Fitch: Kinross's Planned Mine Acquisition Neutral to Current Ratings

CHICAGO--()--Fitch Ratings views Kinross Gold Corporation's (Kinross) planned acquisition of the remaining 50% interest in the Round Mountain mine and a 100% interest in Barrick Gold Corp.'s (Barrick) Bald Mountain mine as neutral to the company's ratings. Kinross has adequate liquidity to fund the $610 million acquisition with cash on hand and its liquidity plus cash generation should be sufficient to fund the remaining development capex on the Bald Mountain mine.

The Bald Mountain mine is expected to be a net use of cash in the short run, but a source of free cash flow in the long-run. The mine is expected to be on the lower half of the global cash cost curve at roughly $560-700 per oz. for the life of the mine beyond 2018, with an all-in sustaining cost of between $700-900 per oz. beyond 2018, lowering Kinross' overall cost profile. The additional earnings are expected to be deleveraging on a total-debt-to-EBITDA basis following the close of the transaction but will slightly increase net-debt-to-EBITDA in the near term.

Kinross' ratings reflect its sizable reserves, average cost position, average geopolitical risk position, and the potential for gradual deleveraging in the next three years as production increases in combination with Kinross' commitment to maintain a conservative capital structure given its exposure to gold prices. In weak gold markets, the company has the ability to defer development and exploration.

RATING SENSITIVITIES

Negative: Future developments that may, individually or collectively, lead to negative rating action include:

--Gold prices and internally generated cash flow deteriorate without an equal management response in the form of reduced spending, asset sales or the raising of equity;

--Expectations that total debt/operating EBITDA will be greater than 3.0x on a sustained basis;

--Significant disruption in operations of major operating sites, especially low cost operations in Russia.

Positive: Not anticipated given production guidance and projections, but future developments that may lead to a positive rating action include:

--FCF positive on average.

Fitch currently rates Kinross as follows:

--IDR 'BBB-';

--Revolving credit facility 'BBB-';

--Senior unsecured term loan due 2018 'BBB-';

--Senior unsecured notes 'BBB-'.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Contacts

Fitch Ratings
Primary Analyst
Greg Fodell, +1-312-368-3117
Associate Director
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Secondary Analyst
Monica M. Bonar, +1-212-908-0579
Senior Director
or
Media Relations, New York
Alyssa Castelli, +1-212-908-0540
alyssa.castelli@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Greg Fodell, +1-312-368-3117
Associate Director
Fitch Ratings, Inc.
70 W. Madison St.
Chicago, IL 60602
or
Secondary Analyst
Monica M. Bonar, +1-212-908-0579
Senior Director
or
Media Relations, New York
Alyssa Castelli, +1-212-908-0540
alyssa.castelli@fitchratings.com