as the heap leach, what I would say right now is, I’ll reiterate what Tye said. You know, we are in the budgeting process right now. And we are reviewing what our stacking plans will be on that heap leach and we will come back with more information in January as we put the 2011 budget out. But again, I’d like to come back to a statement that I made earlier. You know, we are getting the tonnes to the leach. The leach is performing as or better than expected. It’s a new leach pad. It’s early. And you know, as we put our budgets together, we will have better information in the future. David Haughton – BMO Capital Markets: Yes, I think you are understating that because 25% better is just a little bit – more than just a marginal improvement.

Thank you for stating that. David Haughton – BMO Capital Markets: And also following up on John’s question at Paracatu. Again you are exceeding expectations. I think, at Denver, Tye had mentioned you’re achieving in September month something like 42,000 ounces per month; previous guidance had been only in the 30,000 range. Can we expect that 40,000 plus ounce per month going forward, even before the third mill is tied in?

Yes I think John, you know, we guided at the beginning of the year, as you say at 35,000 ounces per month. You know, we are now averaging as you saw from the quarter a little over 40,000. We want to stick with a conservative number. You know, each day that goes by, of course our guys are gaining confidence, costs are coming down, contractors are being shed. So, I think, you know, based on what we are seeing so far in Q4 that we are in good shape at that rate, but I would say, you know, ‘let’s just stick at 40,000 ounces a month as a run rate and hold it there. Again, this is very, very large operation with a very, very long life. And as you can see from the approval yesterday of the additional CapEx starting to live up to our expectations and we are pretty excited about how it’s performing. David Haughton – BMO Capital Markets: Well, I guess, Tye, the longer term question here is that as plant one fades away, as that ore type is depleted, post 2015-2016, would we be looking at a further expansion?

Yes, what happens is, as you quite rightly note is that as we run out of soft or the deep the B1 ore, then we will look at ways of upgrading plant one. Adding the third and fourth ball mill gives us the capacity to sustain our current rate, you know, even as plant one reaches the end of its usual terms. So, yes I would say on the three-year horizon, we will review where plant one improvements or overall changes could take that up – that throughput up even further. David Haughton – BMO Capital Markets: All right, just switching assets and countries; you say your development plans for Dvoinoye looking forward to coming into 2013, which kind of offsets the likely depletion of the open pit. We’ve only really got the Russian C1/C2 numbers to guide us for grade. Have you got any drilling that suggests that the grade is in line or different to the C1/C2 measures?

Yes, with drilling still going on right now for this season. So that’s – we would like to wait till year-end to give you answers on that and, you know, so far so good is about the best I’d like to comment on that. And you are quite right, as we get into the lower grade planned life of mine, you know, further underground at Kupol. That’s precisely the reason we made the Dvoinoye acquisition as to add back that higher grade which will take the production rate up further at Kupol even as we get into the lower grade deeper material at Kupol mine proper. So, we are exciting about where Dvoinoye goes, we are excited about the drilling results that are starting to come on the horizon for the Kupol site itself. So, I think the best time to upgrade all that will be our February release with the reserve and resource update. David Haughton – BMO Capital Markets: And, while still at Kupol, and this will be the last question. What was your split between open pit and underground throughput and production in the quarter?

Brant?

Yes, I’ll have to get back to you on that one. I would guess it’s, you know, I mean in the range of two-thirds underground, one-third open pit, but we will have to get back to you. David Haughton – BMO Capital Markets: All right, thank you very much guys.

Thanks.

Next question comes from Don MacLean of Paradigm. Please go ahead. Don MacLean – Paradigm Capital: Well, good morning guys. Ken, you mentioned 20 million ounce pit design. What depth would that take it to?

We are looking depths of about 400-500 meters, and I think there was a drawing on the webcast that gave you a solid good picture of the pit. Obviously it’s rather early to establish a definitive depth, because as we drill, we are refining the outline of the pit. But, you know, 400-500 meters would be a good estimate. Don MacLean – Paradigm Capital: Is that below surface, or is that – is there another 100 meters on top of that to get the below surface number?

No, that is the complete depth of the mining that we have. Don MacLean – Paradigm Capital: So maybe we could just talk about some things about the comfort level of getting to that 20 million ounce design; you are at 14 million ounce with the resource. How deep is that 14 million ounce resource?

At this point in time, we are at about 400 meters. And we are doing drilling to deeper depths. And at this point in time, we are looking at depths of 600 meters. Don MacLean – Paradigm Capital: So how deep would the deepest hole or deepest holes be at this point?

You know, Don, we are not stopping in ore, put it that way. But you know, there are limitations on the RC rigs and we are just getting our new core rigs to site. So, we’ll be taking the core rigs down to 800 meters and beyond, and as you know, there are lots of open pits that go down 600-800 meters. So, we are not stretching the envelope by any means. But what is happening is the orebody is flattening a little bit in its steepness which will help us strip ratio. Grades are very solid at that (inaudible) in some cases a little wider. So, we are understated a bit here. We are excited about what the indicative drilling looks like. We put out that resource update yesterday just to incorporate the methodology changes that we’ve had in a couple of the new holes. But there’s still a, you know, a freight train of samples to be processed in the pipeline today, which is why we have to upgrade the sample prep and sample analysis facility at that site and in Mauritania generally. So, stay tuned is the bottom line. I don’t want to predict with any kind of precision where that resource number goes with. What we put in the slide there was the 600 meters below surface with the 20 million ounce target. We are highly confident we are going to get there. And that’s basically the same tonnage number that we put out, you know, just before the end of the Red Back bid with the tonnage and grade that we talked about there. So, we are optimistic and confident. Don MacLean – Paradigm Capital: So to just characterize what you have been seeing since you did the bid, does it look like the grade widths and the rate at which you can add ounces is living up to your expectation?

It is indeed. Don MacLean – Paradigm Capital: Terrific. Okay, thanks guys.

Next question is from Barry Cooper of CIBC. Please go ahead. Barry Cooper – CIBC: Yes, good morning everyone. Tye, just wondering, you’ve indicated that you’re going to have the pre-feas for Fruta del Norte by year-end. What I’m wondering about – just what subset of all of the resources is that going to include? Obviously, we have got measured and indicated, what is usually the limitations that you can use for defining reserves. And that consisted of about 5.7 million ounces. Then you have got that huge inferred of 6 million ounces. Are you going to be able to tap part of that to include that in the pre-feas that’s coming out?

I will ask Ken to respond Barry.

Yes. Your figures are reasonably accurate. What we are doing is a disciplined approach at this point in time to get us a pre-feasibility study at the year-end. Our targets are within the range you just mentioned with regards to proven and probable. And the pre-feasibility study will have those proven and probable figures within what you just indicated. Out in the marketplace, obviously there is a figure of around 13 million ounces. And we will continue to drill to try and establish exactly where we are with regards to measured and indicated and proven and probable. So, roughly of those $13 million ounces, about half will be in the proven and probable when we publish the PFS.

Yes, and to be clear on the dates, Barry, you know, we are talking feasibility mid-’11 and pre-feas end of this year. And we need that pre-feas done, you know, as you will know, to move ounces from inferred into M&I. Right now, just to verify the numbers there, we are carrying 5.7 of M&I at 11 grams approximately and 6 million of inferred at 7.8 grams. So, you know, we have a Hollywood opportunity here to move ounces from inferred into the M&I with that pre-feas. Barry Cooper – CIBC: Right, okay. And then just further clarification; when you say complete by year-end, does that really mean when you report your Q4 numbers?

Yes, when we say year-end we are referring to our year-end reporting which is early February. Barry Cooper – CIBC: Yes, Okay. Good enough, thanks. That’s all my questions.

Thanks Barry.

Next question comes from John Tumazos of John Tumazos Very Independent Research. Please go ahead. John Tumazos – John Tumazos Very Independent Research: Congratulations on the progress. In your 4.5 million ounce to 4.9 million ounce projection, does that include anything for Fruta del Norte, first? And second, your shares are lagging the early 2008 level. And what is your view on share repurchases, given that your stock has not kept up with your last few additions to resources?

Yes, given, John, let me just speak to your timing question first. You know, FDN, you know, in our minds, we are still targeting a 2014 start. And the number we are reporting to you are on that 4.5 to 4.9 go out to 2015. So, we are including a bit of FDN there in 2014 and 2015. Of course, that timetable is still subject to change, because it’s at this point, an estimate. And we need to finish with the government a development agreement and finish the permitting obviously before construction. So right now it’s an estimate. Could you repeat the second part of your question? John Tumazos – John Tumazos Very Independent Research: What’s your view on share repurchases, given that your stock is not reflecting the last half dozen good things you’ve done?

Yes a great question, of course, one we think about every day. But look, we are running this business for the long term and with mine lives that are going out there 20 and 30 plus years, and a five year capital program in front of us right now, which is a big capital number. I don’t want to – I’ll be clear on that. So, in our minds today, we can invest very aggressively in our capital program which of course is, you know, putting in dollars at NPV to generate, we think very strong IRR. So, at this point in time, with this big capital program, you know, we are focused on doing our job, operating our mines and investing for the future. And I don’t think, at this few months at least, with where we are in that program, that we would contemplate a share repurchase. Down the road, as the projects kick in and the cash flow spikes up, you know, we would review both direct ways of returning capital to shareholders, whether dividend or share repurchase. But at this point, we are, you know, absolutely zeroed and focused on the projects in front of us. John Tumazos – John Tumazos Very Independent Research: Thank you.

Next question is from Anita Soni of Credit Suisse. Please go ahead. Anita Soni – Credit Suisse: Hi, just could you – Tye, could you just run over those numbers again with the splits on the M&I and the inferred and what grades they were at?

Sorry, at which… Anita Soni – Credit Suisse: At Tasiast. I think you said 5.7 million ounces of M&I. What grade was that?

I think that was – I think we are talking about FDN at the time. But let’s just – if you look back at the webcast pages there, you will see Tasiast on page 8 of the webcast which splits it between M&I of 9.3 million ounces and about 5 million ounces of that, a little over, is actual reserve. And then there’s another 5.1 of inferred. And we just updated that by 3.2 million ounces last night. Anita Soni – Credit Suisse: Okay. So that’s 5.7 and 6 million ounces, you were talking about FDN.

Yes. Do you want me to go over the FDN numbers for you again? Anita Soni – Credit Suisse: No, no. I just – when you said 11 grams per tonne, I thought it was (inaudible).

No, that’s the beautiful, you know, deposit at FDN. Anita Soni – Credit Suisse: Okay. And then just another question with respect to the Tasiast. The in pit – the pit shell that you have shown there – you said that grades and intercepts there; I guess grades are coming in relatively well at depth, as I recall, where they were somewhere in the 2 gram per tonne range up to about 3 grams per tonne at the 250 meters below pit level. So that’s about 500-400 level. Is that continuing?

Yes what we are, you know, the tonnage and the ounces we are showing there are at 1.5 average gram – per ton average grade. You know, we are seeing holes that are higher grade at depths and we are optimistic about what that will mean as we start moving ounces forward at the next update. So without getting into too much detail there, grades are strong, improving, and the widths are staying solid. And as I mentioned the shape of the orebody is flattening a little bit as it proceed south. So, stay tuned for further updates there. Anita Soni – Credit Suisse: And then so the intercepts are coming in at around 50-60 meters still then, or better than that?

The width is staying steady at 50-60 meters, yes. Anita Soni – Credit Suisse: Okay, all right. Thank you very much.

The next question comes from Steven Butler of Canaccord Genuity. Please go ahead. Steven Butler – Canaccord Genuity: Okay, good morning, Tye. Guys, just on Tasiast, is that resource actually a pit constrained resource or more a global resource above a certain cutoff?

Definitely the latter. You know, there are no constraints on the pit. As you know from the geography there, you know we can go 360 degrees with no constraints in that desert environment. So, we are simply optimizing the pit shape to the orebody.

We’ve done a layout of the – a provisional layout of the pit and the associated infrastructure that’s required. There’s no constraint with regards to the pit or future discoveries. Steven Butler – Canaccord Genuity: Okay. And the resource – can you characterize, looking at that sort of the stylized or that sectional view here of the conceptual pit, 20 million ounces. Where did you specifically add 3.2 million ounces, guys? Is it simply more at depth than along strike in terms of the 3.2 million ounces added?

Yes, let’s be clear. I think we tried to explain it in the press release. You know, the addition of the 3 million ounces comes from two sources. You know, updating the methodology to how Kinross does 43-101 measurements, which means we can, you know, move up the spacing slightly from what Red Back was doing. And then we added a couple of the new holes that results from which had moved through the assessment assay labs and into the model. So, a combination of those two factors. And that’s where we stand today. As I mentioned earlier, there is still a massive amount of, you know, sample back up right now in the labs and at sites. So, lots of work to be done to catch that up. And yes, what we were doing was simply extending it to slightly down along strike. Steven Butler – Canaccord Genuity: Down along strike or at depth?

Yes. Steven Butler – Canaccord Genuity: Okay. Thanks guys.

Yes, thanks Steve.

Next question comes from Paritosh Mishra (ph) of Morgan Stanley. Please go ahead. Paritosh Mishra – Morgan Stanley: Hi, good morning. Just one question. What’s your sensitivity to US dollar? And do you have any FX hedging in place right now?

Tom?

Yes, we generally hedge about half of our foreign currency exposure. And our sensitivity on an overall basis is for a 10% change in our overall foreign currency basket against the US dollar. It would impact our cost of sales by about $7 an ounce. We have not had a lot of variation in our FX this year. As I said, we had hedged 50% and the actual FX rates have not varied hugely from what we have put out in our January press release at the beginning of the year.

And just to add to Tom’s comment. You know, about 50% to 60% of our costs are denominated in US dollars. So that gives you a sort of order of magnitude. Paritosh Mishra – Morgan Stanley: Got it. And actually if I could ask one more. A few months ago, I think it was in second quarter. There were some changes to, National Instrument 43-101 rules were proposed. Do you know anything about that? What is the status?

Yes, on the 43-101, there has been some conferences and meetings to establish what should be done. And there has been a document published with some suggestions. But it has not been finalized.

Yes, we are at the very conservative side on all of that (Paritosh). We pride ourselves on our QA/QC and Rob Anderson, our qualified person, is right out of the cutting edge in terms of following potential changes. They haven’t been implemented yet. Paritosh Mishra – Morgan Stanley: Excellent. Thank you very much.

Thank you.

Next question comes from Greg Barnes of TD Newcrest. Please go ahead. Greg Barnes – TD Newcrest: Yes, thank you, Tye, you have a pretty aggressive expansion scenario at Tasiast. I think it’s (60,000) tonnes a day by 2012-2013. Is power going to be an issue?

I will answer on the top and then ask Ken to jump in. Power is a big piece of infrastructure that we will require for that big mill and for our electric shovels, of course. So I would say it’s a necessary requirement obviously for what we are doing, but not an issue. And Ken, maybe, you want to speak to a little more detail of what we are planning.

Yes, we’ve done some preliminary work with regards to the power. We have established roughly what size plant we need. So now what we are looking at is a base case with a generation plant at site, could be HFO or it could be even crude. But at this point in time, it’s based on HFO. It’s also an alternative of putting a power plant at Nouadhibou, which is the northern port close to the Western Sahara border and running either a power line or a buried line to the site. And there are other alternatives putting in a rail spur off the SNIM railway line. But these are conceptual at the moment. But we do have a base case. And (Twital) has a very large receiving facility at Nouadhibou with regards to HFO and diesel. So, there is an infrastructure there. And we need to piggyback on that and develop it a bit further. Greg Barnes – TD Newcrest: So the third option is an HFO plant at site?

At this point in time, it’s the secure option. And we have to investigate a delivery chain to that plant. And the other reason for the Nouadhibou (IDR) is it’s easier to have the HFO at a port and then deliver the power down the line. Greg Barnes – TD Newcrest: Right. And how big – okay go ahead?

Sorry go ahead. How big a plant I think was the question.

Oh sorry, how big a plant? Provisionally at this point in time, we’ve looked at what we call an n+1 configuration of gensets. And we are looking at an installed capacity of around 150 megawatts. But the power draw will be obviously less than that. It will be somewhere around 110-115. But we are at the very early stages. We haven’t even finished the scoping study yet. So, these are order of magnitude figures. Greg Barnes – TD Newcrest: Great. Thanks very much.

Thanks.

There’s a follow-up question from Don MacLean of Paradigm. Please go ahead. Don MacLean – Paradigm Capital: Just to follow up on Fort Knox heap leach, if we could get any kind of a guidance as to what percentage of 2011-2012 production that might represent going forward.

Right. Compared to the overall Fort Knox? Don MacLean – Paradigm Capital: Yes, a quarter, a half, bigger than a breadbox?

Just looking quickly here, you know, overall tonnes processed in Q3, you know, obviously, you have got to compare mill to heap leach, overall tonnes processed you know at about 7 million tonnes. And of that, 4 million tonnes are placed on heap leach. Of course, that’s a lower grade. So that’s gives you an order of magnitude of the split, I would say. Don MacLean – Paradigm Capital: Given the success – the apparent success in the quarter, would you be likely to expand the heap leach’s role in the overall production for Fort Knox in 2011 and 2012? And would it represent maybe a quarter of the production for the project going forward, something like that?

You know, as we indicated earlier from a 2011 and 2012 perspective, we are still putting those budgets together. But certainly going forward the heap leach is going to important component of Fort Knox’s success and their production profile. And we are looking at, you know, continued opportunities to expand that.

Sorry, Don, I may have – I said 7.7 million tonnes overall, it’s 7.7 went through the mill and 4.4 went on to the leach pads. So that’s the rough split, call it a third, two-thirds. Don MacLean – Paradigm Capital: Okay. And maybe you could remind us again, roughly what number of ounces of resource might be applicable to heap leach as opposed to mill feed?

I think that’s a get-back because obviously that’s a function of cut-off and what the outlook is. We will be able to answer that question a little better when we get through our budget process and our outlook for ‘11-’12. Don MacLean – Paradigm Capital: Intriguing. Okay, thanks guys.

Thanks Don.

Next question is a follow up from Anita Soni of Credit Suisse. Please go ahead. Anita Soni – Credit Suisse: Hi, just a question with respect to the increasing costs at Chirano, ex the inventory adjustment that we did increase – you guys did increase costs there. But what was the nature of that? Is that the increasing power rates in Ghana?

Brant, you want to?

Yes, you know, as far as any increase in costs at Chirano, we did – we have experienced increased power rates in Ghana, which I think is consistent with what everybody in Ghana is experiencing to-date. And that would be, you know, from an operating perspective; the primary reason. Anita Soni – Credit Suisse: Right. And so obviously that would impact the processing. Can you just let me know how much of your processing costs are related to power and what the power rate increase was?

Yes, I think that’s a get-back on that one as well too. Anita Soni – Credit Suisse: Okay. And then just secondly, with respect to the $320 per ounce depreciation rate for Q4, is that a good number to use going forward in 2011 and beyond at this point, until you upgrade reserves?

Yes, the purchase allocation is preliminary at this stage. And so we will be finalizing that over the course of the next year. And as a result, the allocation between mill interest property, plant and equipment and goodwill could change. But absent changes in that allocation, I think that’s a pretty good base to use going forward. Anita Soni – Credit Suisse: Great. Could I also have someone call me back about the dimensions of the pit, that would be great?

Sure, which pit was that? Anita Soni – Credit Suisse: Sorry; the Tasiast pit.

Right. So we have the little outline there in the slideshow Anita, and we are happy to talk about it some more, but of course it’s still in, you know, scoping study stage right now.

That is the best that we have at this point in time. Anita Soni – Credit Suisse: All right. Thank you.

Thank you.

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

Thanks folks. In closing, as I mentioned earlier, Kinross is on target to drive dramatic growth in our production and reduced cost as we bring on these new projects. So this quarter’s strong operating cash flows from existing mines, very strong balance sheet and I would say an experienced operating and development team to realize on those growth plans. So, thanks for listening this morning, and talk to you soon.

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